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November 16, 2017

To Uber or not to Uber? That is Your Question

November 16, 2017
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OK, I’m probably going to regret this but… should I use Uber taxis? I got into a big argument about this in Canada last week, not that uber v taxi driverthere was a uniform position – Ellie the Oxfam Canada campaigner sees Uber as the spawn of the devil, while Ifthia the fund raiser has an Uber-driver Dad. When I randomly asked a class of students, I got a 10:1 vote in favour of Uber.

So I got to reflecting on how we go about deciding whether something like Uber is good or bad, and what it says about how activists approach a new and disruptive technology.

First, let’s be clear, Uber is disruptive and causes some damage. London cabbies who have spent years doing ‘the Knowledge’ suddenly find that a combination of GPS and Uber have made all that effort redundant. Minicab firms are being undercut, potentially triggering a race to the bottom in terms of fares and working hours. Where there are unionised taxi companies (as in some Canadian cities) they risk being undermined. There is understandably a lot of bad feeling out there among drivers, leading to worldwide protests and the occasional brawl or worse.

But there’s more to it than that.

Winners or Losers? Capitalism is all about creative destruction, but activists typically want the creation without the other bit. Faced with a disruptive technology, we are always worried about the people whose livelihoods are being destroyed, reasonably enough, but what about the ones being created? Would we have campaigned for horse and cart drivers and opposed the introduction of the motor car?

What counts? I have talked to dozens of Uber drivers and other cab drivers in several countries, and am struck by the way the conversations generally focus on things other than money. Uber drivers usually praise the flexibility of choosing their hours, the security of knowing who the clients are and (in the vomit-prone UK) knowing that if some drunk throws up in your car, you will not have to frogmarch them to a cashpoint and risk a fight. Instead Uber deducts the cost of cleaning up the car from the vomiter’s credit card and sends them an email with the subject line ‘oops!’. Nice touch. Non Uber drivers tend to focus on the lack of training, alleged security risks etc, rather than the undeniable fact that Uber is undercutting their business.

Producers v Consumers: There are some curious asymmetries here. I think we often tend to focus on producer (dis)satisfaction – are drivers better/worse off. But we pay very little attention to consumers. The contrast for me of taking Ubers and traditional yellow cabs in New York was startling – friendly, interesting chats in Uber cabs v sullen, occasionally hostile Yellow Cab drivers. Plus the Uber drivers knew how to get to my destination, thanks to GPS, whereas Yellow Cab drivers seemed to think that was my responsibility. And of course, Uber is usuauber go homelly a lot cheaper, which brings in a whole swathe of new consumers like students or parents who use it for their kids, safe in the knowledge that they can track their movements.

What happens next? There is a backlash against Uber in many cities, including London. That is probably a good thing. I have a feeling that this will lead to a process of domestication/regulation, rather than prohibition. Already the house-training of Uber has seen the departure of its savage-capitalist founder Travis Kalanick. Competition from ‘ethical uber’ companies like Lyft has forced Uber to introduce tipping for drivers (and in the opposite direction, competition from Uber has forced cab companies to introduce many of its features, such as sending you the name and number plate of your driver in advance). We’ll see a tightening up of Uber’s security checks and other processes. A key question will be whether it is required to treat its drivers as employees – good news from the London courts last week on this.

If Uber is tamed, its fares are bound to rise, but I have no idea by how much – will it lose its competitive edge? Personally, I would probably use it even if it cost the same as other cabs, for a whole host of reasons (interesting, engaged drivers, convenience, and I like watching the swarms of little cars on my phone, driving around on the street map….), but I may be unrepresentative.

One other thing which strikes me. I’ve been surprised how few women Uber drivers I’ve had (I can only think of one, in Washington). You

Anti-Uber protests

Anti-Uber protests

would think that the flexibility in hours and traceability of passengers would work for women, and maybe now Mr Macho has departed, Uber could help turn around its reputation by offering a Pink Uber with women drivers for women passengers, along the lines of the Pink Taxi movement in many cities.

Anyway, I realize that this is a massively one-sided account of the arguments for/against, so do get stuck in in the comments section, and here’s a longer, perhaps more even-handed long read from The Walrus. And now I turn it over to you to comment and vote.

Should I continue to use Uber taxis?

