The problem is that drivers feel like their services are worth a lot, and passengers simply don't believe it. The reason why Uber is a success is that they created new demand by dropping prices. Everyone I know, including myself, would never have taken an Uber as frequently as we do if the prices were as high as taxis.
You can't replicate this unless you keep pushing prices down, and this is what Uber is doing.
So, as long as drivers want to keep their prices high, the riders won't come, which will prevent more drivers from entering the co-op, which will mean riders will wait a long time before their drivers arrive, which means they will just go to Uber, etc. The co-op will never reach critical mass that way and will fail.
The article doesn't even mention the massive amounts of driver incentives that they pour back into the drivers. One driver told me that if they worked 2 hrs during rush hour, Uber would guarantee $50/hr. That's $100 for 2 hrs worth of work, which is pretty damn good and makes the rest of the day less stressful about trying to hit your numbers to become profitable.
That's an interesting issue. We see the same thing in real estate -- seller's think their homes are worth way more than anyone will pay for them. I think this is one of the reasons For Sale By Owner (skipping realtor fees) hasn't taken off yet in the US. The FSBO seller will price too high, the home will sit on market for a while and people will think there's something wrong with it so they'll stop considering it entirely. As an anecdote, someone approached us the other day wanting to sell their family home for ~$4M that would realistically fetch about half that based on recent comparable sales in the area. At our current scale we can talk him down from that ledge, but we'd really like that listing process to be self-service and online. Traditional agents will say you need a selling agent there to talk the seller down to a reasonable price but my gut says we could solve this with computers.
Also it isn't really true that Uber lowers prices for riders when they lower prices for drivers. Uber practices active price discrimination to discover the highest price a rider will pay. If you get ten people together on the same street corner and everyone calls for an UberX, you'll get ten different prices.
That would be a huge story and would be much more interesting than the typical Uber hit job. If it were true, I have to imagine that it would have been covered by a journalist intent on attacking Uber.
Care to share some actual evidence?
More importantly, there's simply no way that you would have 10 different prices. Ten people on a corner might be enough to flip that area into surge pricing, but each individual would not get their own personal price.
It's not like this is something which is untestable. If people actually think Uber is discriminating on price between different users, that's trivial to test.
Outside of surge everyone pays a published rate.
Absolutely not. This is why price-discrimination always happens jumping through a weird hoop or other. Imagine the typical example of price discrimination, S/M/L coffee for widely spread prices that don't have much to do with the cost for the amount of coffee with prices that wildly change up and down depending how busy it is, customers would be rightly pissed for getting screwed because they're obviously not getting a fair price. Price differentiation needs some sort of trick to obscure this fact.
Otherwise it's like saying "getting away with this is perfectly fine because capitalism", which is motivated purely by greed, not the possible benefits of a free market.
> it's harder to arrange for 10 cars to arrive at a spot than 1.
I think you forgot to divide by ten, there. Try this statement for a fairer comparison:
to arrange for 10 cars to arrive at 1 spot vs 10 cars at 10 spots
Seems to me that the 10 cars at 1 spot should be cheaper.
The only reason they get away with this price differentiation going the other way is because they are able to hide these prices from the customers. Driving up profits from unequal information availability is also known as "screwing people over", so yeah that'd be a scandal (except for all the HNers that will go "I am genuinely curious why this is so *surprising" to anyone" -- because getting screwed should be a surprise, otherwise you should've gotten mad sooner, like when we said there's no proof of getting screwed)
I'm not even sure if it's positive or negative, given that they subsidize markets (running a loss) sometimes.
Wait really? Has this been written about? That would be very interesting!
1) Owning a car
2) Having insurance and good driving/criminal history records.
3) Willingness to do the work.
Even assuming Uber also has minimum age requirement, that's a very large supply of potential drivers, which is going to prevent wages from rising very high, unless there is artifical pressure such as regulation.
As they transition to a more normal company that needs to make money, can they afford those incentives?
This is wrong for two reasons:
1) In general, overheads don't directly affect how much you choose charge for something. By definition, overheads are fixed (i.e. don't change with the output), so don't affect your marginal decision about whether to drive or not.
2) In the specific case of taxis, prices are set via a combination of lobbying and regulation. Taxi tariffs are not set by the market in response to the market value of medallions.
In summary, you have it backwards. Taxis tariffs aren't high due to the cost of medallions. Medallions are worth a lot because taxi tariffs are high.
For a cab it's similar, except you have labor cost and medallion cost as well. With rates fixed by regulation, the only way to increase profit is to drive more.
