The Shafting, Um, Sharing Economy

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The Wall Street Journal had a surprising story over the weekend, How Everyone Gets the ‘Sharing’ Economy Wrong, with the subtitle, “Uber isn’t the Uber for rides—it’s the Uber for low-wage jobs.” While the Journal maintains separation of church and state between its rabidly right wing editorial section and its news sections, I’ve been close enough to some stories to know on good authority that the Journal has refused to publish some stories (and reported sections of stories) because they were deemed to be too business-unfriendly. So what does one make of the Journal giving prominent placement (first page above the fold in the digital version) that depicts Uber and its ilk i the manner you’d expect to see at Salon or Huffington Post, as mainly in the business of crushing wages? Is it that the Journal is skeptical of new economy hype? Or is it that the rental extraction aspects of the “sharing” economy are so bloomin’ obvious that the editors didn’t see it as controversial to depict them in an unvarnished manner?

The article goes after the canard of the feel-good “sharing” branding:

The first thing everyone misses about the sharing economy is that there is no such thing, not even if we’re being semantically charitable. Increasingly, the goods being “shared” in the sharing economy were purchased expressly for business purposes, whether it’s people renting apartments they can’t afford on the theory that they can make up the difference on Airbnb, or drivers getting financing through partners of ride-sharing services Uber and Lyft to get a new car to drive for those same services.

What’s more, many of the companies under this umbrella, like labor marketplace TaskRabbit, don’t involve “sharing” anything other than labor. If TaskRabbit is part of the sharing economy, then so is every other worker in America. The only thing these companies have in common is that they are all marketplaces, though they differ widely in the amount of control they give their buyers and sellers.

A quibble: while author Christopher Mims is technically correct in calling these services “marketplaces,” that is arguably a term that is so broad as to wind up obscuring what is distinctive about these services. It is that they are (or at least aspire to be) networks and subject to network effects, meaning disproportionate returns to scale to the dominant players. The other reason I am not keen about “marketplace” is that markets occupy a sacred spot in economics and neoliberal ideology, so treating Uber and its kin as sponsors of “markets” gives them more of a halo than they deserve.

But the key part of the article is where Mins describes how sharing services drive wages down:

In the minds of critics, perhaps the worst offender in how it controls its labor force is Uber. Uber sets the prices that its drivers must accept, and has lately been in the habit of unilaterally squeezing drivers in two ways, both by lowering the rates drivers are paid per trip and increasing Uber’s cut of those wages….

Boosters of companies like Uber counter that they allow for relatively well-compensated work, on demand. When I asked them for comment, Uber officials pointed to previously released data suggesting just that. The most recent report, a collaboration between Uber and economist Alan Krueger, paints a fairly rosy picture of Uber’s job-creation abilities. Uber has said in the past that world-wide it is hiring 20,000 new drivers a month, and in this report it claims that in major American cities like Los Angeles and Washington, D.C., drivers are averaging more than $17 an hour.

But this data doesn’t reflect what Uber drivers actually make, for the simple reason that it doesn’t include drivers’ expenses. Work by investigative journalist Emily Guendelsberger, for example, shows that Uber drivers in Philadelphia, a fairly typical city for the service, are probably earning only a fraction of that. According to Ms. Guendelsberger’s admittedly limited sample of 20 drivers, including herself, it was around $10 an hour after expenses.

It isn’t minimum wage, but it’s a far cry from Uber’s previous claims about what drivers make, which reached the height of absurdity in May 2014, when the company claimed that the median income for drivers in New York was $90,000 a year. Months of investigation of that claim by journalist Alison Griswold yielded not a single driver in New York making that much.

What this all means is simple: Uber and its kin Lyft, which is more generous with its drivers but has a similar business model, are remarkably efficient machines for producing near minimum-wage jobs. Uber isn’t the Uber for rides— it’s the Uber for low-wage jobs.

Mins also makes clear that Uber is producing McJobs in another sense: they are only part-time, forcing Uber drivers to cobble together other work to make a living. Over 80% either have other jobs or are seeking them.

In case you’d like to depict the Brave New World of more sorta-self employed people (more accurately, what amount to disposable parts for shafting services like Uber) is somehow a boon to them, the data says otherwise. Over the weekend, Bill Mitchell summarized a new OECD study on inequality that discuses how the shift towards “non-standard work,” as in employment arrangements other than full-time jobs, hurts workers and the economy overall. From Mitchell:

How does inequality hinder growth?

The OECD consider that:

… the biggest factor for the impact of inequality on growth is the growing gap between lower income households and the rest of the population. This is true not just for the very lowest earners – the bottom 10% – but for a much broader swathe of low earners – the bottom 40%. Countering the negative effect of inequality on growth is thus not just about tackling poverty but about addressing low incomes more broadly.


The new element they introduce into their evolving awareness that their past emphasis on the supply side might be missing the point – although they don’t express it in this way – is the problem of temporary and part-time jobs in causing rising inequality.

They note that:

Promoting equality of opportunities is not just about improving access to quality education but also ensuring that the investment in human capital is rewarded through access to productive and rewarding jobs … the potential for this to happen has been undercut by the gradual decline of the traditional, permanent, nine-to-five job in favour of non-standard work – typically part-time and temporary work and self-employment. More (often low-skilled) people have been given access to the labour market but at the same time this has been associated with increased inequalities in wages and, unfortunately even in household income.

Which means that not only does the government need to ensure there are enough jobs but also that the quality of jobs increases.

The OECD trot out the usual ‘technological determinism’ argument that the “development of non-standard work is related to technological changes and the associated evolution of labour demand”….

But that only applies if we assume there are no lower skills jobs remaining to be done. I could design millions of such jobs which would advance human well-being, protect the environment and allow workers with lower levels of education to fully participate in meaningful work and earn a solid living.

The assembly-line factory jobs might have gone in many nations but there are millions of jobs available in personal care services, creative industries, environmental care, community development – and the list goes on….

Even the OECD is sensible enough to say:

Since nearly all job losses, regardless of the type of task, were associated with regular work, while growth in employment took place mainly in the form of non-standard employment, technological advancement alone cannot be the only explanation for job polarisation. Labour market institutions and policies have also probably played a role …

And the New York Times’ Maureen Dowd over the weekend pointed out another way that Uber is not living up to its hype. It is supposed to improve the user’s experience by requiring them to rate drivers. However, drivers also rate users. That allows drivers to punish users who are demanding, even if they might by objective standards be not unreasonably demanding (after all, demanding customers serve to enforce higher service standards). Dowd, who found Uber drivers weren’t terribly willing to pick her up by virtue of her having a low rating (by virtue apparently of having made some drivers wait for her), is dealing with that by colluding with drivers to boost her rating by colluding with drivers to boost theirs. In other words, the driver rating of passengers is debasing the entire ratings process by forcing users to give drivers high ratings to assure that they get high ratings. This form of grade inflation of course works marvelously for Uber, since over time everyone will be in on the con. All drivers and riders will have sparkling marks irrespective of how good they are, which serves to maximize how many drivers and users will be deemed to be acceptable when requests come into the system.

