The sharing economy helps end ethnic and economic discrimination
by Howard Baetjer Jr.

Market forces are regulating racial profiling by taxicabs better than government regulations do.
Investigative reporter Russ Ptacek, who is white, had to hail only 22 cabs to get 23 rides one recent day in Washington, DC. (One cab stopped before he hailed.) An African-American teammate in the investigation, dressed in the same clothes and hailing from the same spots, had to hail 34 cabs to get 23 rides. The other 11 ignored him.
A year-long investigation of what certainly looks like racial discrimination by taxi drivers in DC consistently produced such results. (Here’s the video.)
Are cab drivers indulging in irrational prejudice, or is their apparent racial profiling a rational reaction to the security and financial risks of their business? Most cabbies are from racial minorities themselves, but they reasonably worry about crime — taxi drivers are among the most frequently victimized professionals — so they might use race as one criterion in judging how safe it is to pick up different kinds of riders. And cabbies need to keep the meter running; they might worry that if they take a rider home to a low-income area, they won’t find another fare there to pay for the trip back to a busier area.
Whatever its cause, the racial profiling is a frustrating, insulting nuisance to those discriminated against. There must be a solution.
Like most cities, DC has regulations intended to prevent racial discrimination by taxi drivers; the Washington taxi commission can fine drivers for “refusal to haul.” But those regulations don’t work. Ptacek says, “We found no evidence over the past year that the DC taxi commission has done one thing, initiated one program to ensure all passengers are treated equally, regardless of race.”
This regulatory failure is not surprising. What incentive does the DC taxi commission have to enforce its “refusal to haul” regulations? What are the consequences for the commissioners’ jobs and paychecks if they don’t get cabbies to quit bypassing black and brown riders? None at all. Black riders may complain, but they have no other authority to turn to if their complaints go unheeded.
Is there a way around this government failure?
It turns out there is — in our day of smartphones and GPS, at least. A spokesman for Uber, the for-profit ride-sharing company still effectively unregulated by government, told NPR that “with 4 in 10 Uber trips starting or ending in neighborhoods underserved by taxis, Uber is ensuring that no rider is rejected because of who they are, where they live or where they want to go.” Why would Uber-directed drivers, unregulated by any government agency, pick up passengers from minority groups that government-regulated taxi drivers refuse?
The answer is that Uber drivers are regulated by Uber, Uber is regulated by market forces, and market forces regulate far more effectively than the DC taxi commission does.
Uber gets a cut of every fare, so the more fares it arranges, the more income it earns. Arranging more fares depends on building a reputation for getting cars to riders — all riders — quickly and reliably. Hence, Uber has a strong incentive to give its drivers the incentive to pick up every rider — black, white, or brown — right away.
It does that in two ways. First, it reduces its drivers’ reasons for racial profiling. Uber has each rider’s name, cell phone number, credit card information, and the time and route of the ride, so Uber riders are unlikely to rob drivers. Riders can’t skip out on a fare because Uber charges their credit cards, and since drivers aren’t paid in cash, they’re unattractive targets for criminals. And when an Uber driver drops off a rider in an out-of-the-way place, Uber immediately shows where the next closest fare is, so the driver is less likely to get stuck with a long, no-fare trip back to a busier area.
Second, using GPS information from users’ and drivers’ smartphones, Uber “sees” in real time when a driver drives past a would-be rider. “I didn’t see him” doesn’t work; Uber shows drivers where would-be riders are. And Uber fines its drivers for refusing fares. Uber’s regulation of racial profiling is thus comprehensive and immediate.
Here’s a beautiful instance of how market forces push people to pay attention to the well-being of others of all races. And it’s an instance of how modern technology and market incentives are making government regulations obsolete, if they were ever useful at all.

NOVEMBER 25, 2014 by HOWARD BAETJER JR.
First published at The Freeman by fee.org

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