1. Matt is generally in favor of enforcing laws (for example, he reports fake paper license plates). I think there's real harm in companies being able to just ignore laws if they can afford enough lawyers and lobbyists to get away with it.
2. In the specific case of Uber, tremendous harm was done to taxi drivers who had gone into serious debt to get their medallions. That debt was related to the cartel-like nature of the industry, but it wasn't the drivers' fault that the system was so crappy. The drivers were working-class people who had played by the rules and were absolutely run over by people with enough money to break the rules and get away with it.
As an economist by training I found apps like Uber, Lyft, and Airbnb to be really exciting because they let people use their personal property for profit making purposes. That's a great way for people to improve their living without incurring a major expense. There's are good questions to ask about how much of the ride cost the app owner should get vs the driver, but fundamentally this was an exciting example of Creative Destruction taking place in my lifetime.
I remember trying to call taxis to go out on dates in university and how much of a slog that was. The dispatchers always seemed to be rude and wouldn't let you call in advance of when you needed one. Otherwise I was using more expensive services.
Watching the success of these apps reminded me about how capitalism can make life better for everyone.
A few years ago I took a 'law and political economy' class in the same semester as a 'law and economics' class at Harvard Law - both were mostly guest seminars presenting draft work. Of the many, many differences between them, the latter was more laser-focused on empirical analysis and argument, while the former was a kind of disastrous vibes-based fiasco of rhetorical flexing. I came to wonder whether the convened of the LPE course was actually on a quiet mission to expose its intellectual and ideological bankruptcy.
Uber and Lyft have been an INFINITE improvement relative to conditions before their arrival. Easier, better, cheaper, safer, cleaner. Waymo? Better than Uber and Lyft.
I absolutely refuse to accept the framing that 'law and political economy' is inherently left wing. Its just a frame of analysis. In the political economy class I took in college we spent half the course talking about why the USSR sucked at growth.
Ride sharing is good, surge pricing is a good price discovery mechanism, breaking taxi cartels is good.
Uber is still a wanton law breaking enterprise.
Let's say I like upzoning and dense housing. Do I just ignore zoning rules and build high rises and sell or rent them out and dare the municipality to evict residents and bulldoze the high rise? Or do I work to update zoning laws to allow high density housing to be legally built?
Is the taxi cartel a unique evil that justifies law breaking to get a better outcome overall?
I haven't seen anybody mention it here but the best thing about Uber is that you literally know the exact price of a ride! It's fairly insane that we used to pay for taxis without even knowing the cost until the ride was over.
You can believe that taxi cartels are bad, but also believe that the right way to change bad policies isn't to flagrantly break the law and then demand that the law be changed to accommodate your practices. Especially when it wasn't just taxi cartels that Uber was flouting; in all likelihood, it was also employment classification laws.
Declaring that Uber was right because (some of) the laws that it broke were bad ones is a woefully deficient argument. The question is whether a business model of breaking laws you don't like and then demanding that the laws change is one that we should encourage (or tolerate). I think the answer is pretty clearly no...
There was no flagrant law breaking. A taxi medallion was a right to pick up street hails. Black cars were always a phone call away. Uber just made the black car part a lot better and easier so much so that there was little need for street hails.
The normal avenue for challenging a legal interpretation is to appeal it, not to break the law. They didn't do that. They instead brazenly violated it and then went out and lobbied to change it. That's bad.
Many of the people who bought medallions were regular drivers. They put their life savings into purchasing one. It is surprising and disappointing how unsympathetic certain readers are to their plight.
I have noticed that the Uber app now blatantly lies about driver availability; it will say 3 minutes, then spend ten minutes looking for a driver, then tell you to tip in advance to get somebody to drive five miles to your location.
I haven't seen the tip-in-advance thing, but: (1) I agree that in the last few months it seems to be markedly harder to get cars than it used to be (my customer rating has actually trended up very slightly over the same period by one one-hundredth of a point, so it's not that I'm personally being penalized) and (2) recently when I requested a car the app spent several minutes looking for one (notwithstanding that "there are plenty of cars nearby") and then tried to upsell me to a more expensive service level because a car would get there faster if I chose the upgraded service.
I'm also curious whether drivers can now reject trips in a way that they couldn't before because I've had a couple of instances in the last six months or so where the app visibly cycled through several different drivers before one accepted my request.