As Dowd wrote:

Standing in front of the Sunset Tower Hotel, I tapped my Uber app and saw five little cars swarming around my location. But, suddenly, they scattered in the opposite direction…. Finally, a car pulled up, and the driver waved me in.

“Do you know why no one wanted to pick you up?” he asked. “Because you have a low rating.”…

Uber began to feel less like a dependable employee and more like an irritated boyfriend…

It was starting to have the vibe of friending, liking and sharing on Facebook, and that always gives me acid flashbacks to the ’80s when I was forced to go to my brother’s house and watch slides of his wedding. Finally, my nephew explained that I didn’t need to grovel or gush. I simply needed to say, as I got out of the car, “Five for five.” If I promised to give them five stars — even in the Wild West of Uber X, where the drivers often seem so unfamiliar with the local terrain it’s as though they’ve arrived from Mars — they would give me five stars.

Bribery. Lies. Cover-up. My Uber app turns out to have all the usual Washington vices.

As in also being a vehicle for rent extraction, as critics have pointed out.

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  1. Thomas Williams

    Interesting how you defend Maureen Dowd’s wasting of a low paid workers’ time.

    If she wants high ratings all she has to do is slip the driver an extra $5 or $10 and thank them for waiting. She’d get nothing but 5 stars and drivers would line up to drive her.

    Doesn’t the bible say something like “ye shall be judged by how you treat the least among you?”

    Please don’t defend bad behavior on the part of the “entitled elite”.

    Otherwise, a nice piece which is what I’ve come to expect from you over the years.

    Thomas Williams

    1. Bart Fargo

      I don’t think defending her behavior was the point of that anecdote. If she’s making drivers wait she probably deserves to be shunned, but the ratings system is so easily gamed that she can still get 5 star ratings just by promising 5 star ratings to the drivers. Since Uber’s cutoff for drivers being “below customer expectations” is 4.6 stars, guaranteed 5 star ratings have themselves become a currency for tipping. This goes against the whole purpose of having a ratings system in the first place.

      1. Cameron

        It seems people are imagining the rating system out of context. I recently drove someone who said they hated uber because they charged her a $200 clean-up fee for throwing up in someone’s car. “It was only a little puddle, and that’s way too much,” she said of her unpaid uber bill.

        That little puddle meant the driver, who may have driven in from out of town (30-90 min., I hear) couldn’t work the rest of the night, meaning they lost income beyond just the clean up cost.

        So it’s good to remember what people are talking about in the spectrum of rating drivers and riders. It’s pretty simple, for drivers: did they arrive and deliver the passenger safely and promptly and then while driving, treat the passengers generally cordially? 5 stars. Done. For riders, were they waiting or prompt in getting to the car when it arrived and were then just as cordial to the driver for the duration of the ride? It doesn’t have to be all roses, people just need to be prompt and respectful, that’s it. That’s what 5 stars means. If you look at your phone the whole time, or watch youtube videos in my front seat – you still get 5 stars. If you don’t like my driving, and fail to mention anything, I have to go in and double check after each ride whether my average rating has changed, since the ratings given by individual passengers isn’t visible. In other words, I can’t look up a passenger after the fact and retroactively give them a bad rating, and I can’t see my average rating before I rate them. Is collusion possible or likely? Of course. But what does that really mean? It means that both people are quite aware of the necessity of not sucking during the experience because there’s not recourse if someone bluffs. If you were really late, costing me time and money and then say, “5 for a 5” at the end, maybe you’re driver will say, “yep, thanks!” and maybe they’ll still give you a 3 or 4 because whatever rating you give them is going to average into the 40 other people they drove that day, while your rating it going to be your only rating for the day.

        When you’re talking about gaming a system like this it’s important to consider that, outside of making a driver wait, which literally just cuts their hourly wage, wasting their time, people have to really mess up during the trip to get marked poorly. I’ve driven hundreds of people and have only ever encountered any mention of ratings maybe 3 times.

        The framing this story gave to the rating system as part of a comprehensive, semi-diabolical plan is not as true (though surely somewhat true, those Uber kids are pretty calculating) as you’d imagine.

        1. Bart Fargo

          Uber devises a rating system where 90% is a failing grade and you question whether that is part of a deliberate plan to inflate ratings? Unlike eBay transactions where the only issue that matters is “did I get my stuff/my money on time”, there are many more parameters on which to rate an (unlicensed) taxi ride. If 4s and 3s are reserved for major offenses because they will eventually get the driver fired, then a 5 means very little, now doesn’t it? I would think you, as a driver, would want to be recognized for any extra effort you put into your work, rather than have at most 0.4 stars separate you from the worst Uber will tolerate. Though since Uber’s plan is to replace human drivers entirely as soon as it becomes feasible, this inflation/neutering of drivers’ ratings is really just priming the pump for the ultimate commodification of the riding experience that is a driverless car.

      2. hunkerdown

        But it does go toward the purpose of “creating their own reality” (as all good Randians fantasize) and glib self-promotion. Next time you see “Our drivers rated 4.6 out of 5 stars” in the ad, remember it’s as meaningless as any of those other fungible spampuffery terms that are part and parcel of manufacturing consent. (“slow braised”!?).

  2. Ned Ludd

    At a dinner with Uber executive Emil Michael, an editor at BuzzFeed – who was a late invite – did not get the message “that the gathering would be off the record”. Among the guests, who included Arianna Huffington and journalist Michael Wolff, only BuzzFeed reported:

    A senior executive at Uber suggested that the company should consider hiring a team of opposition researchers to dig up dirt on its critics in the media — and specifically to spread details of the personal life of a female journalist who has criticized the company. […]

    Over dinner, he outlined the notion of spending “a million dollars” to hire four top opposition researchers and four journalists. That team could, he said, help Uber fight back against the press — they’d look into “your personal lives, your families,” and give the media a taste of its own medicine. […]

    At the Waverly Inn dinner, it was suggested that a plan like the one Michael floated could become a problem for Uber.

    Michael responded: “Nobody would know it was us.”

    A few months prior to this story in BuzzFeed, David Plouffe joined Uber as a “campaign manager”.

    Plouffe, who has been advising major technology and communications companies since leaving the West Wing after Obama’s reelection, said in an interview that the new job is analogous to his role as Obama’s 2008 campaign manager and then White House senior adviser.

    “We’ll be trying to change the point of view of established politicians, and there’s a lot of resistance coming from people who want to protect the status quo,” Plouffe said, adding that he’ll be working with a lot of young people and “helping see the light about progress and change.”

    I wonder if the idea for digging up dirt on journalists came from Plouffe, to help people “see the light”.

  3. Pepsi

    Uber steals auto equity in the same way air bnb and similar services steal home equity.

    At some point there will be nothing left to squeeze.

