Virginia Is Right to Stand up to Uber and Lyft

taxicabBy Robbie Werth

The proliferation of so-called “ridesharing” companies has spread to over 130 cities across the world. In each city, the story is the same. Uber and Lyft force themselves on cities by doing two things: ignoring existing transportation laws and instilling fear among government and elected officials.

The fear that these companies attempt to instill is that a city or state is “anti-innovation.” They bully governments into thinking that if they don’t swing open their cities’ doors then they will become some stagnant, jobless backwater. Their petulant tantrums are part of their tactic.

The real question is: Why should innovation come at the expense of public safety? Hundreds of licensed, regulated taxicab companies use apps to connect passengers every day with drivers who have been fingerprinted and given a police or FBI background check, and who show up in a vehicle that is 100 percent insured at all times, 24/7.

Uber and Lyft don’t. Their passengers sign a waiver (knowingly or not) that indemnifies these companies of any wrongdoing in case of an accident. Their insurance is murky, their responsibility to public safety is paper-thin, and they have been proven to have allowed felons into their pool of drivers.

On June 6th, Virginia’s Department of Motor Vehicles, after many communications warnings, issued cease-and-desist orders to Uber and Lyft for operating in violation of state law. Their offense: Operating a for-hire transportation fleet on Virginia’s streets without proper registration, licensing and insurance. These actions by Uber and Lyft violate the basic responsibilities of a common carrier to hold a higher degree of responsibility towards the public they serve.

Why should such enforcement cause an uproar? Isn’t it standard operating procedure for businesses to be shut down when they operate outside the law? Doesn’t it benefit the community to have regulators make certain taxi companies are operating in a safe manner before potentially putting citizens at risk? Virginia didn’t require that Uber or Lyft cease operations forever; the state simply asked these companies to apply for easily obtainable operating authority or to wait until legislative changes could enable them to operate safely.

Uber would like states to believe their technology is so radically new that all applicable laws should magically melt away—at least for them. To prove their point, these companies forcefully gain entry into their markets with a “better to ask for forgiveness rather than permission” stance. They won’t take “no” for an answer—and thus attack all who stand in their way as anti-innovation (i.e. anti-jobs).

Well, Virginia believes otherwise. Driving a vehicle commercially—whether it is a taxi, limo, bus, charter or so-called “rideshare”—requires meeting certain standards so the state can ensure its passengers, pedestrians and other drivers are safe. Though so-called “ridesharing” companies claim to be something other than taxicabs, the fact remains that people are being transported for money, therefore making it a commercial transaction. Period.

By issuing these cease and desists, the state is announcing that its number one priority is the safety of its citizens and enforcement of the rule of law. Until Virginia figures out precisely how Uber and Lyft should be regulated, the state can’t risk having its drivers, passengers and pedestrians placed in harm’s way.

Virginia is not the only state raising concerns. One third of all U.S. states, and nearly half of those in which these companies operate, have issued warnings to their consumers that the insurance provided by ‘ridesharing’ companies is unsafe. Lawsuits against Uber and Lyft are popping up all across the country and mainly involve uncompensated insurance claims and operating outside the law.

Uber and Lyft act with an arrogance that is appalling. Crawling out of the shadow of the recession, many cities fall for the scare tactic that opposing these companies is opposing innovation. This simply isn’t so. Requiring Uber and Lyft to obey laws won’t cause your city to lose jobs or the state’s technology industry to pack up and move away. Virginia is already home to hundreds of thriving tech companies that don’t break the law to do business.

Most businesses don’t embrace every regulation they face, but they recognize laws as the price of public safety. The transportation industry is certainly changing, yet as technology evolves the state’s right to safety and accountability for its citizens must prevail. If Uber and Lyft want to compete with taxis, let them. But they should do it in a way that is fair and safe for all.

—Werth is President of Diamond Transportation, a Virginia-based provider of transportation for persons with disabilities. He is a member of the Virginia Taxi Association and serves as the President of the international Taxicab, Limousine & Paratransit Association.

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30 responses to “Virginia Is Right to Stand up to Uber and Lyft”

  1. Lwood Avatar

    Uber and Lyft move people. The key seems to be cellphones. What if someone decided to make an app that extended the concept to packages and freight. If I wanted to send a package across Atlanta I could call an “Ubertruck”. Guys with pickup trucks would come to your home or business. Atlanta to Chattanooga maybe. Maybe all sorts of independently owned trucks. Economics would dictate distance. UPS and Fed-Ex are regulated, but guys with a smartphone and a pickup could compete without the burden regulations. I have a cross-over SUV so why couldn’t I start a little delivery business? Oh yea, the wife won’t let use her smartphone.

    1. larryg Avatar

      actually uber and lyft claim they do not move people – they are “facilitators”.

      they merely are putting customers in touch with providers.

      as to your freight question – I actually see that as a more reasonable proposition… since liability involves only property not people.

