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Comment by koopuluri | Hacker News Reader

I definitely see the argument to classify workers as a more "permanent" status and guarantee all the benefits that come with that. But that would likely increase prices, decrease demand and cause some drivers to lose jobs.

Ofc, this depends on the region (country, state, etc.), I'd love to see some estimates on how much prices would go up in a particular region, and how much the demand would potentially decrease - when classifying drivers as full / part time workers.

Will be keeping an eye on this Seattle experiment.

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> But that would likely increase prices, decrease demand and cause some drivers to lose jobs.

In California Uber and Lyft rammed through a proposition to enable them to continue their labor abuses. Anecdotally, the prices have gone through the roof and I've never had more trouble getting rides, so I don't believe that. It's a failed business model because Uber has to provide a return to investors and livery is basically a race to the bottom without some form of price controls.

Ballot initiatives are not rammed through. Consumers want Uber/Lyft. Taxi cartels were so God awful to deal with even crappy tech alternatives are better.

Maybe people had different experiences with taxi's but I've taken uber 30x more often than I've taken cabs, and still have had 10x as many bad experiences with taxi drivers. From not turning on the meter, to being rude to my wife, to purposefully taking roundabout routes in order to inflate cost, to being told a taxi would show up at 1am, only to have it show up at 8 am.

plus in places like South America uber is the far safer option. I know my wife and her friends hated taking taxis as they were much more likely to be sexually harassed or deal with some strange person. Uber isn’t perfect but it has significantly reduced this since the people who do it get kicked off the app.

A lot of complaints i see on HN are very first world and don’t see how much some of these companies actually help.

> A lot of complaints i see on HN are very first world and don’t see how much some of these companies actually help.

These companies are not set up as charities. If they happen to help people, that’s a side affect of the primary purpose - generate maximum revenue.

Regulation is required where a businesses incentives do not align with societies (mining is an easy example). As much as C level execs will argue, self regulation has never been an effective mechanism. So Uber is incentivised, naturally, to provide a safe experience for a rider, as to do otherwise would reduce revenue. They are not incentivised to provide their drivers any semblance of a “life worth living”, as it has no positive correlation to revenue. This isn’t out of malice, it’s just economics at work. If we, as a society, want a better standard of living for gig workers, then regulation, flawed as it is, is the only mechanism I know of that has some chance of working.

They spent $200M, the most expensive political campaign in CA history. Go on though…

It’s not free to spread awareness on an issue.

See Ohio for what happens to an unpopular ballot initiative.

I’d vote against the Ohio initiative and for the Uber one.

I hated taxi cartels. They had horrible customer service, high prices, and I’m a big dude who had to deal with them. I cannot imagine how toxic it was for gals.

> It's a failed business model because Uber has to provide a return to investors and livery is basically a race to the bottom without some form of price controls.

Sounds good for customers?

No, because if there is no viable business model then the business simply won’t exist, leaving customers to rely on…the bus? Or just not traveling.

or taxis, i mean, they’ve been around since the horse and buggy days and probably even way before that, i don’t know enough about the history, but i’m guessing taxi style travel services were even around during the silk road era. uber didn’t invent travel for hire.

this is going to be a rant, but i mean…

the reason uber and lyft (and countless other “disrupters”) disrupted anything is they pretended the externalities didn’t exist/ignored the very externalities the already existing industry had previously already sorted out and lived through.

and lo and behold, no one even halfway intelligent is shocked that all of these issues arose at scale.

i’ll repeat what i’ve said countless other times: anyone who thinks they have a “disruptive” idea yet hasn’t extensively studied why the already existing industry does things a certain way, is an absolute lightweight and no one should be investing in with them.

we have a major problem in some of our industries of people who have deluded themselves that the people who came before were somehow primitive or less enlightened.

we see this all over the place, from people who want entirely rebuild large software packages from the bottom up, from submarine tourism companies, to “house flippers”, to short-term rental apps, who because their egos refuse to let them explore the history of their project, they just end up in the exact same place. only they took a really long, wasteful, and stupid detour to get there.

if an industry is doing something you think is wrong, explore the history of why it is done this way. don’t pretend like that problem doesn’t exist and then call yourself a disrupter. this is a recipe to have everyone laugh and go “it’s not like you weren’t warned there was giant hole around the corner and then you drove right into it.”

and even worse, if they have explored the history of their project, know very well the problems coming, but try to externalize that to wider society, it’s outright malicious.

> leaving customers to rely on…the bus? Or just not traveling.

again, taxis have been around for pretty much ever.

Taxis are extensively price regulated. That was my point, thank you.

Well, the original notion was silly:

> It's a failed business model because Uber has to provide a return to investors and livery is basically a race to the bottom without some form of price controls.

You can't have a race to the bottom without competitors still in the market.

If competitors like Uber leave the market, Lyft can raise prices.

In the long run, there will be a balance between competitors entering and exiting the market just around the point where the industry is barely viable as a business.

That's also how eg restaurants or cafes work in many big cities; and this explains why so most cafes fail, but why there are also always some cafes around.

Dont drivers have the option to refuse rides ?

Or simply stop using uber ?

Are there no prisons or workhouses?

No, haven’t you heard? They’re literally slaves/indentured workers.

The underlying economics don’t change if workers are paid per gig or per hour, so the customer is unlikely to notice anything.

What changes is the information asymmetry where Uber etc knows a lot more about the conditions of people working for them than the people taking these jobs do. As a general rule those with more information are simply in a vastly better negotiating position.

This is not correct. The costs of employing drivers would increase. The driver supply would go down and the price of an Uber ride would therefore increase. This is basic econ.

