
If Uber works, you might be less happy with your transport options - yummyfajitas
http://marginalrevolution.com/marginalrevolution/2015/10/if-uber-works-you-might-be-especially-unhappy-with-your-transport-options.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+marginalrevolution%2Ffeed+%28Marginal+Revolution%29
======
TeMPOraL
If Uber works, you won't be happy about it, period. Their top management has
constantly demonstrated sociopathic behaviour over the last few years. They
show no respect for law, dignity, privacy and are willing to screw over
journalists and their own drivers alike. _What exactly do you think will
happen if they win?_ Will the company suddenly discover God and become a good
citizen?

Their tech is good, but they are a menace to society.

~~~
imgabe
The top management of every company is sociopathic. Uber just isn't
experienced enough yet to appropriately hide it.

~~~
TeMPOraL
I don't think so. There are many bad and many good companies. Sure, over time,
market pressure may push successful ones towards more and more antisocial
behaviour. But here, such behaviour is an exception. I guess Uber is just far
left on the normal distribution of young companies over evil/good axis.

~~~
imgabe
I don't think it's a matter of good or evil. It's that the decision making
process for most executives is amoral. The question is not "is this good or
evil?", it's "Does this help the company, or harm the company?". Executives
have a duty to do things that help the company and avoid doing things that
harm the company. Sometimes pursuing that leads to decisions that appear
"evil" in the bigger picture, but when many people are depending on you for
their livelihoods, letting the company fail and leaving them unemployed may
also appear evil from that perspective. I doubt it's ever as black and white
as the media likes to paint it.

~~~
TeMPOraL
I will agree that the decision making process for most executives is pretty
amoral - but not completely, they are human beings with conscience, after all.
Of course, as the company gets bigger and its management structures grow both
in people and in layers of abstraction separating them from the bottom line,
decisions become dominated by non-human forces (i.e. incentive structures).

But we're not talking about IBM or Oracle here. We're talking about (what was
just recently) _a taxi startup_.

Choosing their business model to be throwing VC money at lawyers to shield
them from consequences of breaking the law around the world wasn't a decision
made on a shareholder meeting on the top floor of a skyscraper. The pattern of
behaviour, both at the business model level and more personal one stretches
years back and suggests it's not the market pressures, but the company DNA
itself that makes Uber act in the way they do. Keep in mind that not even a
year ago, the media story was "Uber the knight in white armour against the
old, evil goblins of the Taxi Mafia". The industry may in fact be goblins, but
Uber turned out to be Sauron himself.

~~~
imgabe
If you consider it a moral imperative to honor a regulatory monopoly granted
to certain members of an industry, then I guess it would be immoral for Uber
to do what they're doing. Personally, I consider laws and morals to be two
separate things.

~~~
TeMPOraL
Consider that laws, be them right or wrong, are what keeps society together.
Those particular laws seem to be outdated and it's good that someone
challenged them. But there are many ways and motivations to do it, and Uber is
doing it in _a very bad way_ for very bad reasons. It worries me they're so
loved, because the mindset they promote is "just fuck the law". It's not the
example we want every new startup to follow - because as you point out,
companies tend to grow amoral, and the law is the only thing that keeps them
from hurting people for profit.

Also, if you look outside the US, we had Uber-like companies in Europe for
some years. The process of destroying taxi monopoly was way under way here. It
was going slowly, but in a way that didn't threaten the social order.

~~~
imgabe
I think that's backwards. We had society first, then we had laws. Laws exist
to serve society, not the other way around. When a law stops being useful to
society, we get rid of it.

There's absolutely no evidence to suggest that disregarding one law that's
considered unjust implies someone is going to disregard ALL laws. Rosa Parks
didn't immediately decide to start murdering and raping people after she sat
in the front of the bus. Uber does not promote "fuck the law". They promote
"fuck this one particular law that sucks for everybody except a few who
benefit from it".

Maybe we could have had a long, drawn out process where the taxi system was
slowly dismantled over the course of several decades, but who benefits from
that? Not the customers who are stuck paying for overpriced, inefficient taxi
service. Not the many drivers who are able to get flexible part-time work.

