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These "disruptors" need to work on wealth creation and not installing "economic rents." Economic rents, a term in Microeconomics, is trying to achieve profits

These "disruptors" need to work on wealth creation and not installing "economic rents." Economic rents, a term in Microeconomics, is trying to achieve profits beyond those in an efficient market (for example, creating artificial scarcity). The appear to be complaining because Uber is lowering the cost of overly expensive taxi fares when they should be working on a system that provides rides for less money while still helping drivers get more pay (if that is important to them). In NYC, because of the legacy taxi medallion system which artificially limited the number of medallions to 13,000 (resulting in a medallion market value of $1.2 million now down to $700,000 after Uber/Lyft), taxi fares are still about twice that of many US cities. The artificial limit of medallions created artificial scarcity which resulted in "economic rents" thus ultimately requiring passengers to pay much higher fares that then went to the medallion owners. One example would be to lower gas usage by using electric vehicles or hybrid cars (NYC Yellow Taxis are converting to hybrids) which not only lowers fuel costs but lower air pollution. They could make a financial deal with the city or state showing the lower health care costs from lower air pollution and have the cars financed.

tanderson92 10y ago
> The[y] appear to be complaining because Uber is lowering the cost of overly expensive taxi fares when they should be working on a system that provides rides for less money while still helping drivers get more pay (if that is important to them). This is a magazine for American Leftists, so they're really quite clear what they want: they want valuable services rendered to people with profits shared among the workers, not the gatekeepers to an arbitrary app. More than creating wealth, they want that wealth to be owned by the workers. To quote from the piece: > This doesn’t mean drivers are better off working for a traditional taxi company. While Uber’s burdensome cost-shifting has come to define Uberization, the company merely digitized the taxicab industry’s already exploitative practices. The taxi medallion system, which requires drivers to pay their cab’s medallion owner at the start of each shift, deserved to be “disrupted.” But Uber’s employees face serious costs and risks nonetheless. > The possibilities don’t have to be so restricted however. Ride-share drivers usually already own their vehicles, so in theory they could enter the ride-share marketplace themselves. By ditching Uber’s predatory practices for a cooperative model that uses the same technology, driver-owned apps could democratize the ride-sharing marketplace, fulfilling the initial promise of the so-called sharing economy. Uber is really a place where the leftist case makes the most sense, because the means of production is already owned by the workers and are in effect paying a portion of their profits for the right to take part in an economy.
- davidf18 10y ago
  I'm afraid I don't understand this, nor why I was downvoted. Just as in buying computers, buying food, education, airplane fares, consumers want lower prices which is a good thing. In the case of taxis, that means the elderly who often need them because they can no longer drive and are on a fixed income can more readily afford them (surely a leftist notion). There is no disagreement that "economic rents" are harmful to the economy, giving people artificially high profits (see the Wikipedia entry). Are you saying that a politically left magazine want to harm the economy through economic rents instead of helping it through wealth creation? Who would be for that?
  - bradyo 10y ago
    What is so hard to understand about this? These drivers could create an app that results in the exact same price for consumers, except that any profits go to the drivers instead of Travis Kalanick's pocket.
    - davidf18 10y ago
      If they create their own app, they would have to offer lower prices than Uber which they'll be able to do from the money Uber was taking from them. Otherwise, people will use the incumbent service (Uber/Lyft). Is that easy to understand?
      - tanderson92 10y ago
        This is simply false. Assuming that Uber is profitable (this is not clear) then costs to riders could be lowered and drivers could be paid more, simply by splitting the profits going to Uber between these two ends. That's what a co-op is designed to do. I didn't downvote you, but if I had it would have been because you applied the standard arguments about Uber/Lyft without considering the specific argument here: that co-op systems can benefit both the consumer and worker.
        davidf18 10y ago
vegabook 10y ago
well put, if your axiomatic paradigm is laissez-faire economics, whose credibility is fast being eroded as its negative consequences (exclusive returns to capital only) become all too awfully apparent. Terms meant as derogatory such as "economic rents" basically mean allowing some friction to the free market so that labour may obtain more of the returns, and consequently, workers may find some dignity, income stability, social cohesion, and solidarity. Thus some measure of economic rent-seeking should be tolerated, legislated, even if that means equity valuations may suffer, because the alternative is societal breakdown which destroys capital completely.
- winstonewert 10y ago
  It seems to me that economic rents typically end up being friction that allows the owner of capital to capture returns, not something that helps workers get it.
  - davidf18 10y ago
    It applies to both labor and capital. Overuse of licensing for jobs, including barbers and hair stylists. Regarding labor, guilds or labor unions, or the American Medical Association that makes it more difficult for foreign doctors to work here than Israel makes it for foreign doctors to work there. And so on.
- davidf18 10y ago
  Economic rents apply to workers as well: guilds and labor unions. Licensing for any work including barbers and hairstylist with licensing requiring expensive courses. Even in medicine, it is much harder for foreign doctors to work in the US than in Israel, a country with lots of competent medicine. It really applies to any group that uses politics, regulation, to give profits beyond those in a healthy, efficient market. In the case of taxis, it is helpful to eliminate economic rents so that fares are more affordable. Instead of using economic rents to ensure that drivers get undeserved income which works against wealth creation, the workers should focus on eliminating economic rents that creates higher living costs, chief among these are the use of zoning density restrictions to create artificial land scarcity which results in higher rents. Since a significant portion of one's salary goes towards renting an apartment or house or paying for an overly expensive mortgage, then eliminating the onerous zoning laws will go much farther towards improving the economy. It is because of zoning density restrictions that housing is so expensive in SF, NYC, Boston, LA, SD, and other coastal cities.

