As much as I can see the need for disruption in the taxi industry, I can't help but feel like we're going to relearn some lesson from a hundred years ago as to why the regulations formed in the first place.
So far, as a consumer, I prefer uber (or lyft etc, experience is undifferentiated hence why I'm bearish on uber specifically) over literally every other transport-for-hire service I've ever used.
The contractor debate should be seen as a first step by the IRS (and soon enough, other countries' taxmen) to take more from an economy that is moving to being self employed at greater numbers (and in growing, valuable fields). Uber and everyone should fight this tooth and nail, both in courts and through lobbying. As it stands, there are strong legal arguments on both sides.
As to the ultimate fate of Uber: even if they win this, they will lose. Other competitors will steal their network effect and grow by competing on the spread between pay to company and pay to driver. In 6-10 years, self driving cars will replace human drivers, but margins will keep shrinking and competition will stay fierce. It will remain a huge industry in dollar terms, but not exceptional from a gross margin perspective.
All this does is force Uber to offer benefits which would only make them take a higher cut in the long run. Drivers will suffer in terms of their income. This entire thing is pretty dumb.
There are reasonably low barriers to entry in this market, for the most part. If Uber treating its drivers as contractors rather than employees impacts Uber drivers in a negative enough way that they would prefer to work elsewhere, there is likely ample space for a competitor which offers a better deal for its drivers.
Drivers have little-to-no incentive to stay with Uber if they can get a better deal elsewhere (based on what I've seen, many already also work for Lyft), and users have little-to-no reason to stick with one on-demand ride app if there's another app that has more availability/drivers.
If cost-of-ride is the biggest competitive differentiator, the price of the ride will stay the same and drivers will be able to choose whether they want to work for a company which treats them as an employee but takes a bigger cut, or a company which takes a smaller cut but treats them as a contractor.
If this is the case, there is some justice in the world.
Uber is better than yellow taxis by a wide margin because of market regulatory forces (reputation, repeat business, competitors, etc.) which are far stronger than governmental regulations. By shielding yellow taxis from competition (remember what these taxis were like 10 years ago?), the government actually harmed consumers and subjected yellow taxis to less effective regulatory standards.
Because uber is not operating in a free market. Uber actively destroys competition to gain a new monopoly.
We’ll be exchanging one monopoly with another.
How well monopolies work can be seen with Comcast, etc.
In other markets, where sometimes yellow cabs have been governmentally regulated, but in better ways (for example, anyone can drive a cab if they have insurance + drivers license, but only N cabs can use the cab parking), uber is not an improvement, but actually making the market worse, because they reduce competition.
Your argument is like saying "Instead of Comcast, ATT, etc we should all use Google Fiber". Great, replace one monopoly with another, and for some people – take Romanian cities, which have better internet than Google Fiber – the new monopoly would be worse.
We need an open market, not another monopoly.
And we need safe, competition-friendly regulation by the government, not private regulation, not governmentally-enforced monopolies.
One of the major advantages of Uber is the rating system. A bad Uber driver typically won't last long in the job. There isn't much that will get a bad taxi driver to stop driving. Eventually complaints might filter up to their boss or regulators, but it's a much weaker mechanism.
I think the existing regulations were mostly put in place to compensate for information asymmetry. People get into a taxi unfamiliar with the driver, the car, reasonable costs, and the area. To ensure a minimum level of competence, drivers are regulated. To ensure people don't get ripped off, fares are regulated. To ensure people don't get driven on artificially expensive routes... well, that doesn't seem to have been regulated very well.
Smartphones solve this better, though. Rather than some broad regulatory regime to ensure minimum competence from a random unknown driver, you can use an app to find out about your specific driver. To ensure you don't get ripped off, you can use an app to get a fare estimate to your destination before you book. To ensure you don't get driven on artificially expensive routes, you can just compare the route you take with the route your phone thinks you should take.
