Getting Over Getting Over Uber: Tim O'Reilly Does the Math

Susan Crawford yesterday published at Medium a critique of Uber and similar ride-coordinating services, in the form of a kind of paean to the American taxicab. Though she didn't start out with negative feelings for Uber, Crawford writes, her sentiment has swung away from objections to taxis (such as that they seek unfair protection from competition) to an extravagant defense, though it comes with a long list of "shoulds": "[Cities] should be focusing on making their taxi services better," she writes. "Taxis should be more accessible to everyone. Taxi fares should be low, predictable, and uniform. Taxi geographies should be wide. Taxis should be clean, fuel-efficient, driven by trustworthy, well-trained drivers, and available for frictionless electronic hailing." Even with the flaws that list implies, Crawford's description of how well taxis work now is more positive than I've found to be true: "Their rates are regulated and set; their pricing is transparent and can be double-checked (just look at the meter, which is itself regularly tested); they look like a uniform fleet; they are subject to very strict licensing and safety requirements. With rare exceptions, they don’t employ surge/congestion pricing schemes."

Tim O'Reilly has written a response, calling Crawford's arguments "puzzling and unconvincing." O'Reilly dissects some of the math behind the business of driving others for money, as it applies to both conventional taxi drivers and "gig economy" drivers, as well as some of the qualitative effects of ride-dispatch services; surely some readers will take issue with his figures and examples, but they provide a plausible case for doubting Crawford's rosy picture of taxis and dark view of modern app-dispatched rides. O'Reilly writes: "Regulation is not a good in itself. It is a means of achieving public goods. And so far, it is pretty clear that Uber and Lyft (and in particular, the competition between them) are improving the transportation options in American cities. Regulators should be using the opportunity to revisit the old way of doing things rather than trying to make the new conform to outdated rules that no longer serve their purpose."

Comments

The fuss over Uber

[Anonymous Coward]

The Left and the governments (a.k.a. also The Left), strongly believe in supply management as the best way to control the economy and ensure a steady income to the undeserving (a.k.a. also The Left).

Now, these new online services like Uber and AirBNB totally avoid the mechanisms of supply management, simply by ignoring them.

The governments and the undeserving are really thrown off their game as they lose control and the population can freely access similar services at non-inflated prices.

Re: The fuss over Uber

[khallow]

Uber drivers are on strike right NOW.

Then they aren't Uber drivers. And as has been noted before, they aren't really employees of Uber in the first place.

Did you know that?

Nope, and I don't see a reason to care.

Rather than the nonsense of a "strike", the simple solution here is just not to use Uber's service - which would be a boycott. Uber does have competitors and a shift of business from Uber to these other competitors would hurt them. That's more effective than a strike.

"I did not start off being anti-Uber."

[russotto]

...but then a taxi lobbyist dropped a big bag of Benjamins on my desk, and what's a blogger to do?

You know who does that already... Uber

[SuperKendall]

Taxis should be more accessible to everyone. Taxi fares should be low, predictable, and uniform. Taxi geographies should be wide. Taxis should be clean, fuel-efficient, driven by trustworthy, well-trained drivers, and available for frictionless electronic hailing.

Congratulations, you just described Uber, and now understand why it exists.

The only thing limiting availability of Uber in fact, is governments and taxi cartels you seek to improve... if taxis could be any of those things, why aren't they already since they have had decades longer to do so? If you think the "city" can make the taxis into those things, look around at the barley kept -up infrastructure and crumbling streets and answer the hard question of how they could do that one thing well when so many other things have been done poorly.

If wishes were horses I wouldn't need taxis OR Uber, but they aren't so I do

Re:You know who does that already... Uber

[preaction]

Surge pricing is exactly the opposite of low, predictable, and uniform.

Re:You know who does that already... Uber

[martin-boundary]

Markets are fundamentally unfair. They discriminate against those who can afford to pay a little less. (That is why one percenters love capitalism, because they know that as long as there's a market for some good, *they* can outbid everyone else if they badly want to have it - preference for the rich when they feel like it).

A low cost uniformly priced taxi service is much more fair to the population than Uber. The cost of the service should only cover the actual operating costs with a small overhead. This maximizes affordability for all. And access should not be on a market bidding system, it should be exclusively on a first click first served basis.

Re:My auto insurance policy renewal & Uber

[Frosty Piss]

Last May when my auto insurance policy renewed there were a few pages enclosed. Adding / detracting language from the previous policy. While not stating Uber or Lyft by name it was clear that the insurance company was writing them completely out of the picture.

And this is a good point. While Uber claims to have bazillions to insure payments in case of accidents, much of the liability will be negated when the driver's actual insurance company denies your claim for injury. And as well, your own insurence company will bail out as well.

Uber / Lift is an unregulated taxi service staffed by drivers that have met a non-existent bar for entry.

Myself? I always hire a towncar.

Re:I don't care about Uber

[x0ra]

then stfu, don't read the article, and go get a life. it's not as if you had a gun pointed to your head making you read this stuff.

Re:Said it before

[Moridineas]

Wait, you think most taxi drivers are employees with full benefits? Not so at all. So are the evil taxi companies just selfishly "externalizing" all their costs?

See, e.g.:

http://www.washingtonpost.com/news/wonkblog/wp/2014/04/16/new-york-court-guts-a-groundbreaking-health-care-fund-that-would-have-changed-taxi-drivers-lives/

I took two Ubers a month ago in Minneapolis. The first driver was a young woman, an undergrad, studying computer science. She drives Uber about 15-20 hours a week to help cover college and living expenses. At 20 hours a week, she would not be eligible for full benefits anywhere.

