Hacker News Reader

Comment by ScottBurson | Hacker News Reader

I'm not sure you can make a good case that regulation opposed to the interests of AirBnB/Uber/etc. is a bad thing for the economy from the point of view of the workers. From that angle, it's zero-sum: the more people who use AirBnB, the fewer stay in hotels; the more who use Uber/Lyft, the fewer take taxis.

Rather, it's from the point of view of the customers that you can make this case: people have transportation and travel options they didn't have before. That effect doesn't necessarily show up in GDP, but it does mean that life is a little bit better on the whole.

View on HN

> I'm not sure you can make a good case that regulation opposed to the interests of AirBnB/Uber/etc. is a bad thing for the economy from the point of view of the workers.

Sure you can. If I'm a part-time Uber driver, forcing me to be classified as an employee might very well remove a side income stream from me.

It's even more farcical for AirBnB: people renting out their spare bedroom would not otherwise be working in hotels.

> From that angle, it's zero-sum: the more people who use AirBnB, the fewer stay in hotels

Actually, I'm not sure this is true. If AirBnB reduces the cost of temporary accommodation, you might very well see increased travel overall without hurting hotels. In fact, I strongly believe this is true: look at things like the digital nomad movement, which heavily uses AirBnB and would be much less common without modern technology. Right now I'm staying in an AirBnB—if this option weren't available, I wouldn't have stayed in a hotel.

And if you're a full time driver and desperately need healthcare, etc. This prevents you from getting it through Uber.

I don't think the matter is so black and white.

Unless the you're one of the 80% of drivers having another job not because you want one, but because being a driver doesn't pay enough. Part time work is allowed, why would reclassification take away the other income stream?

Or if you're one of the many delivery drivers who are only self-employed because the organisation insists. It gives the organisation a means to evade employee regulations and pay despite a 40 hour week, but nothing to the worker.

Because the cost to Uber of reclassifying these contractors as employees would end their business.

The observation about AirBNB that it increases possibilities for travelling without hurting hotels significantly is spot on.

Personally I know students who would not go to some conferences without AirBNB. Staying in a hotel is just above their travel allowance. Less anecdotal is reports from hotel industry in Norway about record levels of occupancy despite growth in AirBNB and similar services.

Yeah, neither Uber nor AirBnB area a zero sum game, esp. ABnB.

There is some 'growing the pie' at the margins, but I'd suggest that Uber Corp. grabs more than what is created, and that drivers et. al. are holding the losing end of the stick.

The power imbalance between Uber Corp. and drivers is quite massive. Esp. without employment status.

Uber is designed to suck every last penny of real margin out of the system, and leave drivers with the absolute minimum.

Worse: because many drivers make short term decisions about their costs, and don't calculate wear and tear into their decisions, it's probably that Uber driving is borderline unprofitable.

Imagine if there was one factory in the world where you could work. You got $10 an hour - just enough to stay alive. But - you are going to get sick and die in 10 years from the toxicity. Well, the real 'market price' for such dangerous work might be $20/hour - enough to pay for health insurance and medicine, but because of short term decisions made by workers who are desperate - it's $10/hour i.e. a 'long term money losing venture' to work in the factory.

I generally like Uber as a concept, but we can't ignore these issues.

Remember that Uber replaced a model (taxis) wherein drivers not only where also independent contractors, as they had to pay at the start of each day to rent a medallion, not knowing if they would earn enough to compensate.

Uber's model seems strictly better than what has existed for decades.

You're missing the most important difference: Taxi market is regulated, and numbers are controlled. This keeps some degree of profits backed into the market.

The other difference is that taxi drivers have generally stable work. A guy can drive a cab consistently for years. The pay is not good, but the economics have to work out.

Cab companies and owners have enough wherewithal to make long term decisions, moreover, the 'drivers' - the ones on the end of the chain - if they are not owners - are not responsible for the fixed costs of the cars etc..

Finally, cab companies are by nature, small - and don't have hyper-leverage over drivers. Cab companies have to compete efficiently for talent among their drivers. If you can call it talent.

Uber is a hyper-capitalists dream - you take 105% of the surplus from a market.

You're missing the most important difference: Taxi market is regulated, and numbers are controlled. This keeps some degree of profits backed into the market.

The number of medallions (ie, jobs) is controlled, which means their owners reap those profits, not the drivers, who must compete with each other for access to those medallions. Uber's breaking of the monopoly expanded the market and created more jobs.

The other difference is that taxi drivers have generally stable work. A guy can drive a cab consistently for years. The pay is not good, but the economics have to work out.

There's no stability, the cost for leasing a medallion was constantly increasing, as was the number of people with licenses to drive (competitors).

Where do you think the money comes from? Not being responsible just means they don't get to make choices - they're forced to accept whatever the car owner says.

Finally, cab companies are by nature, small - and don't have hyper-leverage over drivers. Cab companies have to compete efficiently for talent among their drivers. If you can call it talent.

Then why was medallion ownership the single best investment in the last 30 years? Compete for talent? Where?

This article from the NYTimes is rather informative, and being from 1995, it's not a submarine for Uber et all: http://www.nytimes.com/1995/04/09/nyregion/driving-a-taxi-di...

