What to do when technology outpaces the law?

The recent cease-and-desist letters from the Virginia Department of Motor Vehicles to taxi alternatives Uber Technologies and Lyft remind me of my first trip to D.C. in 1997. An awkward high school junior traveling alone, I landed at National Airport, followed the signs and hopped into a filthy Virginia-sanctioned taxicab. The heavy stench of stale cigarettes clung to the papers, cups and clothes littering the floor.

En route to my hotel, the driver suddenly stopped and, without explanation, got out of the car. After making a 10-minute payphone call, he nonchalantly resumed our drive. I reached the hotel unscathed, but the unpleasant trip — costing about $15 — seemed second-rate to a first-time cab rider.

A few years later, a freshman econ course revealed that economics can explain the sub-par service I received.

That is me, writing in the Richmond Times Dispatch. I make the case that ride-sharing companies Uber and Lyft have solved many of the problems that plague traditional taxi models. But instead of thanking the companies, the Virginia DMV has issued cease-and-desist letters.

The best defense of the DMV is that they were simply following the law. From their perspective, Uber and Lyft look like motor carriers. And in Virginia, motor carriers are required to be licensed. To this, Uber and Lyft can reasonably reply that they are not motor carriers. They do not employ any drivers. Instead, they employ software engineers who create mobile applications used by drivers. Their service is simply to connect those with rides to those in need of rides. In this sense, the companies are no more motor carriers than Kayak or Priceline are airlines.

So what to do in this sort of area where technology seems to have outpaced the law?

My colleague Jerry Brito offers a simple idea:

[H]ow about allowing the innovation to continue apace while the government studies it and gets its regulatory house in order? Public officials like [Commissioner of the DMV] Mr. Holcomb might say that their job is to enforce the law, and while that’s true, public officials also have a responsibility to exercise discretion in the public interest. It’s clear that the Virginia legislature did not anticipate the invention of platforms like Uber and Lyft when they designed their motor carrier laws, so it would be perfectly reasonable for the DMV to work with the legislature to clarify the law without first banning the services.

You can read more of Jerry’s views in his latest column in Reason.