  2. larryg Avatar

    I agree. This is like a restaurant opening that allows people to order from the smartphones – so they don’t need to be inspected by the Health dept.

    you know the one thing that our schools really fail at these days?

    Critical Thinking

    and the chickens are coming home to roost.

    it’s not only the younger crowd – it’s older guys like Bacon too… they’re so caught up in the anti-regulation/tea party “freedom” that they completely go off the trolley on this.

    they equate regulation to protect the public – as crony capitalism to protect monopolies.

    it sounds good but it’s simply not the reality.

    lyft and uber are basically selling a service operated by uninsured independent contractors… who, I would think , ought to require chauffeurs licenses and their cars required to meet commercial vehicle standards – so that the only rule for Uber/Lyft is that they cannot contract with folks who don’t have chauffeurs licenses or vehicles that don’t meet commercial standards.

    I’m betting that this is going to be the approach that Va ultimately takes.

    1. “It’s older guys like Bacon too… they’re so caught up in the anti-regulation/tea party ‘freedom’ that they completely go off the trolley on this.”

      Larry, I have consistently said that it is legitimate to regulate the industry for the purpose of ensuring public health and safety. So, please don’t imply otherwise. The trick is to decide in the light of evolving technology and business models whether the regulations need paring or updating. Only a dogmatist would deny that regulations need to evolve as conditions change.

      I also have made the point that the stakes are much bigger than Uber and Lyft — the entire transportation industry is in upheaval. As we deliberate, we need to consider the expanded range of services that Uber and Lyft bring, as well as other transportation companies like Bridj (which provides bus transit services), as well as businesses not yet invented. The potential exists to make transportation far more affordable to large numbers of people. That has to be part of the equation.

      1. larryg Avatar

        re: ” Larry, I have consistently said that it is legitimate to regulate the industry for the purpose of ensuring public health and safety. So, please don’t imply otherwise. The trick is to decide in the light of evolving technology and business models whether the regulations need paring or updating. Only a dogmatist would deny that regulations need to evolve as conditions change.”

        Have you seen this:

        “I also have made the point that the stakes are much bigger than Uber and Lyft — the entire transportation industry is in upheaval. As we deliberate, we need to consider the expanded range of services that Uber and Lyft bring, as well as other transportation companies like Bridj (which provides bus transit services), as well as businesses not yet invented. The potential exists to make transportation far more affordable to large numbers of people. That has to be part of the equation.”

        if ALL transportation services can be dispatched from a Smartphone – where does that leave you with the difference in services between traditional taxi verses uber/lyft.

        where is the cost savings?

        Uber/Lyft claim they are not transportation services. Does that mean the use of the Smartphone platform also render traditional taxis not transportation services either because they are now dispatchable -like uber/lyft are via the smartphone?

        bonus question for Jim B –

        are you in favor of lower qualifications, standards and insurance thresholds – for cheaper, more affordable services – as long as consumers know the standards are different?

        would you support that approach for traditional taxi service?

        1. Yes, taxicabs are morphing to become more like their competitors, Uber, Lyft and others. That’s what competition does. The taxicab companies are the ones who should have developed the new technologies in the first place — but they didn’t. Incumbent companies rarely develop technologies that disrupt their own business models. That’s why we need competition, and that’s why we need to keep the regulatory bar as low as we can while providing the most essential consumer safeguards.

          1. larryg Avatar

            well we agree.. but most companies don’t change unless forced to and they are often behind the bubble – e.g. Kodak… blockbuster video, etc.

            but setting that aside – if Taxi companies have their own smartphone app – then what specific things do you think Uber/lyft do – that differentiate their services and still give them a competitive edge?

            what I see is lower standards and questionable insurance – some of it the direct result of the drivers being independent contractors who are supposed to meet the terms of the contract but totally up to the provider to monitor their drivers for compliance… and easy to have flabby monitoring of compliance.

            Let me give an example. If a traditional cab develops a brake issue – it’s generally elevated to management and dealt with.

            what happens if the car is owned by the independent contractor who is broke at the moment?

  3. Consumer protection regulations don’t always exist to protect consumers.

    My own profession is a perfect example. I design large commercial buildings, and meet many applicable building codes as a part of that process. Building codes are promoted as a form of consumer protection. However, there are many, many forms of construction which are against code but are no less safe than standard practices. There are also many practices which are currently code required but which have been demonstrated to be poor practice or problematic.

    In truth, the building code exists to protect me, and to protect the builder. In the days before building codes, if you designed or built something and it failed, you were fully liable. With codes in place, if you design or build something and it fails, all you have to do is show that you designed and built according to code and you’re largely off the hook for the failure. I find this considerably more scary than the idea of life without the codes. I may hold myself personally responsible for the quality of what I produce, but some designers and many builders don’t seem to.