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18 comments

  1. Kia ora,

    Interesting piece, I’m always keen to hear what people think about Uber. Might be good to consider too:

    -the impact Uber is having on public transport (as it’s not strictly Uber vs taxis, but also Uber vs buses & trains). Anecdotally, many of the people I know who use Uber use it instead of taking the bus. With declining numbers of users, what incentives are there for local authorities to improve public transport for those who need it (and can’t afford Uber)?

    -Uber’s business plan – with the ultimate goal being fleets of self-driving cars. As far as I’m aware, this plan hasn’t changed and has some pretty serious implications for workers.

  2. There are a host of issues here needing disambiguation.

    In essence, Uber challenges the state-run licencing system. UBER’s paradigm is that the necessary knowhow can be extracted and transformed into a downloadable best practice, which is available to the unskilled driver for a transactional fee. If the service supply fails, the only recourse is litigation. From the social point of vew, quality assurance through licencing is superior to litigation – it just shifts costs, it does not reduce them. This may work with taxi, where the service is consumed at once (caveat emptor works), but it cannot be extended to plumbers etc. where the error may take years to surface. I dread the aggressive extension of the UBER approach to other services.

    Licencing was provided by the public authority for a flat fee. UBER has an ongoing and natural monopoly over its application and will not be shy of using it to the hilt to monetize its investment (see facebook). The loser is the driver, who’ll be squeezed between an ever ravenous UBER and a client expecting entertainment with the ride.

    It is true that UBER helps in solving the problem of fluctuating demand. In the old system, there was cross-subsidization between peak-time and through-time-users. Eliminate this, and there will be shortage, or outrageous prices at the boottom of demand – or drivers eking out a dismal living at night.

    Uber also challenges the licencing system’s creation of situational rents through the issuance of limited permits (they are traded for hundreds of thou). This is bad news for the holders, who have paid dearly for the licence. This is no different from the local bakery losing out on its locational goodwill when the supermarket nearby puts in an oven. The goodwill was embedded in brick, however, which may be put to alternative uses. A taxi licence cannot be recycled.

    The further issue is speed of UBER’s entry. It does not leave time for the losers to adapt.

    A better solution would have been to have the UBER application freely available. How to deal with natural monopolies in a digital world is a general issue, best considered elsewhere.

  3. We had female Uber driver in San Francisco a couple of weeks ago who enjoyed the flexibility, and we reflected on how few female Uber and tax drivers we had encountered, so I doubt there are that many.

    But gender is not the only equality issue of relevance in the London context where the taxi driver population is less ethnically diverse than the city’s.

    I took part in an interesting Facebook discussion recently that suggested the barriers to entry, such as The Knowledge have probably contributed to this, but I suspect there is more to it than that, which is part reason for the recent backlash against Uber.

    It’s definitely a complicated issue and poses real dilemmas.

    One of my concerns is about the issue of VAT? (See a link to a Murphy blog below for more).

    Will the court case settle that?

    http://www.taxresearch.org.uk/Blog/2017/09/23/why-uber-deserves-to-lose-its-london-licence/?

  4. NEF have voted and they are crowd funding:

    Following Transport for London’s decision to revoke Uber’s licence, the New Economics Foundation is crowdfunding to research and develop the business plan needed to launch a co-operative alternative to Uber.

    This could be a hugely symbolic moment. If we can stand up to Uber in one of its key markets, it will demonstrate the possibility of a digital economy that doesn’t come at the expense of basic rights for workers or put us at the mercy of unaccountable tech giants.

    We’ve called it CabFair and there are more details on our crowdfunding page:

    https://www.crowdfunder.co.uk/faircab

    Contributions are welcome – but social media shares are appreciated too! Sample tweet:
    Help to replace Uber with CabFair, an ethical, driver-owned ride-hailing app. Crowdfund it here: https://www.crowdfunder.co.uk/faircab

    Thanks

  5. Should you use Uber? If there is the option of a Boris bike (temporary bike hire) then I’d promote that, but if the alternative is a taxi then it will also depend on who is paying. If Oxfam are paying I hope you choose the cheapest option, even if you do simultaneously lobby to improve their working conditions.

    I presume you have never had an Uber car arrive and been told by the exploited driver that he would rather you had called a taxi?