That's the reason right there. The rates are totally set by regulation. The number of medallions is similarly set. If medallion rental cost were to go up or down by 20% this wouldn't affect whether the marginal ride would be worthwhile for the driver.
Likewise, there are mental and affordability factors that influence passengers. When I was still going out to downtown clubs, I lived in a close suburb of my mid-sized city. Cabs were regulated by the city, but unregulated outside. That meant that predatory cab companies would charge as much as $50 for a 5 mile ride, and something like $10 for a 4.8 mile ride within the city.
In NYC, historically this has meant that many cabs are kept in motion 24x7, and are concentrated in specific areas in Manhattan to maximize the number of fares.
If they are coming, it's more than 25 years away IMO. Remember 25 years ago, cars weren't super different from today. ABS was first in a production car in 1971. I think the average car on the road now is 11 years old, so there's bound to be unpredictable manually-driven cars still on the road for a long time that any driverless cars would still have to contend with as well.
Self driving cars are pretty much unicorns.
Add to this, that each time a special case comes along, the software can be patched and it won't happen again. Something humans are terrible at - learning from others' mistakes.
You can't blame the driver, they weren't driving. The car manufacturers can't accept blame, as it costs a lot if you have to factor in the cost of a lifetime of support for a maimed infant. Even ignoring the fact that it only works on highways and not normal surface roads, Tesla's "beta" Autopilot feature takes no responsibility because the driver is still supposed to be holding the wheel.
Also as any software developer would tell you, software updates would also be a problem in themselves. If you propose that cars be auto-updated automatically, I wonder how insurance would work when the car is running different software to the software it was originally insured with. Critical saftey systems can't get auto-updated without a lot of testing. What if the auto-update mechanism gets hacked, or maliciously changed by a disgruntled self-driving car employee? What if a legitimate update causes another bug where it maims the elderly now instead of infants? Do they roll back to the infant-maiming software now? I'm being silly but updates on critical safety stuff isn't so simple, especially with the legal ramifications.
I think legal issues will be a problem for self-driving cars, maybe even a larger problem than the actual designing a working self-driving car problem. Someone has to be responsible for inevitable accidents (bugs?). After a century of being able to blame the driver, car companies won't want to change that status quo.
Maybe insurance will decide that they'll cover self-driving cars if they prove themselves to be safe, but we'll see.
(Not that auto-driven cars don't produce less accidents when other human-driven cars behave expectedly.)
But on real roads with questionable maintenance and other unpredictable cars on it, I just can't see it happening unless there's some major change to the roads infrastructure.
I associate self-driving Ubers with unicorns and flying carpets not because of self-driving car technology, but because of the total shift in business model for a future Uber.
Self driving cabs require, at a minimum:
- Owning or leasing capital assets (robot cars)
- Maintenance (from mechanical repair to removing puke and vandalism)
- Provide local infrastructure for them (real estate for storage, maintenance and charging)
- Own liability for all of the various mishaps that will naturally happen. (accidents, human-prompted mischief or criminal acts (Uber drive by shootings, prostitution, narcotics transport, etc)
Luckily unicorn-driven magic carpets don't face this problem.
It can. The problem wasn't that. The problem was that it wasn't able to differentiate the color properly and thought nothing was there. There's more info in Tesla's blog post. And it's not like it is an unsurmountable problem that is leading to accidents everywhere. It was an edge case and will probably be sorted out.
>massively premature to suggest that there's anything like a driverless future
I really think that's a very harsh opinion. And you're asserting this opinion on many intelligent people working towards a difficult solution. Thousands of people have used auto pilot without any problems and many lives were probably saved (consider if they were driving normal cars instead of self driving ones?)
>There's just too many variables on our roads and the stakes are too high.
Nobody is disagreeing with you on that. That's the reason it already took so long. Self driving cars first appeared in 2005 if not earlier . And remember all of self driving is mostly a software problem, which greatly reduced iteration time for new developments unlike electronic or mechanical revisions.
>25 years away IMO
Funny how people predict things. Ray Kurzweil predicts AGI (general Artificial Intelligence) to arrive before the year 2045, 4 years after you say we get self driving cars. I'm not going to argue with you on that number since we probably have different opinions on what constitute self driving cars. Just so you know, I predict we'll have fully self driving cars on the road (with humans in them) in 5 years.
>Remember 25 years ago, cars weren't super different from today
Please tell me you're kidding. 
>Self driving cars are pretty much unicorns
At least those unicorns are achievable and people are trying towards achieving it rather than give up.
>It can. The problem wasn't that. The problem was that it wasn't able to differentiate the color properly and thought nothing was there.
Really? You're arguing that it can avoid a guardrail if it was actually able to tell a guardrail was there?? lol.
