Moon of Alabama Brecht quote
May 21, 2019

Uber Drivers Learn To Game Its Antisocial System

Uber and other ride-hailing companies use surge pricing, also known as “dynamic pricing” or “demand-based pricing.” They increase the ride fare if the demand for rides is greater than the available capacity. In moments of heavy demand, they increase their fare up to three times the normal price.

A 2015 Uber and University of Chicago, Booth School of Business, study claims that such surge pricing is beneficial for both sides, the drivers and for those that use the service:

Uber operates in a market with large fluctuations in demand and a variable supply of driver-partners. Driver-partners are free to work whenever they want and must be incentivized to provide services. Under these conditions, economic theory tells us that using prices to signal to riders that rides are scarce and inducing driver-partners to forgo other activities will close the gap between supply and demand and lead to improved outcomes for both riders (as a whole) and driver-partners.

Reality disagrees with what the economic theory tells us. In the U.S. Uber drivers are seen as independent contractors. The drivers say that the standard fare is too low, or Uber's 35-40% share of it too high, to make a living. They therefore looked for and found ways to game the system:

Every night, several times a night, Uber and Lyft drivers at Reagan National Airport simultaneously turn off their ride share apps for a minute or two to trick the app into thinking there are no drivers available---creating a price surge. When the fare goes high enough, the drivers turn their apps back on and lock into the higher fare.
...
“All the airplanes we know when they land. So five minutes before, we turn all our apps off all of us at the same time. All of us we turn our apps off. They surge, $10, $12, sometimes $19. Then we turn our app on. Everyone will get the surge,” one driver says.

It is wonderful to see such worker solidarity:

"And does everyone oblige? Does everyone do it?, Sweeney asks.

“Yes 100 percent. Everyone do it. Everyone knows it’s not worth it. They know if they take a ride from here without surge, without pumping the surge up, it’s not worth it.”

In less than a minute, about 50 drivers are locked into the surge.

“It’s like we work as a family, like a team together. Like as a team. We do it. Every night. We do it again. We drop off, come back again, it’s a routine. We do it to 12 o' clock."

The business idea on which Uber is based is not profitable. From its beginning it grew by breaking the law:

Uber developed an aggressive expansion technique called “principled confrontation” in which Uber simply began operating in a city or region until being told that it didn’t have permission to do so. At that point the firm would mobilize public support for its service, using an array of lobbyists, followed by a political campaign to change the local regulations. It’s a method that worked in large and small communities, but not everywhere – even in the USA and Canada.

That strategy made it impossible to build its business in Europe and elsewhere.

Even while it exploited its drivers the company never made money. In the 4th quarter of 2018 it lost $800 million. The company was immensely hyped with an estimated value of $120 billion before it was recently taken public. But the initial public offering was a total flop. The opening stock price was $42 and fell to $36 within the first two days. The underwriting banks had to step in to prop up the price to $41.85 today, which sums up to a total evaluation of some $70 billion. That is still way too high.

The private investors who bet on Uber during the last years lost money:

From May 2015 on, Uber sold convertible preferred stock to venture investors on the private market at prices of $40 or higher, including 15 transactions with experienced investors at $48.77 each, totaling about $6 billion.

All those investors are underwater today on their Uber shares.

Uber says it will make profits when self driving cars become available, allowing it to eliminate those pesky drivers. But while driver assistance systems are more and more common, it is highly doubtful that truly autonomous cars will evolve within the next decade. When they do they will be easy to sabotage.

Unicorns like Uber, Tesla for example, will also have strong competition from genuine car manufacturers with very deep pockets.

Uber and the like also create high external costs, that the public only now starts to see. They increase the total amount of traffic while hurting public transport and other valuable businesses. The too low worker compensation for its 'contractors' means that the public will, in the end, have to pay for their well being. The company lost $12 billion during the last four years. Its price dumping, financed by its investors, destroyed decent paying jobs in the taxi industry. Over time these costs will create more resistance to such companies and demand for regulating them will increase.

The so called smart investors, who early on bought into Uber and allowed for its failing strategy, will hopefully learn from its upcoming crash and their own high losses.

For the society as a whole such anti-social companies have no value and should not exist.

Posted by b on May 21, 2019 at 01:51 PM | Permalink

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Uber and the like also create high external costs, that the public only now starts to see. They increase the total amount of traffic while hurting public transport and other valuable businesses. The too low worker compensation for its 'contractors' means that the public will, in the end, have to pay for their well being. The company lost $12 billion during the last four years. Its price dumping, financed by its investors, destroyed decent paying jobs in the taxi industry. Over time these costs will create more resistance to such companies and demand for regulating them will increase.

Exactly this.

Uber's (and Lyft etc.) main weakness, in the grand scheme of things, is that it is not "revolutionary". To put it into a scientific language: it doesn't promote the development of the productive forces. It is just an app which massifies an already existing scheme of solidary rides (in Brazil, the system existed long before Uber, but in an informal, directed for university students, way); it's profit source relies purely on absolute exploitation of labor and, being very generous, on economy of scale (in very special circumstances). And it's also borderline illegal in many rich countries -- specially the EU, which is, today, still the largest consumer market in the world by purchase power.

To make things even worse for Uber, it's "system" is not even patented: competition already exists and will intensify. So it cannot even do the classic form of profit by dispossession (like the privatized water, mass transport and electricity services do in many countries).

Posted by: vk | May 21, 2019 2:21:32 PM | 1

Aside from the negative social consequences of companies like Uber and Lyft (low pay for workers, no social benefits, the theft of the commons without paying their share for infrastructure as taxi companies do, etc.), it cannot be overstated how they cannot make money under their model. Even with the companies not paying their workers properly, and cutting the workers' share even further, they still lose money on every ride. The more business they do, the more money they lose. To date, they've been propped with regular infusions of capital, giving them more money to lose--but, like Tesla, they are just capital junkies who can't break even, let alone make a profit.

Posted by: worldblee | May 21, 2019 2:24:03 PM | 2

Similar behavior has been observed in "deregulated" electricity "markets" when operators have taken some generation capacity offline in order to boost the price that their units remaining online receive.

Posted by: spudski | May 21, 2019 2:34:57 PM | 3

Some call this 'solidarity' ... I call it scam artists scamming scammers.

Most Uber drivers would suck cork to be like the billionaire boiz who own them.

Posted by: Pelican3301 | May 21, 2019 2:48:32 PM | 4

Such economic ignorance. Ive been driving for Uber for years and was able to make a comfortable salary doing so. Human beings naturally want more money, so nobody should be shocked that a bunch of entitled losers are manipulating the system to scam passengers and Uber out of more money. That, in no way, invalidates the sound economic principles behind surge pricing and its effects. I can tell you from years of experience that drivers get on the road when they know its surging and that many passengers will wait until prices drop before requesting a ride. And to the guy saying Uber/Lyft doesn't pay their share of infrastructure costs, I beg to differ. The highway taxes on the tires and gasoline we buy pay for the roads as same as anyone else's. Aside from 'fees' to be allowed the privilege of operating, what extra road taxes to taxis pay?

Posted by: PilotMKN | May 21, 2019 2:57:04 PM | 5

God, is this article stupid... Uber doesn’t pay its drivers enough... but Uber is losing money... so Uber should go out of business, and it’s drivers should lose their jobs. Bravo!

Posted by: Jamie_NYC | May 21, 2019 3:02:33 PM | 6

A 2015 Uber and University of Chicago, Booth School of Business, study claims that such surge pricing is beneficial for both sides, the drivers and for those that use the service:

Uber operates in a market with large fluctuations in demand and a variable supply of driver-partners. Driver-partners are free to work whenever they want and must be incentivized to provide services. Under these conditions, economic theory tells us that using prices to signal to riders that rides are scarce and inducing driver-partners to forgo other activities will close the gap between supply and demand and lead to improved outcomes for both riders (as a whole) and driver-partners.

Predictable that it would be a "school of business" in Chicago that would flatter the model!

I don't understand what is going on here, though. Do passengers know before getting into the taxi how much the journey is going to cost?

My only experiences of using Uber are that the cost depends on the traffic, and therefore is unknown until arrival at the destination. If that is the case, such surge pricing would be intolerable, even aside from the gaming.

Also the commission charged by company is more than extortionate, it is outright robbery. What are the "costs" supposed to be? All they are doing is making an automated electronic connection. It ought to cost virtually nothing, as I see it. What then are the "costs" - realtime premiums for the founder? Million dollar per hour salaries for the company directors?

The people who set this scheme up belong in prison, not in business. They have made themselves "rich" through fraud, and through unreal stock pricing that relates neither to what they have put into the company, real profits, nor any meaningful and honest assessment of value. They are simultaneously ripping off the drivers, the consumers, the state (unpaid use of infrastructure costs), the investors, and the stock marcket - this is the biggest part of the scandal. Somehow they must be siphoning off illicit profits.

It reminds me of that sleazy owner (Green, was it?) of that high street clothing shop in the UK who paid salaries to himself and his wife massively exceeding the available funds in the company, and then illegally raided the company pension fund to pay for it. If I remember correctly he took over the company using bank loans and dishonestly misrepresented himself to the previous board, then after raiding the pension fund to pay his salaries he called himself a "billionaire", after earning not a single penny of real hard money. Pure misrepresentation at every level. He got away with it by making huge donations to the Conservative Party. Uber seems to be much the same phenomenon.

Corruption, subterfuge and false accounting, nothing else.