You're wrong on all points.

+ That there are market controls ensures the viability of the system, that alone doesn't speak to necessarily how it was distributed. But you've contradicted yourself - and I don't think you grasp my argument: Uber vs. drivers is an infinitely large imbalance than cab-owners vs. drivers.

Putting the 'profits' in local cab owners - all things equal - is still better than putting all the profits in Uber.

+ "Where do you think the money comes from? Not being responsible just means they don't get to make choices - they're forced to accept whatever the car owner says."

Again you contradict yourself: Uber drives are more forcibly required to 'accept what uber says' - then any cab driver is forced to accept what an owner says. But again you missed point point: Cab companies and drives are businesses, and they can make longer term decisions about insurance and capital allocation. Cab owners will not run their business at a loss. Many Uber drivers, probably are running their business at a loss.

"Then why was medallion ownership the single best investment in the last 30 years? Compete for talent? Where?"

+ One, I don't believe you, and two, they compete for talent (i.e. drivers) like any other entity. Drivers can work for another owner, another cab company. There is a massive diversity of Cab owners in any region. This diversity creates competition. Uber is a de-facto monopoly in the service that they provide, given them even more power.

"Uber has crated jobs" - Uber has created a means for people to get around regulatory issues - earn mostly less than minimum wage, by making short term decisions about their work vs. long term investment in capex (i.e. cars) - and reaps 100% of the profits from a system.

Now - if we want to have a discussion about whether or not cab companies regulatory framework are appropriate, that's fine. But make no mistake - almost all of the benefit from Uber goes to Uber, and Uber riders, not the drivers.

I fully admit I may be wrong, though I don't believe I have contradicted myself.

Are Uber drivers running at a loss? Perhaps. At least the analysis I've seen (such as [1]) don't point to that, especially if we assume drivers aren't buying an extra car exclusively for Uber (just wearing it more). The earnings are crap, but then again, the NYT article I linked above mentioned pre-tax income of $19k, which would be around $11/h today. And there more people driving, so the overall effect is positive.

The monopolization effect is worrying, but while it may be naive, I believe it's a short-term concern. Uber has no "moat" - especially as they refuse to actually hire people, hence they can "hop" between apps -, and while some competitors may be in dire straits, others are still popping up (around here, the new one is Cabify).

I don't like Uber; they're dishonest and I'll probably stop using it as soon as new competition arrives. But I think the medium term consequences will be beneficial to both drivers and users, at the expense of middle men.

[1] http://therideshareguy.com/what-are-your-rideshare-expenses/

How big is the "digital nomad movement"? And how do you differentiate a digital nomad from a backpacker or a professional on a sabbatical?

You're assuming that people who take Uber would take taxis if Uber were not available. That's a big assumption.

I (like most people, I'd imagine) evaluation my options for each trip:

- Drive for myself. Fast, comfortable, fun, probably a trivial amount of gas, but I refuse to search for street parking and depending on destination I may not want to pay $30+ for a garage space.

- Taxis, which will probably run $25-30 each way + tip, for around $70 spent on transportation for the evening.

- Cycling, which is a no-go in Chicago winter, or when I'm going somewhere nice and don't want to arrive sweaty, or when I'm going home late and don't trust the safety of the bike path.

- Public transit, which will be cheap but excruciatingly slow and a revolting experience on hard surfaces in a harsh florescent-lit car smelling urine, listening to ambient rap music from people's shitty phone speakers, and trying to find something to look at other than the people my seat is pointed at.

- UberX, which is fast but a tad expensive for me at ~$15 for a taxi-like experience (except you can actually get one in my neighborhood).

- UberPOOL, which is usually a "just right" balance of comfort (sit in a nice or at least modern car, look out the window, other passengers are rarely if ever an issue), speed (the routing algorithm does do ridiculous things, but rarely), and cost - usually around $7-$10.

- Not go out because I don't want to put up with public transit or spend what it costs for private transit.

Withdrawing Uber won't put me in a taxi, it'll put me in my own car, occasionally public transit, or more likely staying in and ordering delivery.

Same with Airbnb. I take longer vacations, or vacations I wouldn't have in a hotel, because Airbnb is cheaper. I don't have extra money lying to pay hotel prices; if the cost of travel increases I will buy less travel.

If you live in a city with good public transport, like London, Uber is much less important.

> Withdrawing Uber won't put me in a taxi, it'll put me in my own car, occasionally public transit, or more likely staying in and ordering delivery.

This is my experience as well. My wife and I have traveled from our inner suburb into the city for dinner and drinks far more often than we ever did before Uber. Because of convenient and reasonably priced transportation, we've spent more money overall in the local dining economy.

With increased supply come decreased price and increased usage. Uber and airbnb increase the supply of transportation and hotel places in total, decreasing the price for customers and increasing the total volume used.

Specifically, this is because demand for these things is elastic, in econ terms.

A buddy of mine in the hotel industry says that this seems to be the case. They can't quantify the negative impact of AirBnB on their bottom line. But he's at a high end hotel, I'm sure different parts of the industry see different things.

Reply on news.ycombinator.com