the sharing (on-demand) economy?

[JohnRoberts]

It is interesting to see the recent battles between upstart UBER and established cab drivers. While it may seem hard to imagine that cab drivers are an established power base ready to defend their business, they are (staging traffic jams in international cities etc).

Even the political candidates are working this as a 2016 topic of interest.  Hillary has observed the preferred behavior of these start-up sharing economy companies to treat all workers as independent contractors. This is done to avoid the myriad of government employee related regulations (like withholding taxes) when these workers are considered direct employees of the parent company. Fedex is an example of a larger company that treats their drivers like sub-contractors .  Unions favor employees over contractors because the employees are easier to organize.

An interesting conflict is going on in NYC where the mayor supports the established cab drivers and has put Uber on hold for a one year long traffic study. (Wasn't that a traffic study that blocked the GW Bridge traffic?)

I am enthusiastic about any modern trend that unlocks value, and this (Uber) seems like a way to make some cash on the side for individuals without significant new investment. That said i don't see the drivers making much of a living (similar to cab drivers but probably even less).

The irony is that both sides will be unemployed several years down the road when self-driving cars put them both out of business. 

JR

PS: This sharing or on-deamnd economy will reduce individual car ownership so a lose-lose for car makers. Of course somebody will have to make the driverless cars, but I expect a less profitable business.

 

[mattiasNYC]

Yeah, it's interesting. I suppose the argument against the sharing has to do with insurance and responsibility both literally and figuratively. A cause for regulation of various sectors has been safety as much as anything else, and so one wonders what can or will happen when more consumers experience poor business practices by these sharing entrepreneurs...

 

[pucho812]

I recently took uber to the concert I went to. For starters the service was prompt. This was a little unusual but the moment I put in for uber, the uber driver happened to be right there down the street  so it was less then a minute to pick up.  The driver's car was clean, he was friendly,  and the ride was 4 dollars plus tip. Had it been a  L.A. cab it would have easily been 10 dollars, smelled funny and who knows what else.  While I do understand the concerns the cab drivers have  and so forth I think a little healthy competition is a good thing.  I think large established norms are not always the best way, cost effective or otherwise. If the cabs want to keep their business, then they better do better. There is a reason people are preferring uber over cabs and so forth.    Cabs are in the position that they are in due to how they handled business for so long as there was no other option, now their is.... Healthy competition is the cornerstone of doing business in the U.S.A. While I do find it interesting  that people like Hilliary Clinton are talking about it and picking a side, I think more people are focused on what Donald trump will say next. 

 

[Andy Peters]

Big-city taxi drivers are already independent contractors -- very few NYC cabbies own the (very expensive) medallion.  So, they lease the cars and are responsible for fuel (I don't know about maintenance) and the lease is expensive. The magic of the medallion is that it allows the driver to cruise for fares. Plus the drivers have to pay for the special licensing and the required insurance. 

And that's the rub with Uber ... the typical personal auto insurance policies prohibit the use of a private car for business use.

I suppose that the courts will settle all of this as soon as a passenger in an Uber car dies in an accident.

-a

 

[Krcwell]

I would say, in the cab business, regulation has been more about revenue for the municipality than safety. Medallions cost big bucks, and the municipality usually takes their cut of cab fares. Rarely do I get a feeling of safety in a standard cab; in fact, I stopped taking cabs altogether after I was in a pretty bad accident last year caused by my cab driver. Their customer service is also usually terrible; either that or I am just so unlucky that the credit card machine in nearly every cab I've taken in the city of Chicago is broken, despite city law stating that cabs must accept credit card. Oddly enough, when you say you have no other form of payment and start walking away, the machine magically starts working again...

Every experience I have had in an Uber has been positive, and I've never not felt safe.

I do feel somewhat bad for traditional cab owners and operators as they bought into a government created monopoly and are now seeing their investment becoming worthless. Unfortunately, they bought into a bad/corrupt system, and everything involves risk.

 

[mattiasNYC]

I suppose that the courts will settle all of this as soon as a passenger in an Uber car dies in an accident.

-a

something like that...

 

[JohnRoberts]

I suppose that the courts will settle all of this as soon as a passenger in an Uber car dies in an accident.

-a

Not much wait, a Lyft passenger was killed in an accident in Nov 2014. The company's 1M liability policy is expected to pay.

AFAIK they meet statutory safety requirements, while some of the safety hardware in normal taxi-cabs, like bullet-proof barriers are to protect the cab driver from the passengers.  ???

JR

 

[JohnRoberts]

Every experience I have had in an Uber has been positive, and I've never not felt safe.

I expect they will mature to be as squirrely as regular cabs, at least until they get replaced by self driving cabs. 

I do feel somewhat bad for traditional cab owners and operators as they bought into a government created monopoly and are now seeing their investment becoming worthless. Unfortunately, they bought into a bad/corrupt system, and everything involves risk.

While not intentional (I hope) it is the nature of heavily regulated industries to become barriers to competition. Uber/Lyft have been able to overcome the barrier by being better/cheaper. If i was a cab owner I'd be trying to embrace the same technology that Uber/Lyft are using while ironically the regulations that thwarted competition probably block too much innovation.

Interesting times, but capitalism at work...

JR

 

[dmp]

I've used Uber several times and do like it but I took a ride to and from a brew pub recently. On the way there the driver ran a red light. On the way back, the driver was texting most of the way. I think I would have been safer driving myself, even somewhat intoxicated. They do have a rating system I think - I'm not sure how it works though.

treat all workers as independent contractors. This is done to avoid the myriad of government employee related regulations (like withholding taxes) when these workers are considered direct employees of the parent company.