>Funny how people predict things. Ray Kurzweil predicts AGI (general Artificial Intelligence) to arrive before the year 2045, 4 years after you say we get self driving cars.
Interesting. Who knows. I've heard people say that it will accelerate exponentially after the first AI is developed as the AI will be able to iterate itself.
>>Remember 25 years ago, cars weren't super different from today
>Please tell me you're kidding.
Sure, they're safer because of improvements in crumple zones/better brakes/steering/etc. I meant the basic technology of an internal combustion engine for power and a human in control. There have been incremental improvements but nothing like an autonomous car.
>>Self driving cars are pretty much unicorns
>At least those unicorns are achievable and people are trying towards achieving it rather than give up.
I think they're technically achievable with dedicated road infrastructure but on normal badly-maintained roads with non-autonomous cars to dodge, they're unicorns. Legal issues will be the biggest hurdle IMO.
In some big cities, Google Maps can provide this, sort of, Uber vs bus fare, for instance.
The corporation isn't some money-sucking black box. It's dispute resolution, software development to match rides efficiently (Uber Pool is tricky), and advertising.
Yes, it also skims money off the top to pay for things like driverless car R&D, but is a small, likely disorganized co-op going to be efficient enough at all the above to take advantage of that margin?
That said, the reality is irrelevant here. Jacobin is the kind of magazine where economic reality is treated as a suggestion, to be discarded as is convenient.
Could things work differently? Absolutely. Are they going to work differently because some hack gets off fantasizing about how in abstract theory, the services Uber performs could be better performed by a co-op that pays workers more? No.
All the co-ops I've encountered or dealt with fall into one of three categories:
* Non-functional, incapable of making decisions or delivering value.
* Functional but completely unscalable. May depend on bizarro local economic conditions or be in one of the few cities where people are willing to pay 30% extra for pizza because it's a co-op.
* Function, scalable, and does not operate much like a co-op at the level of service delivery. REI falls into this category.
Uber works because it's functional, scalable, and reliable. You can go to almost any major city in the US, boot up your Uber app, and reasonably expect to get decent service. It is, abstractly, possible for a co-op to do that. You and Jacobin are completely, totally, 100% correct on this point. Things could be different and better for the people who Jacobin has decided matter.
In fact, we all live in a framework where such a thing is possible! If only someone was brave enough to put their labor where their mouth is. Maybe the propagandists at Jacobin could... nah. They wouldn't go for that. They much prefer theory.
No true scot? The definition of a co-op is a group organized to meet economic or social desires through jointly owned business. What does this have to do with any particular approach to service delivery? You appear to be defining cooperatives as some unworkable theoretical concept and then any actual successful example of implementation is an exception. Convenient!
Vanguard also falls into this category but is absolutely a cooperative.
If it's structured like a co-op and exhibits none of the benefits of a co-op, what's been gained? I'm saying that co-ops generally have to sacrifice at least one of: structure, functionality, scalability.
So yes, REI does deliver the benefits of a co-op to its owners - high-quality goods at a lower price than they would be unable otherwise be able to get. This is the entire point of a consumer co-op. Workers can also be member-owners of the co-op, and frequently are, but the benefits are geared towards getting better discounts on the goods REI sells. This is in addition to the implicit benefits of being an owner of the company and having a say in its direction.
At least you've cut out Wall Street and co.
The founder and family made Forbes' billionaire list.
and a few others.
The issue is though how does one get drivers to switch from a reliable (though possibly imperfect, inefficient) source of regular income with a well-known brand to an upstart at a large enough scale to pose a direct threat to Uber, thereby forcing them to change their model or go out of business?
I'm living in LA right now and I typically wait 4 min for a car (longest has been 10 min). My last ride cost $4.44. That's less than a Big Mac! ($5.04 average price in the US). I can't imagine a new service being able to beat that from it's inception.
The other issue is that if drivers are allowed drive for Uber and Swift there could be a free rider dynamic: drivers get the benefit of belonging to Swifts' co-op but still get to be part of Uber's network. Sure Uber's service would suffer, but it would be a huge drain on Swift's resources and undercut their model (and reason of existing) from the driver's perspective.
Incrementally, starting to use the second for a small percent and then gradually more
It seems like a few lines later, it says:
By turning to co-op apps, drivers can retain the flexibility of working under a model like Uber’s while also having a say in their own wages and conditions.
If the workers have a "say" in their own wages that means increasing prices, unconditionally. And who is going to provide the assurances that drivers won't lose money if they drop prices. When Uber drops prices, they guarantee wages as per:
How will this happen in a co-op? Spoiler alert: it won't.