I wholeheartedly agree that we need an open market, not just another monopoly. But in doing so, we should take the lessons from Uber, not just the lessons from the past. The present looks a lot different. Any system which looks like traditional taxis and doesn't take advantage of the easy flow of information is going to be inferior.
Mandating the features Uber voluntarily chose to add will only hold future competitors back when some new type of technology moves beyond our existing capabilities. And good luck removing those regulations once those are in place. You'll have powerful companies like Uber fighting tooth and nail to keep competitors out of the market.
Also, how do you suppose Uber would become predacious monopoly? Certainly not by being subject to the relentless competition of new market entrants seeking to take their customers on a daily basis. Predacious monopolies (e.g., cable companies) exist in markets where they are heavily shielded from competition. When competitors arrive, their behavior changes.
In a way Google has de-facto search engine monopoly - by offering the best service that's hard to replicate because of scale effects, and by being a globally recognizable brand. Add to that Uber's eagerness to actively sabotage competition by means literally taken out of spy movies (burner phones and CCs, really?), and I can see them holding a monopoly for a while once they get it.
(And "for a while" is enough; Uber is perfectly aware that self-driving cars are coming, and is in fact preparing for it.)
Google is dominant in US search, but they aren't really a monopoly. They have formidable competitors who hold nearly 1/3 of the US market. Of Google's service got really bad,I can switch my default search engine to a respectable competitor in a matter of seconds.
I certainly wasn't implying that Uber doesn't benefit from network effects and can't establish long-term dominance like Google, but if they are solely a consumer chosen "monopoly", there really isn't anything to fear. The concern is that Uber will do as taxi companies did before them and lobby for anti-competitive regulatory favors. I expect this will be the case, but this predacious form of monopoly cannot be achieved without the help of governmental regulation.
For example, for the drivers. They have no choice where to work – uber or jobless.
It’s also bad if uber abuses that to gain power in another market.
The problem with Uber, and Facebook, and Twitter, etc is that to have competition you need users, and to have users you need mindshare, and whoever is on top always has the mindshare.
Its also a modern phenomenon. You could Xerox it while competing copiers could effectively compete in the market by making a better product for value and getting fewer sales as a result of less marketing and brand recognition than what Xerox had, whose customers than pay an advertising and brand premium. Same with kleenex, or even search. The dominance of a competitor does not impair the competitions ability to compete unless those competitors use force of law to break a free market.
With Uber and Lyft, the more dominant Uber is, the less likely Lyft can get drivers and thus the less likely Lyft can get customers because Uber has all the customers and drivers. Its the same problem you have with operating systems, where you need the software users want, but the software also needs users to justify the investment, which is how Microsoft can continue to dominate with a demonstrably inferior product.
I'd love for there to be a way to break up mindshare monopolies, but destroying Uber through tax regulation and killing an entire fledgling industry is anything but a solution.
It is so by definition.
>(reputation, repeat business, competitors, etc.)
Those are not regulatory mechanisms. Those are mechanisms that enhance competition. Competitive markets usually need less regulation.
But none of those things you mentioned is going to get Uber drivers to buy the insurance they need to be covered against any harm they could possibly inflict on the people they are ferrying around.
What will happen is that eventually some gruesome accident will lead to a high profile court case and then finally governments will decide that yes, Uber drivers need to buy commercial insurance.
Competition is a regulating force. It's a force outside of oneself that governs and influences how they behave. I would love to charge excessive prices and line my own pockets with profits, but I do not. Why not? Excessive prices are consistent with what I want, but my customers will leave and I'll wind up with no profit, so I govern my behavior accordingly.
But anyway; competition on the market is a very powerful regulating force. It happily regulates pain, death and suffering into the work. I'm less worried about us having to re-learn the reasons for taxi laws, per 'panzagl. I'm worried that, as evidenced by people saying things like you did, that we'll have to re-learn the lessons of the Industrial Revolution. There is a reason we regulate markets, why we have employment and safety laws. Our forefathers paid in blood and tears to bring them into existence, so that most of us can enjoy working in safe environment and reasonable hours. The default, if you let competition have its way unchecked, is sweatshops.