~~~
TeMPOraL
> _We had society first, then we had laws. Laws exist to serve society, not
> the other way around._

Laws are extensions of social customs that happen when society grows beyond a
certain size (think few dozen - hundreds of people). The things Uber does
break are against social customs as well.

> _When a law stops being useful to society, we get rid of it._

Yes, but the way we usually do it is not by someone unilaterally deciding they
don't like it and breaking it, while raising enough money to keep its
enforcement at bay.

> _They promote "fuck this one particular law that sucks for everybody except
> a few who benefit from it"._

They break this particular law (and a set of others, like tax laws, insurance
laws, etc., as well as ideas of being decent and not threatening people who
disagree with you - ideas that are sort of important in a civilized society)
because that's the area they're doing business in. But other companies
enlightened by their example will be breaking other laws. Who knows, maybe
next SV-backed startup decides to ignore FDA? Because who cares about those
"clinical trials", they're only slowing progress down. And the next one after
that will ignore biosafety. Would you like to live in that world?

> _Maybe we could have had a long, drawn out process where the taxi system was
> slowly dismantled over the course of several decades, but who benefits from
> that? Not the customers who are stuck paying for overpriced, inefficient
> taxi service. Not the many drivers who are able to get flexible part-time
> work._

We _had_ that in Europe before Uber, and it was going fine. As a customer, I
benefited from local company that offered pay-for-distance drive-by-GPS
service stirring up the taxi market. They had some legal battles, there was a
law adjustment, and the local market improved (the company is still around,
and I'm still their happy customer). Rinse and repeat. That's how you do the
progress of civilization.

~~~
imgabe
Uber doesn't get to unilaterally decide anything. _Customers_ overwhelmingly
decided that they prefer Uber to whatever benefits they had been receiving
from the regulated taxi industry. If they hadn't, Uber would be out of
business and we'd only have taxis.

> _maybe next SV-backed startup decides to ignore FDA? Because who cares about
> those "clinical trials", they're only slowing progress down._

Maybe they will? If a company can reliably produce safe drugs without FDA
trials, why wouldn't we want that? Right now we have expensive drugs that are
very safe. Few people die because they got a drug that was manufactured
incorrectly (presumably, I don't know the actual statistics), but many people
die because they can never afford the drug in the first place. Maybe without
the trials more people would die from bad drugs, but more would live because
they'd have access to cures that were previously out of reach. I don't know,
but it's a question worth asking. There's also the issue of the black market
created by the high prices caused by FDA trials, where drugs are sold from
shady online pharmacies and manufacture under who-knows-what conditions.
Desperate people will take risks like that when they have no options.

If you were poor and contracted some rare disease where the treatment costs
$100,000, but only has a .0001% chance of complications, would you rather die
because you can't afford it, or try a $100 treatment that has a 1% chance of
complications? Right now you don't even get the choice. For whatever reason
we've decided it's better for people to die because they're poor than for them
to die because of a manufacturing / clinical problem with a drug. If that's
what we all think, that's fine, but we should be aware we're making that
choice.

> _As a customer, I benefited from local company that offered pay-for-distance
> drive-by-GPS service stirring up the taxi market. They had some legal
> battles, there was a law adjustment, and the local market improved_

The fact that they had "some legal battles" and the laws was changed, implies
to me that they were also operating in defiance of the law at the beginning.
How is that different from what Uber does? Besides, now you have the taxis,
your preferred company, and Uber as options. With your recommended strategy of
"everybody obey the taxi laws", you would only have the taxis. Aren't you
better off this way?

~~~
TeMPOraL
> _Uber doesn 't get to unilaterally decide anything. Customers overwhelmingly
> decided that they prefer Uber to whatever benefits they had been receiving
> from the regulated taxi industry. If they hadn't, Uber would be out of
> business and we'd only have taxis._

Customers don't know shit. They only see the cool, new, better taxi company.
Ask around, most people don't realize Uber is operating illegally.

Questions you ask about FDA and consequences of prolonged trials are
important. They are being asked. But my point is, you don't want random
companies operating in the light while ignoring medical safety laws - that
will lead only to people getting seriously hurt. You always have an avenue of
operating under the radar; the enforcement around drugs is not _that_ strict,
if you want to ignore safety there are tons of ways to get pretty much any
chemical. Folks over at nootropics communities order various experimental
chemicals from chem labs, and it's probably even mostly legal. But they know
all the dangers and they take full responsibility over what happens.

