
Uber Makes Economists Sad - luu
http://www.bloombergview.com/articles/2014-07-09/uber-makes-economists-sad
======
rayiner
It's absolutely no surprise that the majority of people might prefer a
particular resource to be allocated by lottery instead of auction, because
they can't afford to outbid the wealthy minority for those resources. There is
a lot of social conditioning in our society to accept auctioning as normal for
resources like land and housing, but for things like taxis or tickets
auctioning hasn't been practical to date so the socialization isn't there and
this more basic preference, arguably rational for the average person, shows
through.

You see similar attitudes in many other areas. E.g. when it comes to spectrum
auctions, people complain that the big telecom firms just get even richer by
buying up all the spectrum. Well sure, that's what happens in markets. Those
with the most money buy all the resources.

~~~
icebraining
_It 's absolutely no surprise that the majority of people might prefer a
particular resource to be allocated by lottery instead of auction, because
they can't afford to outbid the wealthy minority for those resources._

That would be rational if the supply was fixed; but since it isn't (the number
of drivers increase with the surge pricing), it's far from clear whether the
average person is negatively affected by the temporary price increase (as far
as I know, surge prices usually last a very short time).

~~~
Vik1ng

       (the number of drivers increase with the surge pricing)
    

I doubt there would be suddenly tens of thousands of additional drivers more
after the WC final on Sundary in Germany to drive all the people home from the
bars and public viewing locations, when more than 80% of the population is
watching the game.

    
    
        (as far as I know, surge prices usually last a very short time)
    

Well, that's already sucks enought, when it's late in the night and you want
to get home. Might as well wait until I can get public transport in the
morning...

~~~
alwaysdoit
Having talked with many Lyft drivers about it, the drivers are definitely
aware of what times pay better rates and many of them choose to schedule their
workdays around it. I don't know if it works for one off events like the WC
but it definitely increases supply during evenings and late nights.

~~~
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------
dntrkv
I don't have a problem with surge pricing, but what I do have a problem with
is when a driver cancels my ride so they can get a higher surge rate. Example,
I was in LA trying to go from Downtown to Venice, I got an Uber for 1.75x
normal rate. Waited about 10 minutes while watching the driver head in a
different direction on the map, and then all of a sudden, they cancel. I go
back to reserver another driver, and what do you know, it's now 3.25x rate.

That shouldn't be allowed. You should be locked into the first rate that you
request a driver at. If the driver cancels, and the area now has a higher
surge rate, Uber should recoup the difference in cost from the drivers next
trip because they fucked a customer over.

~~~
w4
Yeah, that's completely horseshit. At a minimum the rate ought to stay locked
in for you by virtue of the agreement to take your fare, and the difference
should come from the offending driver's next fare as a disincentive.

~~~
mox1
You always have the option of not choosing Uber.... You can even start a blog
and inform others of this practice. Finally, you can complain to everyone you
know and encourage people not to use Uber...

Or just ask the government for more legislature I guess...

~~~
w4
Or, a customer service flaw that disincentives use of Uber's service due to
the unreliability of their contractors could be addressed by Uber, as a cost
to those unreliable contractors, as I suggested. What part of my post (or any
other posts I've made on this topic, for that matter) suggests I feel
government legislation would be appropriate here?

EDIT: Furthermore, this is already something Uber does with their star rating
system. This would just be a logical extension of that.

------
untog
New York didn't kill surge pricing. They limited how high surge pricing can go
during emergencies. A pretty huge difference.

 _Uber will not totally eliminate dynamic pricing during emergencies but will
instead cap how high its rates can go based on what it charged consumers over
the previous two months._

[http://www.slate.com/blogs/moneybox/2014/07/08/uber_price_go...](http://www.slate.com/blogs/moneybox/2014/07/08/uber_price_gouging_not_during_emergencies_in_new_york.html)

~~~
shurcooL
What are the minimum requirements for a situation to be considered an
emergency?

~~~
anateus
From the AG's announcement (and Uber's announcement promises to abide by this
definition):

New York’s law against price gouging (General Business Law §396-r), was passed
in the winter of 1978-79 in response to escalating heating oil prices. It
defines an “abnormal disruption of the market” as “any change in the market,
whether actual or imminently threatened, resulting from stress of weather,
convulsion of nature, failure or shortage of electric power or other source of
energy, strike, civil disorder, war, military action, national or local
emergency, or other cause of an abnormal disruption of the market which
results in the declaration of a state of emergency by the governor.”