I don't understand where this misconception keeps coming from. Uber holds commercial insurance specifically covering passengers being ferried around by their UberX contractors.
Here: http://newsroom.uber.com/2015/01/certificates-of-insurance-u...
http://newsroom.uber.com/2014/02/insurance-for-uberx-with-ri...
It will take another few until they’ll acknowledge that their drivers are employees, not contractors, and can demand medical insurance, retirement funds, etc.
All these things used to be provided thanks to regulation, and we’re seeing now how removing the regulation leads to uninsured cars on the roads driven by people earning below minimum wage without any social security.
No, most taxi drivers were already contractors, those things were not being provided before Uber came around.
No, it would be paid for out of the same revenues that Ubers drivers are currently being paid with. Instead of "$1/mile", it'll be "$0.30/mile, minimum mile requirement, and you get health insurance". Out of one pocket, into the other.
[1] "If someone is driving for your service, you must verify, not just trust, that they're insured, whether or not you provide that insurance yourself."
Mandatory minimum wage, mandatory health insurance, mandatory retirement funds, mandatory unemployment insurance, etc.
Yes, in the end they usually get nothing for doing extra work (just their wage, plus 0€/mile), but that’s most definitely better:
The risk is gone – you don’t have to worry about medical stuff, or anything anymore, even as McDonalds fastfood drone you still have insurance, etc guaranteed.
When you think someone is flouting a reasonable law, that should directly translate into "here's a collective action problem whose solution they're disrupting".
"X should not be allowed to pollute at Y levels." -> "There is a collective action problem of preventing damage to the environment, which requires that everyone pollute less than Y, even though people privately benefit from doing more."
"Hans should not be allowed to pickpocket the wallets of passersby." -> "There is a collective action problem of ensuring stable property rights, which requires that people respect others' possessions, even though they privately benefit from stealing."
"Uber should buy health insurance for drivers." -> "There is a collective action problem of ????, which requires that Uber buy health insurance for drivers, even though they privately benefit from paying them cash instead."
Note 1: your answer to ???? must not be so broad that it proves you should buy health insurance for every person you buy a service from, including e.g. the independent courier that delivered your package.
Note 2: I made an honest attempt to unravel the logic of "what is the law accomplishing with the employer/contractor boundary", in an attempt to answer that question, in this post here: https://news.ycombinator.com/item?id=10717768
If you have a better answer, I'm very interested in learning from it.
The result is subsidized healthcare via a complicated and weird system.
In fact, in Germany the employee always pays the healthcare insurance themselves as solution, but the government subsidizes it.
Sometimes the situation is that, yes, everyone should have something, so the employee/contractor divide makes no sense.
In the Uber/Lyft situation, the drivers should have health insurance through the government, and the car should be insured during the ride or between the rides by the companies.
So I don't know why you (earlier upthread) thought that the German practice provided any insight into how to resolve the issue, given that US forces some purchasers ("employers") but not others ("customer") to provide certain benefits.
The German model does, however, provide a clean way to "cut" this "Gordian knot".
I get the feeling from Hacker News that in bigger cities there are far, far more people doing Uber full-time-ish than in smaller, population-1-million cities. For those doing it 40 hours a week as their livelihood, I can understand the call for more regulation, etc.
However, by far most of the folks I know doing Uber or Lyft are a lot closer to a contractor in definition.
* They use their own car they've already had before Uber (I.e., they didn't buy it just for Uber as some Uber forum posts talk about) * They do it part time * Most are doing it for "something new," when I ask them about it. For example I knew one driver who in her fifties just tried it to be out of the house more.
Interestingly, buying a car specifically to drive for ridesharing apps would actually be a point in favor of them being a contractor (they're making an investment in their "business")