> _The fact that they had "some legal battles" and the laws was changed,
> implies to me that they were also operating in defiance of the law at the
> beginning. How is that different from what Uber does? Besides, now you have
> the taxis, your preferred company, and Uber as options. With your
> recommended strategy of "everybody obey the taxi laws", you would only have
> the taxis. Aren't you better off this way?_

They didn't break the law. They found a loophole in the licensing process and
exploited it. Taxi companies got angry, the issue went through the legal
system and the law was adjusted in a way that took into account the innovation
and increased efficiency, while also keeping the good parts of the existing
system. Contrast that with Uber, which not just breaks the law, they're being
blatant about it.

~~~
imgabe
It probably varies by city whether Uber is breaking the law. In my city Uber
argued they were considered a limousine service rather than a taxi company,
which falls under different regulations. The difference being that a taxi is
hailed from the street while a limo is not. You could argue that using an app
is the same as hailing, but you could also use your phone to call a limo
service to send a car to you, which is not considered hailing. So, it's a bit
of a technicality.

Customers do know one important thing. Uber is beneficial to them and taxi
regulations are not. The taxi regulations were set up to protect the taxi
companies, not the customers.

I don't think it's likely that any business is going to start flouting
regulations that actually protect customers from something, because harming
your customers is not a good business model (tobacco industry aside).

~~~
TeMPOraL
> _Customers do know one important thing. Uber is beneficial to them and taxi
> regulations are not._

There are a lot of things that are beneficial to some parties while being
destructive to everyone else. Strip-mining is beneficial to those enjoying the
cheap metals. Dumping toxic waste into a river is beneficial for those
upstream, not so much for those downstream.

> _The taxi regulations were set up to protect the taxi companies, not the
> customers._

Some, maybe, and many eventually grew to serve taxi companies more than the
customers. But not all and probably not most, initially. A lot of regulations
and the monopoly taxi companies get exist, so that you:

\- can actually get a ride if you don't live in the city centre

\- can actually get a ride if you're sick, elderly or disabled, in a car
that's equipped to handle you

With Uber you can't get either of the above, because it's unprofitable for the
company _and_ the drivers (actually, a friend is reporting that people are now
lying about their location and then calling to the driver directly to ask them
to start counting the fare on their way; we'll see how that dynamics evolves).

> _I don 't think it's likely that any business is going to start flouting
> regulations that actually protect customers from something, because harming
> your customers is not a good business model (tobacco industry aside)._

Of course they are, and they're constantly doing it. Things like safe
medicine, safe food, safe clothes, etc. were all things we had to fight them
in courts for. If you're the only provider of something your customers need,
you can be as evil like you want to them, and they will still buy from you.

Also, regulations are not usually about company vs. their customers, because
those are not the only parties of the transaction. Regulations also serve to
protect _the rest of society_ from externalities that are being dumped on it
through the transaction. In case of Uber, they have a good value proposition
for customers. But they dump a shit ton of externalities on the rest of us,
including fucking over their drivers, destroying the taxi industry _while not
covering for all the parts they dismantled like catering to elderly and
disabled_ , and eroding the rule of law. Oh, and fucking us all over again
with taxes that should have been paid.

To take your tobacco industry aside, they're not really hurting their
customers. The customers were obviously participants in voluntary trade. And
the families that have to take care of them and bury them when lung cancer
finally ends its work _were not the customers_ , so why would a tobacco
company care about them?