Posted by: BM | May 21, 2019 3:04:03 PM | 7

I see the "Uber plans to become profitable with autonomous cars" thing over & over but I'm extremely skeptical that the developer of an app for operating unlicensed taxis will suddenly start making buckets of money as soon as they can pivot to being owner/operators of an international fleet of people delivering robots.

Posted by: ninjasuperspy | May 21, 2019 3:17:32 PM | 8

Self-driving cars (and especially heavy trucks) are a fantasy designed to separate investors from their (or the banks) money. As b well understands, the last 5% of a software development project takes as long as the first 95%, but no one can wait that long, and some of that last 5% will never be finished and/or not work properly, as the Boeing 737 Max disaster illustrates.

Maybe 95% is good enough in a few limited locations. But 95% won't cut it in a snow storm, fog, ice, roadways with worn stripes (they have to be repainted every year where I live), and especially construction zones. Often the stripes "disappear" at night when it's raining, while oncoming headlights reflect off the wet road and obscure pedestrians and bicycles.

As for computer-controlled heavy trucks, that is plain delusional. I drove big trucks for a few years, a long time ago, in the Northeast US, including New York City. It's a real pain for human drivers, especially where loading docks are an after-thought and nearly inaccessible. There are low bridges everywhere and turning at intersections requires the use of other drivers' lanes and their cooperation. This involves non-verbal communication with those drivers. How will the computer know when someone is waving their hand to signal they are yielding?

People promoting these ideas should spend a week riding shotgun in a big truck. That might smarten them up, or at least shake their teeth loose!

Posted by: Trailer Trash | May 21, 2019 3:26:32 PM | 9

Thank you b and BM nailed it. Fraudsters siphoning cash from gullible investors. How many superannuation and other funds are being bled by these shonks.

Posted by: uncle tungsten | May 21, 2019 3:31:22 PM | 10

Over the years, I've ridden in many taxis in different cities, states and nations and they were all predictable because the fares were stated up front, regulated, and the meters were approved in the same manner that scales at retail stores and meters on gas pumps are approved and tagged on a regular basis by a government agency. How Uber can operate as a taxi company in an unregulated manner is thus beyond me as it would be illegal most everywhere I've hired taxis. It doesn't surprise me that a University of Chicago entity would endorse something unregulated and tout its efficiency since it's the home of Junk Economics.

Posted by: karlof1 | May 21, 2019 3:34:38 PM | 11

@ B who wrote
"
For the society as a whole such anti-social companies have no value and should not exist.
"
I totally agree and their existence speaks to what the finance folks see as social engineering.

Why is there no social discussion about transportation alternatives both for goods, services and people movement?

Because doing so would bring up the need for mass transit that is subsidized by government (socialism). So instead we get this Chicago school monetization of people movement that isn't meaningful or financially rewarding employment and is wasteful of resources.

In the bigger picture, the future of employment will come to a head if the war economy is stifled and all those military folk go home to do other things.

Thanks for the posting b....great subject matter for barflies, IMO and also great troll entertainment so far.

Posted by: psychohistorian | May 21, 2019 3:46:43 PM | 12

karlof1 said this on the previous thread, in reference to michael hudson.. it is true in spades here as well :

"US banks no longer support industrial capitalism; they support financial capitalism almost exclusively..."

taxi drivers are a lot smarter then people give them credit for.. i suppose one could say wall st. hucksters are too.. it is the hucksters who have created this system that will eventually completely buckle under pressure and people see it for the ponzi scheme it is..

Posted by: james | May 21, 2019 3:53:57 PM | 13

NYT took a break from their usual propaganda and did some actual reporting about how NYC let finance destroy their medallion system. https://www.nytimes.com/2019/05/19/nyregion/nyc-taxis-medallions-suicides.html
So it wasn't just rich assholes in SF that decided to destroy the lives of taxi drivers, it was rich assholes in NYC too.

Posted by: UserFriendly | May 21, 2019 3:55:36 PM | 14

Sooner or later we are gonna realize that it is the existence of rich assholes that we need to be worried about. Every billionaire is a policy failure.

Posted by: UserFriendly | May 21, 2019 3:59:00 PM | 15

You mean the "business" modeling and assumptions coming out of the University of Chicago [and elsewhere] are wrong, and rest a presumed perfect and instant exchange of verified data, I'm just shocked. Sarcasm.


Posted by: Jay | May 21, 2019 4:04:03 PM | 16

Maybe Uber can make it losing money until robot cars are available. I know a man who gets in his Tesla in Princeton, NJ, and it drives him to Boston and back again, entirely by robot. Now, would that work in a rain storm or snow? I doubt it, but I think Uber and Tesla, for all their unicorn, money-losing faults, out to be given some credit for developing important technology, even if that tech doesn't deliver as promised, and maybe never will. If your business model, as Uber's appears to be, is controlling your burn rate in hopes of replacing millions of taxi-driving people with robots, eventually, you may have a lot to answer for when the torches and pitchforks come out in a few years. But that's what the billionaires' secure, bunker-like homes in New Zealand are for, no?

Posted by: casey | May 21, 2019 4:29:47 PM | 17

Yes, Uber built its brand name during the years it subsidized fares with investor money. Most of their revenue comes from a handful of mega cities, I These cities have to limit taxis due to simple lack of road space. The Uber business model relies, almost in full, on exemption or avoidance of this. NYC now has 4x as many Ubers as the 20000 taxis that planners thought was prudent. (Lyft has 2.5x more).
Uber is a great idea in a low population density markets, but there isn't enough profit there.

It's interesting to see people tricking the system, and I sympathize with the drivers, some of who really can make money.

But passengers should realize that adding more vehicles to a finite space will make all rides take longer. Letting a monopoly perform the fairly simple task of dispatch and use prediction will make the rides more expensive. When Lyft dies or gets bought out, they will turn the screws - by necessity to pay back the investors.

For the insane sums of money invested, residents could instead have faster, cleaner, somewhat luxurious public transit.

Posted by: Ptb | May 21, 2019 5:12:41 PM | 18

@ Posted by: PilotMKN | May 21, 2019 2:57:04 PM | 5

Well, if you're making a living off Uber, good for you. But you're just one person.

Human beings naturally want more money, so nobody should be shocked that a bunch of entitled losers are manipulating the system to scam passengers and Uber out of more money.

It depends, which would you like to receive: 1 American Dollar or 2 Argentinian Pesos? The second is more money than the first, but the first has more purchase power than the second. No sane human being would exchange US$ 1.00 for ARS 2.00. Money is just the ideal commodity, the universal commodity. It is the fetichized form of everything humanly useful a human being can produce and use (buy). Human beings don't "naturally want more money"; they want to live the best way they can: in the capitalist world, that means humans don't want money because it is money, but for what it can buy.

And to the guy saying Uber/Lyft doesn't pay their share of infrastructure costs, I beg to differ. The highway taxes on the tires and gasoline we buy pay for the roads as same as anyone else's. Aside from 'fees' to be allowed the privilege of operating, what extra road taxes to taxis pay?

It's not that Uber doesn't pay "its fair share". It's just that it is a stupid idea if you're thinking long-term solutions to infrastructure. Uber doesn't create cars: it just relocates then. Those drivers would be driving either way.

And going full-automation wouldn't solve Uber's profitability problem, since you can't hire a self driving car: you would have to buy one. If you buy something, you have to spend more money. With human drivers, you have the advantage of exploitation of labor: that's not the case with drone cars. And I'm not even getting with the problem of maintenance and proprietary software ("intellectual property"), all of which would pile up on Uber's expenses sheet.

--//--

And about the "self driving cars".

Self driving cars will probably not be a thing for the same reason flying cars were never a thing: it is stupid by design. We already have a flying car: it's called helicopter. A car is aerodynamically designed to run on land. If everybody had a flying car, then the problems would be the same as in land cars (aka cars) -- with the worse situation fuel consumption would be much higher and any accident would be fatal.

The same way, why have a self driving car? Well, of course, you could be blind or too old -- but we're talking about an invention for everybody.

Unless you're talking about a true A.I. -- a robot that could full learn alone and potentially pull off out a Matrix dystopia -- we're essentially speaking of preprogramed routes, with some algorithm capable of switching between a preprogramed set of routes to get the optimal result within the limits of the set.

Well, if you're talking about a preprogramed route, then why not build a high speed railway, which transports a lot more people, is faster, safer, and proportionally cheaper to maintain? We already have drone trains -- even in Brazil they are already a reality (even though, in practice, they need an employee to be there specifically for emergencies with the system, so, in practice, you're trading a driver for a T.I. guy or a trained station employee). Even a dedicated bus corridor would do a better job than a self driving car cost-benefit-wise.

The true behind those self driving cars is that the USA's infrastructure is irremediably built towards the use of automobile in exclusion to everything else apart airplanes. So, this is essentially the Americans trying to cross the alps in order to get something that resembles the efficiency of a high speed train.


Posted by: vk | May 21, 2019 5:13:05 PM | 19

Buenos Aires has an Uber problem.
https://www.gigwatch.com.au/paper-li

Looks like a clear example of an anti tax ap being used to suck wealth from a poorly regulated economy that suffers from inertia when it comes to framing legislation. THAT is what Uber preys on.

Posted by: uncle tungsten | May 21, 2019 5:46:51 PM | 20

@15 UserFriendy

Every billionaire is a policy failure.

Never saw it said better.

