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Falling Behind: TNC situation highlights pros and cons of markets acting before government

  

The grievances between Uber and Lyft and the St. Louis Metropolitan Taxicab Commission are no secret. After the MTC launched new rules on vehicles-for-hire in Sept. 2015, which included provisions that would apply to rideshare drivers, Uber took the MTC to court in an antitrust case while the commission promised to cite St. Louis Uber drivers who did not follow the new ordinances.

The results have been less dramatic than the rhetoric. Two lawsuits on the issue are tangled up in federal and state courts, and law enforcement has taken little to no action on Uber drivers (Lyft does not operate in the state). Proposals for ridesharing legislation has stalled in each of the last two years in the General Assembly, but legislators are confident the third year will be the charm as it becomes a more and more pressing issue. Thirty-five other states and the District of Columbia have ridesharing legislation, and proponents of the measure fear that the state may be falling behind.

Yet even with relatively little legislation or statute, Uber has still found room to operate in the state of Missouri. Kansas City, Columbia, and Springfield have passed laws that earned the approval of ridesharing companies, but their operation in St. Louis shows that government sometimes has trouble keeping up with an ever-changing marketplace that may only present new challenges down the line.

Grace
Grace

Technically, UberX drivers in St. Louis are operating in opposition to MTC regulations which can mean punishment in the form of increasing fines with each excessive violations to an eventual revocation of license. Yet because the law is not being enforced, the whole situation has become a gray area of debate over what is and is not allowed.

But proponents of ridesharing note the lack of government oversight has not reduced people’s desire for a new service. Dentons principal Brian Grace lobbies for Lyft and believes that the newness of ridesharing companies, in addition to their services, contributes a lot to their popularity.

“Market disruptors, by their very nature, are finding ways to better serve consumers and thus find a profitable business model in markets where the business model has grown stale,” he says. “They’re thinking from a consumer’s perspective first and trying to deliver products and services the consumers want.”

Haahr Emerging Issues
Haahr

Rep. Elijah Haahr, R-Springfield, chaired the Emerging Issues Committee which heard testimony on bills on any major topic that leadership believes requires quick, decisive action. He notes that regulation is important, but he also stresses that a fair, free market approach best serves businesses and consumers in the state.

Haahr sees two primary roadblocks when government must catch up to new developments in technology or culture. First, pushback from the old way of doing things can sometimes stymie the new because it has established power and presence in government. Second, the speed can just be too much.

“Technology moves at such a rapid pace, it doesn’t evolve every two years like we do with elected office; it evolves in month increments and week increments,” Haahr says. “It’s not uncommon for legislators on the federal or the state level to be a little bit behind the curve when it comes to tech issues, especially.”

Becky Lohmann, a lobbyist for the Catalyst Group who has worked on ridesharing reform, agrees with that assessment. With new and developing products, there is generally more education required on the front end with legislators who may not be familiar with certain advances in technology, she explained.

While she would like to see more progress on ridesharing, in some cases, she notes being first is not always most important and that drawing lessons from other states can be valuable for Missouri and its citizens. 

“For new technology to grow and flourish, it’s important to get it right,” she said. “We need to develop and understand what we’re regulating before we regulate it, which is what we have done with rideshare in Missouri.”

Haahr cited a “bio injectables” bill passed early in the 2016 legislative session as one of those pieces of legislation that needed the extra attention and examination.

On the flip side, one of the most noteworthy bills of last session addressed the “off-statute” environment of daily fantasy sports websites like FanDuel and DraftKings. Over 1 million Missourians had accounts on one of those sites in the beginning of last year, and when Gov. Jay Nixon labeled the sites with the “gambling” label in his final State of the State address, the General Assembly was remarkably quick to react. It took only a few months after Nixon’s speech for Rep. Scott Fitzpatrick’s bill to end up on his desk.

Pfeifer
Pfeifer

Danny Pfeifer, principal of Catalyst, led the group’s work to get the legislation passed, and noted that it had certain advantages over a measure like ridesharing. First, people understood the issue of fantasy sports across all ages and regions of the state, so the concept was not as foreign to some legislators as using a smartphone to hail a ride from someone in a metropolitan area. Second, it had a massive user base (roughly one in six Missourians), and third, those fantasy companies acted quickly to create a coalition of legislators and write good language in the bill that a vast majority of the House could support. It passed through that chamber with 130 votes and was signed by the governor on June 10.

But the fantasy sports legislation may prove to be more of an exception rather than the rule. Pfeifer explains that more issues could languish in legislative limbo like ridesharing statutes have.

“The reality is with the advent of modern technology, there are going to be more and more issues like this where industries evolve faster than they used to,” he said, adding that legislators should begin to follow trends, recognize which ones could require a regulatory environment, and learn whether or not and how other states have dealt with those same issues.

In the end, bureaucracy and red tape move slower than commerce and the free market. Yet ridesharing services inhabit a strange air with so little government and regulation, or so little enforced regulation, that it instills uncertainty making Missouri a question mark. Uber and Lyft have both invested significant time and resources into making Missouri another state friendly to ridesharing, but it remains to be seen whether or not they can finally achieve that ultimate statewide goal.

Regardless of whether or not they do, the market and the public will continue to outpace government and deliberative democracy will be slow to catch up.