The economic cost of regulation zealotry

Austin, Texas may think of itself as that state's hippest metropolitan area, but it just took a big step in the direction of economic decline. Not only is an income stream that until last week was enjoyed buy thousands of Austinites no longer available to them, the effort to court the kinds of industries that are set to thrive in the next few years ha taken a big hit.

Courtney Powell at Austin Startups.com looks at the full impact of Prop 1, the city-council legislation that insists that Uber and Lyft have to conduct fingerprint checks on drivers.

Let's start with the aggregate income loss to those residents who have been driving:

If we estimate the total wages earned by part-time Uber and Lyft drivers in 2015 using the numbers above — 10k drivers in Austin multiplied by 60% part-time drivers, multiplied by 5 hours per week (as the only data I have says 60% of drivers work less than 10 hours per week, I‘m using this as a safe estimate), multiplied by $19 per hour — that’s $29 million in part-time yearly earnings alone that will no longer be fed right back into the local economy in the form of income, spending, and taxes.

Powell points up how private organizations that need to make a profit view economic activity and what the proper role of government is as it relates to that:

Many have said that the resulting job loss is Uber and Lyft’s fault. I disagree. The inherent role of a business that has taken on (in this case massive) outside funding, is to produce a financial return for their shareholders. This doesn’t mean funded businesses shouldn’t operate ethically, care deeply for their employees and customers, or contribute to the communities they do business in, but at the same time, they are bound by a fiduciary responsibility to shareholders.

The City of Austin, however, has no such constraints. The Office of the Mayor and City Council is beholden to the people, and people alone. Their job is to protect the interest of the city and it’s citizens. I know of no greater interest for Austinites than enabling every opportunity for as many citizens as possible to earn a living.

In the course of her piece, she examines other aspects of the issue, such as safety (Drunk-driving crashes were reduced by 12 percent in 2014 and 2015), and the above-mentioned harm to Austin's reputation in the tech start-up world. She also links to an Atlantic article that demonstrates the complete lack of correlation between fingerprinting and rider safety.

Just as with the Wendy's chain's food-ordering kiosks as a response to minimum-wage idiocy, this is a case of utterly unsurprising consequences arising from the intentional hobbling of the free market.

H/T: Stephen Kruiser at PJ Media