~~~
omni
So now they can't do surge pricing when it rains? The main reason I like Uber
in NYC is because it is impossible to get a taxi when it's raining. Seems like
this would ruin a big chunk of their value proposition.

~~~
morley
It doesn't say they can't do surge pricing; they just have a cap on how high
it can go during an emergency.

------
ollysb
>> that price gouging actually makes everyone better off by ensuring greater
supply and allocating the supply to (approximately) those with the greatest
demand

I think the issue is that it's not those with the "greatest demand" but those
with "the greatest demand and can afford higher prices" i.e. the service isn't
equally available to people during surge pricing, it skews heavily towards the
wealthier, "(approximately)" massively understates the significance of this.

~~~
cma
The idea is a rich guy can still quickly get to the beautician during a
disaster. He's earned this right and is basically just cashing in on years of
hard work skimming off the top of workers's 401K trading fees--these workers
were forced to select from a few mutual funds chosen based on family ties with
the executives, but he worked _damn_ hard to be born to the right board
member.

Highest bidder would work great and allow excellent prioritization if everyone
had roughly the same means. This is a bit like economist worship of the Coase
Theorem--it completely falls apart when you factor in marginal utility of
additional dollars to individuals at different levels of wealth.

~~~
tptacek
No, that's not the idea. If surge pricing was in effect all the time --- if
travel pricing was always an auction and drivers were kept scarce to keep
prices up --- then Uber rides would be a service for the rich. But disasters
are rare, and the surge multiple is merely the equivalent of several Uber
rides instead of one. Meanwhile, the alternative to surge pricing is a high
likelihood of not getting a ride at all, because disasters suppress demand.
It's hard to see the class-warrior logic in this situation.

( _Later, you edited your comment_ )

It's a caricature to suggest that "Coase" is, to economists, a license to
apply the free market to every public policy problem.

Meanwhile: you have to actually make the case that there's a distributional
problem with surge pricing for Uber rides. If the alternative is no rides at
all, then surge pricing makes some people --- not all of them rich --- better
off while making nobody worse off.

~~~
declan
Yep. Instead of "expensive Uber rides" during a snowstorm, you get "no Uber
rides." (A shortage, in other words.)

Thanks, Albany! Well-done.

------
colinbartlett
I live in New York and use Uber a lot. Last week during the tropical storm, I
opened the app to use it but found the surge pricing to be too rich for my
blood. I hopped on the train instead (it was only 2 blocks away anyway).

Surge pricing works! That car I would have used stayed available for someone
that needed it a lot more than I did.

~~~
prutschman
_That car I would have used stayed available for someone that needed it a lot
more than I did._

That car stayed available for someone willing to pay more money. Between two
people of roughly equal means, that's a good proxy for "needs it more."
Between two people of vastly disparate means it's not.

~~~
w4
Right, but that's a fundamental feature of capitalism. If equality of access
to a non-essential luxury between those of disparate means concerns you, don't
worry about the symptom, worry about the underlying system. On the other hand,
if unequal access to, say, 5 star hotels in Times Square on New Years Eve
doesn't bother you, then neither should surge pricing.

~~~
vannevar
I'm not sure taxi service qualifies as a "non-essential luxury"; there are
times when it isn't (a rainstorm, for instance) and I think that's why it
draws the political interest that it does.

PS I inadvertently downvoted you, unfortunately there doesn't seem to be a way
to upvote it back. Sorry...

~~~
w4
No worries on the inadvertent downvote. I do, however, have to take issue with
the characterization of a taxi as an essential. :)

Seriously, though, even in a rainstorm a taxi is a non-essential. It's nice,
and I'd certainly prefer one if it's raining, but it isn't essential. There
always exist alternate modes of transportation that are going to be less
expensive (public transit, Zipcar, your own car, or an umbrella and your own
two feet). It's not as though one, bereft of an affordable taxi, can never
reach one's destination.