    1. oho

      I drive for Uber and Lyft (15-40 hours per week). Uber HQ/Lyft HQ would be disingenuous if they both didn’t admit that a big part of their business model is relying on the financial illiteracy/innumeracy of many of its drivers as many drivers don’t factor in depreciation.

      The numbers work for me as I drive a 8 year-old, fully paid off, reasonably fuel-efficient car in great shape. So I only have to worry about covering my variable costs.

      And as drivers get rated (and low ratings gets a driver fired), I rarely share my true feelings about Uber/Lyft with passengers who ask—-sounding like a whiner,even if legitimate, (or leaving your customer feeling like an exploiter ) is un-American and is the fastest way to kill any potential tips, lol.

      Other random tidbits—invariably as the article mentions if Uber cites ‘driver income’ they mean ‘gross revenue.’ driver turnover is immense which is not good for customer satisfaction. it’s depressing that ‘market’ says that a starbucks barista should get better pay v. someone who literally is responsible for a bunch of human lives in their car.

      uber’s/lyft’s business model is unsustainable unless fares rise.

      i wouldn’t be a driver if it wasn’t due to my financial circumstances. nevertheless, i truly enjoyed meeting the 1400+ people who i’ve driven and heard a lot of happy stories and sad stores. and maybe i’ll be giving you a ride should you visit my fair city this summer.

      1. ozajh

        To be fair, “relying on the financial illiteracy/innumeracy of many of its drivers” is not unique to Uber. The freight forwarding industry has basically used this factor for it’s entire existence.

        Many, many years ago in Australia the son of friends of my parents worked as a driver for a wholesale company. When they changed to contract-delivery, he was given the opportunity to take up the contract and buy the truck he was already driving at its book value (a very good deal this; he personally knew the truck had not been in any accidents, was in perfect working order, and had been lightly loaded throughout its life).

        He and his parents worked the numbers through, and couldn’t get them to yield the same income as his wages unless he could;
        1. Generate significant side-traffic (which the contract specifically permitted, and for which the truck had plenty of spare capacity),
        2. Not have any significant traffic accidents,
        3. Do all minor maintenance himself (therefore reducing his per-hour income), AND
        4. Ignore any further depreciation on the truck.

        When he declined the company went out to tender, pricing the truck at market rather than book which was a difference of several thousand, and had a list of applicants within days. Pete’s last task before leaving (and he had no hard feelings about this, the company had been completely honest with him) was to show the successful applicant the delivery route and procedures. His conclusion, after finding out a bit about the terms of the loan the guy had used to buy the truck, was that he would be bankrupted if ANYTHING happened to keep him off the road for more than a few days.

    2. tomk

      I don’t understand how Airbnb facilitating the the compensated use of an otherwise unused bedroom, couch or house, is in any way stealing said equity. Yes it may be feeding on financial need, I’d rather not have to coordinate with strangers and get the place clean for them, but for most it seems to work quite well, and is a positive social good in that it utilizes that which would otherwise be wasted.

      1. theinhibitor

        Because, it essentially un-regulates highly-regulated markets without paying a dime.

        Think about it this way: someone opens a B&B and pays well over a million to insure it, get proper fire codes, parking licenses, etc. What do you do to your house to make it OK for a stranger? Nothing.

        Same thing with Uber. Your not licensed to drive people, but yet you do. Get into an accident and the first thing the insurance comapny says is ‘have you been using this vehicle to drive others for money?’. That’s the problem with Uber and Airbnb. They essentially make money off of a business model that should cost them BILLIONS in insurance and other fees, but obscure everything through software.

        Whether or not this is good in the long run, IDK, but it definitely hurts the economy in how it cuts out the the small taxi and motel companies, or family owned businesses. I think this will definitely add to the cultural and economic divide between the rich and the poor.

        The poor will be left with these unregulated services and the rich will fly their G8’s and get taxid to 5 star hotels in Mercs. What a great ‘economy’.

        Definitely agree with you about the waste though. Airbnb and Uber do facilitate efficiency, and that is great. However, in the big picture, there has to be a way to ensure that most people earn a STEADY livable wage, which I would define as about 80-100k/year. Uber and Airbnb seem to do the exact opposite: they provide low wage temp jobs while taking steady jobs out of the economy. Airbnb and Uber could provide better jobs if they, for example, employed people to go out and vet houses/drivers. But they dont, and that’s the problem I have with them.

        America’s economy won’t last long with over 50% of the workforce in temp jobs.

        1. cnchal

          They essentially make money off of a business model that should cost them BILLIONS in insurance and other fees

          Fee Fie Foe Fum. Uber makes money the old fashioned way. They are a middleman.

          Produce nothing and collect a fee on a transaction they facilitate.

        2. tomk

          Thanks for your thoughtful response. I’m not sure how Airbnb provides jobs at all except in the software and problem solving realm. As for vetting the accommodations, in my experience the reviews provide a fair rendition of what you’ll find. Maybe this is an example of putting tasks on customers, but the comments are visible and far more meaningful than the comment cards you fill out at a cheap motel. I think you’re wrong about assuming that people don’t do anything to make their places OK for strangers. Most people are eager to please, and attentive to potential risks. It remains to be seen how the insurance and liability issues play out, but many are comfortable using the services as hosts and guests, drivers and passengers.

          I don’t see these services as replacing motels, bed and breakfasts, or taxis, but as supplementing them. Airbnb allowed me to visit my daughter in the city without imposing on her, or paying more than I could afford for a room in a much less convenient location.

          I’m now in the process of getting my house shipshape so I can post it on Airbnb and help pay for the upkeep and yard projects I have in mind. My potential extra income will be spent within my community. I don’t want to think that I’m engaged in a socially destructive practice that’s unfair to existing businesses but I acknowledge the points you make. This is a very complex issue.

          1. cyclist

            I’m not very keen on this ‘sharing’ business, but as a person of modest means, using Airbnb has been the only way I could afford to travel to some places, both here in the US and abroad. Now I’m not talking about overheated markets like NYC or SF, where there are non-resident people renting out multiple apartments specifically run as a profit making business. I’ve used it to rent a modest spare room in a farmhouse in an otherwise expensive scenic area – I just wanted the basic clean place to crash, and the real B&Bs in that area tend to specialize in froofy Victorian experiences. Or the time I rented the entire 2nd floor of a big old townhouse in a major European city for a pittance. In most cases the hosts are charming and provided a lot of local color, sometimes going beyond a proper hotel or B&B in helpfulness and flexibility. I used the service as an updated version of a 3×5 card on a bulletin board in the university union. But clearly it has its unsavory side.

            And Uber really seems to exploit the drivers for the reasons given above. Wouldn’t hitch-hiking be the true ride sharing?

            1. hunkerdown

              Yep, and that, like Indian potlatches, are misdemeanors. True demeanor suffers for its betters.

  4. Katniss Everdeen

    Having exactly ZERO experience with or need for uber, I must say that I find this constant kvetching over getting a ride somewhere both amazing and amusing.