"We have more competition now, but also a marketplace that’s dominated by a much smaller number of large global companies. And that’s good!"
Is it really good?
Uber's entry into different markets seemed questionable at best (see Richard Gadsden's comments about London) and the antics of Travis Kalanick represented the worst of bro-sexist silicon valley culture. I have grown to accept and on occassion use Uber. As a parent of a 20-something in Los Angeles I do appreciate its availablity and ease to get a safe ride home.
Yes, we can now get rides in places we couldn't before. Yes, people like to have autonomy in setting hours their hours. There maybe more competition because there are more drivers available in more places -- it is a useful service, there was demand and perhaps even a need. However, there is a pretty significant downside. As I see it, App Companies like Uber create a less mobile more stratified job market. Gig work does not offer benefits (retirement plans, health insurance), the risks (car insurance, accidents, wear/tear on vehicles) are borne by the drivers, the wages are low, there is no opportunity for advancement within the company. It is good as a supplemental or second job -- but brutual if you are trying to make a living driving. (Maybe the Taxi Cartels were the same I don't know....) but I do know the work experience and benefits of an Uber driver vs an Uber Corporate Employee is very different and very unequal.
"Gig work does not offer benefits (retirement plans"
As a 1099 employee an uber driver could set up a SEP IRA which is even better than a 401k. It takes 2 min. No match of course but its a very solid option.
Yes, but you have to have spare cash to put into the accounts. The corporate Uber employees (most likely) have a match (free money) and depending on the level access to a money manager to assist them in planning. It is a two-tiered work force -- one with prime benefits and one without out company provided benefits. When you live in a country where retirement benefits and health care are tied to your employment -- this system is not what I would call a "good" marketplace. I know there are benefits to working as an independent contractor for an individual -- but it is also a way for companies to skirt requirements to provide benefits.
Because certain employees have deferred compensation, stock grants, stock options, and probably other things I don't know about. The 401(k) and the match is just one part of some of these people's compensation packages -- and there are different tax consequences and maximization strategies .... so people are given access to money advisors to help them.
"retirement benefits...are tied to your employment"
They aren't and it's dangerous to say they are because then people who could sign up for a SEP IRA don't because they think it's only available for those with "benefits."
You are correct; retirement benefits are not exclusively tied to employment. There are options for self-employed or independent contractors to participate in retirement plans (SEP or traditional IRA). Individuals may also to buy health insurance plans.
My point is that places like Uber, Amazon, Instacart, and other App Companies that rely on independent contractors and/or have high levels of part-time work create a two-tiered workforce by providing generous compensation (retirement plans, health care plans, etc) packages to their "tech" class of employees and then skirt requirements to pay such benefits by having second-tier workforce who are classified as independent contractors.
And in my opinion, having a two-tiered workforce is ultimately destablizing and inherently unfair. I recognize as well there are benefits to be able to drive for Uber on free days or to pick up some extra cash. I also recognize Uber has been life-changing for people who don't have access to a car and/or live in areas without adequate transportation services. And that it even may play a part in reducing deaths from intoxicated driving .... but for the society at large, having a work force that is stuck in gig work is unhealthy. And while the increased competition is positive for the transportation/ride space -- it isn't an unalloyed "that's good!" that Matt declares. There are legitimate downsides to the work environments created by these Apps. Even if you are contributing to your SEP IRA when working as a driver.
"having a work force that is stuck in gig work is unhealthy"
So better they be forced to punch a clock 40 hours a week? Oh, you're new - your shift is 2am to 10am Saturday - Wednesday. That's certainly better than the old system /s
This is a minor self plug but hopefully not a violation of any sort, have you or any of the readers used Empower in DC? Figured I'd ask cause you live in the disctrict and presumably some of the other readers do too. I work as a dev there and was curious about a sort of random sample's opinions if anyone has any strong or particular ones?
Two thoughts:
1. Matt is generally in favor of enforcing laws (for example, he reports fake paper license plates). I think there's real harm in companies being able to just ignore laws if they can afford enough lawyers and lobbyists to get away with it.
2. In the specific case of Uber, tremendous harm was done to taxi drivers who had gone into serious debt to get their medallions. That debt was related to the cartel-like nature of the industry, but it wasn't the drivers' fault that the system was so crappy. The drivers were working-class people who had played by the rules and were absolutely run over by people with enough money to break the rules and get away with it.
