Taxicabs will survive by learning to compete with Uber, Lyft

OPINION:

A century ago dealers in horses and manufacturers of buggies and buggy whips took a sad story to the politicians: The newfangled manufacturers of horseless carriages are driving them out of business. Somebody has to do something.

For years their customers had stepped into the street, dodging the deposits of horse manure and mud, to hail a taxicab and now noisy contraptions spitting smoke and noise were taking their customers. Life was not fair.

The politicians, try as they might, had no workable answer. The automobile was here to stay, in any color a customer could choose so long as he chose black. Horses inevitably gave way, as did the buggy, and soon even the buggy-whip factories either closed or discovered something else to manufacture. There would be no more whips to punish the backsides of horses, or whips with which an angry father could threaten a young man threatening to get fresh with a willing daughter.

Now the “legacy” taxicab industry is in similar straits, and lobbies, as the manufacturers of buggies once lobbied, for someone to do something about the ride-hailing services Uber and Lyft, which a customer can summon, without stepping into the street, at the touch of an app on a smartphone.

Wisely, for the sake of public convenience, free markets and competition, the Maryland Public Service Commission has decided against subjecting drivers for Uber and Lyft to fingerprint-based background checks, a cumbersome and time-consuming procedure that threatened to drive the upstart transportation services out of the state. With them would have gone the jobs of hundreds of drivers across the state.

The Maryland Public Service Commission voted just as Montgomery County-based Barwood Inc., and its affiliated taxi companies, filed for Chapter 11 bankruptcy protection in federal court in Greenbelt, Md., citing declining revenues that it traced to competition from Uber and Lyft.

In its bankruptcy filing, Barwood said Uber and Lyft had operated in Montgomery County for several years without having to comply with county and state regulations, enabling them “to offer fares that were substantially lower than the regulated prices of taxis.”

Uber and Lyft vowed to pull out of Maryland if the fingerprint requirements were imposed, as it had in Austin, Texas, earlier this year after a similar rule was put in place. Uber and Lyft said the checks they perform on drivers are more thorough than the fingerprint checks, which they say can present an incomplete picture of an applicant’s criminal history, if any. Police records are usually not kept up-to-date and can thus fail to show the final disposition of charges, particularly if charges had been recently dropped.

The Maryland commission said it would impose several additional safety requirements, including annual company background checks on all drivers, that such checks be audited and accredited, that drivers report arrests and convictions to the companies within three business days, and that the commission be informed when drivers leave employment. Uber and Lyft have 10 business days to respond to the proposed rules.

Uber and Lyft are not likely to drive all taxicabs off the streets of Maryland, or any other state, but competition will encourage innovation and the taxicab companies will no doubt find ways to compete. When they do, everybody wins. That’s the rough genius of capitalism.