What Uber doesn’t get

You may have heard that ride hailing services Uber and Lyft have pulled out of Austin, TX because they refuse to be regulated. You can read about the details here. The city wanted to fingerprint drivers, as they do for taxis, but Uber and Lyft forced a referendum on the city to make them exempt or else they would leave. The city voted against them. I personally use Uber and really like it but what I like about Uber has nothing to do with Uber per se or regulation. What I like is 1) no money needs to be exchanged especially the tip and 2) the price is essentially fixed so it is in the driver’s interest to get me to my destination as fast as possible. I have been taken on joy rides far too many times by taxi drivers trying to maximize the fare and I never know how much to tip. However, these are things that regulated taxis could implement and should implement. I do think it is extremely unfair that Uber can waltz into a city like New York and compete against highly regulated taxis, who have paid as much as a million dollars for the right to operate. Uber and Lyft should collaborate with existing taxi companies rather than trying to put them out of business. There was a reason to regulate taxis (e.g. safety, traffic control, fraud protection), and that should apply whether I hail a cab on the street or I use a smartphone app.

5 thoughts on “What Uber doesn’t get

  1. I don’t think it’s unfair that Uber is winning against taxi companies. It’s disruptive because the taxi companies have been ripping off people for years and were essentially a pseudo-monopoly in many cities. Regulations are in place for taxis just for this reason (as well as safety, etc.), but not in place for Uber. This might seem unfair. Yet with so many people using Uber, clearly it is not suffering from those issues which caused regulation in the first place. And if it did, the market would turn against them very fast and they would lose business quickly. This is the self-regulation via market forces.

    The telltale sign that this business is working and that people accept it as an acceptable means of short transportation is the sheer number of business people now using it and expensing it. These people are usually much more picky about transportation than your average person on the street. Yet it seems to be not only acceptable, but desirable.

    You see everywhere examples of disruptive businesses that put old businesses out to pasture. Not to mention the labor market shifts of the last 30 years (i.e. outsourcing to China, India, etc.). You can say this is unfair too. That is the nature of progress, unfortunately. The lessons learned is you better learn to adapt quickly, else you will perish. If taxis want to survive, they better link up with Uber or become more efficient in their fares and/our develop a better system.

    I for one am waiting for Uber + self-driving, electric cars (i.e. Tesla) to happen in my lifetime. Go anywhere, any time. Safe, clean, efficient. And most likely very fast due to the lack of traffic congestion due to human behaviour.


  2. @JTK I prefer Uber too for the reasons I included in my post and I believe their business model is better as well. However, that doesn’t give them carte blanche to bully municipalities into yielding to their will. I don’t know the history but I presume taxis came into regulation in the twentieth century because there was an implicit demand by the public. In this situation, the city decided it wanted to regulate Uber as well but instead of cooperating, Uber acted like a petulant child. There are other instances where Uber’s lobbying has induced state legislatures to override municipalities that tried to regulate Uber. I agree that in the future we will all be getting rides from self-driving Ubers but we also have a say in the path towards that end. As the recent work of David Autor has shown, the rise of trade with China in the past three decades was not without cost. There may have been a net benefit for everyone but there is a large segment of the population, particularly in the Southeast US, that has been irreversibly hurt by the demise of the American textile and furniture industries. Sure, these communities will eventually recover but to quote another JK, “in the long run we’re all dead.” If policies can be implemented to mitigate some of this disruption, then I think it is prudent to do so.


  3. I think the issue here is whether you believe disruption requires mitigation. Some might say this is what the US is all about — individualism over society. Who needs mitigation in the winner-take-all culture? There are countless examples of this, and Americans have generally accepted and chosen this path — even if it hurts themselves in the long run. Uber is just one example from a very long list of examples. From lack of gun control and health care and standardized education to unlimited amounts of money to effect elections (by Republicans AND Democrats) — this is the American way.

    BTW, I don’t believe the South will recover from the manufacturing losses. They haven’t shown they have the skills or policies to do so. And with backwards laws in Mississippi, Alabama, and North Carolina (and more States on the way) — their future is uncertain.


  4. @jtk The US has oscillated multiple times between liberal and conservative tendencies. The current situation may seem more rightward leaning but in the twentieth century there was the Progressive Era, the New Deal, and the Civil Rights/New Society Era. This was followed by a rightward leaning phase until the Great Recession where we have since seen movement to both the left and right. The next few decades are going to experience even more disruption as white collar jobs start to be replaced en masse by automation. Clearly something must happen when this happens.


  5. Agreed that the USA has oscillated multiple times in the last century, but it seems firmly entrenched since the 1980s (via Reagan) in a capitalistic right-leaning phase. Currently, I certainly see some shifts to the left in terms of some issues (Gay rights, Obamacare, etc.), but then many steps backward in terms of gun proliferation, gender laws, and our choice of potential leaders (Trump). Stunning how the latter could actually happen. Actually, I see both a right and left shift — almost so that you can split the country into two countries:

    [1] Right leaning: South, Southwest, some Midwest and Prairie states
    [2] Left-Leaning: West and the Northeast

    I am curious if anybody has looked at the GDP of these areas. I would bet that [2] well exceeds [1]. Not only that, I believe [1] leads in incarcerations, obesity, health issues, lower education, income and skill level, etc. This should not be surprising. The digital divide is happening on a grand scale.

    In terms of technology disrupting current industries. I think the largest may be in self-driving trucks. Truck drivers are probably one of the leading jobs in America for men:


    Just imagine when self-driving trucks come online. People will essentially be attending to the truck and can/will be paid much less. Transportation and supply chain efficiencies will skyrocket. With all that profit going back to corporate American and the C-suite and shareholders. Not to the mainstream. Huge numbers of unemployed men will be the result. Economists theorize that technology creates new jobs which will fill the void. This is utter crap. Those low wage jobs replaced by automation cannot move up. The people driving trucks can’t all of a sudden do programming. They will be relegated to being a technician for the machines. And these will be low paying, if available at all. This is already being seen since the Great Recession. Current wage growth in the US is stagnant for the 99% and the jobs are predominately retail. The 1% however are thriving.

    In any case, Uber is just one example of the coming revolution which highlights this great divide.


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