Uber: Are Reports of Its Evil Greatly Exaggerated?

Posted By Brant David in Culture, Lifehacks, Tech

BreakingModern — At the time of this writing, the disruptive app-based public transportation service Uber has once again come under fire for alleged sexual misconduct against riders on the part of a few drivers. Parroted diatribes against “libertarian thought” and “free markets” have shown up in response to the news, in this Valley Wag piece, for example. The press and reader comments respond to the allegations and Uber’s new one-dollar “safe ride fee” (which I’ll get to below).

Economic Motives

But let’s consider the economic unseen, instead of only what is seen and “seems” to be reality.

Let’s be clear at the outset that nobody is defending any Uber driver (or any other public ride service) who is guilty of rider abuse. Uber owes it to the communities where it operates to seriously investigate these allegations and take severe action against any drivers found guilty as charged. Of course, riders may be lying or grotesquely exaggerating. Drivers ought to be considered innocent until proven guilty, just like everyone else.

Also, something must be said about the so-called “safe ride fee.” In response to the reports about certain Uber drivers’ abuses, Uber has begun charging a $1 “safe ride fee” to users of its service. While this fee may be perfectly justified (see below), it’s an awful bit of PR.

Just terrible marketing.

The naming of this fee gives people the impression that if they don’t pay a dollar they don’t have the right to a ride that keeps them safe. Uber would have done far better to name this a “quality service enhancement” fee or something like that.

With all that said, one man who drives for Uber, who describes himself as “a trained chauffeur,” made the following points in a scathing comment on the Valley Wag piece:

• Too many riders aren’t tipping drivers, but Uber does charge its drivers for certain things, including the handing out of water and mints. This means that a lack of tips does real financial harm to the drivers.
• Some riders “want to ride around like a rock star,” but don’t want to pay for such treatment.
• Even some top business executives who use the Uber service aren’t tipping their drivers.
• The commenter takes great pride in his appearance and that of his vehicle, as well as in the safety of his driving and conduct, yet this isn’t getting him much in the way of tips or courtesy from riders.
• Riders for whatever reason seem to think that their rides should be dirt cheap or even free. This might be due in part to some riders’ entitlement mentality.

Could feedback like this from Uber drivers be the true reason behind Uber’s “safe ride” one-dollar charge? It would certainly make sense. It’s a way of saying, “If you expect top quality service from your driver, then it’s mandatory you pay him at least a little something extra.”

I think it’s also likely intended to ease some drivers’ financial tension — tension that can sometimes turn to inexcusable acts of misconduct. (You still need to change the fee’s awful name, though, Uber!)

Not Exactly Uber’s Fault

Another important point about rider safety: Josh Wolford is correct in saying that licensed and heavily regulated taxi cab drivers don’t have anything close to a pristine conduct record. What’s more, research has shown that,

“Occupational licensing laws, which impact as much as one-third of the U.S. workforce, cost roughly $100 billion annually in lost economic output, despite no evidence that licensing improves the quality of services provided to consumers.”

In contrast, plenty of observation as well as research demonstrates that service providers “who receive consistently poor ratings are edged out and sometimes barred from operating, while those who receive good ratings see that translated into better sales.” Since Uber gives riders the ability to openly rate and comment on their drivers, this concept is central to the service’s ability to continually improve as rapidly as possible.

Taxi services, meanwhile, remain government-protected cartels incentivized to remain dinosaurs.

At the time of this writing Uber is valued at $18 billion. It’s quite hard to imagine an alternative taxi service becoming so highly valued and so popular so quickly if it’s ubiquitously or systemically unsafe and abusive for passengers. Media reports about the (alleged) abuses committed by Uber drivers may well be analogous to the media’s selective coverage of airplane crashes and hijackings despite air travel’s super-sized safety and success rates.

As they say in journalism, “If it bleeds, it leads.”

