1) that all economic changes have differing effects on differing groups, both immediately and over time. Any intelligent analysis, therefore, must keep this in mind.
2) That, particularly, new technologies both destroy existing ways of doing things AND create new ways of doing things.
Uber unquestionably affects the income of traditional taxi drivers. In that model, you have a brick and mortar building owned by a company which purchases and maintains a fleet of taxes, and which advertises its services, fields the calls placed to it, and passes those calls along to its contractors. The drivers, in turn, are in my understanding in most cases simply leasing the cabs on a daily basis. Their daily profit is the amount of fares they take in less their cost to rent the cab. The leasing agency–and this is really what a cab company is–may also take a cut of the fares.
This is somewhat abusive to the cab drivers, since they have a fixed cost, but no guarantee of income. The cab company wins no matter what, except when they are unable to provide enough fares to the drivers to keep them coming back to a losing situation. This may be because they don’t advertise enough, have ugly poorly maintained cars, hire the wrong people, or for some combination of factors simply present an unattractive image.
Cost, obviously, plays a role as well. The higher the costs, the fewer the rides. This is basic economics. Even when you are dealing with drunks on Saturday night, some percentage of them will choose to risk it when your cost is 2x rather than 1x.
For people traveling, rather than just call a cab on Monday morning, they will find a friend willing to drive them to the airport for $10 and an IOU.
For people in cities, their decision as to whether or not to drive themselves, take public transit, or take a cab, will be a feature of cost. Whatever ones final opinion–and this is one of those major gray areas which seemingly can make some economists pompous pricks, due to the difficulty of the analysis, and fragility and uncertainty of the results, which makes people argue the most about the least–people TEND to make rational decisions in most cases.
Uber eliminates the brick and mortar entirely, except in its HQ and wherever computer programmers are doing their thing. It does not own a fleet of cars. It does not have a call center filled with dispatchers. It also makes no promise of income, but in turn demands no cost OTHER than having a decent, well maintained car. It may be that some people buy cars to drive Uber, but the costs they incur are up to them. It would seem most drivers already have a car, and are simply diverting it to an alternative use.
Uber does not eliminate the boss, but rather automates it. Drivers are scored by passengers, and if the gradual, collective verdict is persistently negative, they are fired.
So on the one hand Danny DeVito, and Flo the dispatcher, and John the mechanic who worked at Yellow Cab over time see the people working with them diminish, and maybe even disappear, and who perhaps lose their own jobs; and on the other hand, Uber provides de facto jobs for a roughly equivalent number of people, who are in much better control of their destinies in many respects. It creates a room full of IT professionals working to keep the App working and making it better.
Costs are cut dramatically, due in large measure to costs cut on the supply side. No building has to be maintained, no cars need be bought and maintained, at least by Uber, and the connecting process is not only automated, but vastly improved such that service response times are reduced substantially, and in busy times with many drivers, to close to zero even in areas taxis would not normally be.
The logical effect of greatly reduced costs should be, and presumably has been, greatly increased use of hired drivers. Where people walked, they now Uber. Where they drove drunk, they now Uber. Where, in a city, they thought they had to maintain a car, now they Uber.
How one finally sorts out who the ultimate winnners are is impossible, but it seems obvious at least that the end users, the consumers, the people spending their money to make the whole thing work, are getting an equivalent or better service at a lower price. This makes their finances better, and frees them up to either save that money, or spend it somewhere else in the economy.
To side with taxi drivers, then, is to side against consumers. Their gain is the consumers loss, and vice versa, even before one factors in all the opportunities for part time employment Uber affords. It is impossible to predict exactly where any formally complex system will go, but in a free market, it will always tend to gravitate towards improving products, lowering prices, and creating new jobs for those destroyed.
Here is the issue, though, and as far as I know I’m the only one talking about this: as technology is automated, what it SHOULD be doing is increasing the value of all human labor, almost exponentially, to the point where a considerable amount of leisure is possible. We have, as Oscar Wilde urged, made slaves of technology, which ought to have bought us the indolence, or passions, of the Greek and Roman ruling classes.
Instead, the steady sucking of actual wealth out of our economy–of the actual ownership of real goods, versus a lease or mortgage on them created by fiat money, and satisfied in blood and sweat–has made it harder and harder to earn a living. In part, this is because the advertising age and easy money have amplified our wants. We want bigger cars and bigger houses which necessarily cost more money, even with more effective means of production.
But even given this, ALL wages, for all professions, ought to have been going up rapidly, and are instead stagnant or even falling. Democrats blame Republicans, and Republicans blame Democrats, but NEITHER party has even begun to discuss, much less grasp, the final centrality of the problem of money creation. Nobody, that I can see.
One sees people like Murray Rothbard and the Austrians talking about the instability of fractional reserve banking, but this point is obvious. One has only to watch “It’s a Wonderful Life” to get the problems. We know about business cycles, and in my view only the corrupt and foolish deny their causation.
No, the case is MORAL, and moral in an important teleological way, in that small elites are gathering all our wealth to themselves, in an orgy of greed regrettably often precendented in world history. They have, I feel, created the 1% meme to amuse themselves, and to divert and divide the masses. And people are too fucking stupid to understand this.
There is another consolidation worth mentioning as well, which is the movement of well paying jobs to the more intelligent. Logically, if someone who is simply answering the phone is replaced by a computer programmer, the relative demands of the job have gone up with the pay, but one higher paid person might replace 100 of the lower paid, relatively unskilled people, who are then thrown out to compete for the same jobs, and who thereby lower their wages yet further.
This is likely a second dynamic behind wage stagnation. The best paying jobs are getting better paying, but the less skilled jobs are decreasing in value as more people (now including Obama’s proposed permanent Spanish speaking Democrat base) compete for them. As efficiency increases, the skill level and intelligence needed to cash in on the new jobs replacing the old jobs increases. This has been a fear since the beginning of the Information Age–can we equally call it the Age of the Intellectual Ghetto? Or the Age of Vacuous Information?–and a valid one in my opinion.
That genie is out of the bag, though. We cannot uninvent the robot–and both the automated attendant–especially IVR and the Uber app are robots–without massive disruption. And to the point, we don’t need to. Our largest, most substantial fault in our system, and therefore the one area most productive of effectual improvements, remains our financial system.
Rand Paul continues to be my favorite for the Presidency, and he is doing the best he can. It is hard to win the Presidency, though, without the active support of the Wall Street king makers that Democrats and Republican elites likewise kowtow to.
One wonders, though, what excuse Mitch McConnell COULD offer for not pushing through the Audit the Fed bill. With transparency, and public knowledge, perhaps a discussion could at least begin.
And one wonders, too, why the best and brightest and most public economists are too stupid or too pusillanimous or too enmeshed with this system to first understand, and then to take this issue on.