    I often find that the codes set the bar too low on some things, and have often been accused of “overdesigning” in the past. On the other hand, newer and less conventional construction techniques may be approved by local code enforcement officials. However, while there are exceptions, the vast majority of code officials I have encountered myself are not building professionals, they are code enforcement professionals – they are not qualified to understand and evaluate what they are looking at, only apply the code.

    Meanwhile, construction quality has sunk to the lowest common denominator of the code. Most new homes I see going up, from modest to mansion sized, are built to a level of structural quality I wouldn’t use in a slum. The homes are huge and garnished with lots of granite and decorative garbage; since the buyers aren’t building professionals, they can’t really be expected to understand that what they are buying is essentially a polished turd. After all, it can’t be junk, because it passed code! Never mind that their inspector may have been a journeyman electrician or HVAC installer before he became a code inspector tasked with inspecting and approving the structure of a home.

    1. larryg Avatar

      I would AGREE with Chuck if he can show differences between cities where some cities have reasonable regulations and others, too strict.

      I have trouble when someone says ALL cities are doing the same wrong thing and there are no examples of “better”.

      we KNOW there are BAD construction practices. We see them ALL THE TIME in 3rd world countries and we actually see them sometimes in this country where a spectacular failure occurs like the Hyatt elevated walkway or the Hartford XL Civic center.

      1. I work nationwide. In general, localities do not write their own building codes. In the US, there were a handful (literally, I can count them on one hand) of “model” building codes generated by different organizations, which then merged in 2000 to form the International Code Council, whose model International Building Code has been adopted across most of the U.S.

        Localities often modify the model codes when they adopt them as law, but most of the time these modifications are very superficial. Generally they are on the order of 1% to 5% of the code, though there are exceptions where the changes are more significant. In some states the codes are adopted and modified at a local level, but in others (Virginia, for example) the building code is adopted and modified at a state level, and localities are barred from making any further modifications or additions.

        1. larryg Avatar

          I’m aware of the uniform code like I am with the AASHTO standards for roads and signage.

          and I’m not going to argue that no rules are written to not advantage the current players.

          but I’m still skeptical that the standards are way over the top for no good reaso – especially when we still see bad examples .. some disasters and others caught by inspectors…before a disaster…

          Generally even the folks current subjected to the regs are going to complain if standards are driving costs up.

          we build not only buildings, but ships, cars, roads, towers, pipelines, trains, subways, tunnels, etc.. from standards…

          are we saying that in general – across the spectrum that standards are excessive or just with commercial buildings?

          I’m still.. respectfully, not convinced .. that standards are real barriers to entry concocted by those who do not want competitors – as a common and generalized issue.

          many big projects are put out for bid – and this incentivizes lower cost practices… and there is opportunity there for competitors.

          1. With respect, I think you’ve missed my point – I’m trying to say exactly the opposite of what you’ve just asserted.

            Yes, I agree that standards are necessary.

            However, the standards as they currently exist (building codes in my specific example) are not truly for consumer protection. They are actually very low standards, and primarily act as a liability protection tool for designers and builders.

            Consumers believe these codes ensure a level of quality higher than they do, and believe that codes enforcement officials have a higher average standard of competence than they do.

            Because of this, consumers no longer act in their own interest in trying to monitor the quality of what they’re buying. They trust the system to automatically give them a good product. Meanwhile, the system protects people delivering a cut-rate product, because the builders are protected from liability by a fairly low-quality code requirement, and the inspectors aren’t usually competent enough to detect when the builders are taking below-code shortcuts, either. The building codes have become so complex that even a well-trained inspector is unlikely to understand all of the prescriptive requirements.

            Meanwhile, if you’re an engineer looking to work with a system that does have good research and sound engineering behind it, but that hasn’t yet been written into the code by the ICC, you’re usually out of luck. The inspectors are allowed to give exemptions for these situations if you can demonstrate sound engineering practice; most aren’t knowledgeable enough to evaluate them, and wisely won’t take the risk when they don’t know what they’re doing.

            A good and extremely commonplace example in residential construction is crawlspace ventilation. A decade’s worth of current research is demonstrating that open ventilation of crawlspaces to the outside of the building usually results in very poor moisture performance in almost all climates. The crawlspaces generally become damp and frequently have mold and rot problems, and this low quality air is generally drawn up into the living space by other poor construction practices.

            The current system that appears to be best by experience and research right now is to seal and insulate the crawlspace wall from the outside, and isolate the crawlspace from the soil using a heavy plastic barrier. Moisture is removed by providing a small air grating or duct between the crawlspace and the conditioned living space, and then using a very small fan to power ventilate the crawlspace through a pipe to the roof, drawing dry, conditioned air from the home into the crawlspace. This keeps moisture several times lower than an open ventilated crawlspace, almost completely eliminates radon problems, and removes almost all possibility of musty crawlspace air being pulled into the living area of the home.