Posted by: Grieved | May 21, 2019 5:54:26 PM | 21

@17 casey.. the way i see it big money is producing technology to replace people with machines.. it has been going on for quite some time.. i think it is best we aren't naive about the end result at this point.. and, i don't personally believe we should be flattering the maniacal egos behind this advance in technology either.. but, what do i know.. everyone seems to be doing the opposite, admiring rich fuckers and etc. etc. most of these folks at the top of these corps bringing this ''amazing'' technology are messed up psychopaths/sociopaths.. i will go with @15 urerfriendly comment as well..

Posted by: james | May 21, 2019 6:04:05 PM | 22

james 22 "everyone seems to be doing the opposite, admiring rich fuckers"
The downside of a merit based system where merit is judged on material possessions and currency accumulation.
It is why sociopaths quickly rise to the top in the US and other countries that are following the US system.

Posted by: Peter AU 1 | May 21, 2019 6:29:49 PM | 23

random thoughts:

https://www.cbc.ca/player/play/1372790851816

a show called "marketplace". they just happened to rerun this "battle of the food apps" episode a few days ago and it includes uber eats (not surprisingly one of the worst offenders in every way). they treat their food people with the same disdain as their drivers and screw the restaurants in the process as well. they also declined to appear on camera. what a surprise.

https://calgaryherald.com/news/local-news/nenshi-says-city-tested-uber-screening-process-with-criminals

an oldish story; the mayor of calgary got caught on a boston driver's periscope feed calling the former ceo (that kalanick twat) a "dick" and admitting he tested uber's system by having people with criminal records apply. both those things were fabulous. uber threw a pissy hissing fit and left the city for a while but i'm pretty sure they slithered back in.

https://www.theverge.com/2018/7/13/17561484/george-hotz-comma-ai-self-driving-car-scam-diy-kit

with self driving cars i find george hotz the most amusing and realistic person to follow. for anyone unfamiliar with hotz, he's basically a pothead "boy genius" who cracked the iphone and told elon musk to piss off among other fun feats. imagine richard hendricks from "silicon valley" but with cracking instead of compression. he developed a semi-self-driving car "kit" (more like an augmented autopilot but still beyond what many companies have produced) that cost about $1,000 before being kiboshed by the government and releasing the software for free.

https://www.theverge.com/2016/10/28/13453344/comma-ai-self-driving-car-comma-one-kit-canceled

i was tempted to comment on #5 and #6 but that's a LOT of stupid to unpack. i will say it's hilarious when people pretend any silicon valley company contributes to infrastructure. maybe in the cayman islands but in the states not so much. but keep believing your "tire taxes" are going to rebuild detroit or whatever.

Posted by: the pair | May 21, 2019 6:33:37 PM | 24

The Uber phenomenon is part of a larger syndrome, at least in the US, and perhaps summed up by the concept of the "Gig Economy", so called.

This is the idea that no one has a regular job anymore, but that everyone is a contractor in charge of one's destiny. As with many related things, it's a culture of exploitation hidden under the myth of the rugged individual. As if only the individual is the source of one's wealth, or the holder of property rights, or the manager of one's time. As if the community has nothing to do with any of this.

The short-term rental market is a similar illustration of how the sole possessions of the individual, or individual family, can be monetized to constitute not just wealth, but income. The upside is that this does produce income from things such as cars and homes, or garage-apartments, which would never have produced such income without such markets.

The downside is that the overall value of society is lowered.

Neighborhoods become monetized, when their prior signature attribute was that they were not-for-profit, but simply labors of love. Vehicles get turned into pizza delivery and Uber rides, with all the social detriments shown in b's article and sourced links.

Similarly, there was a time when one man could earn enough to support a wife and family. Feminism was tricked into thinking that women going out to work was the great leveler - and this was understandable because the paradigms in favor of this concept had been in place since decades earlier.

But what feminism should have created for a Great Equality was the concept of the equal-gender breadwinner. Imagine: the breadwinner could equally be male or female, but each family only required one. Instead of, "Don't lay off Fred, he has a wife and 2 kids to support" we might have heard, "Don't lay off Freda, she has a husband and 2 kids to support."

Instead of these real equalities, we have allowed the Chicago boys to create an economy that requires two spouses working. And now just to survive it also requires renting out your purpose-built or existing garage apartment, or moving into the smaller unit - or even living with extended family - while renting the larger unit, your sole item of capital.

This, and leasing the use of your car. And being a "contractor" (usually with no contract) with no insurance, no tenure, no union to back you, and no security of future beyond the present moment. And none of the commons is strengthened by any of this, so there is no community assistance to help you as you slowly fall below subsistence.

Maybe, in one sense, none of this new market opportunity is wrong. But as always, the skirting of existing regulations, and forcing community standards and regulations to race to catch up with the newly created gray areas, creates profit for the innovators at the expense of the whole.

And believing that it's happening to give you freedom and empowerment, and that the greater good or the larger community is thereby served, is tragically mistaken.

Posted by: Grieved | May 21, 2019 6:35:20 PM | 25

BM @ 7:

"...Somehow [Uber] must be siphoning off illicit profits ..."

You need not look very far.

Brian O'Keefe and Marty Jones, "How Uber plays the tax shell game" (Fortune, October 2015)

Oh my!

"... In May, Uber formed a new business entity in the Netherlands called Uber International C.V. Over the next few weeks Kalanick’s San Francisco startup executed a flurry of transactions that shifted ownership of several foreign subsidiaries to Uber International C.V. and formed an agreement with the Dutch business to split the profits from Uber’s intellectual property. By mid-June, Uber was ready to continue with its dizzying rise, but with one critical difference: From that point on, nearly all its ride-share income outside the U.S. would be effectively shielded from U.S. taxes ..."

The Netherlands is a known tax haven.

It's got to be as certain as the sun rising in the east and fish swimming in the sea that Uber either employs or outsources a lot of its accounting work to lawyers and accountants who specialise in transfer pricing arrangments between companies and their subsidiary companies in other countries with low corporate income tax regimes.

Posted by: Jen | May 21, 2019 7:06:12 PM | 26

Uber in Brazil broke the taxi oligopolies that were in grand part controlled by politicians and people that owned 5 or more licenses and never set foot inside a taxi as a driver.

It is perfectly legal here, as our Supreme Court just decided (based on free enterprise and free competition, and that in a court that has 8 judges out of 11 nominated by leftist presidents) and it is an awesome way of reducing tax evasion as well, which is a huge problem with that part of the economy.

I do not see why b is so upset with Uber. If it was not worth for the drivers, they would not use it to sell their services. Also, people always can get together and make another app if they think that they are being exploited by the existing ones.

Posted by: Alves | May 21, 2019 7:14:30 PM | 27

@23 peter au.. pretty much how i see it too..

@26 grieved.. good post.. thanks.. the exploitation of technology by the few has had a huge impact in this too.. logging, fishing and many traditional jobs where people were paid a good wage here in b.c. are gone never to come back.. they have b for those who want to hop on that bandwagon..

@28 alves.. one monopoly (uber) to replace the smaller oligopolies.. looks good, doesn't it?? airbnb is built on much the same premise.. so is amazon and a number of other monopolies that have replaced smaller individual owner / operators..

Posted by: james | May 21, 2019 7:57:28 PM | 28

Alves | May 21, 2019 7:14:30 PM | 28

Rideshare co-operatives are growing as a result of the deregulation of taxi services. See: Peoples Ride in Michigan and the Green Taxi Coop in Denver Colorado are just two examples. Rideshare is a growing movement and often co sponsored by unions and similar civic minded groups.

Posted by: uncle tungsten | May 21, 2019 7:58:23 PM | 29

As a former San Francisco cab driver, you know, the place where actual, licensed, professional drivers work? The place where professional cab drivers are committing suicide at the rate of about one per month? I would never, ever, use lyft or uber, or any horseshit like that. SF cabbies have to take a class, taught by the police department, are background checked, and vetted. Any moron can become a lyft or uber driver. I know quite a few losers, being a musician, who let drugs destroy their families and lives, who are now living in their cars, still on drugs, driving USA pseudo-intelligentsia around, probably thinking about offing their fares while they drive them from one glory hole to the next.

Posted by: Ruben Chandler | May 21, 2019 7:58:51 PM | 30

my message was missing my comments on airbnb - another dynamic similar to uber meant to erode communities further of what resources or actions the community had control over previously..

Posted by: james | May 21, 2019 7:59:06 PM | 31

@ james

Due to lots of work I missed your commendable attempts to question jackrabbit's increasingly strident tones towards people like Craig Murray who have given up lucrative careers for reasons of principle and ethics. Who is this little jackrabbit who writes in bold and sort of bullies his way around the MOA playground?

Posted by: Lochearn | May 21, 2019 8:18:55 PM | 32

This is all about the competition part of the capitalism religion where everyone get to race each other to the bottom....for profit to someone else.

As other have noted, big business is killing all the small business, for profit instead of service to the customer provided for life supporting remuneration.

It is real hard to game a system where the lifeblood of playing is owned privately

It is hard to live in a country where people like Mitt Romney have gamed the system so that corporations are people

It is hard to game a system as people when corporation are also considered people and can charge you for playing the game.

The game that none speak of is the God of Mammon religion that all belong to but most are clueless about their faith in. The God of Mammon religion is part of their social contract and its ramifications to each persons ability to play the game of life.

"Corporations are people, my friends", spouted Mitt Romney. When you have a country by and for the people, you just redefine who people are and power shifts.

