Banning Uber and Lyft in Austin has led to an explosion of "black market ride sharing"

A couple of months ago we talked about the failed effort in Austin, Texas to regulate ride sharing in a way which would allow consumers more choices in local transportation. The cab companies and their union lobbied heavily to make it nearly impossible for any competition in the market and they eventually won the day. In response, Uber closed down in Austin and Lyft opted not to operate there. The result was bad news for customers and the growth of a different sort of market which should have been entirely predictable. There is now a growing “black market” for ride sharing taking hold in the city. (The Federalist)

Tens of thousands of riders and drivers are now connecting through Facebook and Craigslist, sidestepping onerous city regulations passed late last year aimed at traditional ride-sharing companies like Uber and Lyft that required drivers to be fingerprinted, among other things.

When a ballot proposal that would have replaced the city ordinance failed, Uber and Lyft left town as promised. Since May 9, there have been no ride-sharing services available in this city of almost a million people. Getting around town has become almost impossible unless you own a car.

Arcade City, the “Uber killer” ride-sharing company, as it’s known, says it’s developing a peer-to-peer ride-sharing app that will connect people who need a ride with people who have a car, and eliminate “concern about red tape or corporate BS—just people providing people a needed service.”

The free market abhors a vacuum and always moves rapidly to fill it. That seems to be the rule in play here and Arcade City is simply a symptom rather than a cause. This Facebook community has become the vehicle for former Uber drivers and other ride sharing enthusiasts to eliminate the middle man and go on providing rides outside of any sort of formal regulation. Customers log in and post their location and destination and wind up getting a ride much the same as they did before.

And what was the City of Austin’s rational and helpful response to this? They set up sting operations to try to bust the people participating in the plan. (KVUE Austin)

In what seems like a never-ending saga between the city of Austin and transportation networking companies, the city is cracking down on another ride-sharing service.

This time, city officials said ‘Arcade City’ is not following ordinances.

The service came into play after Austin voted ‘No’ to Proposition 1, and Uber and Lyft left town. Undercover detectives performed a sting operation Friday night: including one on Nueces and 3rd Street. There, they ticketed and impounded the cars of four Arcade City drivers. Most of the drivers used to work for Uber or Lyft.

People have gotten used to the idea of ride sharing and are unwilling to pay the high prices cab companies charge in exchange for frequently sub-par service and long wait times. Part of those costs are driven by the incestuous deals which are often discovered between cab companies, their unions and municipal governments to keep all of the business lining the same old pockets. These sting operations are a new low point in that practice.

The idea of shutting down arrangements such as Arcade City is an impractical one because the city will quickly tie up much of their law enforcement resources to hang on to a few donations from the cab drivers’ unions to the detriment of the community in terms of fighting actual crime. Also, the idea that you can forbid someone from agreeing to give somebody else a ride in their own vehicle seems preposterous in legal terms. If the passenger “kicks in for gas” at some rate they both agree on, can you really criminalize that activity? I can’t imagine a judge allowing someone who gives their neighbor a lift to a doctor’s appointment to be fined if they accept some gas money in exchange for the favor.

Ride sharing is part of the new economy and consumers are aware of their options. The City of Austin should get used to that idea and give up on squashing new technologies and business models. If they think that Arcade City is truly some sort of evil beast, they should be reminded that they brought it on themselves.