            However, this solution is still technically illegal in many jurisdictions. ICC works on a three year code cycle for revisions, and the localities are usually at least one revision behind that, so what’s required in a given area is usually at least 6-8 years behind current research and experience. In fact, the research was starting to show heavy problems with open ventilated crawlspaces just when the IBC first came out with a code line requiring ventilation openings to the outside. Prior to that, there was no prescriptive requirement. The current version of IBC now allows the sealed crawlspace with power ventilation, but it will still be a few years before some localities catch up.

            What’s the alternative? In some cases, performance requirements. In the current situation, a homeowner with a brand new home and rotten joists has almost no recourse to sue the builder, because if the builder has provided the required ventilation opening size to the outside, he’s essentially considered to have done his due diligence.

            If instead, for example, the standard requires the crawlspace to maintain a certain maximum relative humidity, the builder is still going to look into good practice, because now he’s on the hook if the building fails to perform. If you put the designer and builder back in the zone where they are liable for the results, they will either seek the current best practice, or be sued out of existence. This still requires a building code, but the end result for the consumer is a far more reliable building.

            This is just one specific, cherry picked example based on my own experience. I can think of other examples in other fields where the current system of regulation actually appears to make things worse for the consumer rather than better (food inspection is a good example), but I’ve chosen this example because I’m intimately familiar with it and can discuss it concisely.

            Regulation is required. However, it’s very easy to write regulations, and very hard to create regulations that actually serve to protect the consumer rather than the service provider.

            In summation, my central point – do not assume that a regulation thought to protect the consumer actually does so, or is even intended to do so. In general, a consumer is often better served by a system with few prescriptive regulations, which places maximum legal liability on the service provider. Very, very few examples of regulation systems like this exist, because the service providers in every industry have much deeper financial resources than consumers, and they will always, without exception, exert those resources to ensure that any regulations written are protective of incumbents and offer as little real protection as possible to consumers.

          2. larryg Avatar

            Thanks Chuck.. I DID miss your point… it appears.

            but perhaps we agree – MINIMUM standards are still better than NO standards!

            even though – as you assert – and I agree that some companies LIKE regulation because it actually protects them from liability for sub-standard.

            but I thought – that localities were free to go above the minimum uniform standards… usually.


            for instance, hurricane, high wind anchors… or fire-resistant sheetrock or roofing…

            I thought localities can add these things to their local codes if they felt their locality was more vulnerable than other areas of the state where those higher requirements would be not justified.

            I don’t pretend to know much about this , and certainly not what you appear to know …

            on the issue of taxi’s… specifically – do you believe that the current standards and codes are minimal and not high enough to protect consumers? that would put you at odds with the uber/lyft folks, right?

          3. I had to nest this reply under a different portion of your comment – looks like we’re getting into too many replies for the WordPress comment system here! It’s good discussion, though.

            I think whether minimum standards is better than no standards depends a lot on the case under consideration. With building codes, I can actually say I honestly believe that some of the minimum standards in existence are actually worse than no standard at all in a lot of cases. When you create a minimum standard where no standard existed before, in general, the level of quality will actually sink, not rise, to the new standard.

            Right now, in residential construction, if you want to build above the minimum standard, one of three things will happen. Either you will not find a contractor willing at all to build to a higher standard (many are no longer capable), you will find a contractor who agrees to build to the higher standard but substitutes his normal lower standard work the moment you’re not watching him like a hawk, or you will find a contractor who will actually build what you request, but who charges several times what it actually costs to deliver higher quality, since he’ll usually be the only game in town for quality work.

            Prior to the existence of the detailed minimum standards as they are written now, builders actually had to compete on quality, because standards only covered the most vital life-safety related things. If you built low quality, word got around your community quickly, and your customers left. The highly detailed, “soup-to-nuts” prescriptive minimum standards we have now actually had the effect of reducing housing to a commodity, with everything built to the lowest common denominator, and builders instead compete on house size per dollar (a very misleading measure) and visual frills.

            I design new structures, and also inspect and repair older structures and bridges. Whether construction quality has gone up or down varies based on the building type, the materials, and the customer. In some cases there have been some real improvements in safety, such as the near elimination of unreinforced masonry construction, which fares far worse seismically than most things. We’ve learned a lot, particularly since North Ridge, about what works and what doesn’t in earthquakes, and that’s an area where the new codes actually give substantially higher safety.

            On the other hand, residential construction has really been a race to the bottom. Builders, and even a few engineers, do a lot now that I really question, and I really don’t see any excuse for problems like foundation settlement issues after three years in a brand new home.

            In terms of whether localities can make changes, it varies by state. Some states enforce the building code statewide (this is usually far more effective), while others allow local changes. At the state level, there are few engineers with the technical knowledge to really make any good changes to the code. At the local level, people with the knowledge are rare as hen’s teeth, and if you find one at all, I can almost guarantee they are swamped with other responsibilities. Local level modifications, with some clear exceptions, usually end up being poorly thought out at best.

