In Global Economy, our discussion of the pros and cons of regulation goes like this:
- There’s often a legitimate rationale for regulation (eg, safety).
- Real-world regulation often goes well beyond the rationale, typically because incumbents use it to protect themselves from competition (eg, Tesla, chickens, braiding hair).
Given the strong interests of the incumbents, it’s extremely hard to eliminate regulations once they’re in place. Hard but not impossible. Faced with the question of how to regulate Uber, the city of Sarasota decided to scrap taxi regulation altogether (lightly edited):
In a unanimous vote, commissioners agreed to repeal an existing ordinance that for years had set rules for taxicab operators. City officials couldn’t even remember why, exactly, the municipality started regulating taxicabs in the first place.
“Safety was the pre-eminent (trigger for) this regulation,” Mayor Willie Shaw offered. But few if any residents cited safety concerns related to taxicabs, said Sarasota Parking Manager Mark Lyons, who oversees the taxi regulations. Only one or two complaints came into the city in the past year, he said.