Taxis vs. Uber: The new economy overrides bans

Taxis vs. Uber: The new economy overrides bans

The world has in recent years been experiencing a new breed of economy, dubbed “peer to peer.” It is focused on introducing suppliers of services and products to those who are demanding those services and products. 

This is a new kind of economy, often referred to as the “sharing economy,” which makes it possible to share products, spaces, instruments, expertise and personnel. It is particularly facilitated by smartphones connected to the Internet. As the end of the first quarter of the century approaches, a new economy is taking shape.

The issue lies in whether governments opt to resort to populist policies for the sake of defending the old order against the one that is emerging, or whether they try to harmonize the old with the new, in order to ensure that all stakeholders (including the state’s concerns about possible tax revenue losses) benefit.

Populism will apparently have testing times with the new economy. One key example of this test in Turkey is the struggle going on between taxi drivers and Uber. Regular taxi drivers in Istanbul are uneasy about Uber, even suggesting banning Uber altogether or banning vehicles working for Uber from traffic.

Along with many other websites, Turkey banned Booking.com in recent memory. Why? Because Booking.com was allegedly taking the bread out of travel agencies’ mouths. By applying certain criteria, Booking.com eliminated thousands of options available on the market and provided hotel customers with the best deals.

Booking.com also meant immense accessibility for hoteliers, even though those same hoteliers may be troubled by Airbnb. Market reports from a couple of years ago show that one third of total rental revenues are generated by commercial enterprises that joined Airbnb, signaling how people adapt to the new economy.

It is the same with online sales and service-providing platforms.

Amazon is currently gearing up to enter the Turkish market. But at this point let’s remember proposals made in the past that “large shopping malls should be moved outside of cities.” This idea was defended on populist grounds, with people saying heroic small markets were standing up against supermarkets. We all saw how that ended: Shopping malls simply mushroomed in city centers and large supermarkets opened stores in those shopping malls. The power of rent overrode populism.

Today, physical supermarkets are increasingly being replaced by online supermarkets. And we increasingly see the narrative of “Amazon vs. supermarkets.”

The situation is not too dissimilar for music stores. Just as CDs killed cassette tape sales, platforms such as Spotify and Apple Music have destroyed CD sales. Those platforms allow customers to enjoy music through streaming in exchange for a fee. There is no need to bother buying CDs or dealing with the annoying work of storing and recording anymore. It is possible to access more than 35 million songs on Spotify for less than the price of a CD.

Censorship on commercial deals

Platforms that stream movies and TV series on smartphones, tablets and laptops are also bourgeoning. The leading brand in this sector is Netflix. Recently a draft law was submitted to the Turkish Parliament giving the Turkish Radio and Television Supreme Council (RTÜK) the authority to regulate all online broadcasting. Why should the state interfere in a subscription-based broadcasting method, a deal between the seller and buyer based on their own preferences?

Clearly, Turkey has a habit of welcoming the new economy - which is de facto supervised and graded by users - with bans. At a time when change turns things upside down, it is not sustainable to defend the old and the outdated through a populist. It would be wiser for policymakers to try to create a kind of harmony through which both the old and the new can win at the same time.

Some 1,500 taxi drivers out of the total 17,395 taxi drivers in Istanbul are registered with Uber. That is the reality. Whether it is Uber or any other company, it is always better to think about how to adapt to the new when the old system provides less and less business opportunities.

Politicians who believe they can overcome adverse “side effects” resulting from innovation by resorting to populist policies will have a hard time in the future. The new economy, which creates new forms of doing business through such applications and platforms, will only eventually trash those bans.

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