Was UberTAXI Unwelcome in New York?

Looked at one way, Travis Kalanick should have known he wouldn't be welcome in New York. But that's the regulatory, cronyist way of looking at things, and it's wrong.

I'll explain.

Kalanick's company, Uber , helps car drivers and their customers find each other via smartphone apps. In New York, Uber established three services: one for cheap rides, one for nicer rides, and one for taxis. Last week, its taxi service was driven out of New York .

Under the regulations in New York, a "taxi" is a vehicle that carries one of an artificially limited number of medallions issued by the city's Taxi and Limousine Commission; these vehicles are so minutely regulated that in many ways it's as if there were only one taxi company in the city -- the TLC. For example, all taxis charge the same rates. And the TLC made an exclusive contract with two credit-card processors on behalf of all New York taxis. Drivers choose to run taxis, despite the high level of regulation and the high cost of a medallion, because all other car services are forbidden to pick up passengers who hail them on the street -- even in the parts of New York (most of the city, beyond Manhattan) where taxis are hard to find.

In such a system, one might predict that the regulators, perhaps along with crony capitalists whose business plans depend on the regulations, would find a way to stop an innovator from changing the way things work. And they did. New York taxis are forbidden to prearrange rides, and some argued that using Uber's taxi app to locate would-be passengers violated that prohibition. Moreover, when you get a ride with Uber, Uber processes your credit-card payment, and the TLC argued that that violated the Commission's exclusive contract with the two credit-card processors.

Yes: from one perspective, Uber was not welcome.

But unlike the TLC, Kalanick had no power to force anyone to do business on his terms. If anyone used UberTAXI at all, it was welcome -- they welcomed it. Some taxi drivers chose to accept UberTAXI electronic hails; some passengers chose to use the software to solicit cab rides. And because it made it easier for cabdrivers to find passengers outside Manhattan, it may have made it easier for outbound passengers in Manhattan to get cab rides home. (Taxis are required to accept fares to anywhere in the city, but that doesn't mean they do.)

In the face of these facts, to see UberTAXI as unwelcome in New York is to accept the premise that it is for regulators, not customers, to decide whether a business is welcome in a particular place -- as if the regulators owned the place and businessmen operated as their guests. But we are not all the guests of our governments: it is our governments that exist on our behalf, to secure our rights.

Related: A Victory in D.C. (on Uber's fight with the city council there)

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