Economy & Business

An America Safe for Uber

The more power government has over the economy, the more big business can stifle competition.

Editor’s Note: The following article is an excerpt from Marco Rubio’s forthcoming book, American Dreams: Restoring Economic Opportunity for Everyone.

On Monday mornings I teach a class on political science — Florida politics, to be exact — at Florida International University in Miami. It makes my mornings at home a little more hectic, getting the kids out the door to school and getting myself to campus by 8 a.m., but it’s worth it. Teaching is rewarding and it gives me a sense of what young Americans are thinking these days. More often than not, my students surprise me.

In one class last year I overheard my students talking about how easy it is for their friends in Washington D.C. to get a ride home after a night out on the town. They use a service called Uber, they said. Uber was pretty new to Americans at the time — and nonexistent in Miami. Like most young people, my students are excited by the possibilities of technology to make their lives better. (And when you add partying to the mix, their level of interest multiplies exponentially.) What they didn’t know then was that Uber wasn’t just in Washington but in cities all over America, and even in Europe. It’s an app that you download to your phone, set up an account, and enter your credit card information. When you’re ready to go home, the app locates the nearest car and sends it to your location. It’s quick and easy, and no cash changes hands.

The students in my class were genuinely intrigued by this innovative service and wondered why they didn’t have it in Miami. I explained to them that it was because of regulations created by government. Politicians, I said, had passed rules to stifle competition that might threaten their constituents and supporters in the existing taxi and sedan-service industry. In Miami, for example, there was a government-created cap on the number of sedan medallions allowed in the city. That regulation effectively shut out any competition to the existing car-service companies — competition like Uber.

As my progressive young students listened to me explain why government was preventing them from using their cell phones to get home from the bars on Saturday night, I could see their minds change. They went from fervently believing that big government is necessary to protect the little guy to realizing that big government is often used to stick it to the little guy. Before I knew it, I was talking to a bunch of 20- and 21-year-old anti-regulatory activists.

It was another one of those times when my students surprised me. The entire identity of liberalism as a political movement is built on the idea that liberals stand for the less powerful, that big government is necessary to fight big business. But as my students learned, the truth is often the opposite. More often than not, big business co-opts big government — and vice versa — and they work together. After all, big corporations can afford to influence government, and the little guys can’t. And the more power government has over the economy, the more those with the power to influence government win. Big business uses its influence to create regulations — typically under the guise of public safety or some other seemingly unassailable good — that it can afford to comply with but smaller companies can’t. Aided by the indispensable help of the coercive power of the state, big business gains a competitive advantage. Those of us without lobbyists on retainer have less opportunity, higher prices, and less choice as a result.

#page#Some call this “crony capitalism.” Both parties are guilty of it, but for liberals it presents a serious ideological challenge. After all, if the effect of liberal big-government policies is to put the powerful ahead of the powerless, what exactly do liberal progressives stand for? My Senate colleague and liberal-populist hero Elizabeth Warren had a point when she told a MoveOn.org audience last year that “the game right now in America is rigged. It is rigged so that those at the top keep doing better and better, and everyone else is under increasing pressure, is under increasing economic strain. The rules don’t get better for America’s middle class. The rules are getting better for those who are a thin slice at the top.” As I said, Senator Warren had a point — it just wasn’t the point she thought she was making. It is government that is increasingly rigging the game against the working and middle classes.

A good example is a guy named Brad Soden and his marvelous invention, the Tankchair. Brad has been described as a “robotics savant.” But he’s really just a regular guy — he didn’t even go to college — with a talent for engineering and a wife, Liz, whom he loves. In 1999, Liz was in a car accident that left her paralyzed from the waist down. To make it possible for her to continue to go on family hikes, Brad began designing and building a wheelchair that could go off-road. He worked mostly in his garage at first, using whatever he had on hand – a lawn mower engine, an old air-conditioning unit. By borrowing some ideas from the army’s Bradley Fighting Vehicle and remote-controlled fighting robots, Brad eventually came up with the Tankchair. One writer described the Tankchair as “a wheelchair in the same sense that an aircraft carrier is a boat.” Instead of wheels, it has tracks. It can climb hillsides, traverse beaches, and go up to 30 miles per hour.

Brad Soden’s gift of independent movement to his wife has since become Tankchair LLC, a family company that employs Brad, Liz, and Brad’s parents. They custom build about 200 chairs a year. Brad is a veteran and a lot of his customers are wounded warriors. He’d like to expand his business and employ disabled vets to build more chairs. What’s standing in his way is crony capitalism. Government is by far the single largest purchaser of power wheelchairs, through Medicare. If a company can’t get Medicare reimbursement for its power wheelchairs, that company can’t be competitive. But getting certified in order to be reimbursed by Medicare can cost a manufacturer up to $1 million in meeting government safety and other regulations. This government-created barrier to entry into the power-wheelchair market has allowed the big manufacturers who can afford to get into the market to hugely inflate their costs without fear of being undercut by competition. One report found that Medicare pays these manufacturers four times what it costs to make power wheelchairs. The bill for this overpayment, of course, is ultimately paid by all of us. Meanwhile, Brad Soden, an innovator, entrepreneur, and humanitarian — everything we should be encouraging in our economy — is frozen out of the market.

— Marco Rubio is a Republican U.S. senator from Florida.

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