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. 

If you like Uber, you would've loved the jitney - Los Angeles Times

This op-ed by Matthew Mitchell and Michael Farren in the Sunday Los Angeles Times shows that maybe history does repeat itself.  If you like Uber, you would've loved the jitney - Los Angeles Times:  It sounds like the resistance that ride-sharing services Uber, Lyft and Sidecar apps are getting is very similar to the resistance that the Jitney services received 100 years ago that killed off those services. --They were regulated out of existence!

Like the Jitney services, these ride-sharing services are popular with the users.  However the competition for those businesses used the government and regulation to kill off the competition so they could continue to have a monopoly.

The main opposition to Uber, Lyft and Sidecar is obviously coming from the cab companies who have a very tight relationship with most of the governing bodies.  They make huge donations to politicians who support them and spend heavy on lobbying.  They also arrange to pay extra taxes to the City, so eventually the cities depend upon that revenue.  Regulation of cab companies is also somewhat corrupt.  For example it appears that cabs get higher rates for pick-ups at airports, even though airport pickups are probably the easiest for them to do, since they have lots of drop-offs and pickups at the same spot.  The enlightened regulators also go out of their way to restrict competition at the airport to allow the cab companies to gouge even more.  It seems to me that regulators would try to force the companies to discount rates at airports so cab companies would work harder to provide service to less popular areas --but political graft and city profit generally cloud their judgment.



I sympathize with cab drivers situation.  Their job is difficult, lonely and frustrating.  However, because of monopoly pricing, their companies have not adopted the latest technology.  Because of that,  in general cabs and drivers are not employed in an optimally efficient manner.  Some cabbies can wait in cab lines for hours for a fare. A terrible waste of labor and equipment!   It appears that in just a few years, we may have "driverless cabs" so the issue may be moot.  Cab driver jobs may be phased out and allow that large section of the labor force to be redeployed to jobs that are more productive for society.  Of course that may require more education, training and opportunities.

Uber faces backlash from new Luddites | UTSanDiego.com

I've never been a big fan of Cab companies or City regulation of cab companies.  I do believe there were efficiencies in having large cab companies, because they could position cabs at optimum locations for customers, and could install and operate good, modern centralized dispatch centers.  Times and technology have changed that.   Yes, some regulation is necessary to protect the public from unsafe cabs and fare gouging.  Current City regulation seems to go further, however and involves granting a monopoly to cab companies, and allowing them to exercise monopoly pricing.  With no competition, they can always argue for higher prices.  The City usually profits from the arrangement by collecting significant "franchise fees" from the cab company operators.  This franchise fee is just another form of tax on the public, since the public must pay the fee as it is passed on to them in the fares.

What has been the result of this arrangement?  It appears that there are far too many cabs and cab drivers on the street -- at least in some locations.  Drivers can spend hours waiting in line for an opportunity to get a fare.  It has also gone the other way --with "medallions" selling for a million dollars or more in NY City. Both of these situations are signs of extreme inefficiency.  In other cases, the Cab Companies are so powerful that they are able to restrict all competition.  Some cities (such as in Mexico) restrict buses from stopping at airports to force travelers to use cabs.   City planners have been strong-armed by cab companies to restrict having light rail traffic going to airports (SFO for years, LAX still doesn't have light rail, SDO only has busses).  We were impressed that on Langkawi Malaysia that the cab companies have fought to prevent any buses from operating on the island, even thought it appears that a bus system would be much more efficient.

Now technology breakthroughs are starting to make the traditional cab company partially obsolete.  Handheld smartphone technology from Uber, Lyft & Sidecar have eliminated the need for the large cab company and heavy-handed City regulation.  The technology avoids the need for central dispatch, and uses supply & demand to optimize locations of "cab stands"  However the cab companies (and drivers) are trying to fight back to maintain status quo  Greenhut wrote a good article this morning that points out some of the futile attempts in the US and France: Uber faces backlash from new Luddites | UTSanDiego.com:

I sympathize with the cab drivers.  It isn't a "fun" job, and it is somewhat dangerous.  Yes, they also deserve to earn a "living wage" for the long hours of work they put in.   Some of them are in danger of losing their jobs due to this new technology.  However Uber, Lyft and Sidecar use drivers, so total number of jobs aren't being eliminated.  Only the jobs working for the large cab companies are being affected.  Those companies are using every financial and political trick possible to try and maintain the current system.  As described in Greenhuts' editorial, they try to use safety as an argument.   Of course the tax revenue they produce and the favors they provide to politicians are also part of their toolbox.  They will also try to take advantage of organized labor, when necessary to help them maintain their monopoly.

Eventually, there probably won't be any cab drivers, and we will be going to computer driven cars.

In recent history there have been other "revolutions" like this.  When the barcode came out on grocery store products, the grocery unions fought against it because it required fewer employees in a store to keep prices on products, operate the check out registers, and perform inventories.  In some Cities and states, they were successful at passing laws against it.  However now that the technology is firmly entrenched, all consumers benefit through lower costs, and more selection in stores.  Self-serve gas stations were a threat to service station employees, and some states passed laws to prevent self-service stations.  Last time I went through Oregon, they still had that law on the books.  Now it seems like such a waste for an employee to be standing around waiting for a customer, and then the customer to be standing around doing nothing while the attendant pumps the gas.  The Video and Music Recording Industry did everything in their power to stop electronic distribution of their products.  Now, in less than 10 years, almost all music and video is distributed electronically.  Yes possibly hundreds of thousands of jobs have been eliminated.  No need to manufacture video tapes, CDs or DVDs, package, ship, inventory or sell them.  However, now the consumer has an almost unlimited inventory of music and videos to choose from at significantly lower cost.   Why not allow the cab industry to also evolve in a similar fashion to a more efficient and convenient system?