Yesterday, Salon published what amounts to a hit piece on Uber. Since I recently spent a weekend in Miami using Uber and taxis to get around, and I’m a libertarian, I noticed several things in the article that need a response.
The article begins by generally disparaging Uber for implementing “surge” pricing during the recent hostage situation in Sydney, Australia. According to the author, Uber should be faulted for not acting in a “civic” manner and provide rides free of charge to people looking to flee the area. To the author, this callous disregard for people’s safety is an example of Uber’s lack of altruism and mindless self-interest. Also, this is why Uber is like Ayn Rand, or something.
Following up this cliche invocation of Rand to accompany any critique of libertarianism (even though I’m not yet sure why libertarianism is being mentioned), the article continues with the example-free assertion that “[t]here was once a time when we might have read of “hero cabdrivers” or “hero bus drivers” placing themselves in harm’s way to rescue their fellow citizens.” For some reason it’s Uber’s fault that there weren’t cabdrivers or bus drivers selflessly hauling people out of the area. Is it also Uber’s fault that people who drive their own car for Uber, or some other service weren’t practicing pure altruism? What about random citizens? Did Uber prevent them from jumping in their own car to help?
Obviously, Uber has nothing to do with that. As much as taxis, buses, and private cars could get into the area, they were doing so. The issue is that because of the crush of demand, there was only so much supply of rides available on public transportation and in taxis. Therefore, to encourage (keep in mind that people who drive for Uber choose their hours) drivers to go to a dangerous area and haul people out, Uber raised prices. If you happened to be a person wanting to get out and couldn’t get a cab, bus, train, or walk, you had an additional option to pay extra to get a seat in someone’s private car. “Surging” prices did nothing to take away any other options people had. Why should Uber be faulted for charging more to create something where without the extra cost, nothing would exist? In other words, imagine Uber didn’t operate in Sydney on the day in question. People would have had to rely on fewer, traditional modes of travel to escape. Fortunately though, Uber did exist and because of it’s ability to entice drivers to the area by raising prices (until people complained), more people were able to get a ride than they otherwise would have. That is a good thing.
Next, the author claims that the above is merely an example of how the poor and middle class will get priced out of needed services. What that attitude is actually saying is that in order to properly value lives, services that increase the available options for rides during a crisis should at least be forced to charge the same as the existing options, or even better, make them available for free. Well, that attitude assumes that everyone will react to a dangerous situation with pure altruism and come rushing to assist their fellow citizens. I don’t know about you, but I’m not willing to risk that assumption. It is far safer to allow available options to materialize during needed times. Granted, doing that may require paying more. The horror!
Following that, I agree with the author that classifying services like Uber as part of the “sharing economy” is inaccurate. True, it’s a business, not just “sharing.” However, Uber is not an “under-regulated taxi company.” Uber is a technology company that provides a platform for people to find a ride and for drivers to find passengers.
At the heart of the article’s next line of argument is the underlying message that people, especially those not in the upper class, are entitled to transportation in other people’s cars at a rate the passenger believes to be affordable enough. Well, there is no “right” to transportation. Instead, businesses and individuals have a right to attract passengers by charging fares people are willing to pay to ride in vehicles the passenger is willing to ride in. If the passenger doesn’t like the available options and public transportation or cabs aren’t available, they are free to walk, bike, call a friend or family member, or ask for the kindness of a stranger.
Expanding the argument to focus on Uber’s hiring and pay practices, the article then asserts that Uber underpays drivers and fails to provide benefits because there are government programs that drivers can take advantage of. My first response is to inquire into taxi driver’s pay and benefits. It appears that taxi drivers would like to be paid more and the vast majority also lack benefits. So why does the author only target Uber?
Nevertheless, even assuming that Uber does as accused, the natural response to that is “OF COURSE!” Companies provide benefits as a means of attracting talented candidates because they know if they don’t, their competitors will, and other things being equal, they’ll lose the potential hire. Well, this general rule supposes that employers are competing for talent. What the lack of benefits and lower wages suggest is that Uber has a glut of people wanting to drive, so they don’t need to offer them because enough people are willing to drive without having higher wages or benefits provided.
