In the past week or so there has been a lot of chatter concerning a recent decision by the Department of Motor Vehicles here in Virginia. It appears that their tolerance for alternative methods of transportation within the state has come to an abrupt halt.
On June 5, the Department of Motor Vehicles issued a cease and desist letter to both Uber and Lyft, with Virginia’s DMV Chief Richard Holcomb suggesting that the companies focus their resources on participating in a state study “rather than continue illegal operations in the meantime.”
The letter further said that the “state does not recognize their business model.” This is the business model that is not only helping entrepreneurs around the state but is also providing safe, affordable ride-sharing to Virginians. Uber and Lyft have already been fined $26,000 and $9,000, respectively.
What is so wrong with these innovative companies that state agencies are making such a public effort to bring them screeching to a halt? The Virginia DMV has argued that Uber and Lyft are not safe modes of transportation. The state has further encouraged potential riders to opt for approved transportation services that have been through the state’s background check process.
Despite the DMV’s statements, the real reason behind this state action is Uber and Lyft’s competition with the taxi cab industry. Taxi cartels have lobbied the government to ensure that anyone wanting to provide transportation must first go through an onerous licensing process. Alternative ride-sharing companies are not buying into it, and this is costing both the taxi industry and the Virginia DMV.To be fair, Holcomb has openly stated that the DMV is starting a case study with the goal of making Uber and Lyft’s business models legal. However, until this is the case, he wants the companies to focus on participating in the case study rather than providing highly in-demand services. The fact that the government is asking these two innovative companies to focus more attention on lobbying and less attention on providing services is unfortunately no surprise.
Despite the DMV’s concerns to the contrary, Uber and Lyft already have their own safety policies in place. For example, Lyft will only hire a driver if he or she has no history of violent crimes, sexual offenses, theft, property damage, felonies, or drug offenses. In addition, both companies have at least a $1 million liability insurance policy, which is far above that which is required by most taxi services or government regulation. All vehicles used by part-time drivers have to be models from the year 2000 or later and must also go through thorough inspections.
Some skeptics are arguing that these companies have their own lobbyists fighting to impose restrictions just like those from the cab industry. To this I say – so what? These companies have said they plan on continuing to provide services to Virginians despite their warnings from the DMV. But ultimately if they want to keep functioning, they will have to get into the lobbying game to convince the government of the legality of their business model. This is the unfortunate, but realistic, state of our system.
Others argue that Uber and Lyft are unfair for taxi services who went through the proper licensing channels. But remember, these are licensing requirements that the taxi companies lobbied to put in place.
Remember, no one is making you use these ride sharing services! If you are a fan of regulation, then you are more than welcome to go to the DMV website and choose an approved taxi service. Still, just because a service is licensed and government-approved does not mean that it is the best service.
The war on Uber and Lyft is not only an attempt to stifle alternative transportation services, but it is also an attempt to limit free market practices where consumers get to choose what services are best for them. We are in a new age of transportation, and DMV’s around the country need to realize that these unique companies are the future – not because they want to defy the government, but because the people want their services.
People have realized there is a fun, affordable, and innovative alternative to awkward, expensive taxi services, and for that reason Uber and Lyft are here to stay.
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