http://www.theatlantic.com/business/archive/2011/10/the-amaz...
Its 100% responsible, from one perspective, because "bankruptcy" is one form of government "meddling" in economic markets.
I agree that NYC has not increased the number of medallions in a manner commensurate with its growth since 1970. But this is like referring to the sale prices of commercial condos - you don't need to own a storefront in order to have a retail store (most business owners don't). Likewise, you don't need to own a medallion, just have access to one (ie, rent it, which is what most taxi drivers in NYC do).
If Uber could help usher in the end of some of the other government monopolies, we'd be looking at some huge steps forward.
Zoning is not needed for the former.
For example there is a fixed limit on available land, therefore it makes sense to regulate its use for the common good. The problem with licensing taxis isn't that they are licensed, it's that the number of licenses is fixed arbitrarily without regard to the actual need for taxis.
True; many of those other forms of licensure are also bad.
First, land use has different externalities, but for-hire cars still have obvious externalities. And because of the civic role that taxis have assumed over the last 50 years, decisions about the management of the taxi market have still more externalities.
Second, my point wasn't that land use and taxis have the same issues, but rather that the logic that taxi medallions were bad public policy because "monopoly" was flimsy. Which, it is.
Like what? Note that, for example, "They take up space on the road and pollute the air" doesn't count because not-for-hire cars do the exact same thing. It has to be an externality that is caused by the fact that the ride is for-hire. There may be such externalities, but I think they are far from obvious.
> the logic that taxi medallions were bad public policy because "monopoly" was flimsy
It's not the medallions per se that are the bad public policy, it's artificially limiting the supply (and then compounding the problem by making them transferrable). That's what the OP (almost surely) meant by "monopoly". Zoning also artificially constrains the supply of land available for certain uses, but that is clearly justifiable because of the (actually obvious) externalities of land use. The externalities of paying someone for a ride are far less clear.
More specifically, the externality argument about taxis is that they take up space while hunting for fares, while private cars only drive when actually being used to get somewhere.
I agree though, that the point is irrelevant to Uber, since it's strictly a by-request car service that is not hailed from the street, and so doesn't cause the congestion that typical fare hunters would.
It seems like what she was saying is that if the people who own and use the common resource have the ability to create rules and enforce them, then they can avoid a tragedy of the commons. I'd totally agree with that, you need some way to govern the resource.
About freeing up street space, I'd be curious to see some kind of statistics about how many lyft drivers were headed that way anyway and just pick up passengers vs. how many are providing a taxi-like service. Is there a way in the lyft or uber software as a driver to say that you're only looking for passengers going from one location to another location?
It seems like slugging is more likely to provide those benefits.
I am sorry to say that I do not have the statistics that you are looking for.
People operate taxis to make money. If the number of taxis becomes such that the roads fill with taxis, then the number or taxis should lower itself for two reasons. A.) If the taxis can't get anywhere either then people won't pay for them. B.) The ability of any single taxi to turn a positive profit will approach 0.
I agree with your point that there are natural pressures that would keep the number of taxis down if the artificial limitation was removed. It's just that I don't think that the natural equilibrium point financially is going to be the optimal level in terms of getting people where they want to go efficiently. In my mind, the entire transportation system is useful to provide a service to individuals and other sectors of the economy, and if it's not doing that well it doesn't matter much if the people working in transportation are at a natural equilibrium.
I'm also not saying that the medallion system is the right way to handle the situation. A taxi or car on the road uses up some common, limited resource (space on the road). Maybe you'd have more luck charging for that resource more directly, like a congestion charge?
Whether or not that is feasible under Uber's business model is, of course, a totally different question.
So I guess the real question is, for those of you who believe Uber should behave this way (and, w4, I recognize that you're merely explaining modeless's argument, not claiming you agree with it), do you believe Uber should be expected to behave this way, given that they are a for-profit company, or do you believe that it is merely the *right thing to do (for some ambiguously-defined moralistic definition of "right")? I suspect that what you really believe is that it's what you personally think should happen, because it would result in lower surge prices for the same supply, and you would like to pay less money. And that's not a very compelling argument.
Imagine for a moment that surge pricing were kept the same. The only difference is that, now, Uber takes no cut whatsoever. This would result in greater profits for Uber's drivers during a surge, better incentivizing drivers to get out on the street and start accepting fares. This increase in the incentive would, one can assume, result in an even greater increase in supply during a price surge than is produced under the current system, and more effectively address the supply and demand imbalance that creates the need for surge pricing in the first place.
Now, does Uber have a moral obligation to do this? Fuck no. However, it's certainly disingenuous to suggest that surge pricing is just all about addressing supply and demand imbalances.
(I'm not saying you say that's what it's all about; you don't. That is, however, what wutbrodo and a lot of other posters seem to be suggesting).
EDIT: As an aside, Uber's incentive (besides defensibility) for not taking a cut of the surge is clear: by making the incentive for drivers to get on the road as powerful as possible, Uber would all but guarantee that its users can get a ride at any time, any day, in any conditions. That would solidify Uber's primacy over other, less reliable transportation options. However, given that their product is already so superior to the alternatives, it doesn't seem to be the case that they need to look at doing anything like that for the time being.
If they could do this without tacking it onto price, by making an explicit 'please get out of bed' payment from uber to a fresh driver on their first fare during a shortage, they may be able to create the same economic incentive to the driver without being seen to price gouge. Of course, this would involve raising prices slightly overall to pay for it, but you get rid of the swings in price.
Perhaps you think they deserve to make less money, but as wutbrodo pointed out, the lack of supply at these times does not mean Uber has failed at recruiting drivers. After all, having extra drivers sitting around idle is not helpful to anyone (not to Uber, not to the drivers themselves, and not to the passengers). The only mechanism Uber has for putting more drivers on the road when demand increases is to adjust prices. Theoretically they could merely reduce their cut to put more drivers on the road without increasing the cost to passengers, but there's no incentive for them to do that.
Ultimately, what you said would make sense if drivers were actually Uber employees that operated at the direction of Uber. In that scenario, Uber could order more drivers onto the road without surge pricing. But that's not the case, drivers are voluntary contractors that make the decision themselves about whether to start working. The only tool Uber has to influence how many drivers start working is to increase their pay, and the only way to do that* is to turn on surge pricing. And since surge pricing acts to reduce demand in addition to increasing supply, the only way Uber itself has an incentive to use surge pricing is if Uber itself gets more money that way (which means taking a cut of the surge-boosted price instead of the original price).
I'll grant you that if Uber was a regulated service operating on behalf of the public, then perhaps it makes sense to penalize them for not adequately meeting demand. And in such a scenario, surge pricing can't be justified anyway, so the natural penalty of not filling as many rides as there is demand for would suffice. But Uber is a for-profit company, offering what is essentially a luxury good, and the only arguments that really have any bearing on Uber's behavior are economic ones.
it's possible that there are times when it makes sense to do that, e.g. when surge pricing is already on and raising it further will suppress demand enough that they won't make as much money. It's possible that reducing their cut could increase driver supply enough to make up for the difference (due to more rides happening). But I don't know if this is ever true in practice.
*short of reducing their cut, as mentioned previously, but there's no incentive to do this instead of surge pricing
As long as monopoly abuses are prevented, this problem will work itself out.