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Taxis Must Abandon Privileges If They Want to Beat Out Uber and Cabify

By: Jorge Chuya - Jun 20, 2017, 1:59 pm
(La Prensa)
Taxi drivers stage protests through the city, a clear example of the conflict between the free market that wants economic progress for all, and a business group relying on state aid to preserve its privileges. (La Prensa)

EspañolJuan is about 24 years old and the father of two children. When I got into his car, he greets me with a warm smile, asks if I want a bottle of water. It’s rush hour, and we’ll be on the road for a while. On the way, we start talking about his life and his work while he maneuvers a protest holding up traffic.

Juan has worked at Cabify for five months. He gets up every day at nine a.m. to drive the streets of Guayaquil, Ecuador. It’s not his only job — his shift begins at dusk in a call center that, at times, keeps him up until four in the morning. I ask why he makes such a tremendous effort each day. He says he needs the extra money.

“I have a newborn son, and in the situation we’re in — it’s not enough for me anymore.”

In recent weeks, tension has worsened between taxi labor unions and independent services like Cabify and Uber. Taxi drivers stage protests through the city, a clear example of the conflict between the free market that wants economic progress for all, and a business group relying on state aid to preserve its privileges. Why pick a fight against people who want to work honestly, just like Juan? Why leave hundreds of drivers unemployed that just need to make a little extra cash?

The essence of the free market is that there are no privileges for anyone, and everyone must compete to offer a good, quality service. Given the universal existence of limited resources and boundless desires, competition exists in all societies and cannot be abolished by any governmental edict. If taxi drivers want to “keep” their business, they should offer better service. Applications like Cabify address a part of the market that taxi drivers have not been able to reach — namely, the upper middle class willing to pay for a somewhat nicer ride, and with a debit or credit card. Many times, taxi drivers turn down rides because it’s rush hour, or because they simply don’t want to go to a certain place. But Uber, Lyft and other applications offer added security and a fair price.

 

Taxi drivers have not approached the problem in a smart, effective way. The issue isn’t with defeating competitors, but rather in freeing themselves from the excessive state regulations they’re so accustomed to. To begin with, it’s necessary to make an internal quality assessment and correct your flaws in order to provide a better service. Taxi drivers have to focus on reducing obstacles to becoming a formal taxi driver. Some have paid up to US $10,000 to taxi companies to obtain and keep their license.

Private initiatives such as Uber or Cabify have shown that good service without overblowing the need for security. The consumer is the most important factor in this process. The free market allows them to choose from several options, and they always go with the best one.

Asking for privileges and excluding competition is not the solution. That’s called mercantilism or crony capitalism. What would have happened if eighteenth-century workers had protested against steam engines and not allowed them to be used? Times change, but mistakes remain the same. Restricting competition is restricting trade, and restricting trade restricts progress. The key is to do a self-assessment and think about how you can offer a better service, so you can continue to compete fairly and freely.