Uber, France and Protectionism

France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Carsharing service (or unlicensed taxi service, depending on who’s talking) Uber has faced enourmous regulatory hurdles where local taxi cartels try to protect themselves from the popular service. Europe is no exception as several there is a movement in several countries to stop or regulate or extract fees from Uber. However, Europe has lagged the U.S. in startup activity and success and has taken action against many prominent U.S. tech companies, such as the recent antitrust actions against Google and previous antitrust actions against Microsoft that seem so quaint now.

With that backdrop, let’s take a look at France and Uber.

The French government recently declared that some of Uber’s services would be banned in 2015. Like many places, there are some consumer protection rationales.

““Currently, those who use UberPop are not protected in case of an accident,” Mr. Brandet told the French news channel BFM TV, on Monday. “So not only is it illegal to offer the service, but for the consumer, it’s a real danger.””

Anyone anywhere who has ever taken a licensed cab knows this is silly. The real answer? Regulation and protection of a local cartel.

“Critics contend that the service represents unfair competition for other taxi operators, and falls afoul of many licensing rules across Europe. That has led cities across Europe, including Brussels and Berlin, to outlaw the budget car service.”

But what happens if a local company makes good?

“The 28-year-old student is one of a growing number of people across France relying on ride-sharing to travel long distances. Driving the change is a homegrown startup called BlaBlaCar that is challenging state-run railway monopoly SNCF by creating an alternative transport network out of empty car seats.”

Is longer distance safer? What about how everyone loves European trains and how every U.S. city wishing to be considered “world class” wants more trains?

It turns out that when given a choice, people prefer not to take public transportation.

“BlaBlaCar’s ascent has come partly on the back of a deteriorating public-transport system across the continent.”

Even better:

“Its business model responds to the flaws in train travel his association has been complaining about for years: high prices and bad service . . .”

It makes you think that maybe a homegrown company has advantages over a foreign company providing what the local authorities cannot.

Or maybe they simply don’t like it when people make money in an unregulated environment.

“Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from a company like Uber, which also uses some nonprofessional drivers and bills itself as “ride-sharing.”

“There has been such a hijacking of the word ‘ride-sharing,’ ” said Mr. Brusson. “The key is about the driver not making a profit, and the driver going to his destination anyway.””

And yet, BlaBlaCar has business aspirations, as long as the drivers don’t make money.

“BlaBlaCar was originally called covoiturage.fr—simply the French word for “carpooling”—but its founders changed the name to BlaBlaCar to ease international expansion with a non-French brand they could own.”

Uber
France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Bitcoin Ban – U.S. Senator Demands Regulators Ban Bitcoin

Bitcoin ban urged by Sen. Manchin, previously best known for a compaign commercial where he used a shotgun to shoot a copy of the Cap and Trade bill.

Senator Joe Manchin (D-WV) sent a letter to federal regulators demanding a ban on Bitcoin.

Should we be surprised?  Well, as one particularly brilliant commentator stated:

“There has been a lot of news lately about the efforts of a variety of U.S. regulators to understand Bitcoin, and these regulators are not in the business of exempting financial products that compete with government issued currencies or act outside of the established financial regulatory environment. . .

As a result of all of the above, there is substantial expense and risk in using and accepting Bitcoins, as there should be a risk premium attached due to the very real possibility that the U.S. and other governments could shut them down.”

Other countries, such as China, India, Japan and Russia have either moved to ban or restrict Bitcoin or have threatened to do so.

In addition, Bitcoin has been under review in the U.S. as well.

And now, we have a U.S. Senator urging an outright ban because Bitcoin is unregulated (which is arguable, but for reasons we don’t need to get into here).

As Sen. You-Kids-Get-Off-My-Lawn said, Bitcoin is:

“highly unstable and disruptive to our economy. For the reasons outlined below, I urge regulators to take appropriate action to limit the abilities of this highly unstable currency.”

He is also using the criminal use of Bitcoin as an excuse.  He discussed the “deflationary nature” of Bitcoin, technical problems around Mt. Gox (which I cannot believe he understands in the least) and volatility as other reasons to ban it.  He even trotted out the Consumer Price Index!

He also had to include a softball to “hard-working Americans” in his letter in his final hit:

“The clear ends of Bitcoin for either transacting in illegal goods and services or speculative gambling make me weary of its use.  The Senate Homeland Security and Governmental Affairs Committee issued a report just this month stating, “There is widespread concern about the Bitcoin system’s possible impact on national currencies, its potential for criminal misuse, and the implications of its use for taxation.” Before the U.S. gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.”

If the “clear ends of Bitcoin” are for illicit activities, why not put the risk of deflationary pressures and volatility on the persons engaging in such activities?  Whatever.

Bitcoin’s pricing will smooth out once there is greater acceptance in the marketplace.  It should not surprise anyone that a relatively new currency experiences volatility or that a new technology experiences some bugs.  The early adopters will absorb the early losses, and changes addressing the early problems may generate the trust that allows for widespread usage.

However, as I have said from the beginning, the risk of Bitcoin lies not with technology or the vagaries of market pricing.  The risk of Bitcoin lies with regulation.  The U.S. government is not in the business of allowing non-government sanctioned currencies or payment channels to exist.

Sen. Marlboro Man gets tough with a pile of paper.

 

Gibson Les Paul Sticks It To The Man With New Model

New Gibson Les Paul commemorates government raid and property seizure.

In August 2011, federal agents raided Gibson Guitar Corp.’s facilities SWAT-style.  To seize wood.  For alleged violations of foreign exporting laws that the foreign governments declared not a violation.

Some declared the raid to be a political hit job since Gibson’s CEO gives to Republicans while other CEOs of musical instrument purveyors support Democrats.  Regardless, Gibson resolved the issue with a financial penalty and donation to a federal agency for some BS research project.

To commemorate the shakedown, Gibson has released the Government Series II Les Paul. The fingerboards on these guitars include wood returned to Gibson from the U.S. government after the resolution of the matter. The guitars also sport a distinctive “Government Tan” finish and a bald eagle graphic on the pickguard.

This is a topic near and dear to me as a Gibson Les Paul owner myself.  I have a black 1986 Les Paul that I bought in high school.  I bussed a lot of tables at a local restaurant to afford that guitar.  It was my first professional grade guitar.  It is still one of the best in my collection.

In the words of a musical group that does not use guitars:

Gibson USA: Government Series II Les Paul - Government Tan
Gibson USA: Government Series II Les Paul - Government Tan

Fight the Power!