Jeff Nadel | Startups vs. the state
Give me Liberty | Disruptive startups put government in its place — and consumers have been benefiting for centuries
September 15, 2013, 3:44 pm · Updated September 15, 2013, 10:13 pm·
Give Me Liberty
What does a 36-year-old, Silicon Valley tech startup founder have in common with a bearded abolitionist who died 126 years ago?
Believe it or not, Uber — the taxi-industry competitor that delivers chauffeured black cars to its users just minutes after they tap a button on the company’s mobile app — is building upon a legacy started by Lysander Spooner.
In 1844, Spooner founded the American Letter Mail Company. The aim of the venture was to provide better, cheaper mail delivery than the United States Post Office. It succeeded. Seven years later, the United States government had shut down the company because of its competition with the postal service.
The experience of Spooner and the American Letter Mail Company is only one of a seemingly unending litany of examples of government stifling innovation by obstructing the tide of increasing efficiency and decreasing prices with red tape, bureaucrats, fines and threats.
Travis Kalanick, the CEO of Uber, knows all too well about the snarls of regulators, who are often wed to anticompetitive policies advocated by behemoth companies and unions. Uber has faced intense regulatory backlash in San Francisco, Chicago, Houston, Washington, D.C., Miami and other cities throughout the country.
Miami sets a government-mandated price floor for all rides taken in chauffeured sedans. Washington, D.C. almost passed new regulations called the “Uber Amendments” that would require black-car rides to cost five times more than taxi rides. The company has been sued by California government agencies and has been issued cease-and-desist letters from municipalities and public-utilities commissions from coast to coast.
Why the upheaval? Because Uber brings a better, more efficient service to consumers — and that threatens the livelihood of entrenched taxi unions and the City Hall politicians and bureaucrats beholden to their interests.
Asked about Uber’s experience dealing with regulators, Kalanick says matter-of-factly, “The regulatory systems in place disincentivize innovation. It’s intense to fight the red tape.” The broader lesson is this: Under the flag of public safety and the banner of consumer protection, the government will often leverage its power to encumber and enjoin the onward march of innovation, to the great detriment of the very consumers the supposed do-gooders purport to protect.
And government efforts have tangible effects. As Peter Thiel, the first investor in Facebook and an incredibly successful technology pioneer who was famously portrayed in the movie “The Social Network,” noted: “More government regulation leads to less technology, [which] leads to demand for even more politics to redistribute the pie that’s no longer growing.”
There is hope, though, and it lies not in the flag-bedecked chambers of City Hall, but with consumers themselves. We can encourage inspired solutions to the problems that frustrate us and allow for technological advances and entrepreneurial vision to better our lives in ways we didn’t even know were possible. But the discussion can’t end at sticking out our tongues and spitting the “Debbie Downer” epithet at the bureaucrats whose rolls of red tape are always ready to be deployed.
We’ve already seen the influence of determined consumers at work. Washington, D.C. Councilwoman Mary Cheh, who proposed the anticompetitive “Uber Amendments,” ultimately reversed course. Not only did she withdraw the amendments, but she decided to advocate the authorization of Uber’s operation and announce that D.C. should be “supporting,” not “penalizing innovation.”
Why the about face? Because the D.C. Council received over 50,000 emails and tens of thousands of tweets in support of Uber. The consumers demanded that government step out of the way and let the tide of innovation sweep through the District.
We have the power to determine how life-changing businesses and technologies will be received in our world. The default reception is one of hostility, proffered by governments with no meaningful incentives to make things better. The very attainable alternative, however, is a warm reception provided at the behest of consumers who have their minds set on letting businesses innovate, succeed and make our lives a whole lot better in the process.
Shervin Pishevar, a managing director at Menlo Ventures, characterized the outcome of the Uber-D.C. saga as the “dawn of a new local politics.” Let’s do our part to make sure he’s right.
Jeffrey Nadel is a College junior from Boca Raton, Fla. His email address is firstname.lastname@example.org. Follow him @theseends. “Give Me Liberty” appears every other Monday.