Study Finds Uber Doesn’t Put Taxi Drivers Out of Work But Does Drive Down Pay

A more accurate alternate headline would be "VCs and institutional investors contribute $10 to each Uber ride, taxi use drops"

Because, you know, people start to suffer, can't afford to make rent or mortgage payments, take their kids out to the movies, etc. Stuff like that.

Which I know may seem kind abstract, from where you sit. So I'll point out a second major factor: As (middle class) incomes decline, do does purchasing power (in areas of the economy that really matter). And with it, the (meaningful) parts of the economy slow down greatly as well.

Note that I emphasized the "middle class" part. Yes, we know that as wages go down, the money doesn't really disappear, and is still active in other parts of the economy... namely, in the bank accounts of richer people. But by and large, richer folks tend to allocate their money towards "dumber" or less meaningful parts of the economy, dollar for dollar, while folks in the middle and lower-tiers tend to put their dollars into more fundamental sectors. Which is why when their incomes go down, everyone suffers.

It's just how things work, when you start to consider the whole system. And part of the bedrock of modern economic theory -- and one of the root causes of this thing known as The Great Depression, way back when.

It's only bad if it is down and things cost the same. Shouldn't purchasing power be the relevant metric?

When wages go down, it's not like boom, prices come down to meet them, not at the same pace anyways. (And if we're talking about a sudden wage hit to a certain class of workers -- basically you can't count on any commensurate price decrease at all to come to their rescue).

But more generally -- any analysis which only looks as one or two "metrics" -- and neglects to consider the effects on the system as a whole -- is fundamentally flawed.

No. Taxis are used less meaning less income, they not cheaper.

"The 10% Taxi's Used To Take Now Returned To Customers In The Form Of Lower Prices"

That's also not true. Uber is usually not cheaper.

The headline should be:

"More taxi drivers = less money for individual drivers"

Or economically:

"Uber uses value chain power to grab surpluses in taxi market, leaving drivers with less money on average, and consumers with the same price. But they have a cool app now."

The article doesn't say that at all though.

Maybe the loss to taxi drivers is going straight to Uber. Maybe it's 20% cheaper to use Uber.

You would sell your piece of market share, and then go work for an entity that has absolute power over you, and will drive your surpluses to zero - or even into the negative at the greatest pace they can?

When Uber has a monopoly, the 'short term' income of most drivers will be under minimum wage (because there's no income regulation) - and because so many drivers do not properly account for 'wear, tear and insurance' - the 'long term' net may actually be negative.

Uber's business is about paying drivers the equivalent of a short-term 'pay day loan' on value of their car as it degrades over usage, after which real income is negligible.

Or at least, that's the economic end-game.

Uber has demonstrated fanatical adherence to market principles - they leverage their power as hard as they can. The natural thing for them to do in a monopolistic scenario would be to jack up prices massively, jack up margins massively, and make sure drivers earn next to 0, and consumers benefit next to 0 - so that they capture all of the surpluses.

If anyone things that Uber will not do this they have not been paying attention. Uber will price at the 'profit maximizing' point for them - which in a monopoly situation is 'very high prices' (i.e. a shade below what you wouldn't be willing to pay) for consumers, and 'lower than minimum wage' for drivers (i.e. a shade above what they can possibly get away with).

Travis's comments on his hearing were pretty clear - he's a free market fundamentalist of the 'scary kind' (and by that I mean, economically illiterate, parroting the virtues of the ideology he espouses without actually understanding the scope of them).

So long as there is real competition, Uber will be limited by that, but if they ever get de-facto monopoly, the only winner will be them. They will ensure they get all of the surpluses.

The NYS trial lawyers are doing a good job holding Uber hostage. Once they get what they want, Uber is fucked.