Tuesday, October 13, 2015

Why Government Did Not Invent Uber

There is an article in this month's issue of Government Technology titled "Why Didn't Gov Invent Uber?" (seriously, page 44). Given the controversy over the ban on Uber in St. Louis, it caught my attention.

The article is asking why municipalities did not innovate themselves and come up with the (in hindsight obvious) value-add of an application matching drivers with rides. The immediately obvious answer the article dances around is of course: Government does not innovate, and really, they are not supposed to. Private industry innovates and even of that, it is really only a sliver of private industry: the outsiders, underdogs, entrepreneurs who produce innovation.

Government does not innovate because it is no good at it, has no incentive to do so, and it is not even appropriate for the public sector to take the risk with the public's money. The large corps who dominate markets have no incentive either (the article points out that Netflix developed streamed movies, not Blockbuster and Amazon, not Borders, "made it easy to buy books online"). The market leaders only innovate when they are forced to by competitors and they usually prefer to simply buy the innovator out or lobby for protective legislation. ONLY the market outsider has the incentive to take the risks to invent something like Uber knowing that 95% of such efforts FAIL. In Uber's case, the inventor won and the business is now valued at billions of dollars. This is also why public-private partnerships (one of the article's recommendations) often fail to innovate: once a business has a guaranteed market from a public monopoly, there is no reason for them to take the risk of something new (and plenty of reason for them to squash anything that someone else invents). Small-business incubators (another of the article's suggestions) can produce innovation, but only when the result must sink-or-swim on its own merit.

A disturbing bit: "While cities like Chicago and New York are now trying to play catchup and build their own official taxi apps to compete..." WHY for the love of Pete would the municipalities need to play catchup TO COMPETE? Why is it appropriate for the public sector to "compete" with a private market? What they need to do, is just *get out of the bloody way*.

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