            Getting back onto the real topic, I actually suspect the proper level of regulation is somewhere between where it currently stands and where Uber and Lyft exist right now. I think any regulation that doesn’t have a direct, real-world effect on user safety should probably go immediately.

            For example, the practice of regulating the number of taxis in a town is anticompetitive, and drives up prices without providing any user benefit. The same goes for rules that attempt to keep these companies from competing with transit (i.e. no regular route), there’s no consumer protection element there. Rules requiring taxi labeling (a roof light and three inch letters) are a bit silly, too – VA already has a special license plate requirement that applies to for-hire vehicles. If you check out DJRippert’s link below to the DMV site, even the insurance requirement is only 25% higher than that required for a normal, private driver in VA. In fact, if you look through that page, I don’t see a single taxi regulation that is actually a consumer protection rule, except perhaps the prohibition on misleading advertising. Even that seems a bit silly, since that should be illegal statewide as well, whether you’re a taxi service or not.

            Some of the local ordinances at least appear to carry a few more details, but I’m not certain how effective they really are. Higher insurance requirements aren’t a bad idea at all. I’m fifty-fifty on background checks – every criminal in the world had a clean background check before he got caught the first time, and I think that’s honestly more of a feel-good measure than anything else. Half the rest of the regulations look to be self-solving issues; no one is going to continue using a taxi company if its drivers all show up reeking of alcohol in broken down, rattling cars. Reputation spreads quickly even in a world with nearly 7 billion people, and consumer reviews are often more effective than trying to have an overworked, underpaid regulator manage a program which attempts to accomplish the same thing. Keep the laws to things that are broadly problematic and easy to enforce – for example, a drunk taxi driver is already violating the law before you even consider the fact that the car he’s driving is a taxi.

            Overall, I’m mostly really interested to see how this all plays out. I think it’s reflective of a lot of changes in how people view responsibility for their own safety in most of western society now, so this relatively small topic ends up being a microcosm of a lot of larger, ongoing changes around the world.

          4. larryg Avatar

            Chuck – I’m at a loss as to how this can get reconciled – by government given the current environment against the regulation we have now.

            you seem to be arguing for much higher standards – of which the current pool of regulatory opponents would be joined by even more to further reduce regulation.

            how would what you say, ever work given the reality of the current anti-regulation sentiment? I think there is a snowball in hell chance of implementing even tougher standards unless they relate to things like hurricanes or flooding, etc.

          5. Ah, that’s the question, isn’t it? That’s why I’m here discussing it in blog comments, and not out fixing the problem! 🙂

            Personally, I’m not strictly anti-regulation as is the current belief system du jour. However, if I had to take a stab at a random number, I’d personally say I do believe about 3/4 of the regulations we all deal with day to day are probably counterproductive, or even worse than no rule at all.

            Nothing functions right in a system that’s completely without regulation. I think the folks that are 100% pure free market believers miss the big fact that a free market only functions when all of the participants have equal economic power, and that’s never the case. Regulation will always be necessary to protect the weak from the strong, and that even footing is the grease that keeps the gears of the economy turning.

            Were I king for a day, I’d personally prefer to live in a legal environment where there were very, very few prescriptive regulations which attempted to prevent harm to others (as my experience is that prevention in this way is largely futile), but extremely high penalties for those who actually do cause harm to others – and no liability shielding. For instance, I have no moral objection to someone doing 120mph down a deserted road, but the instant they strike and kill someone, I would find a prison sentence of decades and a fortune in family restitution to be fully appropriate.

            There is no personal responsibility anymore because there is no expectation of it – after all, my safety is someone else’s responsibility (the police, FDA, USDA, roll the dice and take your pick today), and of course if something bad happens, it’s never my fault, so why should I be punished? After all, (TV/Music/Video Games/God/The Devil, I think that covers most of the “evils of the world”) made me do it!

            Lucky for the world, I’ll never be king for a day, so I’m sure this personal responsibility stuff will never catch on! It’s a pretty radical idea, after all.

          6. larryg Avatar

            Chuck- there IS personal responsibility. It’s just not practiced by 100% of people 100% of the time but I think you are wrong on regulation as a concept.

            when you buy an aspirin or a new tire – you are depending on regulation and you are depending that there is some level of efficacy in the product.

            whether it’s eggs from the supermarket or the elevator in the building -you are counting on some level of efficacy and – yes – some level of responsibility that most elevators work – safely to transport people.

            If I accept your premise – I should not trust anything or anyone because it would be an unreasonable expectation.

            I’m not sure how you got to that but I’m not there but I’m pretty sure the anti-regulation folks would find your viewpoint – interesting.