tanderson92 10y ago

> The[y] appear to be complaining because Uber is lowering the cost of overly expensive taxi fares when they should be working on a system that provides rides for less money while still helping drivers get more pay (if that is important to them). This is a magazine for American Leftists, so they're really quite clear what they want: they want valuable services rendered to people with profits shared among the workers, not the gatekeepers to an arbitrary app. More than creating wealth, they want that wealth to be owned by the workers. To quote from the piece: > This doesn’t mean drivers are better off working for a traditional taxi company. While Uber’s burdensome cost-shifting has come to define Uberization, the company merely digitized the taxicab industry’s already exploitative practices. The taxi medallion system, which requires drivers to pay their cab’s medallion owner at the start of each shift, deserved to be “disrupted.” But Uber’s employees face serious costs and risks nonetheless. > The possibilities don’t have to be so restricted however. Ride-share drivers usually already own their vehicles, so in theory they could enter the ride-share marketplace themselves. By ditching Uber’s predatory practices for a cooperative model that uses the same technology, driver-owned apps could democratize the ride-sharing marketplace, fulfilling the initial promise of the so-called sharing economy. Uber is really a place where the leftist case makes the most sense, because the means of production is already owned by the workers and are in effect paying a portion of their profits for the right to take part in an economy.

davidf18 10y ago
I'm afraid I don't understand this, nor why I was downvoted. Just as in buying computers, buying food, education, airplane fares, consumers want lower prices which is a good thing. In the case of taxis, that means the elderly who often need them because they can no longer drive and are on a fixed income can more readily afford them (surely a leftist notion). There is no disagreement that "economic rents" are harmful to the economy, giving people artificially high profits (see the Wikipedia entry). Are you saying that a politically left magazine want to harm the economy through economic rents instead of helping it through wealth creation? Who would be for that?
- bradyo 10y ago
  What is so hard to understand about this? These drivers could create an app that results in the exact same price for consumers, except that any profits go to the drivers instead of Travis Kalanick's pocket.
  - davidf18 10y ago
    If they create their own app, they would have to offer lower prices than Uber which they'll be able to do from the money Uber was taking from them. Otherwise, people will use the incumbent service (Uber/Lyft). Is that easy to understand?
    - tanderson92 10y ago
      This is simply false. Assuming that Uber is profitable (this is not clear) then costs to riders could be lowered and drivers could be paid more, simply by splitting the profits going to Uber between these two ends. That's what a co-op is designed to do. I didn't downvote you, but if I had it would have been because you applied the standard arguments about Uber/Lyft without considering the specific argument here: that co-op systems can benefit both the consumer and worker.
      - davidf18 10y ago

vegabook 10y ago

well put, if your axiomatic paradigm is laissez-faire economics, whose credibility is fast being eroded as its negative consequences (exclusive returns to capital only) become all too awfully apparent. Terms meant as derogatory such as "economic rents" basically mean allowing some friction to the free market so that labour may obtain more of the returns, and consequently, workers may find some dignity, income stability, social cohesion, and solidarity. Thus some measure of economic rent-seeking should be tolerated, legislated, even if that means equity valuations may suffer, because the alternative is societal breakdown which destroys capital completely.

winstonewert 10y ago
It seems to me that economic rents typically end up being friction that allows the owner of capital to capture returns, not something that helps workers get it.
- davidf18 10y ago
  It applies to both labor and capital. Overuse of licensing for jobs, including barbers and hair stylists. Regarding labor, guilds or labor unions, or the American Medical Association that makes it more difficult for foreign doctors to work here than Israel makes it for foreign doctors to work there. And so on.
davidf18 10y ago
Economic rents apply to workers as well: guilds and labor unions. Licensing for any work including barbers and hairstylist with licensing requiring expensive courses. Even in medicine, it is much harder for foreign doctors to work in the US than in Israel, a country with lots of competent medicine. It really applies to any group that uses politics, regulation, to give profits beyond those in a healthy, efficient market. In the case of taxis, it is helpful to eliminate economic rents so that fares are more affordable. Instead of using economic rents to ensure that drivers get undeserved income which works against wealth creation, the workers should focus on eliminating economic rents that creates higher living costs, chief among these are the use of zoning density restrictions to create artificial land scarcity which results in higher rents. Since a significant portion of one's salary goes towards renting an apartment or house or paying for an overly expensive mortgage, then eliminating the onerous zoning laws will go much farther towards improving the economy. It is because of zoning density restrictions that housing is so expensive in SF, NYC, Boston, LA, SD, and other coastal cities.