The State has become an all-pervasive entity that tries to regulate and control virtually all aspects of our lives, whether at the Federal, State or Local level. These institutions limit innovation and create rigid systems that all 330+million US citizens have to navigate continuously. Those of us that believe in liberty, free markets, and personal responsibility know that we can eliminate these governmental units and replace them with new businesses and business models that will be more effective, cost less, and give people more choices when it comes to how they live their lives, run their businesses, or spend their money. The agency that I am going to argue against today is the DMV.
Nobody enjoys going to the DMV. The lines. The forms. The increasingly limited hours and locations. Unfortunately, the state has a monopoly on the services that the DMV provides, which forces the people of Virginia to deal with these inefficient, unresponsive bureaucracies. In 2022, the DMV will have a budget of $319 million while it also generates millions in fees over the course of the year. What I will propose here, is a system that will eliminate the DMV and give the people of Virginia options when it comes to drivers licenses, selling or purchasing a car, etc.
Currently, the first time a person typically interacts with the DMV is when they apply for their learners permit on the way to getting their license. They take a vision test and an exam before they are sent to a driving school for their lessons. After 36 hours of classroom material and 45 hours of behind-the-wheel experience, the person is allowed to apply for their license. They go back to the DMV, take a more comprehensive written exam and a road test with a DMV employee, many of which last less than 30 minutes. Assuming all goes well, the person will receive their license.
In this system, the driver’s schools has no incentive to improve their courses. As long as they can get the next group of students out the door and most of them pass the DMV test, then their job is done. The DMV has no incentive to improve their services. They are the only option, people have no choice but to go the DMV for anything license or vehicle-related. There is no competition that would force the DMV to change their pricing, policies, or products.
But luckily, the State is not needed in this process at all. An alternative process would be:
The market (driver’s schools, insurance companies, customers) determine the criteria for a person getting a driver’s license. After these criteria have been generally agreed upon, people can go to a driver’s school in their area, take the course, and upon completion of the course, receive a driver’s license directly from the school.
A driver’s school can accept documentation proving the identity of the person and their address, just the same as the DMV can. The school can purchase a card printer to produce a quality license just the same as the DMV. What is different is this: Currently the DMV will give a license after a written exam and a short road test. In my suggestion, the school will have worked with a student for many hours, including both classroom and behind-the-wheel experience. They will have a far greater idea of the driver’s understanding and ability as a driver. The schools would have the option to suggest further instruction and the students would have the option to go to a different school if they are unhappy with the product.
Driver’s schools can be held accountable by the market. I would recommend that the industry adopts a program where the schools create instruction programs that can be certified by different auto insurance companies. This way, people would have choices in the level of service that they want to select. If a person wants to spend more money on a driving school that is certified by several large insurance companies, they will be able to select a school that has such certifications. If a person wants to spend less, they can choose a driver’s school that perhaps has fewer certifications or works with smaller insurance companies. Upon completion of the course, the student would be able to purchase insurance from any insurer that has certified that school’s program. Schools can even offer different levels of courses. Perhaps one course will have 30 hours of driving experience and another course will have 40 hours. The second course will cost more, but the insurance companies can offer a discount in premiums for the additional experience. At the same time, the insurance companies can track the claims that are filed by their customers and relay that information to the schools they work with. If an insurance company notices that students from a certain school are filing more claims than usual, the insurance company can suggest improvements to the courses or even revoke their certification with that school if the situation does not improve. Losing certifications would cause a school to lose customers or force them to lower their prices. This market pressure will keep the vast majority of schools in compliance.
As drivers age, insurance companies could encourage them to continue taking driving courses in order to secure lower payments, etc. Insurance companies can set standards for their customers when it comes to claims, so if a driver files claims over a certain limit, the insurance company can tell them they must complete an additional course or risk losing service. The driver would have the option of following the insurance companies guidelines or moving to another insurance provider.
In this system, the driver’s schools would be forced to constantly improve their courses. Real-time feedback from insurance companies would provide these schools with guidance on where their programs are lacking and a number of choices will make sure that the students are paying a fair rate for the product. Insurance companies would also be held accountable to provide their customers with good products for the correct prices. If driver’s schools notice that students aren’t interested in a particular insurer, the school has the ability to cut ties with them as well, which would cut the insurer off from potential customers. This would be a great example of individuals and private companies using the free market to buy and sell products and services that benefit them all.
While there are currently several different services that the DMV offers, they generally fall under the category of buying and selling a car.
Most cars are currently bought and sold through dealerships while a good-sized portion are private sales between individuals. In either case, a purchase or sale can be registered by the parties involved and the State does not need to take part. The State’s involvement leads to higher prices, higher taxes, fees, and more bureaucracy for what should be a simple transaction between two parties.
When a person buys a car from a dealership, both parties can sign a document, which the dealership verifies, showing that the car has moved into the buyer’s possession. This document can then be shared with insurance companies, banks, etc. If a person sells a car to a dealership, both parties can sign a document, which the dealership verifies, showing that the car has moved into the dealer’s possession. For private sales, the buyer and seller could go to a dealership to verify the sale (for a fee) or they could go to a private company that can verify the sale and provide any necessary documentation. In this scenario, both the buyer and seller have documentation showing the transfer of money and vehicle from one party to the other. They can then take that documentation to any interested third-parties like insurance companies, lien-holders, etc. No government agency needs to hold the title of a vehicle or register it. The only parties that need to be involved in that are the owner, insurer and the lien-holder, if any.
Licensing a vehicle so that it is easily identifiable is also possible without the State. Insurance companies can provide a license plate for any vehicles that are listed on a policy. Instead of the license plate showing the state where the car is registered, it can show the insurance company’s logo, serving as a small billboard for the insurer. In the event of an accident, both drivers will be able to easily determine the insurance provider of the other driver and reach out to that insurer for any claims. If a crime is committed and the driver’s license of a vehicle is obtained by the police, they can reach out to the insurer for information on the driver or multiple insurance companies can create a single database that police organizations can access. This database could take advantage of blockchain technology to secure the information of the people. Private licenses also mean that people no longer have to pay annual fees for their license plate renewals, saving people money.
Licensing for tractors, trailers, bicycles, recreational vehicles, boats, etc can all be handled in a similar way. If you want to insure your trailer, your insurance provider can let you know any license plate policy that they have, for example.
Commercial drivers can also follow these same guidelines for driver’s licenses, education, and buying and selling vehicles. There is already an existing framework regarding different grades of CDL licensing and CDL schools can make similar arrangements with insurance companies that I outlined earlier. Buying and selling semis, dump trucks, etc. would mostly be handled between companies (truck manufacturer and shipping company, for example) and they can create the any documentation that the buyer and seller need. Owner/Operators can use the same buying and selling method that I outlined earlier.
While there may be some situations that I haven’t covered, what I laid out above will cover the vast majority of transactions that people have with the DMV. The free market can provide the products and services that the people need and it will allow them the freedom to be safe drivers, without interference from the State.
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