I'll agree that the current system is skewing the market, but it was put into place to prevent a race to the bottom situation (i.e., too many market entrants, undercutting each other and allowing the capital investments in vehicles to lapse).  Personally, I'd prefer a city-run licensing scheme that allows the revenues from annual licence fees to go to the city (and support regulatory enforcement) rather than allowing plates to become a capital asset.

But those are only part of the regulations that Uber is avoiding:  driver training, special licencing, insurance, labour laws affecting their we'll-pretend-they're-not-really-employees....