I just don't see how Uber can possibly be construed as an essential, except
maybe in _highly_ exceptional circumstances. You're hiring someone to
chauffeur you to your destination with an expensive computing device, via a
similarly expensive data connection. How is that anything _but_ the definition
of a non-essential, luxury good?

~~~
vannevar
You're a mother carrying groceries and a kid and you have to walk ten blocks.
Is it as essential as medical treatment? No, but it's a substantial
degradation of your quality of life if you get priced out of it. I think the
political attention on the topic speaks for itself as to how essential the
public views it. And we're not just talking about Uber here, we're talking
about taxis in general: if Uber drives taxis out of business by undercutting
them during ordinary circumstances, there won't be any around to undercut Uber
during a surge.

------
modeless
The problem with Uber surge pricing is that it's not just the drivers who get
paid more; Uber gets paid more too. That doesn't make sense because surge
pricing is actually indicative of a failure on Uber's part (they weren't able
to recruit enough drivers). From an economics perspective, all of the surge
price increase should go to the drivers and Uber should be paid the same or
even less. That would also make surge pricing much easier for Uber to defend
politically.

~~~
bedhead
No, Uber didn't fail anyone. To the extent there's a failure somewhere, it's
the monopoly the municipality holds on taxi medallions, which artificially
limits supply of taxis overall.

~~~
tptacek
Municipalities and states hold "monopolies" on licenses of all sorts; the
argument that says medallions are bad public policy because they're
monopolistic applies equally to many other forms of licensure, for instance
zoning.

~~~
bedhead
While this is true, what makes taxi medallions so unique is the price
discovery. This is one of those rare things where you can see, quite
unambiguously, the direct effect of the monopolistic behavior. Other things
like zoning tend to be very complex and ambiguous, but taxi medallions are
simple. The effect? NYC taxi medallion prices have grown by 29% annually over
30 years. As someone in the investment world, that might be the single best
performing asset class I can think of, all for the privilege of taking someone
from point A to point B. I noticed airlines don't need medallions - how has
that worked out?

[http://www.theatlantic.com/business/archive/2011/10/the-
amaz...](http://www.theatlantic.com/business/archive/2011/10/the-
amazing-1-million-nyc-taxi-medallion/247158/)

~~~
tptacek
Did you just suggest that it's easier to start a commercial airline than it is
to get a taxi medallion? Have you ever paid attention to the drama about who
gets what gates at which airports? Or watched local political battles over the
addition of new runways at an airport?

~~~
bedhead
No. One's supply limited by the government, the other's is not. At the end of
the day they both just transport people from point A to point B. Owners of
planes have gone bankrupt 1,000 times since 1980, while owners of taxis have
the single best returning asset I can think of. Do you really think government
meddling (or medallioning, heh heh) hasn't been about 85% responsible for this
otherwise incomprehensible result?

~~~
tptacek
The supply of available airport gates is absolutely limited by governments.

~~~
bedhead
Well this is going nowhere. I don't know why I try sometimes.

------
AndrewKemendo
This mis-characterizes the Economist's wonder at price mechanisms - as though
this one characteristic in a vacuum should be a shining example of the
"invisible hand" (subtext mine).

The key market assumption that is missing that would make this a wholly
positive pricing activity, is that the marginally increased demand also comes
with a marginally increased supply at a marginally higher cost, which it
doesn't in these cases. The supply market does not expand in order to cover
more customers in most cases, with everyone paying a slight penalty for the
transaction/logistical cost, all it does is take a saturated supply market and
price out the lower tier.

So if Uber was able to dispatch MORE drivers for a slightly higher cost at
surge times (arguably easier with Uber than with traditional taxi companies),
that would actually be closer to the Pareto efficiency that economists like.
Perhaps I am wrong but it doesn't look like that is what happens in the case
of Uber.

~~~
icebraining
Why do you think Uber doesn't dispatch more drivers? As far as I know, one of
the reasons for the surge pricing is to get more Uber drivers on the street,
increasing the supply.

~~~
potatolicious
One of the stated reasons. We've yet to see any evidence that this effect
actually occurs and is significant.

This is the same company that tried to eliminate its competition by ordering
cars and canceling them at the last moment. I like their product enough, but
their business practice track record suggests that they are not on the up and
up.

Particularly in NYC where surge isn't just long events like New Year's - surge
kicks in during half hour rainstorms as well. I highly doubt there's any
significant supply change in that kind of time frame - in which case Uber is
simply price gouging without any of the claimed positive supply effect.

~~~
herge
> Particularly in NYC where surge isn't just long events like New Year's -
> surge kicks in during half hour rainstorms as well.

Surge pricing also encourages uber drivers (who decide their own hours) that
are about to end their shift to end a bit later to take advantage of the
surge.