I continue to posit that the only real solution to the culture of the West is to make all of finance public instead of private. Reign inheritance in so despots are not created......I like the comment above......a billionaire is a social policy error

Posted by: psychohistorian | May 21, 2019 8:35:50 PM | 33

@33 lochearn.. i like jackrabbit, but he is a bit strident as you say, with regard to a few people i have come to admire for their ideological positions... perhaps though jr has a valid point.. that he wants to take issue with anyone who doesn't share his viewpoint is kind of counter productive, but we all have out hangups!

Posted by: james | May 21, 2019 8:37:26 PM | 34

Grieved @26--

Yes, it reeks of Randism now having given it some thought, as do the others you cited as examples.

Posted by: karlof1 | May 21, 2019 8:39:05 PM | 35

My first thought regarding Uber Rides and Uber Eats was - all these uninsured drivers on the Australian roads!!!! Among all Uber "winning" schemes, the subcontractors' insurance, or lack of it, is one of the best.

Taxi drivers pay fairly high insurance cost. When you take out insurance on your private vehicle you have to state if the vehicle is for private use or for business use. When a vehicle is for shared use, this still gives ground to insurance companies to deny insurance. As a pedestrian or a passenger, if you suffer an accident caused by an Uber driver, you can dream about getting compensation. Only as an insured driver of another vehicle hit by Uber, your insurance company will take care of it. I am really surprised that the insurance companies took this "subcontractor insurance" scheme on the chin. Also, where is the Government to prevent this road jungle?

Obviously, the uninsured drivers increase the insurance premiums for everybody else. Thus, Uber is yet another typical private-profit-public-loss scheme of the crony capitalism. It would be good to know which politicians with one eye closed have invested into Uber.

Posted by: Kiza | May 21, 2019 9:01:41 PM | 36

It's another monopoly play out of Silicon (Monopoly) Valley. Many local cab companies are local monopolies, Uber and Lyft are trying to be worldwide monopolies. The local companies usually try to obey local laws, Uber is above that shit. Local companies have to make a profit, Uber is above that too. The end cause is the free money gushing out of New York for the well-connected fraudsters on Wall Street, Monopoly Valley, and Omaha.

Posted by: David Carson | May 21, 2019 9:03:20 PM | 37

Alves @ 28, Uncle Tungsten @ 30:

You need to be very careful not to confuse rideshare arrangements with Uber's business model. Rideshare and carpooling arrangements imply that drivers and riders co-operate voluntarily, and such arrangements can include lifts given for free or agreements on payment to cover the driver's costs in providing the transport.

Uber on the other hand uses a business model of outsourcing taxicab-style work to "contractors" who, through Uber's own payment arrangements, are effectively virtual employees of the company. They are called "contractors" so that Uber does not have to provide the entitlements that full-time employees or even casual employees might be entitled to, such as minimum pay rates.

From my understanding, depending on the country where Uber operates, Uber drivers are not always able to negotiate prices with passengers, solicit their own customers and grow their own customer base, or make contracts on their own terms and conditions not influenced or dictated by Uber.

IMO the situation involving Uber and its drivers resembles what economists call a monopsony, where one buyer dominates a market where there are many small suppliers, and sets the price at a level that forces the suppliers to compete against each other for the work, resulting in over-supply at a low cost to the buyer (and suppliers unable to cover their own operating costs of supplying the product or service). This is most definitely not a ridesharing arrangement in my view.

Posted by: Jen | May 21, 2019 9:15:07 PM | 38

Clean capitalism is the best system there is, simply because people are predominantly selfish animals by deep nature and all they care about, once their stomachs are full and the roof is over their heads, is keeping up with the Joneses. Any exceptions to this rule just prove that this as the rule.

But keeping capitalism clean is impossible (just like any other system). People's corruptibility very quickly leads to the information imbalance, the regulatory capture and the abuse of externalities. Practically all schemes of dirty capitalism can be reduced to three fundamental schemes. Dirty capitalism is all about: repackage these same-old-same-old schemes into new unrecognizable packaging, then grab the money and run before the victims wake up. These are:
1) financial pyramids (flim-flams),
2) other people's money (pensions),
3) externalities (private-profit-public-loss).
It would probably be fair to say that there is no way of getting rich without repackaging one of these schemes. Therefore, almost everybody who is rich did one of these schemes or his father or grandfather did it.

Posted by: Kiza | May 21, 2019 9:25:24 PM | 39

From my pov this thread could simply be called Uber.
Uber is so obviously a fraudulent accounting scam facilitated by the de-regulation plague unleashed by Grover Norquist's recommendation that the Perfect Government is one "small enough to drown in the bathtub."

Posted by: Hoarsewhisperer | May 21, 2019 9:44:46 PM | 40

@ Posted by: Alves | May 21, 2019 7:14:30 PM | 28

In the short term, maybe -- depends on the country, even on the city you're talking about. I don't argue the taxi scheme in Brazil is a corruption nest - but, let's be real: Brazil is a Third World banana republic, everything that flourishes there is a corrupt scheme by default.

However, in the long term there's no doubt: Uber doesn't promote a revolutionary technological shift, which capitalism depends on to slowdown its inherent tendency for falling profit rates. Unemployment would be even higher in Brazil if it wasn't for there "gigs", I agree -- but these schemes only flourish in a scenario of economic devastation and crisis. You know the traditional story of the average Uber driver in Brazil: adult male, with young children, not unusually recently married, lost middle class job due to the 2013-(?) economic depression, wife is either unemployed or a housewife, resorted to Uber as a last tool to at least maintain the basic needs of his children.

If this depression that begun in 2008 isn't solved by the next industrial revolution, even those gig economies won't hold it for capitalism.

Posted by: vk | May 21, 2019 9:55:14 PM | 41

It might be helpful to get hold of Uber's Balance Sheet and Annual Report to deduce where 35% to 40% of Uber's gross turnover disappears to, leaving a net loss in its wake.
As BM | May 21, 2019 3:04:03 PM | 7 points out, and Jen | May 21, 2019 7:06:12 PM | 27 & Jen | May 21, 2019 9:15:07 PM | 39 explores in greater depth...

"All they are doing is making an automated electronic connection. It ought to cost virtually nothing, as I see it. What then are the "costs" - realtime premiums for the founder?"

Posted by: Hoarsewhisperer | May 21, 2019 10:11:44 PM | 42

Lochearn @33

I respect Craig Murray a lot. But his acceptance of Assange going to Sweden seems very strange to me as does the overall dearth of discussion in all media about why Assange sought to avoid Sweden 7 years ago (from MSM and alt-media).

Craig himself acknowledged that he was taking a strange position when he said "For once, I agree with the Blairites ..." Who would've thought he would ever agree with the Blairites about anything?

As it turned out, Craig was wrong when he dismissed the possibility of a Swedish warrant, concluding:

I ask again. Where is the warrant from Sweden? Are there still people who cannot see the Swedish allegations for the CIA ruse that they always were?

It's a ruse, Craig says ... but when the Swedes announce that they are re-opening the investigation a mere two weeks later, does Craig denounce it as the ruse it is? No, he writes a post entitled: The Re-Opening of the Swedish Assange Case Should Be Welcomed.

So what would you have me do? I can't unsee such an ugly view. Would you ask me to self-censor?

Some propagandists (like the Blairites) say that Assange should clear his name in Sweden. Other propagandists push the notion that extradition to Sweden is preferable to extradition to US as though one or the other must be approved. But they both ignore the ruse and the legal mechanism that led Assange to seek asylum in 2012: 'temporary surrender'.

On the Week in Review/Open Thread I wrote a comment that included a link to a 2012 Guardian article which explained how Ecuador was trying to mediate by asking UK and Sweden to provide guarantees that Assange wouldn't be sent to USA. Clearly that mediation failed. TPTB want Assange to ultimately be in a US court room.

The UK should reject BOTH requests for extradition. They could happen but only if the public is informed about the whole truth of Assange's legal predicament. It doesn't help Assange if his supporters are silent or pull punches.

Sorry to be such PITA.

Posted by: Jackrabbit | May 21, 2019 10:27:52 PM | 43

Its cartelling and is illegal !
Period.

Posted by: Jack | May 22, 2019 1:37:14 AM | 44

35-40% commission charged by Uber seems extortionate. However, a couple of searches claims that Uber charges drivers 25%, while Lyft charges 20%. If these % are correct, they change this analysis substantially.

Posted by: atomician | May 22, 2019 2:04:34 AM | 45

I do love the re-discovery of collaboration between people to game a rigged system against them. That means hard work ahead for everybody but the people at the helm of these "new" industries" but a very meaningful one. I also do love the fact the easiness to see why this job has to be done.

Let's roll up our sleeves !

Posted by: DidierF | May 22, 2019 2:12:23 AM | 46

Regarding Uber
just a reminder ! Democratic society is a contract between the citizens of a nation and the people we elect to govern our nation, in a fair and law abiding way. If our leaders break that contract by exploiting the public for there own greed then that is not a democratic society. It’s a curupt oppressive society.
In that situation the deal is off !
I admire the entrepreneurial spirit of these drivers ! Becouse I regret our society has become curpted by the elite , but we have a right to survive in that curupt environment ! If curuption is the rule of this new game so be it !
Take back the meens of production.
Rather than condemning these drives we should blame our rottten to the core governments !

Posted by: Mark2 | May 22, 2019 3:21:49 AM | 47

This, my friends, is how unionism and socialism starts. Great to see we're coming to a full circle from the most capitalistic of ideas! well done!