What is the "bloat" of Uber that this taxi co-op would avoid. Uber's primary spending is on marketing and developer salaries. Without marketing, how do you expect anyone to use the co-op app?
Ultimately, I think it comes down to drivers (and leftists) not valuing developers. You're not going to build and maintain an app which competes with Uber if you're not paying for the "bloat" of developers.
Those are the two ingredients of capitalism: competition and the profit motive. Once you take away one of them, things start breaking down. And that's why not-for-profits are notorious for being wastefully run and being taken advantage of by their senior management.
As someone who works for a company with high hiring standards and correspondingly high pay, I have mixed feelings about this. It seems like there should be some jobs that are easy to get without much training, and taxi driver is a good candidate for this. If we build fences around every kind of job, life gets even harder for the unemployed.
So I'm not automatically on the side of workers with more "skin in the game." I'd need a stronger argument about why we should support them rather than part-time drivers.
Economic rents are harmful to the economy and keep new labor entrants out as you have pointed out making it harder for young people or others to get a job.
A way to complete with Uber and existing taxi services is to provide greener vehicles such as electric or hybrid (the new yellow taxi medallion cabs in NYC are all hybrid). Just as people are willing to pay more for organic food they probably be willing to pay for cleaner vehicles.
Taxi service was often discriminatory in NYC and other cities: taxi drivers often refuse to pick up black passengers assuming they won't pay once they reach their destination and I've had gay friends openly complain about how SF cab drivers used to throw them out on Pride or after a PDA with their significant other. This was the status quo for decades because of the barriers to entry of municipal taxi services' monopoly. They never had to anything about it since their was no competition and if you didn't like it, you probably shouldn't take a cab.
Besides Uber's barriers to entry are it's scale (low prices and reliable service) and brand than de facto monopoly status (which I assume is what you're talking about since you mostly talk about competition beside summing up your link). The fact that a co-op could potentially "disrupt Uber" is evidence of that.
I live in NYC and if you look at my other posts to this article, you'll see I made the point that before Uber/Lyft the medallions went for $1.2 million.
Still, Uber/Lyft are way, way too expensive compared with other cities in USA and this is from the "legacy pricing" from the pre-Uber/Lyft days. Also, the "surge" pricing is really annoying and makes it Uber/Lyft far more expensive than taxis (they have the Arro app). I've had surge pricing on a Saturday morning! Hardly rush hour when it is raining! (I didn't use it).
>> Besides Uber's barriers to entry are it's scale (low prices and reliable service)
Uber does not have low prices in NYC. In other cities I've used it they are lower, eps. Uber-pool when it is available. Don't take my word for it. Check the Uber prices of NYC vs. Chicago or other large cities. NYC is about twice as expensive.
Make NYC as cheap as new mexico to live in, and you will see new mexico prices.
Also there are many elderly on a fixed income that can't drive or negotiate mass transit easier.
It's similar to how programmers often look at consulting rates, but don't factor in non-billable hours.
And also at the expense of the customers.
This is exactly the argument for minimum wage: by raising prices and limiting # of employed (which could mean more people at fewer hours for the same total pay, OR fewer people at more hours for the same total pay), there is more funding for the overall labor pool, instead of more worker-hours sharing a smaller pie of funding.
That's only a relevant question if the policy being proposed is actually likely to achieve a transfer from highly-paid professionals to the unemployed. Which is certainly not obvious, let alone consensual.
I don't know how many people that is. It would be interesting to find out.
In NYC, because of the legacy taxi medallion system which artificially limited the number of medallions to 13,000 (resulting in a medallion market value of $1.2 million now down to $700,000 after Uber/Lyft), taxi fares are still about twice that of many US cities. The artificial limit of medallions created artificial scarcity which resulted in "economic rents" thus ultimately requiring passengers to pay much higher fares that then went to the medallion owners.
One example would be to lower gas usage by using electric vehicles or hybrid cars (NYC Yellow Taxis are converting to hybrids) which not only lowers fuel costs but lower air pollution. They could make a financial deal with the city or state showing the lower health care costs from lower air pollution and have the cars financed.
This is a magazine for American Leftists, so they're really quite clear what they want: they want valuable services rendered to people with profits shared among the workers, not the gatekeepers to an arbitrary app. More than creating wealth, they want that wealth to be owned by the workers. To quote from the piece:
> This doesn’t mean drivers are better off working for a traditional taxi company. While Uber’s burdensome cost-shifting has come to define Uberization, the company merely digitized the taxicab industry’s already exploitative practices. The taxi medallion system, which requires drivers to pay their cab’s medallion owner at the start of each shift, deserved to be “disrupted.” But Uber’s employees face serious costs and risks nonetheless.
