28 ms·

The main thesis here - that an Uber-like service requires people who will work for less money than customers are prepared to pay for - is a truism, and probably

The main thesis here - that an Uber-like service requires people who will work for less money than customers are prepared to pay for - is a truism, and probably the #1 principle of any business. There's a definite relevance that the current inequality leaves people with less other choices for work; I'm sure a lot of Uber-drivers would not be Uber-drivers if they had other, better paying work, but similarly, a lot of Supermarket checkout staff, or bartenders, or waiters, or other low-paying jobs, would not be doing those jobs if other jobs were available. In the current age, driving is unskilled labour, and so the supply pool of workers is very large. It is not surprising that driver wages are low. The bigger issue with Uber is one of monopoly effects and competition. The interesting part of Uber - the middle-man part run by Silicon Valley technologists - is the ride allocation part, which by virtue of network effects probably tends towards monopoly. If Uber gains too strong a market share, which it looks like it might be doing, that is when the real problems begin. In a way, the best thing might be if the cities themselves licensed and ran the ride-ordering technology, as a public good.

ctdonath 12y ago
the best thing might be if the cities themselves licensed and ran the ride-ordering technology, as a public good. Isn't the inevitable problems therewith, as exemplified by NYC's taxi regulation system, exactly what led to the rise of Uber?
- dllthomas 12y ago
  To my understanding, cities never did dispatch...
- wozniacki 12y ago
  Yes. This. Municipalities everywhere are notoriously inefficient at running anything sensible that isn't burdened by politicking, group-pandering, graft and ultimately riddled with short-sighted reactive decision-making. Perhaps we should ask why our governmental - local or federal - bodies are prone to these kind of malaises. Could it be that our best minds are increasingly not wanting to serve in the public sector? [1] [1] 'Pro-Government' Millennials Take Government Jobs, Discover They Suck, Move to the Private Sector http://reason.com/blog/2014/12/17/millennials-take-government-jobs-discove http://reason.com/blog/2014/12/17/millennials-take-governmen...
  - tormeh 12y ago
    Part of it is also the political climate. If everyone in government is stereotyped as incompetent and corrupt, who do you think would want to soil their reputation by entering a government job? That's right, the people who already are incompetent and corrupt. As for the people who aren't, what are their incentives for doing their jobs honestly? They're going to be accused of incompetence and corruption anyway. (some jobs, like teaching, social work and partly policing, attracts people with idealistic personal incentives, but I'm talking about the administration) Distrust in government is a self-fulfilling prophecy. "Trust but verify" seems like a better strategy.
    - dnautics 12y ago
      it's certainly a self-reinforcing prophecy, but you don't suppose there is something inherent about being able to force people to do things that attracts moralizing ninnies and those with corrupt intentions in the first place?
      - tormeh 12y ago
        Power in any form (government, church, big business) corrupts and power attracts corrupt people, yes. Thing is, power is incredibly resistant to egalitarian distributions, so someone has to have it. We just have to make the best we can out of it, and the best is substantially much better than the US government.
        dnautics 12y ago
        economics is not a zero-sum operation, though, if two people exchange money for a service or good it is only because a person values the service or good more than the money, or vice versa. Moreover, in order to wield money as a form of power you have to be willing to give it away. This is not necessarily true of the other types of power.
        tormeh 12y ago
        That's only true for small and medium business. If businesses become big enough, they practically speaking become part of the government except with private profits. Then there are monopolies and competitors who are a bit more coordinated than they should be. Big business' power is more limited but in return they get less oversight and a lot more independence. It evens out. There are many situations where corporations can take your money without permission. A monopoly in a sector you can't do without or a company willing to work the government are obvious examples. Far more insidious are companies who own media, as shown by Berlusconi, Greek oligarchs, Fox News et. al.
washedup 12y ago
True. It's the driving force behind any service economy or market place.
rayiner 12y ago
The palatability of service jobs can vary a great deal. One thing that struck my wife about living in Germany was that even cashiers took pride in their work. They want to vocational school for service jobs, and felt like they had a role and a place. I'd imagine it's a lot more fulfilling than making a few bucks here and there being a task rabbit.
- dctoedt 12y ago
  > even cashiers took pride in their work ... and felt like they had a role and a place I suspect the cashiers' attitude is partly influenced by how they're treated by others. It's hard to stay motivated if others subtly signal that your job makes you a lesser form of life. I've often wondered how the world might be different if everyone treated everyone else with more respect.
timdellinger 12y ago
> which by virtue of network effects probably tends towards monopoly Uber could dominate their market the way that Google dominates search, but for both companies (and unlike, say, Facebook), the switching cost for users is essentially zero. Drivers would lose their built-up reputation by switching, and would have to spend the time to be vetted by their new agency, but these are somewhat low switching costs. Maybe I'm wrong, but I'm just not seeing network-effect-driven monopoly power here. I can see advantages coming from a strong brand driven by nationwide (and international) reputation, and from battle hardened business practices and from economies of scale...
- GeneralMayhem 12y ago
  Drivers won't move to a new service that has no demand. Customers won't use a service that has 15+ minute wait times when they could be in an Uber in 3. Google can reasonably claim not to have a forcing monopoly because they and their competitors are directly providing all of the relevant value, so a competitor (Microsoft, Yahoo) could provide exactly the same service even while Google continues to exist. Uber and co. don't directly provide anything, and only work with the existence of a driver/consumer network. If they paid drivers directly for their time and not just on commission, it would be different, but then it wouldn't be Uber.
  - thinkling 12y ago
    Drivers can run more than one app and be in more than one network. Similarly, customers can check NewApp for drivers, and if no driver is close enough, use OldApp as a fallback. I don't want to argue that there is no network effect at all, but it's not clear to me that the lock-in is strong.
- qq66 12y ago
  The network effect becomes very large if you start introducing significant discounts for carpooling, as Uber has done. The chance of finding a carpool partner and getting a 40% discount are much higher for Uber than a competitor, and will be a big hurdle to market entry.
andyidsinga 12y ago
> The main thesis here ... hmmm. i thought the main thesis was basically : uber etc aren't doing anything new; what is new is the inequality that allows it to occur at scale in places it couldn't have before
happyscrappy 12y ago
>In a way, the best thing might be if the cities themselves licensed and ran the ride-ordering technology, as a public good. Bureaucracy, politics, pensions, liability, what could go wrong?
abandonliberty 12y ago
More generally, any business requires the net inputs (labour, materials, processing, etc) to cost less than the customer is willing to pay for. Poorly paid market-driven unskilled labor is the foundation of many positions. Aside: Waiters and bartenders can do really well for themselves. I know people who've gone from part time waiting to full time call center at 15$/hr and have less take home now. In my city, wait/bar staff are entitled and insanely compensated for their labour in comparison to their peers.