\--

I understand the appeal of Uber. People who like them like them, because
they're breaking the law in their favour. But that's a stupidly childish
attitude. The next company will break law in favour of someone else, and then
you'll be pissed.

~~~
imgabe
> _Some, maybe, and many eventually grew to serve taxi companies more than the
> customers. But not all and probably not most, initially. A lot of
> regulations and the monopoly taxi companies get exist, so that you: \- can
> actually get a ride if you don 't live in the city centre \- can actually
> get a ride if you're sick, elderly or disabled, in a car that's equipped to
> handle you_

Except taxi regulations don't actually accomplish any of these things. It's
well known that if you want to go from Manhattan to Brooklyn you better get in
the cab first before telling the driver that, or they'll drive away. Even
then, they might demand that you get out anyway. If you look like you might
inconvenience the driver, or if you're black, good luck getting them to even
pull over in the first place.

You can complain of course, by sending a message into the black hole of the
taxi regulation bureaucracy, but it's unlikely anything will ever come of it.
With an app that allows immediate feed back and user ratings of each driver,
drivers are far more accountable to providing a satisfying customer experience
than they ever were under the taxi regulations.

> _If you 're the only provider of something your customers need, you can be
> as evil like you want to them, and they will still buy from you._

Yes, like if you've manipulated the local government into making it illegal
for anyone else to provide your service unless they buy a multi-hundred
thousand dollar taxi medallion.

------
mattlutze
Total volume of privately owned vehicles isn't going to dramatically decrease
because of the new slightly more convenient option of private taxis.

The set of privately owned vehicles is going to decrease as a function of
increase in population density and truly alternative transportation options.

It still takes a while to find an Uber driver in lower density areas, and in
both the City and the Suburbs, alternative services like Curb and myTaxi have
been leveling the competitive gap between Uber's microservice taxis and
traditional taxis.

But an Uber-facilitated ride-for-hire is still a taxi ride, albeit one that's
easier to schedule.

Cars will go away when people don't need them. Yes, some people wealthy enough
to afford to take a taxi everywhere are going to get rid of their cars. And it
does constitute further saturating a market with car hiring options.

But folks that don't live within walking distance to daily needs like their
bank, grocery stores, barber, doctor... are going to rack up extra costs
switching to hired cars.

If your town grows 2x or 4x and suddenly there's a grocery store two blocks
down? Less need to get in the car. In those scenarios, eventually yes you're
going to see the cars-per-person go down.

I'm rehashing I suppose, but fleets of subscription-service autonomous cars
will be the next big disruptor. This is where Uber could make that big dent --
when you have a stable cadre of always-on, always-ready people movers,
optimally distributed for service, picking up and dropping people off.

These could replace that second car, or the beater you keep limping along to
get down the highway to work.

~~~
nthj
> But folks that don't live within walking distance to daily needs like their
> bank, grocery stores, barber, doctor... are going to rack up extra costs
> switching to hired cars.

This may be a bit too simple. Technology is solving these problems, too.
Online banking continues to improve. Instacart is expanding to more cities.
People are consulting with doctors over FaceTime for a flat fee. Many other
errands can be batched up into one day a week or month. With all these
improvements combined together, Uber becomes an economic choice for many
people sooner than later. (I have saved ~60% on car costs over the past year
by switching to Uber exclusively. I realize not everyone is in the exact
situation I am, but I'm not riding Uber because I have money to throw away.)

~~~
ghaff
It's certainly fair that Uber + Zipcar + online banking + grocery delivery +
etc. can make a difference in the need for car ownership at the margins. For
example, I know a couple in San Francisco who don't own a car and I think it's
fair to say that they would not have been able to manage this 10 to 20 years
ago--at least without making a lot more compromises.

~~~
mattlutze
Yeah, the linchpin for me there is living in an area with high population
density and a diverse transportation infrastructure.

------
HappyTypist
If ETAs are too high and prices are too expensive, then more people will get
cars again. I don't really see a problem. This is like saying "If email works,
you might be less happy with your communication options" because 'no one will
write letters anymore'.

------
rubidium
>The better Uber gets, the more people can do without cars

Perhaps, but fares would have to drop by about half.

My daily commute is 18-25 minutes each way. Current Uber rate is about $20-25
to get me between home and work (midwest metropolitan city). That works out to
249 * $ 20 * 2=$9960 / year to take Uber currently. True cost to own for my
current vehicle is between $4000-5000/year.

