Friday, July 31, 2015

Uber vs the Taxi Companies

I used Uber for the first time recently when I was in Colorado. It was pretty great. My ride from the airport to the hotel arrived within 2 minutes of my summoning the car. My ride back to the airport took a little longer, but I was kind of far from the middle of the city, so that was understandable. The ride was about $18 both ways; a cab would have been closer to $30. Both drivers were former cab drivers. Both told me that working for Uber was better. One said it definitively paid more, and the other said she made about the same but had more flexible work hours with Uber. One of the drivers gave me some good dirt on her former employer. Apparently some cab companies put out cars that have bad brakes and tell the driver, “F*ck you, go drive this. Fill this dangerous piece of sh*t with passengers and make me some money.” My driver told me she once refused to drive until her boss fixed the brakes on her car. Some cab companies “self-insure” rather than buy a commercial insurance policy, but then they weasel their way out of paying claims when their cars injure someone. They tell the injured party, “Sorry, we don’t have insurance.” Yeah, Sleazy Cab Company, but by deciding to self-insure, you assumed responsibility for those liabilities. Uber has been criticized for supposedly inadequately insuring their drivers on the physical damage coverages (the coverages that cover the Uber car itself), but I don’t think anyone questioned the adequacy of their liability coverage (which covers people injured or property damaged by the Uber car). The driver also told me how common it was for cab companies to hire ex-convicts. She told me about several instances of drivers at her company ripping off or robbing their passengers. Uber is sometimes accused of being potentially dangerous, of inadequately screening its drivers, or of having inadequate insurance. Only someone who is clueless about the actual operation of taxi companies can make these kinds of accusations. These aren’t new problems that didn’t exist until Uber came along. If anything, Uber has a better handle on these issues than the industry it is displacing.

Some people think that Uber is a problem because it’s not regulated like the cab companies. I think this reflects a naïve worldview. Supposedly in a regulated world, the government tells us what we’re supposed to do and we obediently follow instructions. In an unregulated world, without the government telling us what to do, we simply do as we please. The contrast between Uber and the cab companies dispels this naïve view of how regulation works. If anything, the taxi companies are actually sheltered from their wrongdoing. They have a government-enforced monopoly, so they aren’t subject to the kind of competition that governs other industries. Competition keeps you honest. I get the strong sense that ideology drives a lot of the Uber-bashing (just as it probably drives much of the Uber-boosting, to be fair). Uber has indeed flouted the regulations governing taxis, which is a good thing. Uber has shown us that passengers are better off without the regulations and licensure restrictions governing taxis. Passengers have the option of insisting on the “safety” of the regulated taxis, and they are opting for Uber instead.

I’ve seen some pretty bad opinion pieces bashing Uber. As far as I’m concerned, every single one of them should end with the line, “Of course, all things considered this is a huge improvement over what we had before.”

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