          7. I’m certain many would find my viewpoint interesting (and downright odd) on that. I don’t particularly fall within any of the current common “camps”. That’s a result of my own personal experience in having seen failures in both over- and under-regulation over the years.

            I’m not certain that your particular examples of successful regulation are all as obvious a success as you might believe – some are clear successes, and some have their problems. I have to agree with you on elevator inspection rules as a good thing. I’d make the same positive argument for the way aircraft are inspected, as well. Both inspection programs are generally fairly well thought out, well run, and effective.

            Eggs are another story. I’ve got enough personal experience with that one over the years that I now raise my own, actually. The inspection protocols are only related to marketability (eggs are visually inspected and graded only on size and amount of empty space inside the shell), and the legally mandatory cleaning process actually damages the egg’s bacterial protection, increases the risk of bacteria spread, and reduces their safe storage life. I love over easy or eggs Benedict, but I’d be very hesitant to consume either if made from inspected eggs.

            With Aspirin … I don’t count on the regulations there, I count on the fact that it’s been commercially produced for 115 years, and used noncommercially in botanic form for at least 2000 (in terms of recorded history). As a drug, it’s a well known quantity, and as long as the regulations ensure it’s being made the same way it’s been made for a century, with no formula changes or impurities, that’s about all the day to day protection you really have – which is a pretty decent start.

            Where regulation of new drugs is concerned, I started to question the effectiveness of the FDA when a young friend of mine had a severe leg thrombosis several years ago (at 25 years age) due to complications from a prescription drug that was very popular at the time. That problem, along with several others, became so common the drug was pulled off the market shortly thereafter. The good side of this form of regulation is that once the drug had permanently injured many, many people, it was eventually removed from the market. However, I’d liken that more to the aforementioned “punishment for cause of actual harm” than prevention. Those who counted on the drug regulations to actually prevent the harm beforehand were of course let down, since that really isn’t possible. Because the required testing clearly wasn’t thorough enough, people believed the drug was safe thanks to the magic stamp of FDA approval, and both patients and doctors used it largely without looking into the side effects – all of which were evident in the earlier research on the drug. In this case, the stamp of regulatory approval gave the drug a perception of safety that papered over many known problems.

            On the other hand, tire regulations are probably a very good positive example to counter that. The current regulation structure actually works quite well, and produces a tire that you can at least have a reasonable expectation will not fail at random.

            There’s a very interesting difference between the regulations for eggs and tires, though. Egg regulations are essentially prescriptive, just like the more basic portions of building codes. They outline a fixed procedure by which your eggs must be laid, transported, cleaned, visually graded for marketability, packaged, and labeled. They do a fairly mediocre job at actually establishing safety in terms of the sterility of the egg, because things like that are never measured as part of the process.

            On the other hand, tire regulations are a performance standard. The regulations rely completely on a set of repeatable tests where success or failure can actually be measured or quantified. Because these regulations don’t address at all how your tires must be made, only what performance standard they must meet, they have actually done quite a good job of establishing reliable tire safety compared to food and drugs.

            Finally noticing that pattern is actually what led to the rather non-conventional set of beliefs about regulation I hold at the moment. Prescriptive regulations rarely succeed in providing the protections they promise, and they often have negative unintended consequences. Performance regulations, when they are possible, actually tend to be very reliable in providing a good baseline level of safety, and they rarely come along with the negative consequences you tend to get with a prescriptive code.

          8. larryg Avatar

            I don’t know the precise regulations but I base my view on the facts about the propensity of problems we see.

            I just don’t see big news about bad eggs or tires.. or aspirin ..

            I’m not saying there are not gaps in regulations – there are… but the current political environment is not for more regulation… unless of course there is
            a big mess about some particular thing then even the anti-regulation folks will demand that “something” be done!

    2. virginiagal2 Avatar

      Just a couple of quick comments.

      First, building standards may not be as high as those with larger budgets might like. However, the average consumers ability to monitor the quality of what they’re buying, in many instances – including construction – is extremely limited – and their decisions are going to be heavily cost-driven.

      My personal belief is that, absent those standards, quality would be lower, not higher.

      Why do I believe that? I’m on the other end of the transaction – the buyer. The incentives on most homebuyers don’t insure quality construction – most are not building a custom home, they are buying one already built. They want the most space possible for their dollar, and cost is a huge factor – they do not generally intend to be in the home for long periods of time – and when evaluating ability to sell in the future, they know that the market is driven more by visible amenities rather than hidden quality.

      I have, personally, worked with an engineer with some updates, using some new methodologies, albeit a few years back, and while it was novel to the inspector – and relatively new to the engineer – we had no difficulty getting it approved in Virginia. We did hire competent, credentialed professionals which probably helped.

      If you put in performance requirements, uncertainty goes up, quite a bit. When uncertainty increases, price increases. Your likely result is overengineered systems, higher prices, and less home affordabilty. Realize, good practice does not guarantee good results, so builders are going to, out of necessity, refuse to build in some circumstances, in some areas, and in some climates.