    I get the part about exploitative, low wage “jobs” with inconsistent hours and all, but in that regard I find fast food workers and restaurant wait staff far more compelling and sympathetic. Not to be unkind, but anyone who buys a car at a 22+% interest rate and assumes all responsibility for the maintenance so they can be an uber driver has bigger problems than slave wages and inconsistent hours.

    Having said that, the vision of someone like Maureen Dowd or other well-heeled new yorkers fretting because uber drivers don’t “like” them is damned hilarious. I would’ve given anything to see her face when she called for a car and they all went the other way.

    I’ll bet she, very discreetly, lifted up her arm and sniffed her armpit.

    1. MikeNY


      I use Lyft in SF. It is VERY convenient and sure beats the old days of having to call and wait 1/2 hour for a cab if you’re not in the financial district. The drivers I speak with (and I speak with most of them) say they like the gig, particularly the flexibility wrt hours. Yes, almost all of them work at other jobs or are engaged in some other pursuit (I’ve driven with quite a few aspiring artists and musicians).

      I think drivers have a right to earn a living wage — and certainly should be entitled to SF’s new minimum wage of $15/hr net of driving expenses. Of course, I agree that 22% auto financing rates are usurious and absurd.

      1. Yves Smith Post author

        Please see the comment from a Uber driver above. It apparently did not occur to you that Uber drivers cannot be candid about their experience:

        And as drivers get rated (and low ratings gets a driver fired), I rarely share my true feelings about Uber/Lyft with passengers who ask—-sounding like a whiner,even if legitimate, (or leaving your customer feeling like an exploiter ) is un-American and is the fastest way to kill any potential tips, lol.

        See also his comments about the financial innumeracy of drivers, that the fully loaded costs for most Uber drivers (and he is not most) don’t work.

        1. MikeNY

          Actually, it did occur to me that drivers might not be completely honest. But it doesn’t strain credulity when drivers say they like meeting people (as oho above claims) and that they like the flexibility the job offers. I concede they may feel pressured to withhold negative opinions.

          Neither do I dispute the analysis of the economics: as I said in my comment above, I believe drivers should earn a living wage net of driving costs, and vehicle depreciation is clearly a driving cost.

      2. lyman alpha blob

        I really don’t understand the problem with finding a regular cab in a major US city. I lived in one for a decade and never ran into these problems. If I couldn’t flag a cab directly, I’d walk to a corner where I knew the cabbies gathered while waiting for a dispatcher to call them. If it was late at night I’d call and they’d be there in 5-10 minutes generally.

        I also don’t understand why it’s so hard to call a cab when you already have the phone you use to summon uber in your hand. This whole phenomenon seems to be a result of young people who think that if they can’t do on on a smartphone it isn’t worth doing, even if as in the case of uber they are just a glorified dispatcher of the same kind that has existed for decades. This isn’t any new innovation – it’s just being done on a phone. Whoop de doo.

        You want to get good ratings with your regular cab criver and have them run to pick you up whenever you call? Find a cabbie or two who works your neighborhood, get their direct phone number, call them for a ride, ask them not to turn on their meter so they don’t miss a bell they might get from a dispatcher, and then sit back while they haul ass to get you to your destination and back before anyone notices they were gone. And leave them a nice tip for breaking the rules for you. You’ll never be waiting a half hour again.

        1. RalphK

          That reminds me: I went to Starbucks the other day for the first time in a long time, and the people in front of me in line were all glued into smartphones that were half the size of an I-pad. I finally realized that they were punching up their orders, which would bring up a box-code (if that’s what you call it) which they would then scan into a peripheral attached to the register. Aside from the staggering douche factor, I wondered if it occurred to them that they were paying extra-premium prices to donate their labor to Starbucks.

        2. hunkerdown

          Think of the road warriors. Cab services are a patchwork. Uber, like AAA, is one-stop shopping.

          You are absolutely right, though, that once you have built a relationship with human service providers, you will generally get excellent service from them.

        3. oho

          “I really don’t understand the problem with finding a regular cab in a major US cit”

          Apologies for being pithy, but i’m guessing that you aren’t black or hispanic (like many of my customers) or a lilly-white person living in a red-lined neighborhood.

          as I (Uber driver here) don’t drive around with a wad of cash (and my car has near zero resale value), I don’t have any fears of getting jacked. I’ll hand over any carjacker my $15 in cash, my car keys and my el cheapo smartphone.

          But if I was a cash-toting cabbie, hell ya I’d seriously think twice about heading towards marginal neighborhoods at 3:30am.

        4. Sam Kanu

          I really don’t understand the problem with finding a regular cab in a major US city.

          Even in NYC, this claim would be true only if you were priviledged, pale-skinned and did not leave Manhattan.

    2. Jim Haygood

      At a party on Sunday, a twenty-something couple who live in the suburbs offered an unsolicited testimonial for Uber.

      In pre-Uber days, the old dinosaur taxi companies that one found in the yellow pages had a zone system, which meant a fixed, non-negotiable fare of $30 from their residence in an outlying township to the town center a few miles away. With Uber, they said, the fare is $10 and they taxi into town for evenings of pub crawling and such.

      Some folks just hate it that a market makes things work so much more efficiently than the old command-and-control model. ‘Bring back the ICC,’ they cry plaintively. But we won’t listen.

      1. Bart Fargo

        I doubt cheap and easy availability from the suburbs will last much longer once drivers start to wise up. To wit:

        “Don’t get stuck in the suburbs. The exception to Rule 2 (Stay Put Between Fares) is if you drop a passenger off way out in the suburbs. The suburbs blow. Since walking anywhere is much harder out there, you’ll keep getting asked to drive 15 miles to pick up passengers who wants to be driven half a mile to the mall — a transaction on which the driver actually loses money after you factor in expenses. And since the driver doesn’t know where the passenger wants to go until they get in the car, there’s no way to avoid these crappy fares.”

        Rules and tricks for being an Uber driver

        Or more likely, Uber will continue to attract drivers so green/desperate that they’ll gladly put up with this. Of course the low profitability/population density is why taxis in the suburbs cost so much in the first place, it’s just that Uber has found a way to shift all the operating expenses to the drivers such that Uber still makes money no matter who their drivers pick up.

      2. Katniss Everdeen

        “Twenty-somethings” “crawling” around “pubs.” Another truly disturbing yet iconic american image.

        Do you think these young but astute “consumers” realize that the “old command-and-control model” keeps the “salaries” of the servers at the pubs they crawl through at a whopping $2.13 per hour while denying them the opportunity to refuse to serve any crawler they don’t “like” or who doesn’t know how to tip?