Reason associate editor Ed Krayweski, a resident of Philadelphia, would be the first to agree with that take. An experienced user of both taxis and Uber, he calls the fear-mongering about Uber “silly” and tells us about an experience after a late-night train ride from Washington, D.C. back to Philadelphia:

“[I got home extremely late.] My cab driver missed our exit on the highway … Then he pulled over and asked me to enter the address onto his phone GPS. When he got off at the right exit he didn’t know which direction to go, and he made a wrong turn a little later when I wasn’t paying attention again. All in all, the ride took twice as long as it should have. Why did I take a cab? Philadelphia doesn’t allow Uber X. Since I was at a train station, where cabs are plentiful, I didn’t see the need to order a black car via Uber, which would cost maybe twice as much … I had a licensed cabbie but I might as well have been hitchhiking … [I first used Uber in Washington, D.C.], after getting a cab ride to the train station last time I was there and ending up missing the last train headed north. The cab driver’s card machine broke and he accused me of breaking it.”

Note: Uber X is a lower-cost service option. Under this option, the Uber driver doesn’t drive a sedan or “town car” but instead drives a smaller hybrid vehicle such as a Prius.

Catch this awesome video produced by Reason TV showing how Uber is getting attacked by the government for crony-capitalist reasons, and catch a regulated taxi driver engaging in some unethical behavior, too:

Video: Uber Wars: How D.C. Tried to Kill a Great New Ride Technology

So, What’s Unseen Here?

Howard Baetjer Jr. writes that Uber’s founders saw opportunity to profit from introducing their disruptive technology-based service because their app is,

“Able to connect riders with the closest available car, show waiting riders their car’s approaching, measure the distances traveled, calculate the fares, bill the riders, pay the drivers and let both drivers and riders leave reviews for others to see.”

Uber’s service is now also competing against taxis on price.

So what’s the big problem with this brilliant idea?

“[W]e don’t have free markets for city ride services. Legislators and government bureaucrats have political authority to intervene in these markets. And the taxicab companies, whose profits — and even existence — are being threatened, are trying to use this authority to block or impede the creative destruction that is doing so much to improve the lives of city dwellers,” writes Baetjer Jr.

Taxi services, while almost always privately owned and operated, are in reality cartels protected (and puppeteered) by municipal governments. They are so heavily burdened with regulations that it’s impossible for them to easily or quickly adapt to compete with a disruptive service like Uber.

But regular users of taxi cabs can attest that all the regulatory burdens don’t make the taxi ride experience totally safe, clean, efficient or even cost-competitive. What’s more, taxicab drivers are harmed financially by a regulatory burden that depresses their wages, giving them no incentive to increase quality.

Taxi services are so tethered to their regulators that they owe their very existence to them. So, now they’re turning to those regulators, hoping they forcibly shut down any competition. Or at least take away any competitive advantage other ride services may have.

Bureaucratic interference muddies the waters and forces Uber to spend money fighting just to operate instead of, say, raising its drivers’ wages. It’s common sense that happy, financially satisfied drivers — who, in this context, are analogous to happy “employees” — are less likely to commit offenses of any kind. As the Tibetan Buddhists’ proverb puts it: “One thinks of Dharma when the stomach is full; one thinks of stealing when the stomach is empty.”

To borrow concepts from The Cato Institute: Informed consent by riders will become more sophisticated as the market for information about Uber and similar services becomes more free and open. But cartels with monopoly protections impede the advancement of transparency and technological improvements.

As riders come to see the value of a service like Uber, we have good reason to be hopeful that it will become expected to provide tips for drivers so that the service can grow.

Meanwhile, Uber feels the need to spend a lot of its money to take on the taxi cartels and their regulatory masters. The company has enlisted the services of a PR master named David Plouffe. Plouffe ran the president’s 2008 campaign and spent years as a senior adviser at the White House.

In his blog Plouffe writes:

“Uber has the chance to be a once in a decade if not a once in a generation company. Of course, that poses a threat to some, and I’ve watched as the taxi industry cartel has tried to stand in the way of technology and big change. Ultimately, that approach is unwinnable. But I look forward to doing what I can right now to ensure drivers and riders are not denied their opportunity for choice in transportation due to those who want to maintain a monopoly.”

It’s too easy, or seems to be, for monopolistic cartels to make use of the guys with guns, while not getting blood on their own hands, to prevent disruptive competitors from growing their businesses and changing an industry’s landscape. What we must keep in mind is that monopolies are oppression, too. Political tyrants don’t have a monopoly on that.

For BMod, I’m Brant David.

Cover Art: Original Photo by Gangster Car Driver on Flickr.

Second Image: Original Photo by bfishadow on Flickr.

Third Image: By Users Omnibus, Uris on en.wikipedia [see page for license], via Wikimedia Commons