taxiiReal-time ridesharing is a service that arranges one time shared rides on very short notice with non-commercial vehicles. It is a technologically driven alternative to hailing a taxi cab, by using GPS and smartphone apps to arrange rides, as well as using social media to establish trust and accountability between drivers. Many people like this idea due to its effectiveness and the fact that it can benefit the environment by limiting the volume of car traffic, and reducing congestion on the road. However, there are opponents to ridesharing, and they originate overwhelmingly from taxi companies and public transit operators.

Ridesharing companies have already danced with the legality of this issue in Los Angeles, but now the city of Chicago is preparing engage in the same, as the taxi industry has gone to courts to protect their monopoly. We have already covered how the licensure racket operates in occupations like taxis, with areas such as New York City charging almost a million dollars for a single taxi cab license.

The non-profit, public interest law firm, the Institute for Justice (IJ) has partnered with 3 rideshare drivers to combat the Chicago taxi cartel’s attempt to maintain their monopoly. In February of this year, several taxi cab companies filed a lawsuit against the city of Chicago, demanding that federal judges freeze the city’s transportation regulations in order to protect cab owners from competition. Chicago’s outdated regulations serve to keep the number of taxis on the streets artificially low, resulting in long waits, poor service, and in many neighborhoods, a complete inability to call or hail a cab.

IJ attorney Anthony Sanders says that, “There is nothing in the Constitution that protects taxicab companies from competition. Unfortunately, if the taxi companies’ lawsuit is successful, Chicagoans will be left out in the cold hailing cabs while the rest of the country amends regulations to spur technological innovation and hold entrenched businesses at bay.”

Here are some of the key points that IJ lists in this case:

  • There is no constitutional right to force the government to arrest your competitors
  • Chicago’s taxi owners erroneously believe that the city has a constitutional duty to maintain regulations originally drafted in the early 20th century, rather than foster innovation that offers drivers and riders increased options and greater flexibility
  • If entrenched interests like the taxi companies in this case had their way, Chicagoans would still be hailing horse-and-buggies or riding street cars.
  • Smartphone-based ride sharing technology offers drivers a way to make ends meet using resources they already have. At the same time, it gives riders new, cost-effective modes of transportation. Chicago should be celebrating innovation, not debating whether or not to crush it.

Renee Flaherty, an IJ attorney on the case, says “Customers aren’t property, and competition isn’t theft. Consumers and entrepreneurs, not lawyers and city officials, should be deciding which transportation options are available in Chicago.”

Last year, Los Angeles cabbies staged a protest at city hall demanding that the city crack down on ridesharing. The California Public Utilities Commission and the Los Angeles Department of Transportation both sent the companies Lyft, Uber, and Sidecar (all ridesharing companies) with cease and desist letters in 2012 and 2013. Despite this, the businesses continue to operate today.

Hopefully the efforts of IJ be will successful in letting people freely choose their mode of transportation without the use of force from government being involved. As long as mechanisms for accountability and safety are there, what reason exists to forbid their existence? The taxicab companies are now guilty of crony capitalism with their attitude that they can lobby the government to use force and coercion to restrict competition.