      3. German native speaker

        So, the couple live in the suburbs, and as you say later: in an outlying township, “a few miles away” (how far exactly?) from the town center.
        Let’s take the example of a “town” I know well. I would not drive anyone from Pittsford, Brighton or Charlotte to Rochester for ten bucks, even though the distance is ‘just a few miles’. Even if I happened to be very close to the location where these people call from. Especially not, if I first had to drive three miles to pick them up. And these ‘suburbs’ are not outlying or exurbs. Most towns are more spread out than Roc, even in upstate NY, let alone in the South or West.

      4. OIFVet

        What is the base fare, per minute fare, and per mile fare in your area? Frankly the $10 fare sounds impossible from an “outlying township” to the town center. I think your twenty-sumpthins just wanted to show how hip and with-it they are. That, or the pub crawls resulted in a few blank spots…

      5. Alejandro

        “Some folks just hate it that a market makes things work so much more efficiently than the old command-and-control model. ‘Bring back the ICC,’ they cry plaintively. But we won’t listen.

        Some ‘folks’ just love to spew the language of “efficiency”…but always omit the caveat of ‘entropy’, their assumption being that “it’s somebody else’s problem”, you know, “external” to them…until, it’s everybody’s problem, including them…will they listen then? The GFC provided the answer to that.

  5. Kas Thomas

    Uber represents a threat to the Established Order of smokestack-industry control over wages and jobs (even if it also represents “markets” gone awry and new era capitalism taken to the extreme), so one suspects WSJ sees it as an unjustified empowerment of the proletariat (or paroletariat as the case may be), operating outside the “rules” of orthodox status-quo wage slavery capitalism. Uber takes power away from the “real” “job creators” — Uber and its kind are capital-terrorists who threaten an Isis-like encroachment on the hegemony of the existing power elite.

    So next we should see stories that are anti-Airbnb and anti anything that hastens the disintermediation of biz-as-usual with consumers-as-usual. This degree of disruption of “as-usual” is unusual and not to be tolerated by the Bigs.

    1. German native speaker

      Well, interesting that you don’t see Uber and Airbnb as the exploitative corporate models that they are.

      I remember staying in B&Bs in Ireland/Great Britain decades ago, and AirBnB has nothing in common with that concept. I have looked a few times what was offered an Airbnb as an alternative to hotels, and found that the absurdly high prices that the ‘owners’ asked were ridiculous, and this latter aspect is NOT the idea of an “air” b&b, but has become the norm – just another aspect of the ‘entitlement culture’. In LA, a room in a private home via AirBnB was more than the nearby Marriott, so guess where I stayed.

      1. carl

        I think it depends, in part, on the particular market you’re in. We can, generally, get a better experience at a cheaper price through airbnb than using more conventional means, but sometimes in some places, there’s little or no savings. Also, there are times when we’re going to a place for the first time, and local advice from the host is worth quite a lot. I’ve stayed at some spectacular places in hot markets (Austin, San Francisco), but there was little available in New Orleans around the Christmas holidays last year, so we chose a more conventional property.

    2. Sam Kanu

      Uber represents a threat to the Established Order of smokestack-industry control over wages and jobs (even if it also represents “markets” gone awry and new era capitalism taken to the extreme), so one suspects WSJ sees it as an unjustified empowerment of the proletariat (or paroletariat as the case may be), operating outside the “rules” of orthodox status-quo wage slavery capitalism. Uber takes power away from the “real” “job creators” — Uber and its kind are capital-terrorists who threaten an Isis-like encroachment on the hegemony of the existing power elite.

      So next we should see stories that are anti-Airbnb and anti anything that hastens the disintermediation of biz-as-usual with consumers-as-usual. This degree of disruption of “as-usual” is unusual and not to be tolerated by the Bigs.

      Agreed that Uber is a threat to the established order of exploiters. The problem however is that Uber is in fact funded by a wing of the established order aka “venture capital” – and ultimately aims to be the new slavemaster. They ain’t no John Brown….

      1. German native speaker

        Apropos established order: a few weeks ago, I happened to look up who in the German media is involved with certain ‘by invitation only’ “elite” organizations, such as trilateral commission, council on foreign relations, etc. This was prompted by what a German satirical show called “Die Anstalt” exposed about such ‘connections’ between media and power.
        I was a bit surprised to see the CEO of AirBnB Brian Chesky on the lists of many such elite gatherings.

    3. hunkerdown

      “Paroletariat”. Very good.

      Still, tell Mr. Axelrod we said hi. We’re not interested in a glibertarian world order, either.

  6. Randy Weinstein

    This article concludes by characterizing Uber’s business practices as a form of rent extraction. In researching the term, found the following relevant and ironic example:

    ” Taxi licensing is a commonly-referenced example of rent-seeking. To the extent that the issuing of licenses constrains overall supply of taxi services (rather than ensuring competence or quality), forbidding competition by livery vehicles, unregulated taxis and/or illegal taxis renders the (otherwise consensual) transaction of taxi service a forced transfer of part of the fee, from customers to taxi business proprietors.”

    Perhaps the driver gets screwed either way and — as always — the paymaster gets paid first.

    1. Pepsi

      Taxi licences are a racket. However, constraining the supply of cars for hire is a good thing for dense congested cities. You want as few cars on the road as possible, while still providing enough supply for people to move from point to point as needed.

      Uber upends that constraint, and does it in an unaccountable manner.

      1. washunate

        Interesting. I’d say banning cars is

        a good thing for dense congested cities


        You want as few cars on the road as possible


    2. Rhondda

      Hey Ran — Perhaps that Wikipedia entry was edited by Brian Chesky & his Uber Friends. The sharing encyclopedia, an’ all…lol

  7. Noni Mausa

    More and more, I see this shovedown of work onto the customers, and management onto the workers, while the go-betweens take any profit. Sharing economy, my patootie. You can bet Uber would cry blue murder if an app appeared that put drivers and passengers in direct contact, with no toll gates between.

    I have participated in work sharing organizations from time to time, where you supply hours of work in return for hour credits towards other people’s services. Inefficient information and feedback systems made these clumsy and limited in scope, but also they drew the ire of the tax authorities; Heaven forbid a plumber and carpenter might exchange skills without paying a slice of the estimated value of their labour to government.

    But of course, the plumber and carpenter would get something back for their tax dollars. What Uber and the others want to do is step into that government niche and extract the equivalent slice for themselves. It’s a business strategy which can only work where people are desperate for a little more cash income, or for slightly cheaper services. The result is “pancaking,” a deflating economy with workers working for less, resulting in having less to spend, seeking out services for less or dispensing with them altogether, wash, rinse, repeat.

    A prospering economy wouldn’t have the level of desperation needed to drive (ahem) people to work for Uber.


    1. diptherio

      There has been a lot of talk in the tech co-op world about creating an Uber-killer app. The idea is to have a platform that is owned and democratically controlled by the drivers and/or riders. Check this out:

      Cooperatives’ Uber Moment

      In principle, it would be the perfect model for a worker coop: a piece of software owned by drivers around the world that helped them do their work better with the costs and surplus or profits shared. In reality, it required the high-risk VC (Venture Capital) environment to finance and build such an innovative and disruptive piece of software. Public agencies, NGOs, social enterprises and coops do not have a strong track record building innovative technology. Even the great and successful collaboratively made pieces of technology—from within the open source community—are regularly criticised for not having a great user interface. Open source exceptions to this, such as WordPress, are run as private, profit-making companies.

