The good thing about governments conspiring to create a shortage is that taxi drivers make a reasonable income.

This is an aspect that Silcon-Valley-style technology platforms have no apparent interest in supporting. For example, as time progresses Adsense might sign up more and more publisher capacity, yet that pushes down the income and discourages respectable publishers from using the service.

You go from a fairly well respected public service, to something that's got a nice brand and run by virtual slaves.

A large majority of Uber drivers are former taxi drivers, you don't have to lease a vehicle for 45k per year, choose hours of work, and you have more control over passengers bad behaviour (two way rating system).

That's the way these things work though. Start-up moves in, offers good rates because they have the VC money to burn. The early adopters do well (like drilling for oil), then after several years reality sets in. The legacy employer no longer exists, in fact, there are no competitors except one or two global technology companies. Finally, cars drive themselves.

And what happens when Uber continues to lower the rates Uber drivers earn at? Eventually taxis will look like a better job again.

That's a meaningless hypothetical. Why would Uber do that? They have every incentive to make sure that drivers are getting paid as much as possible and that riders have the cheapest prices possible, they literally have hundreds of people working on finding the equilibrium.

Once you become the de facto platform and you move from a start-up to a multinational public company, there's no longer a need to look after the contractors. There's added pressure to milk those contractors for all they've got. The contractors are easily replaceable and will live under constant threat of upcoming automation.

No. Uber will always have the incentive to keep drivers happy, as they are competing with every other job. If another position values their time more they will move there.

On the topic of self driving cars, full saturation is at least a couple of decades away.

There are good arguments in favour of restricted supply, mainly because the roads themselves are publicly owned, and the public pays the cost of every extra vehicle on them. What's especially problematic about the way regulations are used now, is they're forcing the exact opposite outcome: uber (and others) are much better at efficiently routing cars to passengers. Taxis driving in loops around the city, waiting for someone to hail them, places far more of a strain on traffic than an uber driver.

I'm not sure about the routing efficiency assertion. Sure a few years ago that would have been true but most taxis are/can be hailed by app at this stage.