If uber wants to kill their margins even more by reducing supply and driving up costs, that's their own mistake to make. They instead could keep the service cost that works at the price it's at right now by reducing executive compensation and finding other ways to increase efficiency.

Or they could keep pissing off the people with the monopoly on violence, maybe that'll work long term?

Company’s can reduce pay down to minimum wage, the only way it would force them to pay more is if on average people where making less than minimum wage on average.

Uber has already lost 35 billion, and somehow still exists. Uber has never been a viable business

So if Uber has lost all that money, aren’t the customers the ones actually exploiting the drivers?

Uber is a massive wealth redistribution initiative.

Stop shifting blame from corporations to customers

Real abolitionists didn't wear cotton.

Relevant: https://i.redd.it/whnuvoh4od031.jpg

You could have made the information asymmetry arguments perhaps a few years ago. But these days Uber's practices are fairly well known, so no one has to go in blind.

It’s all about edge cases, ie what specifically happens when a customer throws up in your car.

That’s not something the average person off the street is going to ask. But many are going to be pissed learning they will reimburse you for paying someone to clean your car but not the time it takes you to do it yourself, nor the lost wages until it’s clean.

If you take the inside view and look inside Uber, you might find that they handle each specific edge case according to specific rules.

But taking the outside view, you don't need to know all the specifics. You can just check Uber's general reputation (or lack thereof perhaps) for fair dealings with drivers. That general reputation will reflect how they are dealing with those edge cases in general.

Just like in the 2010s you could be reasonable certain that a job at Google meant you got free food, even if you didn't know the exact specific rules about what food would be available when and where.

Reputation is something companies manage, which introduces bias.

If people get a worse impression than reality they can release more information, but if the public has a better impression than reality then they have zero incentives to say anything.

Information asymmetry isn’t about people knowing nothing. If you’re offended a job at some salary you know roughly how much they are willing to pay but you don’t know the minimum you can negotiate for. Similarly, companies don’t know the minimum you’re willing to accept but they do know quite a bit about market rates.

It doesn't have to increase prices, it could decrease executive pay (which has grown far, far faster than worker pay) instead!

If they could just decrease executive pay, why aren't they doing that already? In a sense, executive pay comes straight out of shareholders' pockets, so they would clearly have an incentive to decrease it, if they could.

Executive pay seems fairly independent of the issue at hand.

> If they could just decrease executive pay, why aren't they doing that already?

Counterpoint: if they could extract more profit from the market by increasing prices, why haven't they done so already?

Market determines viable price for service, not cost. If the cost of doing business can't find a balance at rates the market will pay at acceptable profit margin, the business simply doesn't exist. Many aspects of our lives suffer from this reality: renewable energy companies in many places survives only because they're propped up by government subsidy.

The answer to "why aren't the executives cutting pay" is obvious: it's up to the executives, and why on earth would they cut their own pay, when they could instead simply decrease worker conditions and cut cost of labor? Without a union, executives have literally all the power.

Executive pay + shareholder profits (through stock buybacks, dividends) are where all the massive margins go to right now. There's no more profit to extract from the market (unless the finance team is terrible at their jobs and have been leaving money on the table) so that's where the money to cover increased cost of labor needs to come from.

I'm not really upset at the idea of CEOs making less money, I don't get what the big deal is.

> and why on earth would they cut their own pay

So market set the pay for services however executive pay is not affected by the market at all?

Uber pays its executives what it does because other comparable companies pay the same. If they cuts that people they’d want to hire will choose to work for other places and they will have to find someone who agrees to work for less (which might or might not be bad a thing)

Thanks for making my argument more explicit.

And arguable, executive pay is perhaps a lot more elastic than ordinary workers' pay. Companies aren't shy about paying huge bonuses to their CEO one year, but cutting them to nothing the next. Ordinary workers have a much steadier pay check, even when working for Uber.

Similarly, most companies are also quite willing to hire and fire CEOs. Statistical distribution of CEO tenures is a well studied subject.

> The answer to "why aren't the executives cutting pay" is obvious: it's up to the executives, and why on earth would they cut their own pay, when they could instead simply decrease worker conditions and cut cost of labor? Without a union, executives have literally all the power.

No. Uber still has to compete for workers with other companies looking for labour. Unions presence or absence doesn't change that dynamic.

> Counterpoint: if they could extract more profit from the market by increasing prices, why haven't they done so already?

Not sure that's a counterpoint to anything? Yes, I assume that they are setting their prices to maximize long term profits.

However, if regulation increases costs across the industry, supply curves will recede, and if demand curves stay roughly the same, prices will rise (because the point where the curves meet will be at a higher price point).

Are you asking why executives aren't decreasing their own pay?

Executives are supposed to work for the shareholders.

If the executives of Uber could just ignore shareholders, they wouldn't need to worry about profits at all.

They do work for shareholders but since shareholders aren't equally divided, i.e. one person or company may own a larger portion, and it's difficult to sue over this, executive can ignore the shareholders to an extent.

How would you prove a decision was wrong without hindseight? How would you prove an executive shouldn't make X amount of money?

Imagine I'm the CEO of Nike, I make $100 million a year. The company is doing amazing. Is that because of decisions I made, marketing, good product, word of mouth, things that happened before I was CEO. Prove that I shouldn't get that money.

There's no need to prove anything: the shareholders can replace the CEO (via some indirection) at will.

They don't get the money back they already spent, of course.

Some executives are themselves shareholders and want to pay themselves twice.

Yes, but in that case it doesn't matter, a dollar is a dollar and they can't make extra dollars this way.

The different tax treatments of the two suggests otherwise.

Giving money to shareholders via buybacks is typically taxed less than giving money to executives.

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