      The coop version of Uber will surely inevitably come, but at such a pace that when it does, Uber may have Facebook-levels of market saturation, and be midway through being hardwired into bus stops and taxi ranks the world over. Before looking at the cultural approaches that set successful digital businesses and services apart, it’s worth considering what exactly Uberfication could mean in the context of cooperatives, and why it’s of increasing social urgency that future Ubers are owned by the people who are governed by them —be that workers or consumers.

      1. hunkerdown

        There are people looking to fix the lack of design-first philosophy in FOSS. See Aral Balkan, who is at the moment building a design-first, decentralized, peer-to-peer, FOSS social network and entertaining suggestions as to better places than the au-Torytarian UK from which to do some good work.

      2. washunate

        That’s a great article diptherio.

        The how is always the tricky part when talking about alternatives to profit-driven innovation, especially in computing. People want to get paid, and computer programmers are no exception. Organizing resources at scale requires management, which is neither a universal skill nor a costless activity.

        1. hunkerdown

          1. Bzzt. Disproven by the existence of FOSS.

          2. How much LABOR (resources?! you’re glad we’re not standing in the same place right now) does it really take to build a *vibrate people near me* system? Not a whole lot, when you leave the economists, psychologists, advertisers, and profit out of the design requirements stage. Neither does it take all that much for hosting.

          Besides, once it’s done once, it can be packaged such that anyone can “npm install untercab” or whatevs, scan a QR code, and turn their cars into a private livery club. You seem to be highly invested in the rental model of software…

          1. washunate

            Sorry, I don’t quite follow here. I think you’re anticipating I’m coming from somewhere very different. I’m talking about actual, real world mass computer usage. Not what a techie can do with Linux.

            FOSS? OS X, iOS, Android, and Windows dominate western personal computing (and even much of the rest of the world). Those are all proprietary efforts of for profit companies. Heck, Unix itself was developed by a for profit company (AT&T). The top workers at these companies make lots of money. The most well known computer person, Bill Gates, became the richest person in the entire world. If computer programmers and other highly paid professionals were willing to abandon the IT and consulting and other industries en masse, well, they would do it already.

            As far as the notion that designing, making, and distributing quality software is easy, well, my point is that the proof is in the pudding. Where is all this non-profit-driven computing power that real people use in the wild? I personally detest the IP software model. I’m simply observing the brutal truth that nonprofits haven’t navigated it any better than for profits. Indeed, what seems to stand out about FOSS is how niche the places are where it has achieved some level of critical mass.

            As far as organizing resources, I agree of course that takes human labor. (If you’re objecting to the semantics of the word resource, that’s okay with me, use whatever word you want. Call it smiles.) At a macro level (not microeconomics), human labor is the only economic input in organizing resources at scale. That’s what money is – the conceptualization of the idea of labor. The universe charges no currency fee to use its resources. Rather, it charges a fee denominated in labor.

            [In English, the same economic word of work is also used in physics and is even measured in joules, which is the same basis as how we think of the nutritional energy in our food necessary for the human body to do anything. The colloquial calorie is a thousand joules. The single biggest consumer of energy in the human body is our brain. And what’s impressive about the brain’s power is not the absolute amount so much as the efficiency. It is productive enough to fit inside a small enough space and consume a small enough amount of energy that the humanoid form factor can support it.]

  8. Dino Reno

    Ten years from now, self-driving cars will put Uber and Uber drivers out of business and out of work. I think the fax machine had a longer life span.

    1. oho

      in a world of publicly shared, self-driving cars…..don’t be surprised to find in the back seat puke, random vaguely identifiable body fluids, trash, empty drink containers, open liquor, drugs, smoke stench or the remnants of the previous passenger’s in-drive meal…. unless uber films passengers 24/7 to keep everyone in check.

        1. hunkerdown

          Why do you think they’ll command such a premium over non-self-driving cars? Sensors, actuators and microcontrollers are dirt cheap, and the marginal materials cost of code — which, for all we know, might well be provided by USDOT as a standard distro/SDK for free to carmakers, like everything else developed with state money — is approximately zero.

          1. sam s smith

            The LIDAR sensing system runs abour $100k right now. Unaffordable for consumers, but not corporations.

            In 10 years there will be no truckers tooling down the highway talking on CB radios.

            1. hunkerdown

              Sensors, actuators and microcontrollers are cheap – I can almost promise you they’re not even 20% of the cost of this thing. It’s the low-volume production and the novelty rents that are unaffordable for consumers, but affordable for corporations.

              I don’t know about no truckers, but I could see whole convoys being driven by one guy at the front, and maybe autonomously deadheading back to base, or hauling a trailer from point A and dropping it at point B. Maybe.

              The big question is, how does this technology allow those who can afford it to externalize their costs?

              1. oho

                there’s no reason why at the very least automated grain farming/harvesting (like I saw at the World of Tomorrow ride at EPCOT in the80’s), mining, etc. doesn’t become common in 6 years.

    2. bob


      The simplest mode of transport to “automate” would be trains, and they still need drivers. Those drivers only have 2 choices, faster or slower. No steering, lane changes, kids running out into the road.

      That meme needs to die. Google recently admitted that in a trial, 40% of their self driving cars crashed.

  9. Gareth

    Uber is nothing but a new form of labor racketeering with a little loan sharking thrown in. If this is the new economy we are all screwed, well, most of us.

  10. Edwin Gordon

    Everyone is all for people having higher wages except when it impacts on their costs. What’s amusing is that everyone has this implied hypothesis that services like Uber are going to lead people to higher wages. Even Uber was stupid to even imply that. It may render the market more fluid for hiring and firing and make it easier for people to find a means of getting from point A to point B but it was never going to make people who decided to make themselves available as Uber drivers rich. When you have more than 100 million people out of the 210 million working age americans out of work (and one can quote equivalent figures for most western countries) let’s be serious about Uber providing a means for people to earn enough to live comfortably. It was never going to happen.

    If people want a couple of starting points for getting control over their lives, we should first start with getting the right to call binding referendums in their locality and then for their state. Then one can start passing laws that limit the ability of politicians to borrow money directly or indirectly “on their behalf” that increases inflation, externalises costs related to companies poisoning themselves, their children and the environment via GMO foods, pesticides such as glyphosate, herbicides, fracking, etc and the myriad other ways that we have allowed politicians to control our lives.

  11. John

    The South developed the sharing economy 150 years ago in its ag sector to replace slavery. It was called sharecropping. Worked out real well for the landowners, not so much for the sharecroppers themselves. Who’d a thought the old Jim Crowe South would have been such an innovative place. Sharing to replace slavery…don’t monetize your meat workers as in slavery, just rent them. The overhead is away lower.