~~~
potatolicious
Sure, all of this is logical and works in a thought-experimenty way. I'd like
to see some data that backs this up though.

Market reality and what looks great on paper are often two very separate
things - we in startups should know this better than anyone else.

How many extra cars get on the road during these short surge events? Is it
worth charging everyone 2X if it brings an extra 1% of supply? 5%?

One thing you get used to after dealing with startups for a while is to listen
to what they're _not_ saying as well as what they're saying. Uber, along with
all other "sharing economy" startups, like to trumpet their social-good side
(see: AirBnb and the "helping poor New Yorkers pay rent" narrative). The fact
that they've released nothing even remotely resembling data regarding the
supply-boosting effects of surge pricing is suspicious. My suspicion is that
the effect is not substantial unless during extended surge events (say, New
Year's), certainly not substantial enough to placate people looking at 2X,
even 3X fares.

------
tptacek
If you want to hear two libertarian-leaning econ professors talking about
Uber, including some novel arguments against it (they both support Uber, of
course, particularly the surge pricing), check out this week's EconTalk:

[http://www.econtalk.org/](http://www.econtalk.org/)

~~~
w1ntermute
Direct link:
[http://www.econtalk.org/archives/2014/07/michael_munger.html](http://www.econtalk.org/archives/2014/07/michael_munger.html)

The episode is pretty good. It's fun to listen to economists' perspective on
these services after being absorbed in the tech.

~~~
tptacek
I liked it fine, but I found the economics to be extremely predictable and the
public policy analysis to be very shallow. For instance, Airbnb is to Mike
Munger an unalloyed good; I found myself yelling at the car radio "but what
about the mob hotels?"

You knew Roberts and Munger were going to like Uber, and, of course, they do.

~~~
w1ntermute
I think that was to be expected, based on the fact that they are both
professed libertarians. There are other episodes where the guest doesn't share
Roberts' ideologies though.

------
dbingham
The problem with this is that the people who get the rides in surge pricing
are not the ones with the most demand, but those with the most resources. It's
an inherently classist system. The surge price, to that rich person coming out
of work to catch a cab to that upscale restaurant for dinner is pennies. But
the surge price to the single mother who desperately needs the cab to get to
school to pick up her kids on time before the school closes and they have to
walk home in the rain with out jackets is breaking the bank.

This does not make things "better for everyone" as the article argues. It only
ensures that the wealthy always have it good, instead of having to compete for
the limited service with everyone else. And it doesn't give the rides to those
who truly need them most.

~~~
dkural
So let's do this for housing as well. Let's assign the best houses by lottery
for a fixed price so that the poor mother of two has a fair chance, as opposed
to a rich person housing their lover on the side.

I think symbolic legislation around feel-good examples like cabs allows
society to maintain the fiction that somehow it's not already completely
capitalistic. It's like a safety valve.

~~~
lotsofmangos
Complaining about pricing of cabs is rich people wanting their bit of
capitalism to feel fair to them.

For many people a cab is something you use when all other transport options
have failed and you need to get somewhere now even if it means eating just
beans on toast for the next week.

~~~
crygin
Yes. I had a friend once who took a cab to work when her bus didn't arrive,
even though it meant she would have a net negative income for that day, so she
wouldn't lose her job.

------
pbreit
The author appears to have little or no grasp of human psychology. People
object to cash being the only tool utilized to increase supply which is
totally reasonable. Why doesn't Uber try =any= other incentives? There's not a
huge difference between "no one getting ice" and "a few rich people getting
ice". That is what people object to and it has nothing to do with politics.

Also, my read of Uber's agreement was that it would only cap surge pricing
during natural disaster-type problems based on some formula for recent surges.