  6. I had a conversation with a black cab driver in London once who complained that TFL makes it difficult for drivers by publishing tariffs online (https://tfl.gov.uk/modes/taxis-and-minicabs/taxi-fares/tariffs). In a competitive marketplace, it enables non-TFL providers to set their prices just below those set. No matter how TFL responds, private providers have commercial information that allows them to always slightly undercut. There are relatively easy ways to manage that, but it just struck me as an interesting unintended consequence of trying to improve transparency.

  7. As an individual, I think Uber has lots to recommend it. It’s super-convenient. I can actually afford it, while I can’t afford a black taxi, and so can occasionally take a cab where I’d have taken the bus/tube before. It feels safer than an unfamiliar mini cab company. It’s quick. And using crowd-sourced info on congestion/disruption is demonstrably better than relying on The Knowledge.

    BUT, for London itself, I think Uber is a bit of a disaster, and will remain one, even if it starts – as I surely hope it will be forced to – paying a fair wage to drivers. Those little cars zinging about, Duncan – they’re congestion. They’re fumes – London is choking on transport emissions. They’re (some of) the vehicles that create the road threat that means my children can’t walk around on their own, as I did even as a very small child in South London. Uber doesn’t substitute car rides, in general – it substitutes for the bus. I think we all need to be fighting agains the dominance of motor vehicles and the health damaging pollution they create.

    So, for the moment, it’s no Uber for us. We use an even more cutting edge alternative – http://www.pedalme.co.uk – a start-up that uses specially adapted cargo bikes to whizz passengers around London. Costs about the same as Uber, but pays a living wage to riders; near-zero emissions; and for most central London journeys, quicker than a cab as well. I recommend it!

  8. I generally avoid Uber because of the evilness of the founder and their attitude toward regulation and public good. But I do use ride-hailing services, just trying to avoid Uber. However I use them sparingly. I think there are some important considerations:

    1) Congestion, pollution and public transport. I think the evidence worldwide is pretty clear that such services divert some people from sustainable, pollution-free or congestion-reducing forms of transport. See for example recent paper: https://itspubs.ucdavis.edu/wp-content/themes/ucdavis/pubs/download_pdf.php?id=2752, or here for the blogged form https://nyc.streetsblog.org/2017/02/27/its-settled-uber-is-making-nyc-gridlock-worse/. Given the disastrous levels of pollution in most cities, this is probably the worst effect. But this requires use of public transit/bike to solve rather than a choice between Uber/other ride hailing app/licensed taxi.

    2) Rights and pay of drivers – here its pretty clear that Uber is the worst in terms of pushing things to the lowest common denominator. And the network effects of the size of user base keep drivers working for them despite the better pay to be had elsewhere. Lots of surveys on this:
    http://time.com/money/4849359/lyft-uber-driver-who-makes-more-money/
    https://therideshareguy.com/category/lyft-vs-uber/
    https://www.theverge.com/2017/1/18/14311540/uber-lyft-drivers-satisfaction-survey-rideshare-guy

    3) Effect on long-term investment in public services. I think this is most important but also the least direct. The more privatised services such as Uber and Lyft succeed the more we proceed dopwn a path of normalising the kind of hyper-capitalist world and delegtimise public investment and public services. In a future era of fleets of driverless vehicles taking people to destinations, there is a question about what is the role of the State and of public transit. Do we want non-profit oriented transit solutions? Unfortunately I think our urban transport agencies spend so much time caught up in making the tubes/subways/buses run on schedule they aren’t thinking enough about what the public transport systems of 2030 should look like (sustainable, resilient, people-oriented) and how to get there.

  9. I stopped using Uber before the issues about pay really came to light because because of the ‘fake cars’ problem. It seems there are lots of Uber drivers near you and when you click you find they aren’t near you at all and they are fictitious. Don’t know if that has stopped. But living ‘Sarf’ of the river the main rival was mini cabs. To me I was much happier to sit in a cab where I knew the name of the river than the very dodgy mini cabs around me.

    It has also transformed the social life of my 16 year old’s pals which I am not that happy about. The girls all have Uber accounts of their own which their parents pay for (yes, we do live in a swanky area!) even his boy pals use their parents Uber accounts, so no lifts back at 1am, worries about them getting back when the trains have finished etc. I said no, walk or get the train, but he just bummed rides off his pals and got the reputation of being a sponger, so I give in sometimes. But luckily he is tight like his Dad and even he baulks at taking taxis at every turn even when he isn’t paying!

    It’s convenient for me to take public transport, so I’m not really faced with the dilemma, but I would take Uber over mini cabs any day of the week as they are much worse, but black cabs if possible.

