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Comment by danielamitay | Hacker News Reader

As an East Village resident who fled yesterday (post-Sandy) due to loss of power and even cell service, I'm siding with Uber on this one.

When I needed to go 60+ blocks uptown, I didn't manage to hail a cab because every single one was taken, and only because of a private car (who separately charged three individuals for a concurrent ride, literally a 3X fare) did I manage to get to my destination without carrying my heavy duffel + gear for an hour or more in the drizzle.

In this situation, price is not the problem, it's supply.

Edit: From what I can tell, Uber now locked rates at 2X, and is eating half of the fare. That's pretty darn generous.

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There are price gouging laws against this specific activity. You can not raise prices during a disaster. I hope Uber gets shafted to the full extent.

This is what you sound like:

When I needed to eat all the bread in the grocery store was gone. Except for this one grocery store that was charging $100 a loaf. They filled my belly when everyone else was sold out. What a good grocery store!

If that bread is being imported from outside the city, then yes. What a good grocery store.

Per Uber (and even PandoDaily), the available driver supply has indeed risen due to prices. Without the price increase, some drivers wouldn't consider it worth the painful traffic.

And lets not forget: It's not like the folks at Uber flipped a switch and doubled the rates. Their system responds to demand automatically--it doesn't know when there is a disaster.

"...Uber finally backed down and agreed to pay drivers an increased rate but keep fares at their normal leves"

The outrage here stems from the fact that people do not perceive Uber as the corner grocery store, or some guy on the corner selling umbrellas at twice their cost when its raining. Uber is perceived, as most startups are, as a "good guy," an entity who would try first and foremost to help during a crisis before trying to make a profit. If they had done this (eat the losses) from the beginning not only could they have avoided the bad press but probably gotten enough good pr to increase their customer base.

> The outrage here stems from the fact

Or more likely, it stems from the fact that some people understand economics and some don't.

You want prices to go up in an emergency, because it creates incentives to go beyond usual measures to provide supply. Anti-gouging laws are not just useless, they are mindbogglingly harmful. There's a good reason you don't set ceilings on prices during usual times: If the cost of supply goes above set price, there is no supply and people have to go without. The pricing mechanism still works and is even more important when there is an emergency. If conditions make providing supply hard and legislation limits the prices to a set ceiling, retailers aren't going to eat the cost of providing supply, they are just going to say that it's too hard and close up for the duration. If prices are allowed to rise naturally, it incentivizes not just going above and beyond to get goods where they need to be, but also stockpiling supplies before the disaster.

Price gouging is a good thing, because the choice is not between very expensive bread and non-gouged bread, but between very expensive bread and no bread. If there was enough supply to provide for all demand during the crisis, prices wouldn't go up.

Price "gouging" (if you can call it that under the circumstances I'm outlining) is a good thing as long as prices are going up relative to the risk taken in the seller procuring the goods. To use an example that exists outside of the controlled economy, if drug enforcement teams are cracking down hard on a city, the price of marijuana is going to increase. The dealers and growers are taking a much more increased risk to keep supply.

However, here in Michigan after 9/11 (a place not directly affected by the disaster), gas prices shot up drastically, immediately. The governor stepped in and set gas prices at a controlled rate, with serious repercussions if the price limit was breached. That's an example of bad price gouging, in an area where that type of activity should be controlled. There was no immediate threat to Michigan's gas supply, nor to the Michigan transportation network. Prices were not going up as a result of increased risk in the market, but because companies knew they could incite a buying panic at a hugely inflated profit margin. They knew that when their supplies of highly profitable gas ran out, they could get more at the normal rate, then sell it massively inflated again.

What Uber is doing while operating in NYC right now is an example of increased risk. NYC is in a disaster zone. There is a massively increased risk to operating a business on the streets of New York currently. With the public transport out, they need more drivers. Depending on the area, they might need drivers willing to take the risk of operating on these streets. There is a risk to the continuity of their business, a need to fill demand with limited supply. Increasing prices temporarily makes sense. It's the tradeoff between everyone can afford it but no one can buy it versus some can afford it but all who can will be able to buy it.

If the government wants to limit the ability of the market to assess risk, maybe they should compensate Uber and other hire-car companies (aka cabs) to help offset the supply vs demand equation.

it's a shame to see the headline right below this thread is "Airbnb waives fees for Hurricane Sandy affected area."