So the economists will only miss studying true price gouging.

~~~
wutbrodo
> There's not a huge difference between "no one getting ice" and "a few rich
> people getting ice".

The idea behind demand pricing is that people who need it the most will be the
most willing to pay; pricing is the only real general mechanism we have to
express need/desire. With Uber, I sometimes take Ubers even though my
destination is straight down a bus line (to avoid waiting at the bus stop, if
the weather is bad, etc). If the price was high enough, I may decide to just
take the bus, which means the Uber is freed up for someone taking a trip
that's less amenable to purely taking transit.

You are of course right that this effect is distorted by the fact that the
wealthier you are, the less valuable money becomes, so you're willing to pay
more for things that are less important. It just seemed like you were being a
little reductive and ignoring the actual intent (and partial result) of demand
pricing.

~~~
vannevar
_...pricing is the only real general mechanism we have to express need
/desire._

There is another one, actually. It's called voting. And it's how taxi
regulations came about in the first place.

~~~
wutbrodo
Wait, what? How does voting determine who gets a taxi? I'm not sure what
jurisdiction you're thinking of, but none of the ones that Uber operates in
holds a referendum every time N people are trying to hail M taxis (where N >
M).

Of course, voting expresses needs and desires, but that's in an entirely
different sense of the word than it's being used in this context. The only way
one could mistake the two is if they read my comment COMPLETELY without
context: without having read the article, the headline, or any of the HN
comments page....unless you're just nitpicking semantics to be contrarian
because you have nothing else to contribute, in which case I'm not interested
in wasting any more of my time.

~~~
vannevar
_Wait, what? How does voting determine who gets a taxi?_

How does it not? Voting represents long term needs and desires, like the
desire for an orderly, reliable public transportation system. Voting
determines whether there are going to be taxis at all. It's not a matter of
semantics. I read the article, the headline, and many of the comments,
including yours. And I don't see any 'context' that supports a flat statement
that pricing is the _only_ way people express their need for transportation,
sorry.

~~~
wutbrodo
As I said in my comment:

"Of course, voting expresses needs and desires, but that's in an entirely
different sense of the word than it's being used in this context....The only
way one could mistake the two is if they read my comment COMPLETELY without
context: without having read the article, the headline, or any of the HN
comments page....unless you're just nitpicking semantics to be contrarian
because you have nothing else to contribute."

I understand that you're trying to be deliberately obtuse here, but in the
small event that you're not, i'll make it blindingly, incredibly, extremely,
amazingly obvious that I'm talking about allocating resources at the time of
purchase, for each potential purchase. I mean jesus,you claim to have read my
comment, and yet you're pretending that I didn't give an explicit example of
what I was talking about and you're continuing to talk about something that
couldn't be more off-topic. Here is the example again, in case you somehow
(???) missed it:

When there is a rainstorm, and there are T taxis, and P people who want a
taxi, and T < P, there is no jurisdiction in the world who holds a referendum
(or has Congress decide) that taxi 1 is assigned to Bob, taxi 2 to Fred, taxi
3 to Alice, etc. To make this ultra-ultra-ultra-clear, so hopefully even you
will understand it, when I said prices are the only mechanism of expressing
needs/desires, I was incredibly ridiculously obviously talking about
"needs/desires of each person for a given product at a given time", since that
is the context of the article, the headline, the HN comments, et al. The fact
that you're pretending not to have understood any of the context of this and
insist that "voting" is an expression of every individual's demand for a
product at every relevant moment in time (which again, is the topic of the
conversation here) is either incredibly disingenuous or mind-blowingly stupid.
The fact that voting can set the value of T beforehand(in the above example)
has NOTHING to do with expressing each individual's need/desire for the taxi
product at every relevant moment of time (which, again, is what the
conversation about and what you were attempting to rebut when you claimed that
voting could take the place of pricing in that regard). I mean really, Jesus
Christ

~~~
vannevar
I understand what you're saying, and I'm not being deliberately obtuse. The
"context of the article, the headline, the HN comments, et al", in case you
missed it, is a _policy_ discussion on whether surge pricing should be
permitted. You narrowed that context down to the moment of getting a taxi; I
deliberately broadened it back out. It was not intended as an insult, only as
a reminder. And I never suggested that "voting could take the place of
pricing", only that it was another way of expressing need or desire in the
long term.

You took for granted that "of course" those people also had the power to
express their desire politically, you just didn't think it was relevant for
the point you were trying to make. I get that. In these discussions, I see a
lot of comments along the lines of "give the consumer choices" and "let the
market decide", putting the focus just as you did on the point of transaction.
But in a democracy the consumer can also exercise choice by voting to limit
the market. I'm making the point that those choices shouldn't be discounted
simply because they weren't made at the time the immediate need presented
itself.

