Republicans have hailed Uber, the smartphone-based car service, as a symbol of entrepreneurial innovation that could be strangled by misplaced government regulation. In August, the Republican National Committee urged supporters to sign a petition in support of the company, warning that “government officials are trying to block Uber from providing services simply because it’s cutting into the taxi unions’ profits.”
But for Republicans, being the party of open and competitive markets is not always easy in practice. Just look at what happened two weeks ago, when UberX, one of Uber’s various ride-sharing options, began in Philadelphia. The local taxi regulator called UberX an illegal taxi service, so several drivers were fined and had their cars impounded.
Mayor Michael Nutter sent a clear message: Don’t blame me.
“I strongly support having Uber/Lyft services in Philly,” the mayor, a Democrat, wrote on Twitter on Oct. 27. “The #PPA, a STATE authority not run by the City, opposes them.” As Mr. Nutter correctly notes, Uber’s fight in Philadelphia is with the Philadelphia Parking Authority, a state agency that regulates taxis and whose board is appointed by the governor. Five of six parking authority board members are Republican appointees.
Anticompetitive business regulations are mostly imposed at the state and local level, and they usually have a strong built-in lobby: the owners of the businesses that are being shielded from competition.
The R.N.C. chairman, Reince Priebus, probably doesn’t get a lot of phone calls from taxi medallion owners, or car dealers, or other businesspeople who want to be insulated from competition.
But local politicians do; Republicans may be especially likely to hear from them because small business owners are a constituency that skews Republican.
As a result, in practice, it’s not clear Republicans are any more pro-market than Democrats when it comes to business regulation.
Andrew Moylan, a senior fellow at the R Street Institute think tank, has examined ride-sharing regulations around the country and doesn’t see a clear partisan divide. On Monday, R Street and Engine, a group advocating policies that support start-ups, will release a report card rating the 50 largest cities on their friendliness to ride sharing. The eight cities receiving failing grades include ones in blue areas (Philadelphia and Portland, Ore.) and red ones (Omaha, Phoenix and San Antonio).
“There didn’t seem to be any obvious ideological trends,” Mr. Moylan said. “It may have something more to do with population density and consumer demand.”
In the case of Uber, the cities with the most to gain from innovation tend to be large and dense, and often Democratic. So at the local level, the leaders in welcoming Uber are often Democrats. Conservatives like to mock California as anti-business, but the state is one of just two to have enacted a comprehensive, statewide regulatory framework that is friendly to ride sharing. The other is Colorado, also run by Democrats.
But it’s not just about Uber and taxis. Consider state laws that prohibit auto manufacturers like Tesla from selling directly to consumers. Car dealers favor these laws, which interfere with Tesla’s direct sales model. Of 22 states that permit direct sales, 14 voted for President Obama. New York, California and Illinois all have freer markets in auto retailing than Texas. Did I mention that car dealers are a strongly Republican constituency? In 2009, the statistician Nate Silver found that 88 percent of car dealers’ political donations went to Republicans.
When it comes to business regulation, “I don’t know that there’s an ideological breakdown,” said Clark Neily, a litigator at the Institute for Justice, a libertarian public-interest law firm that opposes many kinds of business licensing. He pointed to Florida, one of just three states requiring a license to practice interior design. Republicans in the state’s House of Representatives voted overwhelmingly in 2011 to deregulate the profession, along with others like auctioneering where the need for a government license was unclear.
But under pressure from licensed interior designers, the State Senate, also held by Republicans, killed the deregulation bill on a 32-to-6 vote. Despite more than a decade of solid Republican rule, you still need a license to decorate other people’s homes in Florida, or braid their hair, or auction their property, or run a ballroom dance studio.
The Institute for Justice has also spent years fighting state laws that restrict the sale of coffins to licensed funeral directors, which protect funeral homes’ ability to control coffin sales and impose large markups on their customers. These laws have existed mostly in strongly Republican states in the South, and funeral homes have vigorously defended them in legislatures.
The institute has mostly succeeded in getting the laws thrown out, not by legislatures but by the courts; the one remaining state where you’re likely to get in trouble for selling a coffin without a license is Oklahoma, which is dominated by Republicans.
At the federal level, Republicans have spent several years hashing out the difference between being pro-business and pro-market. Many Republicans in Congress have soured on programs favored by large companies, such as the Export-Import Bank, seeing them as anticompetitive business subsidies. But as the coffin fight shows, you don’t have to own a large business to be a crony capitalist.
Mr. Priebus wrote in the summer that the fights over Uber were about more than just Uber: “It should be consumers, not government bureaucrats or legislators, that decide what companies get our business.”
If Republicans want to own the issue of freeing businesses from anticompetitive regulation, they’re going to have to have some intraparty fights at the state and local levels.