Protests against Uber -- I think we need the competition!

Michael Hiltzik wrote a column about Uber protests.  I usually agree with him..but I'm not sure this time

What the New Yorker magazine misses about the Uber protests - LA Times

I do agree that Uber & Lyft are destroying the taxi paradigm.  However, we do need to keep them in competition with Taxi companies.   Taxi companies are also free to set up their own smartphone app that rates drivers and customers.  I agree that 20% "commission" sounds steep, and I think that competition could drive that down to 10-12%.  On the other hand, drivers already own their car and presumably have no better "opportunity cost"  for the time they are spending.  So getting 80% of the fare is probably a lot better than what a traditional cab driver earns.  I also expect that cab drivers are on the "endangered species list" with self-driving cars on the horizon.  
I think that Uber/Lyft are doing to cab companies what Craigslist & Ebay did to newspaper advertising revenue.  I don't believe they are "employers."  If I make a business buying/selling on Ebay & Craigslist, and I agree to standards and fees charged by those businesses, am I their employee?  If I rent my home using AirBnB and receive payment from them isn't that similar to renting my car-driving service on Uber?  
This is a technological revolution.  I remember when grocery bar-code scanning was fought by the grocery union because they feared loss of jobs (stamping prices on goods) and loss of skill requirements (memorizing prices of unstamped goods).  However now it is fully accepted.  Consumers got much larger selections in stores (easier inventory management) and more accurate check-out.  Mark-ups in grocery stores can be less because of lower expenses.  A win-win for everyone!  Uber & Lyft are doing the same thing.  We shouldn't stop the change.  I believe we can manage the change, and help minimize or mitigate the damage to the displaced workers and businesses. 

Uber drivers ruled employees by California Labor Commission.

A California Labor Commission has ruled that Uber drivers are actually employees rather than self-employed users of a web-based application. Here is Slate Article about it    Here is LA Times Article & Huffington Post Article

The Commission says that this is a decision only applicable to this one situation --but everyone seems to recognize that this could set a precedent for other rulings to follow as well.

There needs to be some standards set for what is 1099 work and what is an in employee/employer relationship.I think the standards need to be applicable across the US -- not just in one state.

I can understand how a Labor Commission might make this determination.  The drivers are dispatched by the application, and receive their money via the Uber application.  Uber has standards for the employees and their cars to comply with in order to drive for them.  However it could be said that Many other businesses are similar, and that this sort of ruling could destroy innovation, entrepreneurship, and venture capital.activities in California--and if it spreads, throughout the country.

I was a newspaper carrier for the Washington Star, an evening paper, in Suburban Washington DC (Silver Spring, MD) in the late 1950s and early 1960s. I was in 7th through 10th grade, and I had to cover a very wide growing rural area on my bicycle and eventually had around 100 customers.   I paid for my newspapers, and then collected payments from my customers.  I worked hard to get new customers, and provided my best service to try to earn good tips.  I felt I was running my own business.  My mom taught me bookkeeping so I could figure out if I made a profit when I had some customers who paid far in advance, and others delinquent. I bought IBM stock with my earnings and that investment's rapid growth helped cover a LOT of my college expenses.  I thought the experience was VERY valuable for me, so I was very sad when government pressure forced the newspaper companies to convert carriers to full-time employees.  All kids lost that opportunity!  I'm afraid that this type of ruling could kill the opportunity we have with Uber & Lyft-type businesses to make our economy more efficient.  It is clear that there is tremendous inefficiency in the taxi business when you see long lines of cabs waiting for a turn for several hours, and then, at other times, when we need a cab, there aren't enough around!  Applications like Uber/Lyft help smooth out that problem.

At the Federal level, the 1099 vs employee situation has never been all that clear either.  When a 1099-type employee files income taxes, there is always risk that the IRS could declare that the job was actually an employer/employee relationship.  So companies and professionals are both taking risk when doing 1099-type work.

If Uber is determined to be an employer, what about "mechanical turk" or other similar job-placement services?  There are hundreds of them!  What about VRBO, AirBnB, and Flipkey?  They have standards for rental properties, and collect and pay owners for renting.  Are owners of AirBnB properties now employees, similar to owners of cars working for Uber?   Why should Uber reimburse a driver for car expenses, and VRBO not reimburse an owner for utilities in a property rental?

I like the idea of having some sort of fair competition involved in all aspects of business.  Too much competition can be bad, cutthroat, and counterproductive, so it does need to have rules to keep it all under control.  So I like business constructs where labor is given opportunity to compete.  1099 work provides that opportunity, and these new internet applications have enabled more of that.  I also see the advantages of having organized labor.   Labor unions have a role to play, but they also need competition to keep them on their toes.  Just like we have laws to prevent monopolies, we should have laws to prevent monopolies in labor.  If every 5 years labor contracts were put out for bid, then unions could bid on those jobs and compete, rather than go on strike.  If one union is more efficient with better trained and productive employees than another it should be selected as the winner!  To implement such a system, Union size would have to be limited.  To be fair, corporation size should also be limited.  The size of our corporations are now so big that stockholders, customers, suppliers and employees have little or no control over it's power.  Government recognizes that those companies are "too large to let fail" --so even if they are terribly mismanaged, Government will prop them up.  Because they are so large, the corporations are free to contribute immense amounts of money to politicians allowing even more control over Government.  I'm afraid now that the US Capitalistic system is in a "death spiral"....

