Taxi Dancing around the Question of Regulation Uber is a ridesharing service introduced in San Francisco in 2009 and qui

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Taxi Dancing around the Question of Regulation
Uber is a ridesharing service introduced in San Francisco in
2009 and quickly expanded to 140 U.S. cities and 40 foreign
countries. Customers “e-hail” a ride through an app on their
smartphone and a ride is there within minutes. The service is
cheaper than a typical taxi and there is no cash involved as the
charges come straight from the customer’s credit card. The
service has its detractors, including cab services and some
dissatisfied customers.
Management Update: Add drivers to the list of possible
Uber detractors. In September 2015, a California judge
granted class-action status to an employee status lawsuit filed
against the company. The suit is open to all Uber drivers in
California. The lawsuit claims Uber misclassified its
employees as contract workers. It alleges Uber treats drivers
like employees without providing the requisite benefits. Uber
plans to appeal the decision saying there really is no “typical”
driver, the key question at issue. If the suit is successful,
it could mean the end of Uber.
“Innovation and regulation simply don’t work together.” So
says Larry Downes, the victim of the cab ride described at the
outset of the case and formerly of the Northwestern University
School of Law and the University of California-Berkeley’s Haas
School of Business. Assuming that he’s right, why is this
so? Why is regulation often incompatible with
innovation? Why do we regulate most industries in the first
place? In your opinion, what sort of tradeoffs should we seek
when we try to balance the opposing advantages of regulation and
innovation?
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