Calling them "ride sharing" is just doing PR for the companies. They should be called "ride hailing".
So you defend Gypsy cabs too, I imagine?
As an economist by training I found apps like Uber, Lyft, and Airbnb to be really exciting because they let people use their personal property for profit making purposes. That's a great way for people to improve their living without incurring a major expense. There's are good questions to ask about how much of the ride cost the app owner should get vs the driver, but fundamentally this was an exciting example of Creative Destruction taking place in my lifetime.
I remember trying to call taxis to go out on dates in university and how much of a slog that was. The dispatchers always seemed to be rude and wouldn't let you call in advance of when you needed one. Otherwise I was using more expensive services.
Watching the success of these apps reminded me about how capitalism can make life better for everyone.
A few years ago I took a 'law and political economy' class in the same semester as a 'law and economics' class at Harvard Law - both were mostly guest seminars presenting draft work. Of the many, many differences between them, the latter was more laser-focused on empirical analysis and argument, while the former was a kind of disastrous vibes-based fiasco of rhetorical flexing. I came to wonder whether the convened of the LPE course was actually on a quiet mission to expose its intellectual and ideological bankruptcy.
Uber and Lyft have been an INFINITE improvement relative to conditions before their arrival. Easier, better, cheaper, safer, cleaner. Waymo? Better than Uber and Lyft.
I absolutely refuse to accept the framing that 'law and political economy' is inherently left wing. Its just a frame of analysis. In the political economy class I took in college we spent half the course talking about why the USSR sucked at growth.
This is uncharacteristically weak.
Ride sharing is good, surge pricing is a good price discovery mechanism, breaking taxi cartels is good.
Uber is still a wanton law breaking enterprise.
Let's say I like upzoning and dense housing. Do I just ignore zoning rules and build high rises and sell or rent them out and dare the municipality to evict residents and bulldoze the high rise? Or do I work to update zoning laws to allow high density housing to be legally built?
Is the taxi cartel a unique evil that justifies law breaking to get a better outcome overall?
The rule of law is important.
The economics textbook I pirated (snitches get stitches!) agrees with this.
I haven't seen anybody mention it here but the best thing about Uber is that you literally know the exact price of a ride! It's fairly insane that we used to pay for taxis without even knowing the cost until the ride was over.
You can believe that taxi cartels are bad, but also believe that the right way to change bad policies isn't to flagrantly break the law and then demand that the law be changed to accommodate your practices. Especially when it wasn't just taxi cartels that Uber was flouting; in all likelihood, it was also employment classification laws.
Declaring that Uber was right because (some of) the laws that it broke were bad ones is a woefully deficient argument. The question is whether a business model of breaking laws you don't like and then demanding that the laws change is one that we should encourage (or tolerate). I think the answer is pretty clearly no...
"isn't to flagrantly break the law"
There was no flagrant law breaking. A taxi medallion was a right to pick up street hails. Black cars were always a phone call away. Uber just made the black car part a lot better and easier so much so that there was little need for street hails.
This.
It was a clever workaround! Somehow people seem to conveniently forget that in their desire to defend the literal mafia who controlled things before.
That's precisely their strategy. It's well documented.
https://lawshun.com/article/how-did-uber-break-the-law
That's pretty weak sauce. They challenged a regulator is hardly fragrant law breaking.
The normal avenue for challenging a legal interpretation is to appeal it, not to break the law. They didn't do that. They instead brazenly violated it and then went out and lobbied to change it. That's bad.
You need standing.
You need standing to sue. You can challenge laws and regulations by lobbying. You don’t go out and finagle yourself standing by breaking the law.
Many of the people who bought medallions were regular drivers. They put their life savings into purchasing one. It is surprising and disappointing how unsympathetic certain readers are to their plight.
I have noticed that the Uber app now blatantly lies about driver availability; it will say 3 minutes, then spend ten minutes looking for a driver, then tell you to tip in advance to get somebody to drive five miles to your location.
It never did that before.
The App might be a worse deal for drivers than it used to be so sheer numbers of drivers have decreased, who knows?
I haven't seen the tip-in-advance thing, but: (1) I agree that in the last few months it seems to be markedly harder to get cars than it used to be (my customer rating has actually trended up very slightly over the same period by one one-hundredth of a point, so it's not that I'm personally being penalized) and (2) recently when I requested a car the app spent several minutes looking for one (notwithstanding that "there are plenty of cars nearby") and then tried to upsell me to a more expensive service level because a car would get there faster if I chose the upgraded service.