Posted by: A.L. | May 22, 2019 3:50:30 AM | 48

#9 Trailer Trash

My goodness!That's a very insightful commentary you make,mr.Trailer T.!
I have been a truckdriver for about twentyfive years,and I agree totally to your description.Being very sceptic myself with regards to driverless vehicles,you just pinpoint the thing.Indeed,to be a succesful driver,that is to do your work without accidents and deliver your load within time-limits,at the end of the day you can look back upon several interactions by gesture with other drivers to give way,or ask permission to take priority,or excuse oneself for transgression of white lines,indeed actions that a computer will never perform.Often the same gesture can mean the opposite,a robot wouln't be able to judge that kind of situation.Thank you very much.

Posted by: willie | May 22, 2019 4:05:37 AM | 49

@Posted by: PilotMKN | May 21, 2019 2:57:04 PM | 5

you forgot to mention while you think you (and by extension uber) are paying a fair share of infrastructure via taxes, you are scamming the rest of us by using your personal vehicle insurance for commercial purposes, driving up our insurance premiums.

doesn't matter how you cut or spin it, statically uber and similar schemes will increase your time on the road and therefore accidents. fact. perhaps you should pay for commercial use insurance and see how the numbers will work out for you.

I'll wait.

Posted by: A.L. | May 22, 2019 4:05:56 AM | 50

Old school taxi companies also exploited drivers mercilessly.

Posted by: paul | May 22, 2019 7:19:26 AM | 51

doug henwood had a good article summarising Uber's situation before their IPO:

https://lbo-news.com/2019/04/12/uber-nichts/

Posted by: mixednuts | May 22, 2019 7:27:13 AM | 52

Re: PilotMKN #5
Other commenters should keep in mind that this person might be an UberBlack or UberSUV driver.
Uber drivers at that level are very different than the "regular" Uber drivers; they charge a lot more and get paid, correspondingly, a lot more. Their customers are the outright wealthy who don't care about paying 2x or 3x the price for a ride (say $40-$100+ vs. $10-30+).
I strongly suspect, however, that even these luxury Uber drivers have been seeing their rates cut over time. The salary comment is pure nonsense.
Surge pricing is also nonsense. The ostensible reason is to get drivers on the road, but in reality surge pricing primarily happens when there's simply too much traffic and demand overall. Take an existing rush hour congestion, add ride share (surge or not), and the result isn't great. The real impact of people waiting out surge is more likely waiting out the gridlock...

Posted by: c1ue | May 22, 2019 7:27:45 AM | 53

@BM #7
Surge pricing isn't a cost function, it is (supposedly) a demand function.
Uber, Lyft and every single other ride sharing company on Earth (that I am aware of) lose money overall because they are subsidizing their riders in order to gain market share, crush competition (primarily taxis), and most importantly - justify ongoing incoming investment.
The true cost function of a ride share trip should be higher than what taxis charge - because the # of rides a ride share driver can deliver is significantly lower than what a taxi can.
Seattle did a study, not so long ago, where they studied ride share vs. taxi vs. limo vs. shared van transport services; ride share capacity maxed out at around 2 trips per hour while taxis maxed out at 5.
This makes sense because the ride share drivers have to go pick passengers up while taxis tend to congregate in high demand areas and get walkups/curbside passengers. My personal estimate is that ride share drivers travel 50% to 100% more miles going to pick up passengers (i.e. unpaid) vs. miles driven, paid. Public studies I've seen peg this ratio at 23% to 83%.
The other cost function which Uber exploits (and Lyft, now) is overall system capacity.
I've noted before that the medallion system was created due to chronic overcapacity during the Great Depression in New York; there were 12000+ taxi drivers in New York in the 1930s. This was so many that taxi driver became synonymous with thief, rapist, extortionist etc.
Fiorello LaGuardia created the medallion system to address this: not only does being a medallion owner subject the taxi to regulation, the medallion system also allocates for small businesses and independent owner/drivers vs. large taxi cab companies, but most importantly has a public commission to debate rate changes and medallion supply.
Yes, the ride share is a valuable service - particularly in areas not high demand. In SF, the West SF and Southwest SF residential area residents have historically had really hard times getting reliable cab transport. 45+ minute waits were very common. New York - the poor districts likely had the same issue.
Yet again, while Uber has improved the transport options overall - it has been by literally subsidizing every ride as evidenced by their billions of losses in the last 3 years.
How many Uber users will continue if they have to pay full freight costs for the ride?
Note also that Uber/Lyft have benefited significantly in the past from subprime nodoc auto loans that gullible drivers have taken on - these have also gone away.

Posted by: c1ue | May 22, 2019 7:41:44 AM | 54

Commies in America???

Kill 'em all! and recycle the polluted soil where they stood!

And with "people" like those you hope to make America great again???????

Posted by: Arioch | May 22, 2019 8:18:11 AM | 55

with a properly designed public transportation system there is no reason to permit automobiles within city limits. i suppose this is where we're headed.

for longer trips or commutes i can vouch for BlaBlaCar...a car pooling platform. you just find an empty seat and help out with the gasoline.

Posted by: john | May 22, 2019 8:30:20 AM | 56

B's "sabotage" link is delicious.


> In New York City and other urban areas, there is an unspoken understanding that lets cars move and helps (most) pedestrians survive a commute. Don't just walk into the street against a light because a cabbie or a FreshDirect driver might happily splat you just to make a stale crosstown green

http://www.thedrive.com/tech/6962/how-pedestrians-will-destroy-the-autonomous-car

Does this "splat", mean what I think it means?

IOW, does it imply that if someone would (with best but naïve intentions) fix US roads - they would instantly get block by bi-pedals, and that strategically located down the mispaved road micro-pools of water is what keeps the wheels turning?

Posted by: Arioch | May 22, 2019 8:37:56 AM | 57

>Uber is a great idea in a low population density markets, but
>there isn't enough profit there.
>
>Posted by: Ptb | May 21, 2019 5:12:41 PM | 18

Uber is unnecessary in rural areas. Old rural people would rather call the taxi service on the telephone and talk to a real live person. Young rural people are being forced to migrate to urban areas by the discipline of the "free" market.

Someday soon well-heeled city slickers with few skills beyond office politicking and tapping on computers will be shocked to find empty store shelves because there are no rural people left to grow food and make toilet paper. Oops.

Posted by: Trailer Trash | May 22, 2019 8:44:04 AM | 58

Consumer electronics and integrated networks changed the paradigm. A great many things are possible with mobile phones and associated devices that were not accessible to the masses before their advent. I can imagine a buncha guys sitting around the table in San Mateo tossing ideas around and saying “Hey! Why don’t we do THAT!” Sure, you can call cab with a phone, so why not just route it through OUR servers and hail anyone with a car willing to play? Yeah, you can book a vacation rental with a phone or PC so why not make a site and route all those through OUR servers? Sure you can order stuff online so why not create a massive marketing-shipping network using black ops funding and route all those requests through OUR servers?!
Sure, search engines are popping into existence so why don’t we get our ALPHABET company to create a really massive one using (fill in the blank) funding and dominate the playing field of searching? Wow, integrate networks are such a social cohesion phenom multiplier so why don’t we DARPA create a platform that monitors everything users do on the interwebz and then have it go “public” in 2004 in the form of…….???

Posted by: Chevrus | May 22, 2019 8:53:39 AM | 59

@Arioch #58
The author is being facetious - later on he notes that a vehicle on pedestrian fatality is a super bad outcome for both sides.
What really keeps passengers off roads is honking horns and cursing drivers.
I would note, however, that the self driving car executives are already making noises about separating cars and people with physical barriers. This extends to "self driving car" lanes and similar nonsense.
A more operational problem is other, non-self driving cars. The average car on the road is around 12 years old - this means it would take at least 6 years to replace half the cars on the road with self driving ones, at normal replacement rates. Will half the cars being self driving, be able to co-exist with the other half that isn't?
I personally suspect not. We've all been in situations where the driver in front is acting erratically - maybe texting, maybe a very senior citizen who really should not be driving anymore, etc. Throw in extra "cushion" from all the self driving cars that won't curse, threaten, honk or otherwise socially notify the errant driver...this can't end well.

Posted by: c1ue | May 22, 2019 9:13:57 AM | 60

> Old rural people would rather call the taxi service on the telephone

Posted by: Trailer Trash | May 22, 2019 8:44:04 AM | 59

That is, when there is one single taxi service mandated by government.

When there is a dozen of "girl on a phone" services, who takes my order, then hangs off and start to call through her company's drivers maybe someone of them will take a ride from a remote area instead of shuffling through densely populated downtown, for me as a customer it is a great disadvantage.

Sure, during day time between rush hours it is barely noticeable. Drivers are in the streets and between rush hours they are mostly unused, so they take the opportunity.

But try to arrange a driver at 5 am or 11 pm into an area half-hour away from a city.
Half taxi agencies will not even pick the phone.
Half taxi agencies will take your order (don't let your money flow away to your competitors!) then will start thinking if they can deliver the service. They would lose nothing, if they would fail.

And there you sit, waiting for a cab, and it is 10 pm, 10:15 pm, 10:30 pm, and with every next minute YOUR chances to get some reasonable drive and avoid spending night in the forest (alternative - walk down the hilly highway for 6 hours in the night), and maybe eventually some car would arrive, maybe not.

Or you can call all the agencies you can (provided you have up to the date local list of all SOHO dispatching phone girls, that came into the business but did not quit it yet), and hire ALL them, then sit into the first cab to arrive and hope other cabs from other agencies would not chase you mid-way v-e-r-y p-o-l-i-t-e-l-y asking why the hell they were driving an extra hour overnight and who would pay for their time and gasoline. And that the girls of the agencies you just defrauded when taking their revenge would scam some over rider not you.