ctdonath 12y ago

the best thing might be if the cities themselves licensed and ran the ride-ordering technology, as a public good. Isn't the inevitable problems therewith, as exemplified by NYC's taxi regulation system, exactly what led to the rise of Uber?

dllthomas 12y ago
To my understanding, cities never did dispatch...
wozniacki 12y ago
Yes. This. Municipalities everywhere are notoriously inefficient at running anything sensible that isn't burdened by politicking, group-pandering, graft and ultimately riddled with short-sighted reactive decision-making. Perhaps we should ask why our governmental - local or federal - bodies are prone to these kind of malaises. Could it be that our best minds are increasingly not wanting to serve in the public sector? [1] [1] 'Pro-Government' Millennials Take Government Jobs, Discover They Suck, Move to the Private Sector http://reason.com/blog/2014/12/17/millennials-take-government-jobs-discove http://reason.com/blog/2014/12/17/millennials-take-governmen...
- tormeh 12y ago
  Part of it is also the political climate. If everyone in government is stereotyped as incompetent and corrupt, who do you think would want to soil their reputation by entering a government job? That's right, the people who already are incompetent and corrupt. As for the people who aren't, what are their incentives for doing their jobs honestly? They're going to be accused of incompetence and corruption anyway. (some jobs, like teaching, social work and partly policing, attracts people with idealistic personal incentives, but I'm talking about the administration) Distrust in government is a self-fulfilling prophecy. "Trust but verify" seems like a better strategy.
  - dnautics 12y ago
    it's certainly a self-reinforcing prophecy, but you don't suppose there is something inherent about being able to force people to do things that attracts moralizing ninnies and those with corrupt intentions in the first place?
    - tormeh 12y ago
      Power in any form (government, church, big business) corrupts and power attracts corrupt people, yes. Thing is, power is incredibly resistant to egalitarian distributions, so someone has to have it. We just have to make the best we can out of it, and the best is substantially much better than the US government.
      - dnautics 12y ago
        economics is not a zero-sum operation, though, if two people exchange money for a service or good it is only because a person values the service or good more than the money, or vice versa. Moreover, in order to wield money as a form of power you have to be willing to give it away. This is not necessarily true of the other types of power.
        tormeh 12y ago
        That's only true for small and medium business. If businesses become big enough, they practically speaking become part of the government except with private profits. Then there are monopolies and competitors who are a bit more coordinated than they should be. Big business' power is more limited but in return they get less oversight and a lot more independence. It evens out. There are many situations where corporations can take your money without permission. A monopoly in a sector you can't do without or a company willing to work the government are obvious examples. Far more insidious are companies who own media, as shown by Berlusconi, Greek oligarchs, Fox News et. al.