> The possibilities don’t have to be so restricted however. Ride-share drivers usually already own their vehicles, so in theory they could enter the ride-share marketplace themselves. By ditching Uber’s predatory practices for a cooperative model that uses the same technology, driver-owned apps could democratize the ride-sharing marketplace, fulfilling the initial promise of the so-called sharing economy.
Uber is really a place where the leftist case makes the most sense, because the means of production is already owned by the workers and are in effect paying a portion of their profits for the right to take part in an economy.
2) The high liquidity of drivers would imply a functioning market (not to say that it's perfect). The most obvious solution for drivers who are unhappy with the pay would be to get a different driving job, right?
3) The core issue is that the barrier of entry to driving for Uber is very low, increasing labor competition. This also keeps the price of a ride low. The wage of the driver is the agreement between the rider and the driver for the service, Uber is acting as a mediator. There is nothing in this article that comes close to proving that Uber is not fulfilling it's role as a mediator.
4) It will be interesting to see if the app works, but the strategy seems flawed. The constrained variable are the riders; there are already plenty of options. Paying drivers more doesn't seem to be a very compelling reason for riders to choose a different service.
2) Yes, to a company that is owned by the drivers and gives them back the maximal share of the revenue, taking into account the (minimal) operating costs.
3) To call Uber a "mediator" when both the customer and the driver have no say in the cost of the fare is laughable. Uber unilaterally sets the price, and if you don't like it, you're shit out of luck.
4) Like the point I made in 1), Uber takes a much larger cut than what is truly necessary. Even if the hypothetical ridesharing co-op had the exact same fares as Uber, a much larger proportion of the fare goes to the driver. And I would disagree that riders are the only constrained variable - there is almost zero switching cost between different ridesharing services for not only the rider but the driver as well. If only Uber and the ridesharing co-op are the only options for ridesharing in a given city, and they have the exact same fares for customers, but the co-op pays the drivers better than Uber, any driver would logically switch to the co-op since they would be paid more, and the customers would quickly switch to using the co-op's app as well, since the waiting times would be shorter compared to Uber.
That said the fact it could happen it not really related to if it should happen - as you say it's unclear how much extra money would actually flow to drivers as potentially Uber is operating on thin margins.
Just as in buying computers, buying food, education, airplane fares, consumers want lower prices which is a good thing. In the case of taxis, that means the elderly who often need them because they can no longer drive and are on a fixed income can more readily afford them (surely a leftist notion).
There is no disagreement that "economic rents" are harmful to the economy, giving people artificially high profits (see the Wikipedia entry).
Are you saying that a politically left magazine want to harm the economy through economic rents instead of helping it through wealth creation? Who would be for that?
Is that easy to understand?
Assuming that Uber is profitable (this is not clear) then costs to riders could be lowered and drivers could be paid more, simply by splitting the profits going to Uber between these two ends. That's what a co-op is designed to do.
I didn't downvote you, but if I had it would have been because you applied the standard arguments about Uber/Lyft without considering the specific argument here: that co-op systems can benefit both the consumer and worker.
This is the comment I was responding to.
If the drivers provide a services at sufficient lower costs than Uber (something easy to do in NYC at least) then they won't have to worry about Uber.
Peter Thiel would like to have a word with you. We're supposed to be building monopolies that no natural market force can topple.
For Netflix, sure.
People spend a considerable amount of money on Uber/Lyft etc at least in NYC where I live, thus many would respond to a competitor with a 20% to 30% discount or more. This is possible in NYC because the rates are so much higher than other cities.
But there are a lot of people who need taxi like services that are price sensitive. Think of elderly who aren't able to drive or use mass transit so well and are on a fixed income.
In Jacobin's world, the only person providing value here is the driver. In the world the rest of us inhabit, things like the star-rating system and the dispatch system are valuable too.
So, that they can be sued or lose lots of profits to a competitor if they don't have a fully safe system.
Large US airlines have a huge incentive to ensure that flights are safe. It is not only that they are afraid of losing market share if there is a large accident (and of course the loss of reputation for loss of life) but the average payout per killed passenger is $4.5 million.
In Germany, Lufthansa, the main carrier of Germany, owned a discount carrier where the pilot deliberately drove the plane into the ground, killing all on board. But in Germany the liability is limited to something like $75,000 per passenger instead of the $4.5 million in the US.
Which makes me more interested in flying with US carriers than, say, German ones, But also Uber/Lyft rather than "co ops."
This is real value provided. An especially important to women and the elderly who are most at risk from a problem driver.