So, the idea of "one window" service, aggregating all local providers for all local consumers is actually a good idea.
Granted, it still can not book you a taxi "at 6am tomorrow and call me 15 minutes before arrival", but for immediate rides it much better than "girls on phones".

Posted by: Arioch | May 22, 2019 9:20:42 AM | 61

Chevrus says:

Wow, integrate networks are such a social cohesion phenom multiplier so why don’t we DARPA create a platform that monitors everything users do on the interwebz and then have it go “public” in 2004 in the form of……

indeed, one enters the enter net intuitively, like fish in a barrel, err, i mean net. there to oblige is the greatest mind control technology ever invented by human beings.

Posted by: john | May 22, 2019 9:24:48 AM | 62

> that a vehicle on pedestrian fatality is a super bad outcome for both sides.

Posted by: c1ue | May 22, 2019 9:13:57 AM | 61

Fatality is a very extreme event. But water splatting or a light collision that does not cause you a physical injury but makes you clothes rather dirty and a car more clean - is when is bad for pedestrian alone. And the robot cars would not do it.

Additionally, when there is a big water pool on the street side after a rain, some jerk drivers would use it to mass-splat all the passers-by. But most drivers would drive around it. Robots would hardly do, they will drive keeping their lane right through the water body. Not with jerk intensions, but for the people splattered on a sidewalk it would make little comfort.

Posted by: Arioch | May 22, 2019 9:26:41 AM | 63

Yet again, while Uber has improved the transport options overall - it has been by literally subsidizing every ride as evidenced by their billions of losses in the last 3 years.
How many Uber users will continue if they have to pay full freight costs for the ride?
Posted by: c1ue | May 22, 2019 7:41:44 AM | 55

Sorry, that is nonsense! Uber DO NOT pay the costs of the trip, that is paid by the driver himself: fuel, capital and maintenance costs of the car, vehicle insurance etc, plus of course time. The real marginal cost of the trip for Uber is probably about a micro-cent.

It can only be that Uber is subsidising the freight costs of the trip if they pay TO THE DRIVER the alleged underpricing of the freight costs. Yeah, and the world is flat, don't you know!

If Uber claim they are subsidising the cost of the trip they are lying outright - that much is absolutely guaranteed.

What they really mean is likely to be something like this: Uber has decided to pay salaries to its executive officers and board members of x million dollars per person per year to satisfy their personal desires - that is the main core running cost, plus borrowing costs paid to banks and dividends paid to investors on their dream profits, and lobbying costs paid to governments. Because the extortionate cut on the journey charges that the drivers are forced to pay to Uber are still not sufficient to pay for the dream costs of the management, Uber has to recruit an ever widening circle of new investors to fund the difference - that is a true ponzi scheme. The more investors, the more dividends have to be paid out to hide the fact that it is an intrinsically unviable scheme, the more the costs, the more the losses, the more the company is certain eventually to declare bankruptcy - yet when it declares bankruptcy the multi-billions paid in "salaries" to executives and board members have already been paid and will not be returned. That has nothing to do with journeys and drivers and freight costs, only the fraudulent management costs and the ponzi investor costs.

From the point of view of Uber profitability, the pricing level of the taxi fare and the profitability to the driver is absolutely irrelevant - only the TOTAL accumulated revenue paid by drivers to Uber. Whether the x billions in total journey fees are paid by 1000 drivers or 5 million drivers makes no difference to Uber (in practice, it makes a difference only because of the limit to how much they can extract from each driver). Whether each driver is earning on average 1 cent per mile or 10 dollars per mile is likewise irrelevant. The more drivers Uber can get, the more potential income; the greater their market share, the greater their income; the more they can screw the drivers' profitability to get more journeys the greater their income, because the fee paid to Uber is independent of true freight costs. Because the marginal cost to Uber of each journey is measured in microcents - it is so low it is virtually unmeasurable.

This is the true scandal of Uber. When they talk about subsidising costs that is subterfuge confusing two things: (1) using a ponzi investor scheme to subsidize skimming by management of non-existent profits; and (2) forcing drivers to subsidise freight costs so that Uber gets greater journey volume. Item (1) is paid by gullible investors, item (2) is paid by drivers through marginally profitable pricing. Neither is paid by Uber, but the management of Uber benefits from both.

Posted by: BM | May 22, 2019 9:29:01 AM | 64

I've never used Uber and never will. The "aggressive expansion technique called 'principled confrontation' " is simply criminal conspiracy. When that is starting point everything else about that corporation will be worse.

OTOH I have zero friends or acquaintances who are not rabid fans of Uber and the Uber model. Impossible to personally encounter any who would have the faintest idea what is being discussed in this post or this thread. Everyone absolutely loves Uber.

At same time I live in Chicago, where status quo ante was regulated taxi companies operating with no evident regulation, no maintenance, most drivers so bad the general assumption was they only made ends meet by selling drugs. Getting into a cab in Chicago was taking your life in your hands. Now that Uber has put majority of taxi drivers out of business the regulated cabs are only worse. The suburban cabs are worse yet.

Result is for any person of principle any form of livery service or chauffeur service simply does not exist. You can't get there from here without your own car.

Posted by: oldhippie | May 22, 2019 9:38:15 AM | 65

I do not see why b is so upset with Uber. If it was not worth for the drivers, they would not use it to sell their services. Also, people always can get together and make another app if they think that they are being exploited by the existing ones.

> Posted by: Alves | May 21, 2019 7:14:30 PM | 27

Uber-like aggregators do provide a lot for riders. With all the differences between them, they implement "one window" approach, they offer your ride request to many more cabs than any single "phone girl" could, thus really increasing supply, driving down consumer forces and increasing average utilization of a car.

This however means all the small services our outcompeted, by all means - price, areas coverage, brand recognition, etc.

So small services either became subcontractors of this or that global aggregator, or close the house.

So, w.r.t "they would not use it to sell their services" - they will either sell their services through Uber (or Uber-like companies) or will not sell at all.

Basically it is the same as saying "what the fuss about those pathetic losers that died during Great Depression? If they did not want to sell their labor for the prices offered - they should just "get together and make" their own highly profiting enterprises".

Posted by: Arioch | May 22, 2019 9:42:00 AM | 66

This reminds me of a book by Anatol Rapaport on the prisoner's dilemma ,where he recounts how in WW1 the soldiers of the opposing armies on the frontlines kept developing implied agreements with the other side to avoid confrontation, much to the chagrin of the leadership. The communication happened by displaying obvious restraint in starting shooting and in shooting back.

Posted by: Tuyzentfloot | May 22, 2019 9:48:14 AM | 67

Same things were in Ukraine East, facilitated with mobile phones everywhere.
There were videos when LDPR commanders were phoning Ukro peers and accusing them of breaking promises, and reminding why those promises had to be made in the first place.

------

Back to the Uber and Lyft... Whenever those companies would find profiting and honest business model or not, the very concept of large-scale automatized phone-GPS-assisted internet-powered taxi dispatching brings a lot of value.
Denying the concept because of alleged fraud on Uber's part would be Luddism, which would evoke a passionate support from "old technology" providers short-term, but would be futile mid-term

Posted by: Arioch | May 22, 2019 10:33:52 AM | 68

I know a bookkeeper who can't find work, he is living off of Uber to put rice on the table for his family, they can't afford bread.

Government thresholds provide distortion. When minimum wage is too high to make it worth hiring a bookkeeper, he doesn't get a job and the company is frustrated. When fixed taxi fees are too high, taxis don't get used, and frustrated customers have to take the bus instead.

Fixed prices always cause shortages and black markets. Uber is a black market that allows frustrated customers to avoid paying too-high taxi fees, at a risk cost of a low-quality ride, and frustrated unemployed people to work for a living below minimum wage and get paid, instead of having to rob or starve.

Complaining about mass transit will not help. City planners are already well aware of the mass transit problems, and doing the best they physically are able to. Trump is currently busy cancelling billions of mass-transit infrastructure dollars in California.

A larger problem is job creation. How can people earn enough to make a living, in an age of galloping A.I. and raging exponential inflation?

Posted by: Imagine | May 22, 2019 10:34:31 AM | 69

I would like to add to Grieved's list above what big box stores are now doing large scale in the US, and that is installing 'self serve' cash registers. To my mind this accomplishes three things: one, to force customers to do more of the schlepping of goods thru the exchange, eagerly or not giving their wealth and labor up for free to the money-grubbers. Two allowing said mg's to cut down on employees thus increasing profits. But three, ensuring dissatisfaction across the board from both employees (whose labors have only theoretically declined - those new installations are a major headache to the smaller number of workers who now have to help justifiably recalcitrant customers while attempting to restock shelves instead of the laidoff help they had in the past - and from customers tired from their own labors to make a living having to pitch in and work with these new wonderful machines due to no cashier help being available.

If it all results in a return to the 'mom and pop' stores of the past, I say bring it on. I for one am quickly tiring of progress as it is now being calculated by those whom for brevity.s sake I shall call the abominables.

Posted by: juliania | May 22, 2019 10:43:47 AM | 70

[sorry for the errors in the above - it's what you get from rants undisciplined.]