    1. Carolinian

      Sharecropping is a lot older than Dixie.

      Also note that many of the sharecroppers were poor whites, not just freed slaves.

      The root of the system was Andrew Johnson’s decision to give the Southern plantation owners back their large land holdings after the Civil War. As it happens today is Andrew Johnson day. On May 26, 1868 he was acquitted of impeachment by the Senate.

  12. Former Uber Driver

    Dowd’s story contains a charge which I believe to be made up:

    “Standing in front of the Sunset Tower Hotel, I tapped my Uber app and saw five little cars swarming around my location. ”

    “Revealing that I had only 4.2 stars, my driver continued to school me. “You don’t always come out right away,” he said, sternly”

    Unless something has changed since I drove, Uber never tells its drivers why a passenger has a low rating, anymore than it tells drivers why their own ratings might be low. It’s possible Dowd had this same driver before .. but wouldn’t she mention that?

    1. oho

      ““Revealing that I had only 4.2 stars, my driver continued to school me. “You don’t always come out right away,” he said, sternly””

      I too call BS. Absoutely no way any sane Uber/Lyft driver would be ‘stern’ to a passenger. And lol, oh what I wouldn’t give to drive around Maureen Dowd and get a 20 min. glimpse into the random banalities of her life.

  13. nat scientist

    Johnny Friendly, the shape-up boss on the Hoboken waterfront in “On The Waterfront”(1953) had the same position as the UberLyfters with the stevedores who had zero individuality away their skills in fluffing the boss’ s political needs of the moment. Interchangeable poofs with instant discardability and zero recourse in the ether; all the friction and risk is on the worker, lookout above!

  14. Carolinian

    Re La Dowd–what Lambert would call “weapons grade snark.”

    Nothing quite says “Irish maid” like living in JFK’s old bachelor pad. Maybe the ghost of Maureen Dowd’s great grandmother is feather-dusting the “huge trompe l’oeil pastorals on the living-room wall” as we speak.

    A bit later on in Dowd’s piece she quotes from a Wall Street Journal piece on the explosion of new service apps, including Saucey, which will deliver alcohol to the location of your choice. But this new service fills her with anxiety. She might again receive a poor rating: “Saucey will reveal how politely I grab my bottle of Grey Goose.”

    Of course, we know that the Irish (maids or otherwise) are known for their weakness for strong drink, but in my experience, not so much for their taste for top shelf vodka.


    1. OIFVet

      Sounds like Dowd is self-aware enough to know that she is somewhat less than polite with the peons, and that she resents the peons’ ability to rate her desirability as a customer. Self-awareness should count for something…

        1. OIFVet

          In Dowd’s case, I doubt she is capable of demonstrating enough sentience to earn more than a star, at best. Then again, it might be that I am particularly prejudiced against her.

  15. mk

    why don’t worker organize to create their own worker-owned companies? Seems like it would be pretty easy to do, why couldn’t these uber drivers gather names/addresses of regular uber users and offer an exclusive service, etc.

    1. oho

      “why don’t worker organize to create their own worker-owned companies?”

      Start-up costs. Uber got where it is today (ie BIG) by giving away $1,000,000’s and $1,000,000’s worth of free rides. The ‘back office’/customer service aspect is expensive.

      And Uber is ubiquitous. Given a choice, people will nearly always pick a 4-min. wait from Uber v. 7-min wait from a competitor with a smaller footprint.

      People have limited room on their phones or are ‘mentally sticky’. They tend to like app per category and then stick to it.

      1. Lambert Strether

        And they had all the $1,000,000’s because of they’re the right sort of people to scoop up all that free money the Fed has sloshing around because of QE. Unlike, say, us.

  16. mk

    why don’t workers organize to create worker-owned companies? uber/lyft workers could gather names/addresses of regular users of these services and offer a competing service. then workers could keep the profits themselves, no uber/lyft to skim or hoover them up.

    1. hunkerdown

      Probably NDAs, non-competes, non-disparagement clauses and such, if they’re anything like any corporation I know. Oh, and the company car loan. There’s plenty of potential leverage for the sharing capitalists to squeeze rogues and put down insurrections. Such structures would have to come from without.

      1. Phil Martin

        Do “independent contractors” usually have non-compete clauses in their contract? Uber calls their IC’s “driver-partners,” but judges are calling them employees.

  17. washunate

    I’d say companies like Uber and Airbnb are absolutely creating markets (or more precisely, those are the most well known names operating within their respective markets). That’s the heart of the matter. Should transportation and lodging and other activities be heavily regulated (current model) or not (“sharing” model).* They are like drug dealers and other actors who supply a service desired by a critical mass of people who don’t understand and/or don’t care about the central planning apparatus that has been constructed around that particular activity. They are doing for these areas what Amazon did for tax evasion on sales taxes – an easy way around something that solves a problem for their customers. Markets are exactly the language to use when talking about this.

    And of course, if inflation weren’t a problem, then everybody could afford to pay for that legal hotel stay and making $10 an hour would be enough to have decent housing and healthy food and family vacations and… :)

    *This is not actually sharing because sharing is a nonmonetary economic transaction, but that’s a deeper issue confronting a whole range of establishment monetarist thought, both leftist and rightist, whose focus is on the subset of the economy that involves monetary transactions for things like “jobs” and “growth”. Which answers the question for me: The Journal can talk about these things because talking about jobs and GDP and growth and whatnot is not some radical perspective; it is the preferred method of social control. (More pejoratively known as wage slavery). This is an article talking about the terms of the control, not exploring alternatives.

    Or to say it differently, maybe we don’t more full time taxi driver jobs. Maybe, instead, we need to rebuild our passenger rail network.

    1. Rhondda

      “*This is not actually sharing….”

      Exactly! This is not sharing in the economic sense, but rather in the TMI or perhaps old school, 80’s “thank you for sharing, NOT” sense. Why do we let “these people” hijack the language itself?

      1. Lambert Strether

        The more I think about it, the better I like “the shafting economy”; it’s both euphonious and analytically sound. I think it should propagate, so please let’s repeat at every opportunity. My dream is that a reporter uses it in a question to Elizabeth Warren or Hillary Clinton.

  18. jerry denim

    Air BnB runs a similar ratings scam but the mechanics are a little different. If a user gets screwed by a host Air BnB has a very slow moving and rigid arbitration process which requires the “guest” to first seek compensation from the “host” then if this very slow process fails the aggrieved user can seek recompense from Air BnB. When it comes to the all important rating of a “host” Air BnB requires all ratings to be left in less than a week while the dispute process is still in its very early phases. Nobody seeking a refund is going to rating flame the host when they’re being very nice and promising “the check is in the mail”. Once the ‘host’ runs out the very short clock they have no real motivation to play fairly and the renter/user/guest has no other recourse than plead for compensation with Air BnB. Regardless of whatever Air BnB decides in their arbitration they will not let you leave a bad rating after the very short and arbitrary window closes under any circumstances. They know bad ratings are very bad for business and they have no intention of letting disgruntled customers leave one. Why roll the dice with some strange dude from the Internet with dodgey ratings when you could book a reliable chain hotel with excellent and honest ratings on Trip Advisor?