My wife has a car as well and needs one during the day. If Uber became close
to cost effective with owning, I'd drop my car, take Uber, and we could use my
wife's car for all our other transportation needs.

~~~
exDM69
> Perhaps, but fares would have to drop by about half.

But the opposite is going to happen when they stop subsidizing fares. At the
moment, they are ripping off their drivers and still making a loss on each
ride they sell. Their strategy is predatory pricing and that won't go on
forever.

I'd be willing to share rides (with other passengers that is) as long as it
gets me from where I want to my destination with a single hop and pay a
reasonable price for that. At the moment I'm taking two buses to work and I
can beat that with a bicycle (14 km or 8 miles in 40 minutes at best, 70
minutes at worst).

That time should be beatable using smart routing of small vechiles (I have
5-20 min of waiting for my connection typically), using "maximum flow" rather
than "shortest path" algorithm. There is such a bus service available here but
only in the urban areas so it won't take me to work from where I live.

------
amyjess
Well, my boss is travelling for business next month, and one of my coworkers
was trying to talk him into taking Uber over renting a car (don't know whether
or not he succeeded), so I can totally buy that Uber is eating into rental
cars.

Honestly, I'm fine with it. I don't have a car, and the all my transportations
needs are met by a combination of Lyft and public transit (ultimately, it's
cheaper and probably faster to take the train downtown). I'm fine with
everything else going away.

~~~
ghaff
I suppose that UberX specifically drops the price point a bit but my personal
rent a car vs. get a ride calculus for trips doesn't really change with Uber
and I don't think it would for most people. If I'm flying to an airport and
just need to head into a city like San Francisco where a car would just be
parked until my return, I'll get a cab/Uber or, if there's a good option like
BART, public transportation. If I'm going somewhere that's more spread out
like the South Bay and can't easily get between hotel, restaurants, work sites
without a car, I'll typically rent.

------
lemiant
This is a badly reasoned article. If the total stock of vehicles is decreasing
it creates a lot of savings (as the article admits). How are these savings
captured? In cheaper Ubers. The total cost of all the cars on the road is
already being paid for out of our transportation costs. As each vehicle gets
shared between more people the cost to each person goes down. Obviously there
will be an equilibrium between lower prices from fewer vehicles and higher
convenience from having extra capacity. But, using resources more efficiently
won't cause harm. Even if the total vehicle stock were to decrease as much as
the article suggests the price of an uber would drop much faster than the
convenience.

Now this all assumes an efficient market. If Uber were to start abusing its
monopoly powers, that would be something to be legitimately concerned about...

~~~
RockyMcNuts
I'm not sure I agree that Tyler's point is of major significance, but yours
seems even more wrong.

I think Tyler's point is, there is a stock of underutilized cars that gets
converted to Ubers. Hypothetically, I needed a car for work, and I decide to
drive it for Uber on weekends.

In the long run, I decide I don't need a car because Ubers are so available.
The supply of Ubers then goes down, while demand goes up, since I don't have
the option to drive myself.

I don't think there is any mechanism here that would drive the cost of an Uber
ride down. Total transportation cost goes down because the total of Uber plus
self-driven cars go down, but the mix goes to more Uber, less self-driven
cars.

I think as Uber over time ceases to benefit from an 'arb' where it piggy-backs
on sunk-cost cars and personal insurance, the cost of Uber-ing goes up, but
overall transport cost goes down because people don't have to pay for
underutilized cars.

It's possible that over time the mix of cars goes to utilitarian electric
models, and a 'fun' car becomes a specialty item like a high-end sports car is
today, and some people don't love their new options.

But if you believe in free markets, you would have to say that the market has
spoken and arrived at a revealed preference for paying less for transport in a
utilitarian vehicle that is not underutilized.

~~~
mattlutze
It feels like Uber's use case is still quite a middle/upper-middle class urban
thing, and that the market hasn't decided to hand itself over to microservice
taxis just yet.

~~~
ghaff
That's because, when you get right down to it, Ubers are taxis which have
always been primarily a middle/upper-class, urban-ish thing. It increases the
pool of available drivers/cars and it simplifies the whole process, especially
in areas that didn't have a well-established set of taxi services. But the
economics are still basically the economics of hired cars (whether taxis,
limos, or whatever).

------
petra
This discussion doesn't take into account shared ride services (like
uberpool). They're the thing that might enable the shift from private cars,
and without considering them, this discussion don't teach us much.