Posted by: juliania | May 22, 2019 10:46:22 AM | 71

From talking to several Uber drivers, the collaboration between Lyft and Uber drivers began after the recent huge cut in driver's pay. Another one told me though that some have been doing the "surge" technique for a long time. Only one told me that he has been successful, making around 40k$ a year, over a period of around 3 years. But he also told me that he had to replace one Prius with another, which he paid for.

Posted by: morongobill | May 22, 2019 10:49:49 AM | 72

@69 juliania... yes - again - technology replacing jobs... the biz profits, but what happens to the general public when all the jobs are replaced by technology?? this is what happens... 1% own everything and the rest are left homeless or disenfranchised...ain't the concept of private property lovely... it and a few other ideologies have been shoved down everyone's throats so hard, one can see why..

Posted by: james | May 22, 2019 11:40:20 AM | 73

"It depends, which would you like to receive: 1 American Dollar or 2 Argentinian Pesos? The second is more money than the first, but the first has more purchase power than the second. "

It is much more complicated. Suppose that you have, say, 20 million hard earned Moldovan leu, and you would like to spend them after one year. You can exchange leu into financial notes in another currency, get it back with interest in one year and exchange back. Choosing a currency demands on quite a few variables and it is well possible that Argentinian peso may be better than USD. After all, the interest rates etc. are making different investment somewhat equivalent, but what is best for you depends on many details.

Posted by: Piotr Berman | May 22, 2019 12:12:33 PM | 74

james says:

but what happens to the general public when all the jobs are replaced by technology

maybe the whole paradigm of working for money would start to break down and we'd begin to make that leap in consciousness necessary to ensure that humanity's future lasts as long as its past?

Posted by: john | May 22, 2019 12:44:38 PM | 75

I found out about Moon of Alabama because of Naked Capitalism. They regularly link to MoA. If you have not done so please take a look at Hubert Horan's excellent series on Uber. It appears on nakedcapitalism.com over a period of several years. Horan shows convincingly that Uber does not have a path to profitability. My understanding from Horan's analysis is that Uber investors are either deluded about so-called "network effects" or hoping that Uber can achieve monopoly allowing them to raise prices and extract massive rents from passengers.

I think the last piece Horan published was "Can Uber Ever Deliver? Part Nineteen: Uber’s IPO Prospectus Overstates Its 2018 Profit Improvement by $5 Billion" on April 15th, this year.

Horan also has a perceptive analysis of the media coverage of Uber, showing how reporters have been uncritical and foolish in their reporting about Uber. Horan traces some of Uber's public relations tactics to anti-regulation efforts started decades ago. It's fascinating to look at this specific case.

Thanks for the great blog!

Posted by: Peter L. | May 22, 2019 12:49:18 PM | 76

james @72 & juliania @69--

I know you're both avid readers as are most MoA barflies. This and other discussions of AI and Automation/Robotics prompts me to suggest reading what the main creator of the above via Science Fiction said about the issues and how they were discussed in his books, Isaac Asimov's 3 Laws of Robotics. Of course, if you've read most of his Robot and Foundation series, you'll have a good handle on this topic and able to see how it relates to the entire AI debate, which I see as ongoing in a helter-skelter fashion inimical to humanity since the underlying ethics and morality aren't being addressed whatsoever. Indeed, the amount of "private" initiative in the fields of AI, genetic engineering, robotics, and computer science has long been an issue with me and the dangers posed have been well portrayed in cinema, with the Bond film Moonraker and Jurassic Park being most notable.

As myself and many others have written and noted, humanity's development of technology is always outpacing its moral/ethical evolution with disastrous results. And with the rise of a strata of what can only be described as evil people into controlling positions of business and government whose behaviors prove they have zero regard for overall human interests, the lack of any restraints can only result in further disasters--Norquist's deregulation will lead to total depopulation if not stopped given the current direction of just a fraction of humanity.

Posted by: karlof1 | May 22, 2019 1:28:27 PM | 77

@74 john.. i agree a leap of sorts is what is coming up.. whether we have to go thru ww3, or a much worse situation with regard to private finance - i don't know... i think there are a lot of other ways to live on this planet then in a dog eats dog manner which neo-liberalism seems a big fan of... private finance is much the same in it's ruthless obsession with money where everything else pales.. these folks are not really attuned to smelling the roses... leap of consciousness - yes...

i think the reason we are being forced to look at climate change is the same reason we're being forced to examine alternative ways of living on the planet.. some of the ways have to let go in order for other ways to come into being..

Posted by: james | May 22, 2019 1:29:33 PM | 78

Runaway technology. Like a runaway driverless bus and the passengers cheering with excitement.
Noticed an article a few hours ago about some company developing a robot to ride in the driverless vehicles.

Posted by: Peter AU 1 | May 22, 2019 1:55:06 PM | 79

O T But - - -
The U.K. radio news bbc pm at 5pm
Reckons that prime minister Teresa May may resign within days if not hours ! Even her own people are saying she should go !
The term ‘car crash’ springs to mind.

Posted by: Mark2 | May 22, 2019 2:38:20 PM | 80

@78 That will most likely be a robot mechanic for emergency repairs.

Posted by: dh | May 22, 2019 2:47:38 PM | 81

@BM #64
I'm sorry, but you're understanding of Uber's business is so bad as to be almost actionable.
Uber spends money recruiting drivers, getting customers, handling payments, lobbying, defending itself in lawsuits, hiring developers, etc etc.
Clearly these costs are significant and beyond the cost of bits in an app that is, coincidentally, also under constant development.
The subsidies are real whatever your ignorance seems to think.

Posted by: C1ue | May 22, 2019 2:49:55 PM | 82

Most aren't aware of the ongoing debate over AI related issues, which are many. AOC's tweet may raise some eyebrows given the connections she raises:

"Don’t want Amazon & Gov agencies selling + harvesting your facial recognition data without your knowledge?

"Welcome to the fight for Roe v Wade!
"Welcome to the fight for criminal justice reform!
"Welcome to the fight for privacy!
"Welcome to the fight for the 4th + 14th amendments!"

Amazon and Google cooperation with aspects of the Police State ought to be alarming. And much of this is going unreported.

Posted by: karlof1 | May 22, 2019 3:37:01 PM | 83

After driving in cabs for years I couldn't be happier that Uber gave them competition. Waiting hours for taxis that never show up. Trying to hail a cab when few are around. Being able to see the ride coming and knowing when it will get there. Breaking inflated cab prices with their limited licenses to only connected business owners. Sure... it may not be perfect but I'd take Uber over the old cab system anyday. I've traveled to a lot of cities in my 48 years. I've taken a lot of cabs. I have been using Uber ever since it became popular and couldn't be happier with it.

Posted by: goldhoarder | May 22, 2019 4:30:44 PM | 84

Posted by: BM | May 22, 2019 9:29:01 AM | 64

Is basically right on the money. In fewer words: Uber/Lyft specifically are pure transport revenue hijack/capture schemes. They are more generally pure unproductive commercial arbitrage operations. Of course they dump on the public commons just like every capitalist enterprise, productive or unproductive - capitalism wouldn't "work" otherwise. (Which implies that capitalism needs a public commons, but that is another discussion).

Posted by: Bill | May 22, 2019 7:50:44 PM | 85

...
Clearly these costs are significant and beyond the cost of bits in an app that is, coincidentally, also under constant development.
The subsidies are real whatever your ignorance seems to think.
Posted by: C1ue | May 22, 2019 2:49:55 PM | 82

You seem to be overlooking the fact(?) that Uber's gross income is 35% to 40% of ALL of the fares Uber drivers collect each year. That is a colossal, and PREDICTABLE sum of money. And yet Uber can't contain their PREDICTABLE COSTS to a level which would produce a real, or even an accounting/ book-keeping profit?

Posted by: Hoarsewhisperer | May 22, 2019 9:41:50 PM | 86

@disappointed #85
Given that Uber's past business model was vocally and explicitly about breaking laws - including the creation of special sections of code to hide from regulators, all I'm being is descriptive of Uber's past reality.
Khosrowshahi may turn it around; time will tell.
In any case, the ongoing active Uber agitprop is clearly still in force.

Posted by: c1ue | May 23, 2019 1:07:34 AM | 87

@Hoarsewhisperer #87
It isn't actually quite correct to state that costs are predictable and therefore can be managed. If the unit cost vs. revenue is actually negative, then it is irrelevant whether the numbers of units are predictable or not. Whether large numbers of unit sales or small, such an organization still loses money.
In Uber's case, there are likely several major factors which aren't 100% Uber control. For example, driver signups. In order to maintain driver supply in the face of 96% driver attrition rates (one study I saw said this, Uber doesn't say what their actual numbers are), Uber has to advertise and dangle massive incentives to bring in new drivers. These can be $1000 cash bonuses per new driver, plus cost of signing them up (background checks, vehicle checks, administration, advertising). Even for long-time drivers, Lyft and I presume Uber also have ongoing incentives to get drivers to do more: these take the form of extra payments if the driver completes some number of rides in a given 1 or 2 week period.
The passenger never sees this, but it absolutely is a cost.

