Writing for the Wall Street Journal, James C. Courtovich, the founder of Sphere Consulting and founding president and chief operating officer of the Children’s Scholarship Fund, explains the parallel between Uber and school choice: Ultimately, it’s about innovation that challenges the status quo and special interests by giving consumers choice and ultimately producing better services at lower price.
The two words missing in the piece are “permissionless innovation,” a term coined by my colleague Adam Thierer. Another way to look at the parallel between Uber’s founder Travis Kalanick and Ted Forstmann and John Walton’s contributions to school choice efforts is that they didn’t ask permission to implement new ideas and make people’s lives better. Innovators shouldn’t have to ask the government for permission to offer consumers what they want.
The other thing they have in common, of course, is that they both have been constantly fighting the special-interest groups that benefit from the status quo. The battle is rarely fought on a level playing field, since special interests almost always have legislators on their side. But thankfully, in recent years, consumers have been fighting for legislators to represent the broad interests of the public, not special interests. With school choice and Uber (in some places), they’ve been winning.
The great news is there are many more permissionless innovators than Uber and school-choicers. We know of Uber, Lyft, and AirBnB, but there are more. The innovative sector we call “the sharing economy” supplies alternatives for consumers not just in transportation, lodging, and education, but food preparation, pre-owned goods, and finance. Check this useful summary of some of the main elements of the sharing economy:
And this is only the beginning.
Of course, regulators will, and do, argue that we can’t just have people providing services from their homes to consumers. But over the years the market, through the Internet and information technology, has come up with better ways to alleviate the information-asymmetry problem that the government and top-down regulation have claimed to address. (Ever heard of Yelp and the similar services that give access to information at low cost to millions of consumers?)
As John C. Moorhouse, a professor of economics at Wake Forest University, has noted: “To the extent that consumer protection regulation is based on the claim that consumers lack adequate information, the case for government intervention is weakened by the Internet’s powerful and unprecedented ability to provide timely and pointed consumer information.” (Thanks to Adam Thierer for the quote.)
The next step to make the world a better place is to find ways to prevent the unhealthy alliances between lawmakers and special interests and prevent them from regulating innovators out of existence (think about how close the regulators have gotten to destroying the genetic tester 23andMe). But it’s also important to take on existing barriers to entry, which are making it too expensive for innovators to try to come up with alternatives to the status quo today.