I'm also curious whether drivers can now reject trips in a way that they couldn't before because I've had a couple of instances in the last six months or so where the app visibly cycled through several different drivers before one accepted my request.
Go Halina!! So proud of you.
"We have more competition now, but also a marketplace that’s dominated by a much smaller number of large global companies. And that’s good!"
Is it really good?
Uber's entry into different markets seemed questionable at best (see Richard Gadsden's comments about London) and the antics of Travis Kalanick represented the worst of bro-sexist silicon valley culture. I have grown to accept and on occassion use Uber. As a parent of a 20-something in Los Angeles I do appreciate its availablity and ease to get a safe ride home.
Yes, we can now get rides in places we couldn't before. Yes, people like to have autonomy in setting hours their hours. There maybe more competition because there are more drivers available in more places -- it is a useful service, there was demand and perhaps even a need. However, there is a pretty significant downside. As I see it, App Companies like Uber create a less mobile more stratified job market. Gig work does not offer benefits (retirement plans, health insurance), the risks (car insurance, accidents, wear/tear on vehicles) are borne by the drivers, the wages are low, there is no opportunity for advancement within the company. It is good as a supplemental or second job -- but brutual if you are trying to make a living driving. (Maybe the Taxi Cartels were the same I don't know....) but I do know the work experience and benefits of an Uber driver vs an Uber Corporate Employee is very different and very unequal.
"Gig work does not offer benefits (retirement plans"
As a 1099 employee an uber driver could set up a SEP IRA which is even better than a 401k. It takes 2 min. No match of course but its a very solid option.
Yes, but you have to have spare cash to put into the accounts. The corporate Uber employees (most likely) have a match (free money) and depending on the level access to a money manager to assist them in planning. It is a two-tiered work force -- one with prime benefits and one without out company provided benefits. When you live in a country where retirement benefits and health care are tied to your employment -- this system is not what I would call a "good" marketplace. I know there are benefits to working as an independent contractor for an individual -- but it is also a way for companies to skirt requirements to provide benefits.
"a money manager to assist them"
Why would they need a money manager for their 401k contributions? You put it in a target dated index fund and never think of it again.
Because certain employees have deferred compensation, stock grants, stock options, and probably other things I don't know about. The 401(k) and the match is just one part of some of these people's compensation packages -- and there are different tax consequences and maximization strategies .... so people are given access to money advisors to help them.
That's not retirement planning - which was your original point:
"retirement benefits...are tied to your employment"
They aren't and it's dangerous to say they are because then people who could sign up for a SEP IRA don't because they think it's only available for those with "benefits."
You are correct; retirement benefits are not exclusively tied to employment. There are options for self-employed or independent contractors to participate in retirement plans (SEP or traditional IRA). Individuals may also to buy health insurance plans.
My point is that places like Uber, Amazon, Instacart, and other App Companies that rely on independent contractors and/or have high levels of part-time work create a two-tiered workforce by providing generous compensation (retirement plans, health care plans, etc) packages to their "tech" class of employees and then skirt requirements to pay such benefits by having second-tier workforce who are classified as independent contractors.
And in my opinion, having a two-tiered workforce is ultimately destablizing and inherently unfair. I recognize as well there are benefits to be able to drive for Uber on free days or to pick up some extra cash. I also recognize Uber has been life-changing for people who don't have access to a car and/or live in areas without adequate transportation services. And that it even may play a part in reducing deaths from intoxicated driving .... but for the society at large, having a work force that is stuck in gig work is unhealthy. And while the increased competition is positive for the transportation/ride space -- it isn't an unalloyed "that's good!" that Matt declares. There are legitimate downsides to the work environments created by these Apps. Even if you are contributing to your SEP IRA when working as a driver.
"having a work force that is stuck in gig work is unhealthy"
So better they be forced to punch a clock 40 hours a week? Oh, you're new - your shift is 2am to 10am Saturday - Wednesday. That's certainly better than the old system /s
This is a minor self plug but hopefully not a violation of any sort, have you or any of the readers used Empower in DC? Figured I'd ask cause you live in the disctrict and presumably some of the other readers do too. I work as a dev there and was curious about a sort of random sample's opinions if anyone has any strong or particular ones?