  10. We live in a rapidly changing world. Everyone has to learn to adapt more quickly – both customers and service providers (in this case professional drivers be they black cab or Uber). The next disruptive technology is just round the corner – I predict that all paid drivers will be out of job soon with driverless cars. Will we be decrying the fate of the Uber driver then?

    This is just another example of the truth in the new maxim for our age – if you snooze you lose….

  11. I travel regularly to Brazil where I have a wealth of options for internet [ similar to uber ] based taxi services [ easy taxi ] on my phone that are run by mainly cooperatively owned taxi companies..I am surprised when I don’t find these options when I am in Canada or other European cities — The taxi companies in the north havent taken up new technologies in the same way. I get info and a photo of the driver — can pay by credit card or cash – tip etc. Drivers are great and trustworthy as well. Not sure how Uber is faring in their bigger metropolitan centres.. I am waiting for northern cab companies to catch up?

  12. Should we use iphones? fly when not strictly necessary? Get our morning caffeine kick from starbucks? eat meat? have children? keep more of our salary than stricltly necessary to live? I do most of those. Partly, we’re not saints; Partly, I prefer pushing change through holding power to account – policy not nudging individual behaviour; Partly I want bread and roses (and starbucks and not having to find a local cab number when I’m out). But, I’d never cross a picket line, creativly minimise my tax bill, or buy a ‘blood diamond’ (even if I could afford to). We probably all draw – or fudge – the line in a slightly different place.

  13. One element I think missing so far is that Uber is losing a LOT of money.
    Like more money than any company in history.

    If you only charge passengers 41% of the cost of their journey – then it’s no surprise the service is popular.
    Arguably this is a very successful wealth redistribution from silicon valley investors to consumers and taxi drivers around the world.

    https://ftalphaville.ft.com/2016/12/01/2180647/the-taxi-unicorns-new-clothes/
    https://www.nakedcapitalism.com/2017/06/can-uber-ever-deliver-part-ten-uber-death-watch-begins.html

  14. Absolutely like the idea of the service, but don’t use it, for a number of reasons. There is the long term perspective – there is a widely held belief (particularly among investors) that Uber’s model is low prices now to get market share, and then once the opposition is nicely crushed then to amp up the prices once there is minimal competition. The investment that Uber has required suggests substantial barriers to entry (brand, technology investment), so this might prove easier that you might think. There is also the clear fudge in the grounds for avoiding regulation – it still (I think) claims to be a ride-sharing company not a cab company – this is clearly a convenient semantic that lets them evade regulation. This could be justified on the grounds that a lot of that regulation is unnecessary, but as we’re seeing with AirBNB actually, sometimes it IS necessary, particularly when there are high externalities (such as congestion, air pollution etc), and I’d rather wait a bit before plunging in. My final issue is the proportion of the fare Uber takes for matching drivers and passengers – currently google says its 25% – which seems rather high for an essentially automated service, and adds up to a massive concentration of wealth. If competition fails to bring this down significantly then I think you have an anti-trust issue that regulators should look into.

  15. Thanks for raising this complex, intriguing topic. I suspect that, as with many development issues (if in fact this can be considered a development issue), the experience and perspective may vary from country to country or even from more specific context to context. Here in the USA, when not driving myself I try to use Lyft as opposed to Uber whenever possible because Lyft does seem to be less socially irresponsible (though we’ll see whether the new Uber CEO makes changes in that regard) and because almost all of the drivers who drive for both companies tell me that Lyft treats them better.

    One element that may not pertain to other areas but that has been a factor where I live, in Oakland, California – and on occasion on my visits to other parts of the country – is how lousy some taxi companies (as opposed to their generally fine drivers) have been in terms of service, reliability, etc. when you call for them. Long waits for taxis far beyond the promised arrival time, and even occasional no-shows, as well as surly dispatchers. Uber and Lyft are not perfect in terms of reliability, but generally better than taxi companies. And some of the taxis are simply in lousy or dirty shape.

