Re:The startup economy is fundamentally broken and the virus...
by kerkeslager on Wednesday May 20, 2020 @09:00AM
(#23246326)
Let's be clear on who the rich are here:
1. Executives
2. Venture capitalists
And who "the people" are here:
1. Riders
2. Drivers
Right off the bat, the entire business model is moving money from riders to drivers, while siphoning off a percentage for the rich. So at a fundamental level, the purpose of the company is to use moving money around between the people as a reason to move money from the people to the rich--the exact opposite direction of what you're proposing.
But that's the gross effects, and one could argue that what matters is the net effects. It's possible that while the rich are taking from the people here, these particular rich are taking less than other rich would be. I would argue that "taking less" and "giving" are not the same thing, but I'll at least entertain the point that the net effect might be positive for the people.
To analyze that we have to look at our two "the people" groups separately:
1. Uber's fares are significantly lower in most places than taxis were previously. But we have to realize that this is a temporary anomaly caused by competition with Lyft et al--Uber is using their massive funding to undercut competitors and drive them out of business. If that happens (which is probably will) Uber will have no competitive pressure to keep their prices low. In fact, following incentives, Uber should probably start buying up taxi medallions and then reverse their stance on how those rules should be enforced, so they can pull the ladder up behind them. But even without that, Uber has significant first-to-market advantages that will make it hard for a competitor to arise. Any competitor would have to be global, otherwise Uber will just use their global profits to undercut them on price locally. And a starting a global business has significant technical challenges, which Uber didn't have to deal with because they started locally. There are also legal challenges, which Uber didn't have to deal with up front, since Uber invented loopholes, many of which are now closed. And as a last line of defense, Uber can just keep enough cash on hand to buy out any competitors that arise (similar to Facebook's purchases of Instagram, Giphy, etc.). Whatever benefits Uber provides to riders, are short game: their long game isn't running a rider-focused charity.
2. The data regarding drivers is rife with issues. First off, the results are uneven: some sources say that Uber drivers in New York and San Francisco are making more net profit than they were as taxi drivers, but that effect drops off as you move toward smaller cities and moves well into the negative in more rural areas. And there are good reasons to believe that the benefits of a taxi company are being undervalued in these comparisons: health insurance and mechanic services are priced lower for a taxi service because they have collective leverage: an individual seeking health insurance or a mechanic pays a higher price. And hourly wages don't include the extra time a gig driver has to spend finding parking, getting repairs done, etc., due to not having a taxi garage. These are hours that they work but don't bill for, which aren't included in stats. It would be hard to argue that drivers are better off with the current system. The simplest truth is if you just talk to drivers: the positive thing I hear from drivers is that they don't have cash in their cars so they aren't as likely to get robbed, but most who I've talked to say they have to work more to make the same money. And finally, this is again a temporary concession: Uber is doing their best to replace human drivers with self-driving cars. Even if you disagree with me that net results are worse for drivers, any net benefit you can claim is temporary.
And there are even more fundamental questions: What are the network effects on local economies of taking a percentage of all driver transactions in the world and sending it to San Francisco? Should we be weaving cars into the transportation infrastructure of our cities when bikes and public transit have such clear benefits? Is it worth it to give up your location privacy for a cheap ride?
1. Executives 2. Venture capitalists
And who "the people" are here:
1. Riders 2. Drivers
Right off the bat, the entire business model is moving money from riders to drivers, while siphoning off a percentage for the rich. So at a fundamental level, the purpose of the company is to use moving money around between the people as a reason to move money from the people to the rich--the exact opposite direction of what you're proposing.
But that's the gross effects, and one could argue that what matters is the net effects. It's possible that while the rich are taking from the people here, these particular rich are taking less than other rich would be. I would argue that "taking less" and "giving" are not the same thing, but I'll at least entertain the point that the net effect might be positive for the people.
To analyze that we have to look at our two "the people" groups separately:
1. Uber's fares are significantly lower in most places than taxis were previously. But we have to realize that this is a temporary anomaly caused by competition with Lyft et al--Uber is using their massive funding to undercut competitors and drive them out of business. If that happens (which is probably will) Uber will have no competitive pressure to keep their prices low. In fact, following incentives, Uber should probably start buying up taxi medallions and then reverse their stance on how those rules should be enforced, so they can pull the ladder up behind them. But even without that, Uber has significant first-to-market advantages that will make it hard for a competitor to arise. Any competitor would have to be global, otherwise Uber will just use their global profits to undercut them on price locally. And a starting a global business has significant technical challenges, which Uber didn't have to deal with because they started locally. There are also legal challenges, which Uber didn't have to deal with up front, since Uber invented loopholes, many of which are now closed. And as a last line of defense, Uber can just keep enough cash on hand to buy out any competitors that arise (similar to Facebook's purchases of Instagram, Giphy, etc.). Whatever benefits Uber provides to riders, are short game: their long game isn't running a rider-focused charity.
2. The data regarding drivers is rife with issues. First off, the results are uneven: some sources say that Uber drivers in New York and San Francisco are making more net profit than they were as taxi drivers, but that effect drops off as you move toward smaller cities and moves well into the negative in more rural areas. And there are good reasons to believe that the benefits of a taxi company are being undervalued in these comparisons: health insurance and mechanic services are priced lower for a taxi service because they have collective leverage: an individual seeking health insurance or a mechanic pays a higher price. And hourly wages don't include the extra time a gig driver has to spend finding parking, getting repairs done, etc., due to not having a taxi garage. These are hours that they work but don't bill for, which aren't included in stats. It would be hard to argue that drivers are better off with the current system. The simplest truth is if you just talk to drivers: the positive thing I hear from drivers is that they don't have cash in their cars so they aren't as likely to get robbed, but most who I've talked to say they have to work more to make the same money. And finally, this is again a temporary concession: Uber is doing their best to replace human drivers with self-driving cars. Even if you disagree with me that net results are worse for drivers, any net benefit you can claim is temporary.
And there are even more fundamental questions: What are the network effects on local economies of taking a percentage of all driver transactions in the world and sending it to San Francisco? Should we be weaving cars into the transportation infrastructure of our cities when bikes and public transit have such clear benefits? Is it worth it to give up your location privacy for a cheap ride?