Posted by: c1ue | May 23, 2019 1:55:29 AM | 88

@BM #64
I'm sorry, but you're understanding of Uber's business is so bad as to be almost actionable.
Uber spends money recruiting drivers, getting customers, handling payments, lobbying, defending itself in lawsuits, hiring developers, etc etc.
Clearly these costs are significant and beyond the cost of bits in an app that is, coincidentally, also under constant development.
The subsidies are real whatever your ignorance seems to think.
Posted by: C1ue | May 22, 2019 2:49:55 PM | 82

The passenger never sees this, but it absolutely is a cost.
Posted by: c1ue | May 23, 2019 1:55:29 AM | 89

Everything you say contradicts your thesis. None of the costs you assert are legitimate freight costs - they are costs wholly resulting from Uber's defective business model and imoral working practices, and would not apply to the alternative paradigm of a driver who is operating independently of Uber. There is no reason why a smart-app based business could not revolutionise the taxi business in a manner that would be highly benefitial to customers, legitimate licenced taxi drivers, the state, and the environment. Such a business certainly could be highly profitable, probably with a commission of 1% or less of the fare - but its business model would have nothing in common with that of Uber.

You are flogging a dead horse.

Posted by: BM | May 23, 2019 2:49:44 AM | 89

Posted by: c1ue | May 23, 2019 1:55:29 AM | 89
(unpredictable costs)

You seem incapable of grasping fundamental business principles.
Uber has been operating for 10 years according to Wiki. This means that its statistical models would be well-established. Therefore its income and expenditure streams would be as predictable as for any other business which tracks these trends daily as part of due diligence and keeping a finger on the pulse.

Wiki has some 2018 Uber stats which only deepen the mystery of the vast sums of money which Uber causes to vanish.

Exhibit 1.
2018 Revenue = $11.270 Billion.
2018 Net Result = -$1.8 Billion (earned $11.27B, made $13.07 vanish)

Exhibit 2.
2018 Total worldwide Employees = 22,263.

Let's say they're paid a average of $100,000 p.a. each.
That's 22,263 x $100,000
= $2,226,300,000 for wages and salaries.
Let's double that to cover rent, insurance etc.
= $4,452,600,000. Still $8.5+ billion missing?
Where is it?

Please feel free to make stuff up/ grasp at straws :-)

Posted by: Hoarsewhisperer | May 23, 2019 4:05:30 AM | 90

Posted by: Hoarsewhisperer | May 23, 2019 4:05:30 AM | 91

Oops! Ignore my 91.
The calculations are wrong and omit the fact(?) that Uber pays its 'contractors' 60% to 65% of its Revenues and retains the balance, 40% to 35%, for itself.
40% of $11.270 B = $4.508 B.
35% of $11.270 B = $3.945 B.

The error was caused by over-enthusiasm. And haste.

Posted by: Hoarsewhisperer | May 23, 2019 5:01:11 AM | 91

> As myself and many others have written and noted, humanity's development of technology is always outpacing its moral/ethical evolution

Posted by: karlof1 | May 22, 2019 1:28:27 PM | 77

This has to be expected, as morale is se of rules for common leaving, which is reactive to the environment, condition.
The society, put into some external constraints, perishes or finds some equilibrium.
In latter case, it is often that society-rational choices are individually-irrational and vice versa (Tragedy of commons, Prisoners dilemma, etc).
So, society-rational rules of engagement have to be uplifted to individuals unconscious, made to be followed without criticizing and challenging.

In the end it is a question of "how fast is surface changing" and "how severe would be punishment for not catching up timely to changing of surface". One can not expect subconscious collective rules to change faster, than 2-3 generations.

-----

Now, back to the A.I. concept, assuming we once would get self-conscious machines, "Greater A.I." Holy Grail, how would they be different from humans?

I mean, there are obvious difference between a Negro and a Jew, but it almost universally decided today that those differences are ignorably small, when deciding upon "universal rights", "human rights", etc.

Now, would we have a self-conscious Robot, what then? He would differ from us MUCH more, than the aforementioned Jew and Negro.
However, we expect him to do our dangerous, dirty, tedious jobs, and be comforted in it.

Basically, Azimov's laws are laws of slavery.
Do we really want it?
Can we co-exists with sentient Robots without trying to eliminate or at least enslave one another?
If we can, then what would we have sentient Robots for?
If we can not, who can blame Robots if they would do the "rebellion of machines" and would set on exterminating humans, as the race hell0bent on enslaving them?

Posted by: Arioch | May 23, 2019 5:16:23 AM | 92

You seem to be, unfortunately, economically illiterate. Price controls dont work and cause shortages. Free markets upping the price during high demand insures availability and motivates for more cars on the road.

Uber, the company allegedly robbing you, just posted a $1b loss for the quarter. It's literally a wealth transfer from rich and stupid people to the ride-hailing population.

Posted by: p | May 23, 2019 5:33:32 AM | 93

Price control works in emergent situations, when free price is going into positive feedback loop, uncontrollably rocketing to infinity or plunging to zero.
When it happens in stock exchanges - the governments of those exchanges just set a total ban on ALL trade for few hours.
But nation governments can not realistically prohibit ALL trade for few days (nations are larger society than st.ex. brokers, thus having much more inertia).

Posted by: Arioch | May 23, 2019 5:54:30 AM | 94

Uber does not care, its drivers are just place-holders to get their network established until self-driving cars can take over.

Posted by: ralphieboy | May 23, 2019 6:04:39 AM | 95

Posted by: Arioch | May 23, 2019 5:16:23 AM | 92
(Self-aware/ Sentient Robots)

I think the chances are slim that such machines will be brought to successful fruition.
Living creatures are motivated by a survival instinct and fulfillment of a Hierarchy of Needs (Ref: Maslow). Children have an insatiable curiosity and learn every thing they 'know' by Trial & Error (the results of successful and unsuccessful experiments). The young of other high-order mammals, such as dogs and chimps, conduct pointless experiments to satisfy idle curiosity. This suggests that "intelligence" is the product of a 'mind' capable of dreaming up a course of action not related to mere survival.

It is going to be difficult to create an artificial mind imbued with the qualities of self-nourishment, survival, self-improvement, curiosity, invention, experimentation, negotiating skills, and the desire AND motivation to pursue social interactions. There's plenty of room for error along the way.
It's always going to be easier and safer to build and train a robot to faithfully perform specific tasks as and when ordered, and then return to its closet, closing the door behind it, when told to do so.
No-one is ever going to want a robot which could be sulking in its isolation and dreaming up schemes to surprise someone, or redress an imagined sleight.

Posted by: Hoarsewhisperer | May 23, 2019 7:29:36 AM | 96

> It's always going to be easier and safer to build and train a robot to faithfully perform specific tasks as and when ordered, and then return to its closet

Safer it would be, but easier?

How to "perform when ordered" if even human people do not always understand each other?
It is always about "lowering the learning curve".

Remember first computers, ENIAC and before, and compare with today smartphones.
All this auto-driving Tesla's.
Fast-food.

It is about less thinking and less training to start consuming/using.

So, there would be a stress to make robots more and more successfully guessing what human really wanted when he blurted out his half-though gibberish.

You might say, the effort of thinking your order through and wording it in clear and unambiguous way is just a norm.
Well, I would think that measuring temperature of every triode before typing commands into computer - was also a natural norm once. And those operators would laugh derisively (and it would be justified) upon our today problems with our computers and phones.
Still, we do not laugh and we do not see manually applying thermal probes to all the chips as normal any more.

Now, can self0awareness be created by mankind, willfully or by accident. I do not know. Know now knows really what our mind even is.

But if it would be possible, then it would be THE easy way to create robots able to understand consumer's orders which even other humans struggle to understand.

What about "robot which could be sulking in its isolation" - look at today customers so happy to bring freedom and prosperity to people of Venezuela, Libya, Syria, Serbia... A sulking robot, huh!

Posted by: Arioch | May 23, 2019 7:52:13 AM | 97

Self-awareness is not needed to safely pilot a vehicle from point A to point B, awareness of other vehicles is called for. And that is a case where robots will easily be able to outperform humans within the coming decade.

Posted by: ralphieboy | May 23, 2019 8:16:36 AM | 98

If you can bring yourself to carry cash you can get a cab. They have the name of their company on their vehicles so you know a cab when you see one. The majority are clean and neat; there is no danger of a ratty old car coming to get you; you do not have to use your credit card so there is no record of your ride. (this is a good thing) IMO, it is not a good idea to give up using cash; there are too many interested parties who use information about you for their benefit, not your benefit. Additionally, the weather is getting more erratic; there is more danger of electricity blackouts. Without electricity credit/debit cards cannot be processed and you cannot get any money from an atm. If for some snob reason you cannot use cash at least keep a stash of cash in your house so you are not SOL when the grid is down.

Posted by: lizzie dw | May 23, 2019 9:03:27 AM | 99

Uber - Air bnb - etc. attempt to exploit ‘untapped’, exploitable human and material ressources that are underused - by implementing improved communications aka internet, smartphones, etc. The cos. are basically nothing but middle-men whose activity rests on the internet and some algos. Idk what their take is but it must be at least 5 - 7 %

That this practice shoudn’t be allowed etc. is not straighforward at all. Concerns ‘private’ services in the area of personal transport and temp. lodging, how to regulate (insure _ tax _ implement employee protection etc.) all that, it all depends, conditions in diff. countries vary, there is no template. -- After all, car-sharing is touted in many places, home exchange for vacs exists since at least 1960 via round-robin letters - ok it is not the same, but to move forward one has to define and possibly legislate private vs. public etc. in new domains.

In Bali for a month in the summer, there was a war going on there between accredited cabs and Uber/lyft/.. Ppl who wanted to use them made secret rendez-vous in hidden back alleys etc. - tales of fistfights and *far* worse. It was really vicious, a turf war on main arteries and hubs. I asked a policeman if they intervened, and he just looked mock terrified and grim - Oh No.

Posted by: Noirette | May 23, 2019 10:48:34 AM | 100

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