POST #31: Is Uber-cool?

uber-versus-taxi

In recent years, the smartphone app Uber has massively increased in popularity; changing the way we think about the rules and regulations of marketplaces and the boundaries of traditional ‘professions’. For example, in a tweet a few months ago, the co-founder of Uber, Travis Kalanick, said ‘Work is now flexible to life, not the other way round’.

It’s an app that connects drivers and passengers; those that need a quick car ride, and those that have time to spare to give one. It’s extraordinarily successful and is part of what some are calling an ‘American service sector revolution’, using smartphone technology to collate the various processes we were used to experiencing – which were, as one researcher put it:

[Having to] search yellow pages (or google), find a provider, call or email that provider, wait to connect with someone, schedule a convenient time, hope the provider arrives on time, and then pay with a credit card or cash.

You can see the attraction of replacing that with a press of a virtual button.

images-taxi

But what I’d like to write about is the backlash from taxi drivers throughout the world, and Uber’s (and its supporters’) reaction. I’ve written about the negative impact of innovation before, and Uber is certainly having harsh repercussions for the traditional taxi sector.

Traditionally, taxis had the right to be hailed on the streets, while having to cope with strict state regulation and control over taxi driver licences. Private-Hire-Vehicles (PHVs); the other sub-sector, were booked in advance, and not allowed to ply for hire, while having to contend with much less regulation.

This is where Uber comes in. By offering a virtual ‘hailing’ service, they circumnavigated the system; allowing them to be classified as PHVs while benefitting from the privileges of traditional taxi drivers. Many taxi drivers and regulators oppose this, as this map makes clear.

ubers_legal_issues_2015-02-06

This is because, in effect, Uber has made taxi regulation obsolete. Because any driver for Uber can do exactly the same job without any of the restrictions that taxi drivers must comply to.

This means that we need reform; the old system worked when the two sub-sectors were separate, but now the lines are blurred I feel that there should be a deregulation of the traditional taxi industry to allow for fair competition with drivers for companies like Uber.

One of the main objections to this is that, if we deregulate, it will lead to an increase in risk (you don’t know who the Uber driver is, contrasted with the trust that heavy regulation ensures we have in taxi drivers). Conventional opinion is that this ride-sharing part of our economy is less safe and could lead to higher accident and assault rates.

But does it?

The inspiration for this post was a paper written by Angela Dills and Sean Mulholland, entitled ‘Ride Sharing, Fatal Crashes and Crime’. Some of their statistically significant findings were:

  • The arrival of Uber in different US counties coincided with a 6 percent drop (on average) in fatal crashes and an 18 percent fall in night-time accidents.
  • Driving Under the Influence arrest rates had a decline of between 9 and 18 percent after Uber’s entry into the market.
  • Each month that Uber operates is associated with a 2.1 percent drop in overall fatality rates.

It’s a direct contradiction of conventional opinion, with explanations varying from people using the service instead of drink-driving at night, to the fact that Uber regulates itself, privately, mitigating much of the risk associated with it.

As I have written before, innovation will always have losers; and its strange to think that black cabs, an institution more than one-hundred years old (four-hundred years if you don’t start from the motorisation point) may have been outmanoeuvred by an app.

What are your thoughts?

FURTHER READING:

https://iea.org.uk/publications/hire-authority/

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2783797

https://www.uber.com/en-GB/

https://oecdecoscope.wordpress.com/2016/11/21/the-gig-economy-will-not-abolish-working-9-to-5/

I should also add that this is not the only controversy surrounding Uber. The fact that Uber drivers are treated as ‘self-employed’ while carrying out work very similar to that of an employee of a large corporation is also wreaking havoc with various administrations.

And one last comment:

https://www.facebook.com/plugins/post.php?href=https%3A%2F%2Fwww.facebook.com%2Fthecockneybible1%2Fposts%2F1118080168228755%3A0&width=500

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