The second driver was a retired lawyer who drives Uber whenever he feels like it, to keep active and talk to people (we shared some law stories, so I'm quite sure he was telling the truth about being a lawyer--not that *I'm* a lawyer!). He's retired and doesn't drive enough hours--or regularly enough--that any business in the country would consider him an employee.

Small sample size, but pretty interesting.

Uber drivers do not work set hours, have no obligation to Uber (other than completing a drive if they agree to start one), do not give two weeks notice when they quit, can work for the competition any time (simultaneously even!), etc. It baffles me that anyone would consider them employees.

"Regulation is not a good in itself."

[phantomfive]

"Regulation is not a good in itself."

I wish more people realized that. How many times have you seen people arguing, one side saying, "Regulation is bad!" and the other "Regulation is good!" It's one of the dumbest arguments ever, because both sides are wrong.

Some regulation is good, and some regulation is bad. If you want to know which is which, you need to actually look at the regulation itself.

Re:"Regulation is not a good in itself."

[RogueyWon]

I agree with your first line. Your second, however, just demonstrates that you haven't actually read Atlas Shrugged. That's not uncommon; I can't, off the top of my head, think of another book which more people claim to have read without ever having done so. I read it a couple of years ago - I make a point, once a year, of reading something completely outside of my usual comfort zone, and Alas Shrugged got its turn.

Altas Shrugged has a number of passages on the "proper" role of the state, which include: national security, upholding law and order, protecting property rights and acting as the final enforcement body for contracts. This is why, for instance, the pirate character never attacks military ships (because they are a legitimate use of state power).

Atlas Shrugged is a more complex book than is generally understood, but that complexity tends to get lost in any kind of discussion of it. It has many weaknesses, in particular:

- It has a black-and-white world view which admits very few shades of gray.
- It ignores or brushes over a number of issues which don't sit neatly with the author's world-view (such as the role of international trade and warfare).
- Its dialogue can, at times, be incredibly stilted.
- The 100+ page speech by John Galt near the end of the book is an absolute slog to read and completely breaks the narrative flow just as the plot is reaching its climax (and is also unnecessary as it just repeats points that have already been made).
- Its obsession with the Gold Standard has aged badly.
- Every single passage relating to romance and sex is completely cringeworthy.

That said, it also has some real strengths:

- It is in some respects (though not all), remarkably prophetic, particularly in terms of the uncanny accuracy with which it predicts Bolivarian socialism in Central and South America and the current Eurozone crisis (albeit with the timing out by a couple of decades).
- It's also pretty damned prophetic about General Motors and Detroit (albeit via their lightly-fictionalised incarnations).
- It can be remarkably visually evocative, with some amazingly good descriptive passages about its cityscapes and railways.
- It has a few brilliant passages, particularly towards the end of the novel (and especially the final flight over New York as the lights go out) which stand alongside the best dystopian fiction.
- Stilted dialogue aside, it has some very strongly drawn characters.

Making the book the core of your personal philosophy is a bad idea. It's written from a pretty extreme political position and is occasionally pretty detached from reality. But nor is it some kind of horrific atrocity. Unfortunately, knee-jerk condemnation of it on the basis of little actual knowledge of it has become a fairly popular form of virtue signalling.

Re:You know how much you will pay before you

[AK Marc]

And what stops you from taking a taxi to get home if Uber is too costly?

Re:Strange Arguments

[felrom]

Taxi's can't offer guaranteed service at certain locations and times precisely because they do not use the author's dreaded "surge/congestion pricing schemes."

When your professional society conference lets out at the same time that the local sportsball team's game gets over, and everyone is headed downtown to eat, the taxi company runs out of cabs because they're all cheap and everyone takes one. Uber surges the price to match the market demand, more drivers come out, and everyone who wants a ride can get one.

Under the pure cartel taxi system, if you need to get to the hospital because your wife called and she's gone into labor early, too bad! All the cabs are taken because they're so cheap and the demand is so high. Under Uber's system, the price rises to match the demand and you can pay for a ride.

It's no different than when people decry "price gauging" after a natural disaster. Go ahead and keep gas at pre-disaster prices, and 100% of it will sell out. Then, if you MUST have it, say to run your generator to power grandma's oxygen machine, too bad! It was all sold for $2/gal to a bunch of people who panicked and drank it all up even though they really didn't need it. If the gas stations had surged pricing to match demand, they'd be more likely to have some left, and while it would be very expensive, at least it would be available for people who really needed it, instead of being consumed by people who merely panic-purchased because it was still cheap.

Uber's surge pricing system is a virtue of their business model, not a vice.

Re:In the US only

[fluffernutter]

Once again, Uber is not following the laws so they have the advantage over taxi's whether they provide a good service or not. Why do people have such a hard time understanding this? I could have paid 50% less for my house too if the house builder didn't have to follow regulations that keep me and my family safe in the end.

Re: Gig Economy

[cyber-vandal]

And my point is that they won't be able to see that. Our great-grandparents fought and suffered to get rid of that kind of exploitation and our society improved immensely as a result. These idiots are desperate to bring it back because they don't understand that consumer capitalism needs people with disposable income.

The one big Uber advantage taxis will never have

[Applehu Akbar]

Is that each user JOINS a ride sharing service. Every time a conventional cabbie picks up a fare, he rolls the dice: will this ride be the one that leaves his riddled, bloody body in an alley? Giving rides to people who have subscribed to your service is a huge security advantage.

Re:In the US only

[fluffernutter]

If you want to go live without the government, then by all means move to a country without a real viable government. Enjoy the corruption, and how corrupt you must become in order not to get stepped on. Myself, I like the government keeping a check on things because it protects quality of life for me and my family and I will stay here thanks.

They don't set their rates

[rsilvergun]

and if they turn down too many fairs Uber fires them. Also Uber is dependent on them for their ongoing business needs. Uber doesn't have a business without their labor. That makes them employees. Not contractors.