Further, since when has it been the role of businesses, that can’t exist without profiting, to provide people who CHOOSE to work there with a wage that is “adequate” (whatever that means) and with benefits? The author seems to think that people are just inherently entitled to have these things given to them. Richly, the author then complains that taxpayers have to provide these entitlements to people other than the companies that they work for. So what you’re saying is you want people to have them except when you have to pay for them? What seems to get missed is that the more a business will have to give its employees, the fewer employees businesses will hire, thus resulting in the government having to provide more.
Next, the article makes a tragic assumption about regulations. Ignoring the realities of public choice theory and regulatory capture, the author states that “[r]egulations were created because they serve a social purpose, ensuring the free and fair exchange of services and resources among all segments of society.” Having actually studied legislation and the forces behind it, that is a naive statement at best. The reality is that frequently, regulations actually function to benefit a well-connected organized industry at the expense of the public and consumers.
And, to then add on another layer of dangerous assumptions about regulations, the article assumes that “we” can somehow “streamline sclerotic city regulators, upgrade taxi fleets and even provide users with fancy apps that make it easier to call a cab.” What the author wants is Uber, only worse.
Essentially, the author holds Uber to an impossible standard. Where taxi companies are excused for mistakes because they are subject to government regulations, Uber is villified. An Uber driver misbehaving is somehow worse than a taxi driver misbehaving just because the taxi company played by the rules. That’s just “because the law says so!” stated a different way.
No, whether an Uber driver or a taxi driver misbehaves is equally bad. Both drivers should be held accountable. If Uber’s system of protecting passengers isn’t working, then Uber should be accountable for that. Same goes for taxi companies. Just because taxis operate under older laws doesn’t mean they are sacrosanct. What is good is that we are seeing alternatives created so that we will actually know which system best accomplishes what passengers want. Competitive approaches will actually benefit us instead of just assuming that what taxi companies use is better because its the law.
Next, the author, and the cite used, mischaracterize Uber’s auto loan referral program. Advertising an additional source for obtaining an auto loan is a far cry from “pushing” drivers into sub-prime loans. Additionally, it’s quite a leap to imply that the mere advertising of the lending option means that relatively many drivers are getting involved with economy-crashing sub-prime loans rather than acquiring auto loans through the numerous other traditional means.
Nonetheless, the author is correct to point out troublesome activities that Uber does engage in regarding passenger information, espionage, and deceptive practices. While I use Uber whenever I can because, in my experience, it is FAR superior to the regular taxi experience that I am forced to use if I want to hire a driver in New Orleans, I am not blindly going to defend Uber. However, the proper way of dealing with bad business practices is for members of the public or the press to make the public aware. If Uber doesn’t respond and their customers or drivers are sufficiently displeased, Uber will eventually pay for their ways in decreased profit or even business failure. Unfortunately, this mechanism isn’t as neatly available to punish taxi companies for engaging in bad behavior because governments support them through existing regulation. Therefore, what should be called for is deregulation of the taxi industry so that the public can hold all companies responsible for bad business practices.
Finally, the article also says “[p]eople who work hard deserve to make a decent living. Society at large deserves access to safe and affordable transportation.” While I won’t repeat myself about the harmful attitude of entitlement, I will add important clarifications to these sentences:
People who work hard deserve to make the living that reflects the value they created or added through their hard work. All hard work is not equal.
Society at large deserves access to transportation options they are willing to pay for. That access does not entitle one person or group of persons (i.e. government) to require another person to provide that access for less than they could get from a voluntary exchange.
While I certainly cannot speak for all libertarians, after reading the article I’m not sure the author has ever really talked with any of us. At a minimum, the author seems to misunderstand what we stand for. Hopefully I have been helpful in clarifying what the “truth” is.