How Technology is Freeing the Market in Brazil

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In times of seemingly unending government intervention in every aspect of our lives, some find it hard to be optimistic about our chances of achieving liberty. At the same time, however, we are fortunate enough to live in an era in which innovative new technologies are chipping away at said intervention. And these technologies run on devices so small they fit in our pockets! I am sure we can all attest to this development, and one example recently caught my attention.

City governments here in Brazil still have a heavy hand in the taxicab industry, restricting competition by only allowing a pre-determined number of drivers to operate with a license and designated vehicle in a given area. Whether one qualifies for a license depends largely on experience, tilting the playing field in favor of older drivers. Though this is partly mitigated by the sublicensing of younger drivers, the average age in the profession is relatively high.

In order to pool the risk of accidents and other calamities – among other reasons – virtually all drives are united in a co-operative to which they pay a R$700 (350 USD) monthly membership fee. Besides auto insurance the co-ops operate call centers which people can call when in need of a cab. In short, the only major change the industry has seen in many years has been of a temporary nature: the issuance of thousands of extra licenses by local governments for the 2014 World Cup.

Yet clients and drivers alike are finding that overregulation does not represent immunization from changing times. While Uber has not yet made inroads into Brazil beyond Rio de Janeiro, other free applications for mobile devices have caused a mini-revolution in the previously bogged down industry. Known by such names at 99Taxi and Taxijá (já meaning something like “right now”), the apps use GPS technology to find one’s location on the map and indicate the nearest cabs.

With the click of a button a customer can call one of them, select the preferred method of payment, and monitor the car’s approach in real time. Free messages allow the driver and passenger to communicate even before pick-up. After the ride customers can rate the driver, thereby further increasing competition as well as providing valuable information for other potential customers.

Since many people use the apps for the same purposes such as commuting or to travel to and from nightlife hotspots on the weekends, the apps allow saving one’s favorite addresses to save even more time. As such, “cutting out the middleman” with the use of these apps has facilitated a better customer experience not only by foregoing the need for time-consuming calls to the co-ops but also by connecting customers and drivers regardless of location. Long waits on the phone are a thing of the past and the fact that drivers and customers now know each other’s names has led to increased safety, and can also be of great help in finding any possession one might have lost.

Electronic vouchers enable a faster and easier order and payment process for businesses and their employees by allowing biweekly payments by bank voucher and eliminating paper receipts. As is the case with private individuals, receipts can even be sent via email, further increasing transparency for all parties. Considering how businesses save time and money that can be put to more productive use, the apps could even be said to be creating jobs!

Despite lobbying attempts by the co-ops to get the government to stop the apps, the genie is out of the bottle. The applications have been in use for some time now and considering the ever increasing use of mobile devices, the trend will only continue. Given the aforementioned benefits many Brazilians are much better off for it.

Mart van der Leer is an International Business graduate (B.B.A.) from The Netherlands. He spent time abroad in Denmark, South Korea, Spain and the United States as a student and intern before moving to South America. He also co-founded a local branch of Students for Liberty in Utrecht, The Netherlands and writes about libertarian issues at therawreport.org. Follow Mart on Twitter via @the_raw_report.

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