There’s been much talk about regulating ride-hailing apps like Uber and GrabTaxi in Singapore. Apparently, the transport minister has been getting an earful from taxi drivers and taxi companies.
Singaporean economist Donald Low, however, is having none of that. A respected intellectual, Low serves as the associate dean for executive education and research at the Lee Kuan Yew School of Public Policy. He posts frequently on Facebook, giving much-needed rationality to the cacophony that is social media.
Recently, he turned his attention to the notion of regulating Uber in a Facebook post, which generated heated debate. The post later turned into a long article on local broadsheet The Straits Times. This is a TL;DR version.
Rules are already in place to govern taxi apps.
Drivers on these apps are required to have a valid license and must not be illegal immigrants. They can’t pick up hailing passengers. They also pay commercial car insurance rates, which are more costly than personal ones. This raises the question: why the need for more regulations?
“Safety” is a poor reason to regulate.
The fear toward Uber is exaggerated. There are no empirical studies proving that Uber is more dangerous than riding a taxi. It means nothing if the media reports on a few rape cases by Uber drivers. It’s just like how dramatic reports about plane crashes exaggerate the danger of boarding airplanes, when in fact they’re safer than cars.
And suppose it can be proven that riding Uber is more dangerous than using a taxi, that isn’t grounds for regulating. Rationally, how much more dangerous can it get? The probabilities might be negligible. Further, consumers should be trusted to make their own calculations about convenience versus safety.
“Just as we do not expect the state to regulate freelance tutors, domestic helpers, physical trainers, personal chefs and a whole host of people who provide personal services, all of which involve some risks to our personal safety, neither should we expect the state to impose more regulations on people offering car-sharing services,” he writes.
“Providing a level playing field” doesn’t cut it either.
Donald argues that what proponents of regulating Uber is really trying to protect are the taxi companies, not taxi drivers.
“In fact, taxi drivers may actually have benefited from the new apps. Even if they do not switch to being independent drivers, they benefit from having superior apps that match taxis to passengers more efficiently, increasing their potential pool of customers,” he says.
He adds that running a business is inherently risky, which is true for taxi companies. So, rather than hiding behind regulations, taxi companies should therefore find ways to better compete. If they fail, they should be allowed to die. “This process of creative destruction is at the heart of the market economy,” he concludes.
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