------
josu
>drivers couldn’t be lured out of their warm beds on a cold and needy night.

This is not only about warm beds, it's about risk and reward. A snowstorm
increases the chances of getting into a car crash by many factors, and if the
reward (surge pricing) isn't big enough, drivers won't be willing to risk it.

------
pistle
It creates supply! (It doesn't. It stratifies the haves from the have-nots
efficiently.)

Ice after a storm? Definitely let market forces dictate who keeps insulin cold
and who sips chilly mint julips.

This is the underlying issue with Uber and blind disruption of regulatory
frameworks. Regulatory initiatives often get propelled with moral issues. They
then get calcified and twisted by economic forces.

Disruption of those economic entrenchments is laudable. Avoiding the
acknowledgement of the collateral damage to the moral reasons for existing
regulatory systems creates obstacles to acceptance. Fix that last bit and
market forces can play freely.

~~~
eridius
> _It creates supply! (It doesn 't. It stratifies the haves from the have-nots
> efficiently.)_

Are you disputing that surge pricing increases supply? It should be trivially
obvious that it does.

Your "moral" arguments only apply if you treat Uber as the sole provider of
transportation. If Uber ever starts actually supplanting cabs, your argument
will have some merit, but cab companies have not died off. They have a real
competitor now, which I think is a good thing, and in markets like SF where
the cab companies woefully underserved the population it's now actually
possible to reasonably get a ride. But the cabs still exist, with the same
regulations as before.

If Uber disappeared overnight, the supply of cabs would not increase. The
supply of overall transportation during a storm certainly would not increase.
Given that Uber is an _addition_ to the existing transportation
infrastructure, and not a replacement, what exactly is the justification for
claiming that Uber needs to abide by the same pricing regulation that regular
cab companies obey? There's a good argument for why _safety_ regulations
should apply to Uber, but that doesn't apply to things like pricing.
Regulation of pricing for cab companies is not a natural consequence of the
fact that the cab companies are in the business of transportation; it's a
consequence of the fact that cab companies are seen as providing basic public
infrastructure. Do you view Uber as basic public infrastructure? I don't, and
I don't see how you can make a compelling argument for that position.

------
qq66
Part of me things that this could have been avoided with better messaging and
product design. Instead of calling it "surge pricing," they should have said,
"There are no Ubers available. Your expected wait for an Uber is 110 minutes.
Would you like to offer a bonus to your driver?"

Then you could select a bonus, and drivers could choose to pick you up or not
pick you up based on whether they thought the bonus was enough.

------
rdl
At 8x, I would have considered driving for UberX myself during events
(although probably not NYE, just due to drunk driver risk).

~~~
pbreit
And that is exactly the point.

------
judk
This article misrepresents the facts, and the headline is false in two
different ways. (False claim about surge pricing, unsupported claim about
"economists")

The linked Slate article is more accurate.

Mods, please switch the link to point to the more accurate less blogspammy
Slate source.

------
alexeisadeski3
Price Gouging and the Poor - relevant

[http://bleedingheartlibertarians.com/2013/10/price-
gouging-a...](http://bleedingheartlibertarians.com/2013/10/price-gouging-and-
the-poor/)

~~~
contingencies
The root of the problem is the question of whether social values should have
weight in a situation of limited supply, ie. when taken to its extreme: should
one person be allowed to fuck up the whole planet because they have more
monopoly money, thereby destroying the whole species and all future
generations.

Conventional capitalists will say yes without thinking, then spout whatever
view-confirming stuff they can find (like this URL). Market-libertarians say a
market will evolve to cater for the resource impacted that all people value,
though we haven't actually seen that happen yet (observe the failure of the
carbon credit scheme). Socialists say yes, we should treat one another with
respect because fundamentally we're all in this together.

All views have some credence.

~~~
alexeisadeski3
No, that is not the root of the problem at all.

