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Municipal Choke Point on Innovation

The Consumer Electronics Show, hosted by CTA, is appropriately lauded for being a showcase of technology and innovation.  As they tout themselves, “For 50 years, CES has been the launch pad for new innovation and technology that has changed the world. Held in Las Vegas every year, it is the world’s gathering place for all who thrive on the business of consumer technologies and where next-generation innovations are introduced to the marketplace.”

This year the buzz around the show was even greater than usual, largely because of the promise of a connected life becoming real in so many ways—from cars, to wearables, to thermostats and home alarm systems.  Sharper pictures, bendable screens, virtual reality and the reality that your “phone” is rapidly becoming your personal “smart hub” all fought for attention inside the show.  But the most accessible innovation may have been happening off of the show floor.

This year Uber, the ride hailing app provider, was operating in Las Vegas during the show.  The impact was obvious.  The infamous hours-long taxi lines for those trying to leave the convention center were cut by half or more. This year show attendees were able to make productive use of their time instead of waiting thirty minutes or more for a cab from the hotel to the show.  As a further customer service, Uber partnered with a Dallas start-up company, Vinli, to provide riders with a Wi-Fi connection while they rode.  The entire experience of attending a trade show that attracts 180,000 visitors to Las Vegas changed for the better

So why do so many local governments continue to be the choke point for an innovation that has brought better customer service everywhere it has deployed?  Heavy lobbying by cab unions and taxi companies.  Taxi companies do not like the dramatic drop in business when a lower cost, better quality, easier to use competitor shows up.  The new competitor forces them to adjust after years as a government-enforced car transportation monopoly.  The union’s interest is also clear as Uber drivers, who are independent contractors working for themselves when and where they want, do not have to join a union to be employed. And of course, non-union drivers cannot be required to surrender a portion of their hard earned wages to support union political causes with which they do not agree.

Impact on unions aside, there is an even larger issue at stake: The continued refusal by many city governments to allow, much less understand and accept, innovation.  This attitude places one more stumbling block in front of a still struggling economy and a barrier in front of those who simply want to add to their household income.  Such chokepoints on innovation are troubling in their own right, but sooner or later choking suffocates the victim entirely.

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