There is more to the story than this. Most businesses would prefer to treat employees as independent contractors instead of employees to reduce costs. There are strict rules on this issue (i.e. if a business provides tasks / a desk / etc... the worker is an employee). If two companies are competing, and one can treat workers as independent contractors and one must treat workers as employees, the first company is most likely going to be able to out compete the later.

 

[jackies]

I think it's the last frontier of shedding any kind of social responsibility - if you have no assets that are in demand, you are of zero value for the society and may as well drop dead.

 

[Matt Nolan]

I'm not sure this whole argument quite hangs together, but it is interesting...

http://www.theguardian.com/books/2015/jul/17/postcapitalism-end-of-capitalism-begun

 

[JohnRoberts]

I've used Uber several times and do like it but I took a ride to and from a brew pub recently. On the way there the driver ran a red light. On the way back, the driver was texting most of the way. I think I would have been safer driving myself, even somewhat intoxicated. They do have a rating system I think - I'm not sure how it works though.

It seems like you should report that driver for everybody's safety.

treat all workers as independent contractors. This is done to avoid the myriad of government employee related regulations (like withholding taxes) when these workers are considered direct employees of the parent company.

There is more to the story than this. Most businesses would prefer to treat employees as independent contractors instead of employees to reduce costs. There are strict rules on this issue (i.e. if a business provides tasks / a desk / etc... the worker is an employee). If two companies are competing, and one can treat workers as independent contractors and one must treat workers as employees, the first company is most likely going to be able to out compete the later.

I don't see the distinction between "avoiding government regulations" and "reduced costs". That is two sides of the same coin.

While economics rarely gives us concise comparisons I have been following the trajectory of two competing businesses where one predominantly uses independent contractors for local delivery (Fedex) and the other uses unionized employees (UPS).  One would expect Fedex to have a compelling advantage thanks to the lower regulatory overhead structure and  freedom from organized labor, but the end result is that they are both similarly competitive. FWIW in a large corporation the regulatory overhead costs are easier to  absorb, and UPS  (IMO) is exceptional with respect to their management of unionized drivers. Every time they negotiate pay increases they win commensurate productivity gains. The UPS drivers get paid well, but they earn it by working hard and effectively (creating commensurate value).

Philosophically as a small government guy I should favor Fedex, but I own UPS stock (go figure).    8)
=========
Back to the subject of the on-demand economy. A company like Uber and Lyft is trying to build a large company without the typical huge capital investment.  Keeping the drivers as self employed contractors using their own cars, makes that task easier.  The unions and big government types will be in full opposition to this.

The NYC taxi business is curious example of anti-competitive entrenchment. The price of medallions (city issued license) to operate a taxi peaked at about $1M each  in 2014, but are falling fast as the industry gets upended by new competition.  Any bets on what those medallions will be worth in the future? Mayor Deblasio was on TV announcing that he is working to support the medallion owners.  I thought he was a populist, sounds like a crony capitalist to me. (crony socialist?).

Maybe they can sell those medallions to the self driving cars, that would resolve Deblasio's concerns about traffic congestion. and maybe then Chris Rock can get a cab in NYC. I bet Chris Rock can get an Uber or Lyft ride and that's a good thing.

JR

 

[JohnRoberts]

It looks like Mayor Deblasio blinked in his confrontation with Uber... Curiously if he limited Uber that would have unintentionally locked out Lyft giving Uber an advantage.

Interesting times, but ever local service jobs are not safe from competition.

JR

 

[Piedwagtail]

No mention of Airbnb?

Matt, I read that Mason piece in the Guardian roundabout when it was published, there was a comment somewhere then(which I can't find immediately)to effect of:
"this is all well and good but all the time land ownership is monopolized by corporations/landlords/rentiers they will continue to dictate the prices of real survival requirements ie. food, housing ,energy."

Unconditional Basic Income probably suffers from land ownership issues too, unmentioned in this movie:
https://www.youtube.com/watch?v=8zNEG5FXv8I

Robert

 

[Pip]

This is exactly what happened in LA  when the zoning laws and the enforcement behind it starting shutting down supposed project studios because in truth they were renting time and undercutting the commercially zoned areas where rents and tax bases are higher.

There is most definitely a Taxi Union  in NYC http://www.nytwa.org so the independent contractor argument is mute.

 

[sodderboy]

The taxi drivers union was on the short list of large donors to Dante's dad, along with SEIU and real estate developers.

Uber and via are simply using technology to eliminate market inefficiencies, pure and simple.  I like via for simple repetitive trips in the city.

For any midtown-ish travel, I snag a pedicab or walk.  There's nothing like a southbound evening pedi ride through Times Square.  It's like a 70's Hong Kong kung fu movie montage for me.  Simple pleasures!
Mike

 

[JohnRoberts]

Uber and via are simply using technology to eliminate market inefficiencies, pure and simple.  I like via for simple repetitive trips in the city.

Yup... the trend that doesn't seem very optimal from the "gig economy" where customers can get services and/or work accomplished for lower prices by eliminating market inefficiencies and going around established players, is lower pay.  I see this as meshing with the unintended consequence of government regulations driving companies to use more part-time workers. These workers may hold multiple part time jobs to increase their pay. For an unemployed college grad still living at home with hir parents, picking up a few driving/delivery gigs could help support having a ride, but doesn't seem like a good career path.

(note: it was not unusual to hold a part time job in addition to a full time gig (I did back in the '60s with early entry level jobs before I got paid better). 

This can be good for people who see opportunities in the chaos and make something bigger from this, those who settle for low paying menial gigs will end up doing menial gigs for low pay (kind of like it always was).

Interesting times.

JR

 

[Piedwagtail]

Seems like Uber are lying to their users about their driver availability:
http://motherboard.vice.com/read/ubers-phantom-cabs

R