Uber is also waiving their fees. 100% of the money is going to the drivers. http://news.ycombinator.com/item?id=4728851

Well, Uber knows there is a disaster. A large temporary change in the NYC cab market would not go unnoticed. They can update their own 'system' to reflect current prices, it's not a third-party thing.

I lean very heavily socialist, but I can't see how anyone would benefit from there being no cars available.

Actually, I recall just such an occasion, in Dublin at 4am New Years eve when there was a surprise snowfall. Tens of thousands of people in the city center, taxis weren't running, buses weren't running, and there was no way for many to get home. The worst I saw was girls in skimpy dresses holding their heels in their hands as they walked a few miles home in the snow and ice. They would have been glad to be "gouged" for a taxi.

As a supporter of price gouging laws, the idea isn't that there should be no cars. No one expects UberCar to look at the situation, say "We're losing $X million per day. Oh well." and keep sending cars out on the street. The plan for price gouging laws is for Uber to say "We're losing $X million per day and our Hurricane insurance will pay out $Y million. This will leave us $Z million ahead." The problem is that, for Uber, Y = 0.

Under the price gouging model, every company would be charging extra on a daily basis outside of emergencies to either buy insurance or build a safety fund to use during disasters. Instead of gouging some guy $100 after a hurricane, Uber is expected to gouge everyone 25¢ year round. This slows the economy during the good times, but keeps things running smoothly in the bad.

Whether or not this is a good model is freely debately, but that's how it was intended to work.

Uber don't control the cars or employ the drivers, and can't force their drivers to be out on the street. They have a very good mechanism for ensuring supply during high demand: allow their drivers to charge more.

I see that it would be possible for them to have a hurricane fund which they would use to encourage the drivers to come out, but I don't think its fair to expect them to have expected this.

To be honest, I don't see this as gouging. Its a 2-sided marketplace, and there are pretty simple economics at play.

You feel entitled to a cab at the same price even though it's a disaster and everyone needs a cab.

Drivers feel entitled not to have to drive into a disaster zone for the same price and would rather stay home.

So either way, whether or not prices are raised or prices stayed the same, the result to you and everyone who feels similarly entitled, would be the same - walk home.

At least by raising prices, those who are willing to pay the higher price will be able to get a cab.

Wow...this rational sounds so irrational. Simple economics tells us that when demand far exceeds supply, prices rise. A natural disaster will cause prices for many things to increase.

There is MUCH more social utility for Uber to double & triple prices to ensure there are private cars (i.e. supply) than leaving tons of people stranded.

It's just the market at work....no need to attack them, just don't pay the rate.

If you are stuck on the corner, and water is headed your way, I can guarantee you - you would pay almost anything to get out of there. Just paying 2X or 3X - depending on your perspective - is almost a steal.

I don't live in NYC, nor am I an Uber customer - but if I were stranded in NYC and wanted to leave, I would be glad to pay any rate I could afford.

When I needed to eat, all the bread in the grocery store was gone. But they were only a penny a loaf! I starved, but seriously, what a good grocery store! Only a penny!

Is that your alternative?

And to add insult to injury/starvation: the person who got to the store first probably bought 10x more food then they needed and now has a bunch of food spoiling in their non-functioning refrigerator.

Sounds like you've never heard of supply and demand.

I suspect he has heard of it, he just doesn't like it and expects companies to operate as though it does not exist.

All the responses about supply and demand aren't accounting for the fact that taxi drivers are a protected industry in New York.

You are unionized, have benefits, and have protections preventing any ol' person from starting a taxi service that are VERY COSTLY to NY residents. But it ensures a safe and mutually beneficial industry.

So a big fuck you to anyone who price gouges. I hope you lose the medallion, lose your job, and lose your benefits.

Cheers.

Uber isn't a taxi company. The supply being talked about isn't necessarily about the limited number of taxi medallions issued. Instead, it's about how private car operators don't want to work in NYC right now but might be induced to work if they were payed more.

I'm not sure what you're getting at in your comment. Are you complaining about Uber raising their prices, or about Uber existing at all?

My understanding is that Uber drivers don't have medalions. They compete with the protected taxis.

Uber isn't a taxi company and doesn't have the protected industry status.

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