      FYI, I have some knowledge of food inspection, and I actually think it’s an example where it makes things very much better and safer for the consumer, and saves lives – tens or hundreds of thousands of lives per year.

      Going to your egg example, I do understand your concern about washing eggs. As I’m sure you know, salmonella can be inside the egg, not just outside on the shell. However, eggshells are often contaminated with feces, and fecal matter in your fridge is a recipe for cross contamination, which is particularly serious when you also have food eaten raw in the same fridge. You could die from it.

      I’ve been on restaurant inspections, doing analysis for public health computer systems. I don’t think the food safety systems are perfect. I believe millions of people are alive because of them, and the more I learned, the more I believed this.

      Re taxi signs, I have no idea what license plate indicates that a car is a taxi. I can recognize a TAXI sign. I do remember, fairly vividly, visiting a friend in New Orleans and being warned to verify I got into a real taxi, because, I was told, a guy was pretending to be a taxi, raping passengers, and dumping the bodies into Lake Pontchartrain. I have no idea what kind of license plate is used in Louisiana for taxis and, from my perspective, it would be good for my life not to depend on knowing that.

      Realize, women do think about this a lot more than men.

      Also, I suspect that the same plates are used for for-hire vehicles and for taxis. The background checks are not the same. If you go over to the WBUR website, there was a rape and robbery case in Boston last week where a women thought a passing car was a taxi, got into a for-hire car (not a taxi and not with background checks) and was abducted, raped, and robbed. They caught the guy, but that doesn’t undo what happened to her.

      For-hire has less requirements because for-hire cars are not supposed to pick up people by the road – there is supposed to be data on where they went and with who, which should be somewhat protective. Note this guy didn’t rape his assigned passengers. BTW, if identity of the driver is confirmed, that’s a safety advantage for Lyft and Uber.

      Background checks – I would prefer, getting into a car, alone, with a strange driver, that he not be a convicted rapist. Yes, everyone had a clean record once. He’s also more likely to do it again than a random non-convicted-sex-offender and the risk is huge, and easily mitigated.

      It is not humanly possible for reputation to preceed every single person and every single item that you buy every single day – we don’t have enough bandwidth (human, not network) to process it. That’s why we have regulations – because it is not humanly possible to do this for ourselves.

      RE drug regulation – drug approval does not, ever, mean no serious side effects or no risk of death. Most drugs – including aspirin – have the potential for permanent, severe side effects or death.

      The issues in play are if you are better off with the drug or not, and if there are safer alternatives. I’ve taken multiple drugs that could kill me, including drugs that have known correlations with deep vein thrombosis (cancer survivor.) I don’t want those drugs pulled from the market, because the risk of taking the drug was less than the risk of not taking the drug. Doctors should know this and they are taught this. “I trusted the FDA” is simply a stupid statement, especially from a doctor, because that is not what the FDA claims.

      With any of these drugs, you get side effect paperwork, that goes over the risk in detail. That’s mandated. By regulation. The docs get it and the patient gets it.

      If you pull every drug that has serious side effects, you will have no drugs.

      1. larryg Avatar

        I had asked if the logic behind uber/lyft also applied to those who prepare food.

        do we see the requirement for state inspections of food service places to be “crony capitalism” to protect the existing food service “monopoly”?

        and … we would come up with a new rule that said if you could order your food with your smartphone that such “innovative” businesses would be disadvantaged by having to meet the same regulations as their competitors and the better path would be to let these “disruptive” business models continue to operate under a differently regulatory scheme.

        In fact, there are restaurants right now where you order from a tablet and you go up and get your food when you get notified on the tablet/phone.

        the question is – why would or should this innovation justify a different regulatory approach for food preparation standards any more than a similar innovation for transportation – justify a different regulatory framework?

        Now if Uber/Lyft were TRUE – peer-to-peer services – then there would be no need for a central management and administrative function.

        People would sign up to provide rides and others would sign up to get rides and the negotiation would be only on the smartphone – much like you might see on craigslist – where, as far as I know, there is minimal involvement from anyone at craigslist – except there is a “flag” that users can “throw”
        and someone at craigslist could remove a posting if they determined the “flag” was legitimate.

        I would predict, in fact, if it has not happened already that a true peer-to-peer transportation App – will appear and addressing virginiagal2’s concern – the ride-giver would provide a picture of themselves along with a drivers license and even an online background check much like the Safelite Auto Glass feature that allows you to see what the technician will look like so you can verify it is him/her when they show up.

        such a peer-to-peer services would charge pennies per transaction – much like Ebay or Google.

        that would leave companies like uber/lyft – boxed in between traditional taxi’s and peer-to-peer which probably would cannibalize a good part of the market that Uber/Lyft thought they would consume.

