by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
The market for e-scooters is highly competitive. Other cities, including Charlotte and Durham, allow several scooter providers to compete for riders.
Not Raleigh, however, despite at least seven companies trying to do business in the city limits: Bird, Lime, Gotcha, Spin, Lyft, Bolt, and VeoRide.
Raleigh’s approach was classic cronyism instead of market competition. The Raleigh City Council had scooter companies pitch bids to them to be the sole provider of scooters in Raleigh.
“Competing” for favors from government officials isn’t market competition, friends. Here’s the difference between cronyism and market competition:
There is still a kind of competition in systems in which market competition isn’t allowed, as High points out, such as in socialist economies. This competition is not to woo consumers, but to capture government planners. To be “competitive” in that sense is to be able to compete for government favoritism successfully.
“Instead of success being determined by a free market and the rule of law, the success of a business is dependent upon the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.”
Alongside incentives, of course, sometimes government favoritism includes hitting their competitors with penalties and disincentives or even forbidding public discussions.
Cronyism is directly opposed to market competition. After all, you don’t have government forcing people to do what they’d do anyway. That’s why there’s no law saying you have to put on your pants before your shoes.
The News & Observer reported this week about Raleigh’s Hobson’s choice for scooter enthusiasts, Gotcha. Here is a telling quote:
Gotcha plans to work in cities and at universities where it is the exclusive scooter company, [CEO Sean] Flood said. It’s pulling back in some cities where there are multiple companies and left Nashville, Tennessee, within the last week.
Imagine being proud of a business model that tells you if you face any competition, scoot.