I have the feeling that the Labor Commission made this decision as an attempt to put their "finger in the dike" to stop some of this --but as a result, made a bad decision that will further hurt the country.

Yucca Mountain best solution to nuclear waste problem-By Darrell Issa

I have always been concerned about the nuclear waste storage problem.  I had hoped that President Jimmy Carter, who was a nuclear engineer, would have solved the problem.  But the problem isn't an engineering problem, it is a political problem.  So, we really need a political solution.  We also need some politicians willing to solve it.

I don't always agree with Darrel Issa, our 49th district Congressman.  However his editorial in Sunday's San Diego Union Tribune was absolutely correct!

Yucca Mountain best solution to nuclear waste problem | UTSanDiego.com

Yucca mountain is the correct location for the storage, and we should get working on it ASAP!  3000 Tons of the stuff in California, all stored in relatively unsafe locations really doesn't make sense.

I've also been a fan of nuclear power.  I think we should be using more of it. It is important that the nuclear power plants be properly sited, well designed, carefully constructed, be operated safely, and the waste from those plants be safely and permanently disposed of. I think it is a shame that we aren't going to rebuild San Onofre and redesign or repair the potentially leaky tubes.  The State and Country has too much invested in the site to abandon it.  However, I don't believe any new nuclear power plants should be designed our built until the storage problem is resolved.  Yucca Mountain is the answer!

Repeal of ObamaCare Medical Device Tax

The Union Tribune had an editorial today advocating the repeal of the tax on medical devices.  On rare occasions, the UT editorial staff goes above politics and states a well-researched opinion with a solid foundation.  This, isn't one of those times.  New hope for repeal of Obamacare tax | UTSanDiego.com  The UT complained that the tax was destroying jobs etc.

USA Today's editors the opposite side of the debate in their editorial, however they did publish a rambling opposition opinion by Tom Fogerty that complains that the tax somehow reduces innovation.  But back in 2013, Michael Hiltzik wrote a convincing column that the tax should remain-- I find I usually agree with Michael Hiltzik's opinion. .

First of all, the tax on the devices is only 2.3% which is hardly noticeable on a patient's medical bill. I don't know if there is sales tax added on medical devices but the 2.3% is probably less than 1/3 of the state, county or city sales taxes that would be added.  If there is not sales tax on such devices, then 2.3% is negligible compared to taxes on everything else.  Does the 8% sales tax we pay on electronic gadgets stop innovation?  Second, the 2.3% tax is reduced by the savings a company gets on their income tax, so that the 2.3% is actually around 1.4% after taxes.  The tax isn't charged on eyeglasses, hearing aids or exports.  So over half of the industry's products aren't affected.  Because it isn't charged on exports, it shouldn't affect international trade.  Yes, it is likely that the tax pushes up the price of those devices by the amount of the tax.  But we also know that a very large percentage of the cost of getting a heart stent, hip joint, knee joint etc is the cost of the operation and recovery.  The cost of the device itself is probably less than 25% of the total medical cost.  Also much of the cost is actually paid by the Government!  If a medicare, medicaid, military, or VA patient gets a new hip, the Government pays the tax as part of the overall medical bill.

I recently read the book America's Bitter Pill by Steven Brill.  It is a very long and very detailed description of how the ObamaCare --Affordable Care Act --was put together, and the struggle to get the important website up and running.  The negotiations among the many stakeholders in the process of developing the bill was very complex and very intense.  As part of the plan, it was recognized that by adding all of the new patients through Obamacare, some businesses would reap sudden windfall profits.  Doctors, hospitals, Insurance companies, pharmaceutical companies and medical device companies would get a huge boost in sales and profits when new patients were added.  As part of the process, all of the participants gave up some "share" to make it fair to all.  The medical device companies share was the 2.3% tax.  They are now experiencing that windfall in sales and profits.  However they have spent $150 million over the past 5 years to lobby and make contributions to political campaigns in the hopes of eliminating this tax.  The problem is, if the tax is eliminated then next the other businesses, such as hospitals, will then want to also eliminate their "share."  The Republicans know this, and understand that if that tax were eliminated, it would possibly cripple Obamacare.  That, I believe, is their main goal. They have been working very hard to find some way to make the ACA appear to have failed, so they can more easily kill it.  They want to kill it, not because it doesn't work, but because they don't want credit given to the Democrats or Obama.  The "NIH" or "Not Invented Here" complex.  The Republicans killed the Clinton medical plan, and had many opportunities to present their own.  However they have never proposed any plan that appeared to work.

Concerning the tax effect on innovation.  A device such as an improved hip replacement part would sell just the same with the additional tax as without if the improved device, is, in fact, improved.  How many patients would worry about a 2.3% tax when selecting the best hip replacement joint?

It is revealing that Tom Fogerty and the San Diego Union Tribune editorial board carefully avoided any mention of facts or fairness among the industry stakeholders in Obamacare. Their editorials cited unsubstantiated loss of jobs and innovation as the rationale -- none of which meet the test of facts.  You have to wonder if the editorial was written as quid pro quo for the medical device manufacturers placing ads in the newspaper?