  19. dw

    does any body want to ride with some one who is getting paid to drive them, who might be a rapist or murderer? cause neither of the ride share companies wants to actually do the back ground checks to make sure they didnt put you in harms way, since they arent taxi companies. and if you happen to be there when they get into a wreck, you probably wont get any help from the company for your medical bills. after all, they just provided the marketplace . not the ride.

  20. Phil Martin

    To all who are championing the overthrow of regulations from Jurassic, let me ask this of Uber drivers and proprietors of Airbnb properties:

    Have you, my driver, upgraded your personal auto insurance policy to reflect the commercial use of your vehicle? I ask that, because when I accept an Uber ride, I also agree to Uber’s terms and conditions, one of which is to hold harmless Uber to any claim over five hundred dollars. So if there is an accident, Uber’s insurance won’t cover my medical bills, so I’ll be looking at YOUR policy. Hmm, thought so.

    Airbnb host, same question: have you upgraded your homeowner’s policy to reflect that you are now renting a room, sometimes an entire home, to a stranger? I sure wouldn’t want to trip down the stairs because the rug was loose on the landing and find that you only have five thousand in coverage.

    This isn’t complex at all: Uber and Airbnb count on people deceiving their insurance company. Fraud is at the heart of their business model.

    If this doesn’t faze you, then may I suppose it doesn’t matter to you that the guy flying your airplane is a certified pilot, or that the mechanic who fixes the brakes on your car has actually had training in doing so?

    Some of these regulations exist for a reason.

    1. Miriam

      Phil, when reasonable people like you start asking these ultra-practical questions, they run the risk of being treated like unwanted intruders in Fantasy Land. In order to successfully make our way through our lives we need to be proactive, think of the risks involved, and ask “what if” questions so we don’t get broadsided by ruinous expenses later on. It seems like a lot of these sharing economy execs try to marginalize people for asking some pretty innocuous questions, and paint us as being a bunch of sour-puss complainers who “just don’t get it”.

    2. German native speaker

      Uber is illegal in most of Germany now (although the company is fighting the decision, of course), exactly because of the insurance and licensing concerns.
      The idea that Uber would be needed there is too odd, as a “real’ ridesharing organisation exists there since decades (although mostly for longer trips). Ridesharing = get a ride and contribute money for gas.

    3. washunate

      I don’t think people are calling for anarchy, though? Some of the reasons that regulations exist are in the public interest, others are not, and the exact place to draw the line is a matter of personal preference that varies from person to person. Uber et al allows people to choose to circumvent regulations – but only where authorities allow them to offer that choice(!). That there is significant demand for less regulation doesn’t make the regs inherently bad, but it does point to significant challenges in implementing them, from sales tax avoidance to illicit drugs.

      As far as fraud, I think more precisely what is happing is an externalization of risk. Fraud only comes into play if someone submits a claim to their insurance company that is not accurate (for example, claiming to have been in an accident while driving for personal use when actually you were transporting an Uber passenger). I think it’s relatively clear up front that buyers and sellers of these services are engaging in a legal grey area. You get what you pay for – that’s what people are exchanging, a discounted price for the risk that it turns out to be a worse experience than paying the full rate for a taxi/hotel/freelancer/whatever. Accepting uncertainty in exchange for a lower price is a common practice, like flying standby in the pre-TSA era. What’s the Airbnb rating on an airport floor? Or using PayPal – there is no financial compensation if you get stuck investing hours of your time to resolve something. That risk is born by the user (both buyer and seller), not the company.

      We can argue that organized gambling should be illegal, but I’d say that is different from fraud. Something on the order of one quarter of the entire labor market is contingent at this point, and that is only going to continue growing. We are talking tens of millions of workers, just in the US. Talking about pilots is an interesting comparison, since that’s one of the classic examples of how we have taken a once glamorous job and turned it into crap work irrespective of the freelancer/employee dynamic – complete with out of control educational costs and subsistence level starting wages.

      Because of course wage stagnation isn’t about temporary vs. permanent work. It’s about a culture, a policy choice, that inequality should be baked into the cake all up and down the wage scale. Uber et al just use the power of computing to lay that system bare for all to see. Or to say it differently, what makes people uncomfortable about the “sharing” economy is that it isn’t any different from the rest of the economy.

      1. Phil Martin

        Gray areas? There are no grey areas. Your insurance policy is pretty clear-cut. You drive for personal use, you get a personal car insurance policy. Drive for hire, you get a commercial policy. If you drive for hire without a commercial policy, you put yourself and the passenger at risk. How many Uber drivers without commercial policies warn passengers getting into the vehicle that there may be no insurance coverage in the event of an accident? How many passengers are thinking “I’ll save seven bucks if I ride with the uninsured guy instead of the taxi that is insured? People are not making that calculation.

        Instead, they are more likely aware of Uber’s one million dollar insurance policy, trumpeted in big letter, and mostly unaware of the hold harmless condition which I mentioned above. Of course, that’s in the small print, and we all know that no one reads that stuff!

        The only externalization of risk I see is that the risks are shifted from Uber to the drivers and passengers.

  21. anonymous123

    Robert Reich had a good piece about this same topic a few months back (“The Share-the-Scraps Economy”,, and there was a great related article in the Times this weekend (“Public-Sector Jobs Vanish, Hitting Blacks Hard”,

    You can see all the pieces coming together and it’s very concerning for our country’s future. With the destruction of stable, middle-class jobs and people having to piece together unpredictable, low-wage work we will continue to see the social unrest that has been happening. Thinking farther out, this trend is what’s going to rip apart the social fabric of our communities. I’m not sure what that means for what society will look like in 10, 20, 30 years…but I can’t imagine it being positive.

    My only hope is that progressives like Elizabeth Warren and Bernie Sanders start to gain a broader following and that citizens have more of a voice in the political process. Our political system is rigged, and both republicans and democrats are touting the same “pro-business” policies that make it impossible for the middle class to thrive.

  22. Jay M

    been making quite a bit of the old simoleon from the “piss” app. Luckily i have a ground floor where the apparatus isn’t in the back and there is impressive foot traffic. Monetizing porcelain, neo-librealism doesn’t get much better then that.

  23. JTFaraday

    “If I promised to give them five stars — even in the Wild West of Uber X, where the drivers often seem so unfamiliar with the local terrain it’s as though they’ve arrived from Mars — they would give me five stars.”

    Imagine that. Marketing as a positive the very idea of getting in a car with someone who doesn’t know where they’re going.

  24. oho

    ps, i still drive a car without an AUX jack, just an old school CD player. so that should give everyone a clue as to the lavish lifestyle/income potential of a Uber/Lyft driver, lololol.

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