More generally, I'd push back a little: socialism strives to have the workers own the business (broadly, the economy) but there is of course still management and a need for QA, R&D,etc.
I like to point to Vanguard as an example of socialism that works well while people don't even realize it. The people who own Vanguard mutual funds and ETFs are collectively those who own Vanguard and control its direction. There is still a lot more than the service of a mutual fund that Vanguard provides, to the extent we don't realize its inverted corporate structure is a kind of cooperative. And all the time, the owners' financial interests come first in providing low-cost exposure to equity markets.
Why hasn't the broad mutual fund market engaged in a race to cut fees with each other? In fact it has been Vanguard's fees which have usually pushed others' lower.
That's not an abstract hypothesis. That's what happened to the Yellow Cab Co-op in SF.
Vanguard is a decent example, but it's in a unique market where information is shared very widely and customers are extremely sensitive to price. And nothing other than price relative to returns.
As for my personal knowledge at implementing this: I don't know how it can be done since I'm a scientist and not a business analytics person. But I know that a cooperative could compete well against the taxi cab industry. Perhaps not against Uber which broke lots of regulations to become an entrenched force in the industry.
Disengaging, I don't like to discuss with those who attack others while ignoring the evidence brought forward.
Not really, they are paying a portion of their profits for access to the connections to drivers that Uber provides. They have every right to participate in the ride-share market outside of uber.
Through it's app, Uber is providing a known brand (as McDonalds does for burgers). People are welcome to open their own burger shops but when traveling, anywhere there is a McDonald's, I know it is safe.
Uber also provides the app technology which does cost money to maintain.
Like in the case of McDonald's, any driver is able to open up their own shop apart from Uber.
Even in medicine, it is much harder for foreign doctors to work in the US than in Israel, a country with lots of competent medicine.
It really applies to any group that uses politics, regulation, to give profits beyond those in a healthy, efficient market.
In the case of taxis, it is helpful to eliminate economic rents so that fares are more affordable.
Instead of using economic rents to ensure that drivers get undeserved income which works against wealth creation, the workers should focus on eliminating economic rents that creates higher living costs, chief among these are the use of zoning density restrictions to create artificial land scarcity which results in higher rents.
Since a significant portion of one's salary goes towards renting an apartment or house or paying for an overly expensive mortgage, then eliminating the onerous zoning laws will go much farther towards improving the economy.
It is because of zoning density restrictions that housing is so expensive in SF, NYC, Boston, LA, SD, and other coastal cities.
The wiki article you supply gives many examples of this from the FAA, to the NRC, to the Fed regulating investment banks, ....
The economic rents frequently are political laws passed to create special licensing requirements to create politically induced barriers to entry for people wishing to have a job. The economic rents also apply to other politically induced scarcities such as limitations on zoning density to create housing scarcity or taxi medallions to create taxi scarcity.
Regarding labor, guilds or labor unions, or the American Medical Association that makes it more difficult for foreign doctors to work here than Israel makes it for foreign doctors to work there. And so on.
Aren't the fares proportional to how many drivers are available? If the fares are too low, don't drive. If enough people stop driving, the fare will go up.
I just don't get it, it's not a right to drive for Uber and be paid a certain amount. If a driver leased a Prius to drive for Uber and saw the rates cut, even still, there's no contract with Uber guaranteeing a certain rate. We've even seen cases where they've exited a market altogether. Uber can disappear from a market tomorrow and those drivers will need to find someone else to drive for or get a different job. Likewise a driver can cut their hours or walk away with zero notice.
If Uber cuts their rates and still ends up with enough drivers, perhaps the only thing you could say is that they were overpaying.
There's only one thing the article touches on which seems worth investigating, drivers which get "stuck" driving more and more to try make their minimum required income. The anecdote of the driver doing 19 hours in a day. First, the driver app should not let you log 19 hours in a day. Second, if Uber is somehow "trapping" drivers to work more for less, I'm not sure I really understand the problem, let alone the solution, but it's something worth exploring, e.g. if there were false promises by Uber.
If that is true then Uber isn't under paying their drivers at all. They are paying them at a slightly above average rate. You can easily look up the average salary for a Taxi / Limo driver in the US on the BLS website and you will find that the national mean hourly wage for this job is $12.53. They also have data by state.
Now, a couple years ago Uber was running adds on Facebook to recruit drivers in average cost of living areas that said things like "Make $70,000 a year driving for Uber". Those were clearly misleading if not outright false when the average taxi driver makes $27k. Perhaps that is where the narrative that they are underpaid comes from.
The beer money group could be significant: retirees, students, people who want extreme flexibility because they have another primary job or responsibility. Half of all drivers is a significant block.