        This ought not to be about the assertion that Uber/Lyft cannot compete because of regulation – because in the longer run – Uber/Lyft themselves, no matter what happens to regulation could be vulnerable also.

      2. larryg Avatar

        re: ” “I trusted the FDA” is simply a stupid statement, especially from a doctor, because that is not what the FDA claims.”

        I don’t disagree.

        But tell me what the FDA – IS DOING? Are they providing something of benefit to consumers? if so, what?

  4. DJRippert Avatar

    Here is the Virginia state-level regulations for taxicabs:

    I don’t see anything about not having a criminal record (although that may be in some other regulation).

    I also see that a taxicab cannot operate on a predetermined route? Is that a consumer safety regulation? Really? Bull****.

    The Taxi needs to be labeled as a taxi. Should Uber cares have to be labeled as Taxis? Is that a consumer safety regulation? Bull****.

    Various jurisdiction also layer regulations on top of the state regulations. From the Fairfax County website:

    “Five taxicab companies are authorized to operate 654 taxicabs in Fairfax County. These companies, which are identified below, and their drivers are regulated under Chapter 84.1 of the Fairfax County Code. Chapter 84.1 lists the current taxicab fares, rates, and charges. It also addresses public safety matters such as insurance coverage, vehicle inspection and driver licensing.”

    Are the restricted number of companies and the restricted number of cabs a consumer safety regulation? Bull****.

    The problem with the regulation lovers on this blog is that they falsely claim that the regulations are only designed to promote consumer safety. Not true. While there are some safety regulations there are also plenty of crony capitalist, rent seeking rules.

    In Seattle, the city council has limited the number of “ride sharing” cars operating at any one time to 150. Do you think this was a consumer safety regulation? Bull****.

    1. virginiagal2 Avatar

      DJ, I call straw man.

      NO ONE on here has said that all taxi regs exist to protect the consumer. I have repeatedly stated that I am in favor of reviewing the regs and keeping the ones to protect consumers, while not keeping the ones that restrict the market. Go back and reread my posts.

      However, you are mistaken about why taxis need to be labeled as Taxi. The reason for that regulation is that otherwise random cars can claim to be taxis, and random pervs can pick up women. There are actual cases of this happening, with non-taxi drivers, resulting in robbery and rape and murder. If you have difficulty finding these, please let me know and I’ll post some.

      That’s why knowing WHY regulations exist is a good thing, not a bad thing.

      Further, unless I’m very much mistaken, taxi drivers are common carriers, with the attendant set of regulations having to do with non-discrimination.

    2. LifeOnTheFallLine Avatar

      Is DJ pulling out the classic “I’ve found a few regulations that don’t make sense to me therefore the argument that regulations as a concept are valid is refuted” feint? Must be a day ending in “y”.

  5. virginiagal2 Avatar

    One other comment – Uber and Lyft are based on apps. Unless I am mistaken, the drivers typically use the apps while driving, and they need to be able to quickly respond to get customers.

    I believe that was the rationale for why Uber got sucked into the fatal accident lawsuit – if I remember correctly, the accusation was that the driver was using the app when the accident occurred.

    Actually, I just checked, and that is the accusation – see

    We need to carefully consider models that require drivers to use apps while driving. This applies to non-taxis, too – delivery services, car features, even law enforcement apps or computers – using an app or a computer while driving can be dangerous. Doesn’t mean ban them, but we need to think, not just blindly say “Disruption! Hooray!” every time someone gets a brainstorm.

  6. Tom Bowden Avatar
    Tom Bowden

    Milton Friedman gave perhaps the best explanation of the case against “safety” regulation. It’s extreme, yes, but supremely rational. Friedman also makes the case that the regulatory process is almost always co-opted by the targets of regulation, usually to exclude competition.

  7. LifeOnTheFallLine Avatar

    There was a tall and very handsome poster here who called them tech savvy criminals a few days ago. It’s nice to know that beautiful stranger was right.

  8. larryg Avatar

    ” In Maryland, Uber is fighting efforts to regulate its operations. In May, it said it would file an appeal to a proposal by a judge with the state’s Public Utilities Commission that it be subject to the same regulations as taxicab companies.”

    I guess the devil is in the details…. but I would think that uber/lyft would have to make the case why they should not be subject to being regulated.

    this is, in a way, more than just about uber or lyft – it’s about the fundamental basis for government and regulation.

    and – I don’t think this is a bright-line right or wrong – it boils down, in my view, to what level of regulation a voting electorate wants – or not.

  9. Lwood Avatar

    I ran across this on Digg. If I read it correctly, it seems that Uber has lowered prices in NYC by 20%. The writer implies that Uber has a fund of cash to compensate drivers for the lower prices while Uber increases market share. He implies that by the time the fund runs out of money , Uber will have a bigger niche and riders that utilize Uber will have less options when Uber raises prices back. If I read this right that is, biology is more my specialty.

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