Republicans occupy the governor’s mansion in a majority of states and control both chambers of state legislatures where a majority of Americans live. In a country that is becoming more urban, however, Democrats have a major advantage: Their party runs most big U.S. cities. Of the 15 largest, only two — San Diego and Indianapolis — have Republican mayors, and 13 of the 15 have Democratic-controlled city councils.
Now, despite the Democrats’ urban dominance, cities may soon be up for grabs. That’s because the party’s refusal in most cases to embrace the innovative technology and disruptive businesses that have greatly improved city life presents a challenge to Democrats — and an opportunity for Republicans.
Democrats face a tough choice. A big part of their base is the unions now facing off against such disruptive innovations as Uber, Lyft, Airbnb and charter schools. Do Democrats support the regulations pushed by taxi and other unions that help to protect the status quo but can also stifle competition? Or do they embrace innovative technologies and businesses that expand transportation options, create jobs and are increasingly welcomed by another key Democratic constituency: urban dwellers, particularly young urban dwellers?
Consider Uber, the popular ride-sharing service just valued at $18 billion. The news has been filled recently with stories about how state and local governments are dealing with this disruptive business.
Ride-sharing companies are the focus of legislative and regulatory officials in Pittsburgh, Chicago, New Orleans, Miami, Boston and other cities across the country.
June began with Virginia Gov. Terry McAuliffe’s administration sending a cease-and-desist letter to Uber and ended with Washington taxi union members protesting the competition. July began with a Pennsylvania administrative law judge ordering Uber and Lyft to stop operating in Pittsburgh — although the city’s Democratic mayor, Bill Peduto, supports the ride-sharing services.
Many of these innovative new businesses were birthed in California’s Bay Area, a Democratic stronghold. They are favorites of city dwellers, which means most of the leading Democratic constituencies — including educated professionals, gays, minorities, single women and working mothers.
This puts Democratic politicians in an awkward position because influential stakeholders like taxi commissions and their unions worry about competition from these innovators. Taxi unions, for example, are often the biggest champions of the legislative and regulatory attacks against the smartphone app-based companies. And when it comes to the coalitions that make up the Democratic Party, labor unions dwarf most other competing factions in terms of political and financial strength.
Though the White House and Senate Majority Leader Harry Reid may gripe about the political donations from the Koch brothers and conservative groups, the fact is that labor unions remain one of the biggest forces in U.S. politics. Of the 10 companies and organizations that have spent the most on politics over the last 25 years, six are labor unions, according to the Center for Responsive Politics, which compiles lists of direct campaign contributions. While corporate America funnels cash to both Republicans and Democrats, unions still largely support Democrats.
This fight also extends to Airbnb, which was recently valued at $10 billion. Amid much talk of forgone hotel tax revenue, New York State Attorney General Eric Schneiderman subpoenaed Airbnb officials last October, seeking information about New Yorkers who are renting out their apartments or spare rooms on the website. Mr. Schneiderman’s targeting of Airbnb no doubt was welcomed by the Hotels Trades Council, which has long supported him.
Airbnb and the state of New York reached a settlement in May by which Airbnb will turn over anonymous information about its hosts in Gotham. The attorney general can use this information to determine if any people are operating what amounts to an illegal hotel or failing to pay applicable hotel taxes. Mr. Schneiderman can then request identities of any Airbnb users he believes to be breaking the law.
The head of the local hotel workers union in San Francisco has referred to Airbnb as a “threat to good union jobs.” There is an effort underway there to pass a measure that would hamper the room-sharing company.
But this effort appears to be going against public opinion. A recent poll of San Francisco residents, conducted on behalf of Airbnb, found 69 percent support for legalizing short-term apartment rentals.
So who will Democratic politicians side with — unions, which see danger in disruptive businesses, or popular share-economy companies?
Many progressives have already shown a willingness to take positions that hurt segments of their base at the behest of unions. This was on display in the fight over Washington public schools. The education voucher program has been extremely popular with parents because it has allowed thousands of children from low-income households to escape failing schools. Yet President Barack Obama allowed the program to expire. It took the efforts of House Speaker John Boehner to save it.
Liberal and progressive resistance to Uber and its ilk isn’t just about money; it’s also ideological. Though share-economy businesses such as Airbnb, TaskRabbit and Uber use innovative technology to more efficiently, conveniently and cost-effectively meet demand, many could find them disconcerting on principle.
Salon recently published an article, “Libertarians’ Anti-government crusade: Now There’s an App for That,” that paints share-economy startups as some limited-government conspiracy because — gasp — they seek to turn a profit. The nature of these businesses may indeed disturb progressives who prefer a unionized labor force, along with top-down, centralized economic models and policies.
As of last year, for the first time since the Pew Research Center’s Internet & American Life Project began keeping track, the majority of American adults now have a smartphone that is the basis for so many of these new peer-to-peer businesses and startups. The share economy is not going anywhere. So Democrats, given the makeup of their coalition, face some serious issues.
Politically, this presents an opportunity for Republicans to make a comeback in cities. By championing the often disruptive share-economy businesses, defending them against the status quo and focusing their political campaigns on these issues, the GOP can show that it is the party that embraces innovation to improve the quality of life in cities.
Grover G. Norquist is founder and president of Americans for Tax Reform, best known for asking political candidates to pledge that they won’t raise taxes. Patrick Gleason is the organization’s director of state affairs. This first appeared on Reuters’ Great Debate blog.