This guy probably should not write about Uber and the taxi business. I don’t own a smart phone; I live 15 miles into the country from a one-taxi town and I can recall using a taxi twice in the last 15 years. However, taking the risk, here are some observations. The first is that the “sharing means economy” competition. We sometimes distort the meanings of words to hide realities and the reality here is that we are introducing more competition into our economy. This guy lived for four years on a British Columbia coastal Indian reserve where the sharing economy meant that fishermen shared their catches or when somebody faced a medical emergency they would get a fundraising dinner. (This was very important where most emergencies meant an expensive plane trip to the big city.) The sharing features of their economy were probably inherited from pre-white contact times. Our society gives lip service to the market economy and competition but when we get to the details our commitment varies according to the color of the hat we are wearing. It is not surprising consumers of taxi services are quite fond of Uber but the owners of taxis and their drivers are feeling threatened by the increased competition. Traditionally the taxi industry has dealt with competition by convincing local governments to license their cars. By limiting the number of cars they can limit competition and keep prices up. If customers have to wait that is irrelevant. A second observation is that providing transportation to others is low paid work and probably always will be regardless of Uber promises to prospective drivers. A Google of “taxi driver earnings” shows that a few drivers earn less than minimum wage and most are only a little better. One has to anticipate that once Uber has changed the industry this will continue to apply. As with many low-paid occupations there are opportunities to exploit workers. It may be that Uber with its computerized collection of data will be more transparent and less exploitative. One of those who appear to have been deceived by the term “sharing economy” is Janice Stein, director of the Munk School of Global Affairs in Toronto. In this essay she writes as if the sharing economy is a new reality based on “disruptive technologies.” (The internal combustion engine was once a disruptive technology.) One of her criticisms of the sharing economy is that “The best available evidence shows that many people who seem to be stringing together part-time work in “sharing” enterprises are at or below the poverty line, with no employment benefits and a social safety net that only the state provides.” Neither increased competition or disruptive technologies should be blamed for current economic problems. Another criticism is that people providing services are not regulated, avoid safety inspections and don’t pay taxes. We must be careful here because regulations including safety inspections can be an excuse to limit competition. As I understand it the new technology makes it easy for customers to provide evaluations and regulation. A driver with and unsafe car would be quickly be called on it. Uber has been criticized for its “surge” pricing. This is the same as time of day pricing which some power utilities are or will be introducing. Prices should be determined by supply and demand. One of the problems with the regular taxi business is that does not meet changes in demand throughout the day. One last concern must be privacy. We should assume anything that happens with a computer is probably being stored and is probably available to advertisers and government agents. Most people appear to be not worried about the amount of advertising to which they are exposed. The risk from government is that people don’t like to be criticized. Computerized data make it easy for government agents to decide who are the enemies of the state, anyone who disagrees with their personal beliefs, and to track them. I find that frightening. The sharing economy is making some industries more competitive which is good for consumers and maybe not so good for producers. Its downside is the potential for social control which goes with the extensive use of computers.
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Filed under: Economics | Tagged: coastal Indians, Competition, Economics, government agents, low wages, market economy, privacy, sharing economy, taxi business, taxi industry, the sharing economy, Uber |