washedup 12y ago

True. It's the driving force behind any service economy or market place.

rayiner 12y ago

The palatability of service jobs can vary a great deal. One thing that struck my wife about living in Germany was that even cashiers took pride in their work. They want to vocational school for service jobs, and felt like they had a role and a place. I'd imagine it's a lot more fulfilling than making a few bucks here and there being a task rabbit.

dctoedt 12y ago
> even cashiers took pride in their work ... and felt like they had a role and a place I suspect the cashiers' attitude is partly influenced by how they're treated by others. It's hard to stay motivated if others subtly signal that your job makes you a lesser form of life. I've often wondered how the world might be different if everyone treated everyone else with more respect.

timdellinger 12y ago

> which by virtue of network effects probably tends towards monopoly Uber could dominate their market the way that Google dominates search, but for both companies (and unlike, say, Facebook), the switching cost for users is essentially zero. Drivers would lose their built-up reputation by switching, and would have to spend the time to be vetted by their new agency, but these are somewhat low switching costs. Maybe I'm wrong, but I'm just not seeing network-effect-driven monopoly power here. I can see advantages coming from a strong brand driven by nationwide (and international) reputation, and from battle hardened business practices and from economies of scale...

GeneralMayhem 12y ago
Drivers won't move to a new service that has no demand. Customers won't use a service that has 15+ minute wait times when they could be in an Uber in 3. Google can reasonably claim not to have a forcing monopoly because they and their competitors are directly providing all of the relevant value, so a competitor (Microsoft, Yahoo) could provide exactly the same service even while Google continues to exist. Uber and co. don't directly provide anything, and only work with the existence of a driver/consumer network. If they paid drivers directly for their time and not just on commission, it would be different, but then it wouldn't be Uber.
- thinkling 12y ago
  Drivers can run more than one app and be in more than one network. Similarly, customers can check NewApp for drivers, and if no driver is close enough, use OldApp as a fallback. I don't want to argue that there is no network effect at all, but it's not clear to me that the lock-in is strong.
qq66 12y ago
The network effect becomes very large if you start introducing significant discounts for carpooling, as Uber has done. The chance of finding a carpool partner and getting a 40% discount are much higher for Uber than a competitor, and will be a big hurdle to market entry.

andyidsinga 12y ago

> The main thesis here ... hmmm. i thought the main thesis was basically : uber etc aren't doing anything new; what is new is the inequality that allows it to occur at scale in places it couldn't have before

happyscrappy 12y ago

>In a way, the best thing might be if the cities themselves licensed and ran the ride-ordering technology, as a public good. Bureaucracy, politics, pensions, liability, what could go wrong?

abandonliberty 12y ago

More generally, any business requires the net inputs (labour, materials, processing, etc) to cost less than the customer is willing to pay for. Poorly paid market-driven unskilled labor is the foundation of many positions. Aside: Waiters and bartenders can do really well for themselves. I know people who've gone from part time waiting to full time call center at 15$/hr and have less take home now. In my city, wait/bar staff are entitled and insanely compensated for their labour in comparison to their peers.