On the other hand, careerists legitimately face an impossible situation, since so much of their life is in the hands of one company that's constantly tinkering with its economics.
The common policy response across similar situations seems to demand every single job must work as a 40 per week career with benefits, killing any pure beer money jobs.
I don't know whether that's a wise policy solution or not. Maybe the benefits do outweigh the costs. But it's certainly not pareto optimal. Restrictive policy responses hurt one group of people in an attempt to protect others.
I'd feel better about such policies if proponents showed awareness of who they were hurting. Like if proponents said, "ok, honestly, we're going to hurt retirees with this jobs protection measure, but we think that's ok, because we value single moms over retirees."
Though if you get that far, you could just reduce it to a wealth transfer. Let Uber do what it wants, then tax retirees and give the money to single moms. Similar effect. One group loses, one group benefits.
Though of course then you'd stop and ask why you're taxing people supplementing a fixed income. Maybe you'd rather tax some other group first.
And that line of analysis is how you end up supporting deregulation combined with aggressively progressive taxation where the benefits are targeted to vulnerable groups.
That's the definition of Pareto optimality
When I've heard others commit similar abuses, they use "pareto optimal [change]" or "pareto efficient [change]" as synonyms for "pareto improvement." ie, moving towards pareto optimality. ie, a change that makes someone better and doesn't hurt anyone.
But you're right, "pareto improvement" is really the proper term there.
I say "incorrectly" because "some regulation R makes some group worse off" (as you were saying) does not imply "all reg changes would make someone worse off" (Pareto optimality).
If at least rates increased as you logged more miles and 5-star reviews that would be something. But it's quite obvious that Uber drivers are fresh meat for the machine. Not only that, but Uber is investing heavily in ways to eliminate drivers altogether. Literally everything about this screams do it for fun, for pocket cash, this is not a career.
It's still better to be under paid, than make no money. Some people simply can't afford to take the morale high ground. It's societies job to ensure that employers don't take advantage for people in unfortunate positions.
While I understand the reasoning and appeal behind Uber, I still think it has a weird business idea. Very few people seem to want to discus the fact that ordinary taxi drivers aren't exactly well paid either. This is despite the fact that their in an artificially limited market, with little or no competition. Uber is an important part in increasing service, which is apparently extremely poor in some countries. In terms of pricing, the salaries don't appear to leave much room for lowering the cost.
I see they say it's not the same as what some other article claimed, but unless Uber was promising drivers that this still isn't underpaying by any definition is it?
I bet this creates a larger defensive moat than most competitors assume.
Uber is a supply/demand driven model (eg success w surge pricing) and even modest additional supply generates lower rates.
Lacking that same supply efficiency in full time driver platforms will keep their prices higher and without a significant price advantage consumers will stay with the known brands.
Not to mention the end game which is going to drop human drivers from the equation all together.
Right... except that the brand is what creates the demand side of the market, the data is what makes the platform efficient and the IP provides strong defense against 3rd parties like this one.
Just to point out this is a thought-piece in a very socialist political magazine - and while I love Bernie as much as the next guy, this piece is a political folly and not really grounded in any business or technical fact.
The difference is that I have 0 trust in a random person offering me a ride. I trust the Uber brand though.
Heck, I can even see it in the distant future, turnkey Uber-like businesses, you get your choice of franchise to buy into. You supply the cash for the cars, they supply you an app and a little branding.
Saying "Uber's playing a long game by waiting for driverless cars and THEN..." just seems totally implausible.
It’s clear they’re using the standard startup strategy: Getting a monopoly in a new market or by replacing an existing market, then abusing that.
Uber, Apple and Google have all taken the approach that they will rely on their own autonomous systems retrofitted onto existing cars or potentially build new cars instead of relying on anything the existing car companies make, otherwise it makes no sense for any of them to be investing billions of dollars into research if they think they can just go to Ford/GM/Tesla/etc. in 2020 and buy enough cars to launch a fleet service.
What scares me is that there is absolutely precedence for companies to act like this, and I can even imagine legal arguments about the hardware requiring certain oversight and maintenance to allow self-drive to be enabled. Kind of like John Deere exerting control over their tractors but even worse.
So to your point, in such a world, no one could go out and buy a self-driving car, and certainly not a fleet of them, and then just try to independently run this service. If you want the car to drive you from Point A to Point B you would be signing a TOS saying it was for personal use, yadda yadda, and all the APIs would be completely locked down like a walled garden preventing people from taking the self-driving platform and building on top of it. This would all be in the name of safety and limiting liability, of course....