The root of the problem is that humans have evolved anti-market biases that
served us well when living in tribal communes but which are Pareto inefficient
when living in large billion person societies.

~~~
contingencies
I'd call that a capitalist view. In all its brevity, it exhibits one of the
absolute top fallacies of capitalist thinking when in "have evolved anti-
market biases" you allude to markets being some kind of 'natural' state of
affairs. This falsity was neatly summed up by George Soros: _Classical
economics is based on a false analogy with Newtonian physics_... by which he
means, if you listen to or read any of his numerous interviews, that there is
no 'equilibrium' and self-regulating nature of the market is fundamentally
more a well-spun, oft-repeated tale than a self-evident truth. Further
smackdown can be applied through reading _Debt: The First 5000 Years_ (which
conventional capitalist economists positively hate).

Leaving that aside, you'll note that I alluded to the ugly truth (the world is
inherently limited; ie. there's sure to be critical resource shortages given
current trajectories). From my perspective, any so-called _anti-market bias_
will evolve right about the time we see mass starvations due to stupid short-
sighted environmental management, potable water shortages, etc. - ie. if you
think we've got _anti-market bias_ now ... my wager is that you'll be shocked
at how hollow the notion becomes in the relatively near future.

But the view does have some credence, ie. some forms of decision-making don't
scale. But the obvious answer to that, far from assuming a self-evident path
of decoupling historically present social, environmental, cultural and other
local factors from economic decision-making across an inherently globalized
god-like market that will deliver us from all ills as you imply (clearly, it
won't), is perhaps to evolve newer and more subtle modes of collective
decision-making that include market-like consideration of these factors and
scale more effectively. That would be more like the market-libertarian view.

------
monochr
Price discrimination only matches supply to greatest demand if everyone has
the same income. But I then again this is Bloomberg so I'd be shocked if I saw
any real economics on their website.

------
anateus
Is a (potentially dramatically) smaller set of riders of more evenly
distributed financial means strictly better than more riders that skew richer?

Egalitarian distribution is in some ways a social good (it's a good antidote
to the hedonic treadmill for just one thing). But at what smaller size does
this more equal ridership become strictly worse than a bigger less-equal
ridership?

------
toby
Serious question -- there appear to be common two ways of allocating scarce
resources in situations like this: either through price, or through semi-
random who-gets-through first (see also online ticket sales).

Why do people think the latter is "more fair"? Are there any interesting
alternative methods of allocation that are equally lightweight?

~~~
declan
> there appear to be common two ways of allocating scarce resources in
> situations like this: either through price, or...

But the quantity of the resource (Uber drivers) is not fixed. If you allow a
higher surge price, you get more drivers.

------
tezka
An important yet neglected aspect of surge pricing model is that it fails to
correctly account for decrease in demand. As such, one can probably argue that
fixed prices capture the real market better in the expectation sense.

------
nilsimsa
Perhaps we can get some special surge pricing setup for only the economists.

------
foobarqux
Why are economists who defend surge pricing not pushing for "real" markets
where drivers set prices?

------
scrame
By the same logic, I'm sure that rent control makes economists sad, too.
However, if that didn't exist, NY and SF would just be real estate speculation
ghost towns.

~~~
tptacek
I think that sentiment is pretty far from uncontroversial amongst economists
of all stripes.

Here's a survey paper:

[http://econjwatch.org/articles/rent-control-do-economists-
ag...](http://econjwatch.org/articles/rent-control-do-economists-agree)

Here's what Matthew Yglesias --- hardly a standard-bearer for libertarian
economics --- has to say about it:

[http://beyondchron.org/matthew-yglesias-is-right-the-rent-
is...](http://beyondchron.org/matthew-yglesias-is-right-the-rent-is-too-damn-
high/)

(Yglesias is not an economist but is a decent proxy, since this is kind of his
"beat").

~~~
wutbrodo
For the life of me, I don't understand why we don't replace rent control with
means-tested cash grants if we really care about displacement (and pay for it
out of a Land Value Tax, but that can be an orthogonal issue). The way we have
it now, we're screwing arbitrary renters (including poor ones) that happen to
move between apts more often, to pay arbitrary renters that happen to move
less often (including rich ones). I don't understand how anyone could say it's
good policy with a straight face.

------
epistasis
Technical aside: this page took forever to load, after being laid out. Is that
due to a WebFont issue? Too much stuff dumped into the onload handler? It's
been over 60 seconds of blank, laid out page now and I still can't see the
content.

This is pretty much worst case when it comes to web technologies. Show the
text first, let the extras come in slowly. Showing everything _except_ the
text is pretty horrific.

