Tuesday, February 10, 2015

Some points on Uber

This is Joseph

A very nice piece on Uber.  It hits both of the issues with Uber, the shift to lower regulation:
But Uber has little incentive to build well-paying, stable opportunities with reasonable hours at salaries of $50,000 a year. Quite the opposite: by creating part-time jobs that are the equivalent of Walmart greeters on wheels, the company can keep wages low (benefits, of course, are out of the question). It’s little wonder why Uber fights regulations that would require it to insure its drivers’ vehicles, conduct background checks, pay fees or limit its workforce: without restraints on the number of passenger-serving cars, and with a very low barrier of entry to the profession, the number of drivers will continue to grow until the market hits a point of saturation, sending costs plummeting in the process. Because Uber has few operating expenses to speak of—the investment is all made up front in developing the app, after which maintenance is minimal—the company enjoys a substantial profit no matter how many drivers flood the market.
And the unexpected consequences of these new changes:
But Uber has no requirement to serve the public. Indeed, there is a strong race, class and age bias as to who can utilize the service. You have to own a smartphone, which has an average cost of more than $500. Uber requires customers to pay with a credit card, cutting off those with no or poor credit. Until recently, the company had no wheelchair-accessible vehicles in Virginia, and continues to lack adequate services for the disabled in many places. 
The real issue with this sort disruption is that regulations may have a place in markets.   Now it isn't the business of any single corporation to deal with the inefficiencies present in the American marketplace.  But it is a matter of public concern if basic services stop being offered to key segments of the market.  We ensure, for example, that everyone has postal service (perhaps with some limitations) because the ability to accept mail is fundamental to being a member of society.

Ironically, Uber is a case where liberals often cross the isle.  Just like conservative libertarians often see subsides for oil companies as a good thing, middle class progressives focus on (the real and amazing) improvements in service that Uber provides to customers.  In a real sense, it is hard to argue that better service for customers and more flexibility for workers is a bad thing.  Because isn't.

But it would be good if we could keep the pieces of the past regulatory regime that created social benefits while helping to reduce the ossification that the industry has suffered.  It's a tricky line to draw.

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