Potentially "jailbreaking" and building your own fleet/app would be an option, not sure how legal but if tesla issues a critical security update and the vulnerability gets published by the researcher and the the jailbroken ridesharing provider you are using hasn't updated yet/can't because it will break their jailbreak in the short term, you are exposed
"When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.
You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.
In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are."
So I think this a great example where you can add your Tesla to Tesla's own on demand service, but if you don't like the rates Tesla offers, and you want to put it in rotation with someone else's service, you likely run afoul of the ToS and risk bricking your car.
This probably helps explain why so many different companies, including Uber, are racing to develop their own self driving platforms. Because it won't be a bolt on feature by a supplier that anyone can build on, it will be a highly controlled and locked down service funneling the profits to the platform owners.
What protects Uber is the network effect. Even if I had a million self driving cars right now, nobody has my app installed, and I don't have an optimized pricing and logistics set up yet.
And if you have your own fleet of self driving cars, why would you build the whole setup yourself? Why not just rent them to Uber?
I doubt very much customers will have much brand loyalty to Uber. There is very little differentiation of the actual service.
Uber must be prepared for a world with self driving cars. But if their entire model requires self-driving cars in order to work, if they are simply burning cash every year until then, then I think they will burn-out long before self driving is a reality.
I doubt this is true, at least if you're talking about all-weather driving. Not even the optimistic researchers I've chatted with are that optimistic; this timeframe would require all-weather driving to be basically solid at the research level by 2018 or so, which is not totally impossible but unlikely. Maybe if it's limited to Uber Phoenix, though.
At least, Uber ATC is in Pittsburgh, where it can become more grounded in reality by potholes, haphazard construction, thin windy two-way roads without markings or lanes, and unexpected acute precipitation.
Self driving cars that work 90% of the day means Uber gets 90% of potential profits, and continues to use human drivers for the other 10% "surge" time period.
For fans of a technology, that's a familiar optimism. I was young once, 20 years ago, I felt that way about fusion myself, hah!
Ultimately, it's impossible to satisfy all parties, particularly drivers. They want to be paid more, but most reports say Uber is not profitable. A co-op cannot rely on VC money to finance its expenses, so to pay drivers more they'd either have to charge more than Uber or avoid most of the expenses Uber incurs. I don't see either scenario leading to a competitive option: either you're the expensive option, or you offer a subpar experience.
BTW, other day I was talking to a black guy friend of mine. He was complaining that the taxis didn't even stopped for him. More than one he had to ask as policeman to stop a taxi for him. As a funny guy, he says that he asks the policeman: "Would you please stop a taxi for me. I'm not able to do it, maybe they are thinking I'm black!".
Disclaimer: I work for Uber.
Is it worth it trying to compete with them?
Will this lead to increased drivers profit ?
Not really. Because the value that they provide is massively accesible,and with the advent of autonomous cars, fully replaceable.
Bad times for taxi drivers are coming quickly, and there's not much anyone can do about it...
If a cooperative treats their employees better and with higher wages then why should the best, most active drivers stick with Uber?
P. S. I have no affiliation with either Arcade City or Christopher David. Read about this effort here: http://www.vocativ.com/327333/a-world-without-uber-dispatche...
arcade city is a great example of unintended consequences -- instead of safer rides, austin's regulations led to consumers choosing a much riskier ridesharing option (no GPS tracking, no recourse when something goes wrong, no background checks at all, etc)
As I understand, they had an experimental phone application. They took down support for it, and are building a next version.
Uber/Lyft claimed that since their services began, DWIs in Austin had dropped by 23%. They have since risen about 7%.
Seems like Mothers Against Drunk Driving needs to get involved with Austin politics so that Uber and Lyft can again operate there. How many deaths will have to happen before Austin decides to not be more stringent than NYC, Boston, LA, Chicago, ....
Except when all this happens on an own blockchain where people can invest in the co-op via tokens on that blockchain?
Maybe this could even be combined with a prediction market which decides how to counteract attacks (on prices) from Uber?!
In fact it's a uber clever way to tax (sic!) workers.
I believe uber will be disrupted, either by nations (goverment must be ultra blind to allow burden its citizens by foreign corporation paying no corp taxes (EU case) plus having most of the cost in different country (all but US case) or by people themselves.
Driving around cars around all day is a silly job, ideally a job that should not exist in 5 years from now. We'd better discuss basic income instead of co-op taxi companies.
If you a mange to do it, of course.
And to answer your question: everyone wants the benefits of economic efficiency but none of the costs. It's much easier to say "low skilled labor should be paid more" rather than "let's increase the value of labor". Also, an easy counter argument is that Uber is engaging in rent seeking against it's drivers. I don't think this has very much merit given the liquidity of driving labor.