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Ask HN: When do we have enough consumer surplus?
I just finished having a ride with an Uber driver who is having a hard time. His price per mile has halved since uber came to be. He was also upset that Uber are building self driving cars, when he - someone who has been working for them for many years - helped get them to where they are today.
The power of Uber's monopoly has already driven down his money making ability, and automation ain't going to help. He wants Uber not to exist and to go back to how things where, where he and his colleagues didn't have to work 90+ hours a week to get by.
I think, in the end, this is a question of consumer surplus vs employee surplus. Uber being so cheap does mean some people who could not have gotten a taxi before now can, and saves others money, but it's making this employee's life more difficult.
This is an age old question I suppose! I don't have a very clear opinion on it. Does anyone from HN have any thoughts? I'd love to hear.
- Eridrus 9y agoI don't think Uber is looking to increase consumer surplus, I think they are very interested in charging people the maximum amount that they will bear over the long term. So, to the extent that Uber succeeds at being a middleman, users will be paying exactly how much they're willing to pay and drivers will be earning fractionally more than their best alternative and Uber will be capturing the gap between those two price points at huge volumes. I think the real issue for drivers is that before Uber they were protected by a monopoly on medallions, but now they need to compete with anyone with a smartphone and enough credit history to rent a car, so wages are falling to the level of McDonald's because driving is a very common skill. Oh, and the main skill taxi drivers did have above and beyond most folks - the ability to navigate to almost arbitrary addresses - has been devalued by Google Maps, and made irrelevant by apps like Waze which can actually do better.
- FailMore 9y agoGood response. Thanks