Uber, taxis and the issue of safety By Alberto Mingardi

Were all safety regulations only made for increasing safety, ours will be a much simpler world. But we know from experience that “safety regulations” are often a very tricky game.

Such regulations may be imposed for the sake of raising barriers to entry to foreign competitors, or–more generally–they turn out to be barely-disguised barriers to entry enacted at the behest of special interests. They may be the inevitable result of strong popular pressure. They may ratify standards that were spontaneously reached by business actors, or drive a demand for newer appliances and instruments.

The New York Times recently made the case for harmonizing criminal background check requirements for taxis and companies like Uber or Lyft. The casus belli is offered by the New Delhi rape that we already referred to, that provided the French a ready-made excuse to ban UberX (UberPop, in Europe).

I am a bit puzzled, because it seems to me that “Taxi Apps” (Uber, Lyft, or whatever) should be expected to be safer than the older system. Imagine you got robbed by a taxi driver, or even that you simply end up forgetting your iPad in a car. With an App, you can immediately trace down the identity of your driver: and either give him a call or signal him to the police. Once again, this is nothing new: what the Apps do, is simply updating to the digital age a very old process, which is taking notice of a taxi’s license plate.

But in the pre-App world, doing this is difficult. For one, you need to have pen and paper at your disposal, and look at the license plate right after you have reached your destination. If you were actually robbed, you were very likely to be too shocked to do so. If you just forgot something, typically you did not know you were forgetting it, when you got out the cab.

True, taxi cooperatives helped in getting hold of the driver, and some taxi drivers are very nice and decent people, and may look for you so that you could have your iPad back (we have no reason, however, to think that some Uber drivers may not be very nice and decent people too). But the process was clearly more difficult and less smooth than what happens now with an App, that basically keeps track of all your travels. This is not unlikely of what happens with your Amazon purchases, or PayPal transactions.

Now, a possible rejoinder to this might be that, whereas Uber may be safer “ex post”, government-regulated taxi services are supposed to be safer “ex ante”. Their background checks are more thorough because they are, well, performed by the government. My colleague Paolo Belardinelli looked at the background requirements for taxi drivers in the cities of Milan and Rome, in Italy (the paper is in Italian, I’m afraid) and was unimpressed. Basically all the municipalities require is that prospective taxi drivers have no conviction to jail terms longer than two years for non-intentional offences. But no psychological test is required, for example.

I suspect there is a sort of psychological bias against Uber drivers at work, too. The idea being that unregulated trade attracts almost by definition people that like to live on the hedge of legality. But is that really so? I would go with the less intriguing hypothesis that drivers that enroll in Uber are simply those that couldn’t buy a taxi license because their number is artificially restricted, or are younger people that like to supplement their income but not necessarily desire to be taxi drivers for life. To put it differently, there are plenty of reasons you may like to be employed in a less regulated sectors (first and foremost, it’s easier to get in), than presumably despicable motives.