    But the issue gets further complicated here in that, at least based on my limited data points, it seems that many taxi drivers work full-time at the job, and are often relatively recent immigrants who perhaps can’t afford the spiffier vehicles that the mostly part-time Uber-Lyft drivers operate. In addition, at least in NYC, I’ve been in Uber or Lyft cars that are really just parts of fleets that are in turn rented out to drivers in a way not that different from how some taxi fleets operate. So this whole phenomenon may be squeezing full-time drivers who need the work more in favor of part-timers who may need it less (though let’s not dismiss what even part-time income can mean to otherwise struggling students, retirees, folks who must supplement their full-time non-driving jobs to make ends meet, etc.).

    And then, of course, there’s the price, which it typically about half of what a taxi might cost for most trips, at least in Oakland and the rest of the San Francisco Bay Area. Working in international development, I’m not struggling, but nor am I so flush that such costs are irrelevant to me. And when I can’t take public transport to the airport, for example, I of course prefer to bill the nonprofits and development agencies I work for a a lower charge whenever possible.

    I’ll end on an ambivalent note, in that while I occasionally still use taxis I do use Lyft or (as a second choice) Uber much more, for reasons of price, reliability and quality of cars, even as I recognize the potential social and ethical trade-offs involved. Of course, the debate and trade-offs may become irrelevant a decade from now (if not sooner), as driverless vehicles drive millions of drivers of all sorts out of work.

  16. Uber exploits workers. It calls its drivers “independent contractors” specifically to avoid having to give them benefits (sick leave, vacation pay, and most important, in the US at least, health insurance) and to avoid the cost of insuring the car and driver, shifting all the risk to the driver and rider.

    As for diversity, look at the dismal stats of the workers they do call employees, those at their home office here in San Francisco, especially for women: https://www.theatlantic.com/business/archive/2017/06/uber-holder-diversity/530193/
    Note that their staff is 71% male. It’s also 53% white in a city where non-Latino whites make up only 44% of the population. When you look at the top of the org chart, it gets worse: 72% are white.

    See also “From passenger safety to workplace discrimination, Uber has a long history of complaints from women who felt mistreated by its practices.” https://www.inc.com/salvador-rodriguez/uber-women-timeline.html.

    There’s also public safety in general: 2/3 of traffic citations in downtown San Francisco are issued to Uber and Lyft drivers for driving in transit lanes and bike lanes, failing to yield to pedestrians, and other motor vehicle violations. https://www.washingtonpost.com/news/tripping/wp/2017/09/26/san-francisco-police-say-most-traffic-tickets-go-to-uber-and-lyft-drivers/?utm_term=.9acdf346150e The drivers are not safety trained and pose a real danger to cyclists. http://hoodline.com/2015/04/safety-courses-not-required-for-uber-lyft-others A friend of mine has been hit twice this year by Uber drivers turning without looking, glued to their GPS because they don’t know their way around.

    The city of San Francisco (home to both Uber and Lyft) is investigating these services (again), this time to assess whether they are public nuisances: https://www.reuters.com/article/us-san-francisco-rideservices/san-francisco-investigating-whether-uber-lyft-are-public-nuisances-idUSKBN18W2F3

    Be careful of cherry-picking data. There are numerous reports of the negative impact of these services on public transportation:
    http://fortune.com/2017/10/13/uber-lyft-public-transit-ridership/
    Or take this study, which found that “the joint presence of the two major private ride-hailing services transformed ride-hailing services from a public transportation complement to a public transportation substitute, at least in the studied urban areas” http://digitalcommons.bowdoin.edu/cgi/viewcontent.cgi?article=1012&context=econpapers
    Or this one: “Looking at the trends in New York City, ride-sharing services may appear to be transit foes.” https://www.citylab.com/transportation/2017/02/uber-lyft-transportation-network-companies-effect-on-transit-ridership-new-york-city/517932/

    It would be interesting to have a constructive dialogue about where the better societal investment is: in better public transit, with its positive economic and environmental impacts, or in private ride-hailing services that use thousands of pounds of steel to drive one individual around town?

    Finally, be cautious about enthusiastic endorsements from current Uber drivers. They assume that you will rate them, and if their average rating falls below 4 stars, they’re out of a job. Since you appear to like Uber if you’re using it, why would they risk offending you by telling you about the downside? Instead, talk to former Uber drivers or Uber drivers who also drive a licensed cab (there are lots of them) when they are in their capacity as cab drivers. You can even use one of those cool apps that show little cars whizzing around to hail an actual taxi with a vetted driver and the backing of a company that has insurance to cover your medical costs if the driver gets in an accident. In an Uber, you’re on your own with that hospital bill if you’re in the US.

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