Nothing New About Uber, Just Cheating

When and why do we romanticize law breaking?

This question came to mind after Manhattan Institute fellow Jared Meyer’s speech last week about the politics and economics of regulating Uber. He outlined what was generally a fairly pro-Uber position, emphasizing Uber’s advantages and what he sees as the restrictive regulations that it has challenged. While many of these arguments are interesting on their own, I was more intrigued by the general tone of his remarks. Uber has found itself in a number of regulatory and legal battles since its creation; it has been accused of violating local urban planning ordinances, labor laws, and anti-discrimination statutes. Meyer’s rebuttal, like that of Uber itself, has not been to deny that Uber violated these laws and regulations, but to point to flaws in the regulations themselves. And this should deeply concern us.

The line between criminality and civil disobedience can be a blurry one, I admit. But it is nonetheless deeply depressing to watch this emerging narrative in which private corporations are applauded for defying the laws of the land, or even, on some occasions, compared to civil rights heroes. Uber’s defenders have, on occasion, made references to Rosa Parks. In a more horrifying example, last February, Airbnb’s chief executive tweeted thoughts on how Gandhi’s resistance to the British Empire evoked his company’s struggles against housing ordinances.

While these are extreme examples, they all evoke this notion of the right of a “disruptive” company to defy laws and regulations in the name of efficiency and innovation. And the fact is that this notion forms the core of Uber’s model, and certainly its public relations efforts. This has a certain superficial plausibility. If laws restrict a popular and effective business from operating, then perhaps those laws are worth repealing, or at least re-evaluating. As Meyer argued in his talk, Uber and similar companies present a number of potential advantages over the status quo.

But when we examine the claim more closely, it is truly bizarre. Could a man accused of murder respond by blaming the laws against murder? There is obviously a long tradition of civil disobedience, of deliberately flouting laws to make a political point. For a wealthy, multinational corporation — much less one that has signaled to the Chinese government that it may be willing to hand the data of protesters over to the state¹ — to appropriate this language is nothing short of insulting. The powerful appealing to their own interests to ignore the law is less reminiscent of civil disobedience than it is of nullification. Nullification is not the symbol of civil rights. Nullification is the symbol of states’ rights and defense of slavery; it is the symbol of resistance to integration; it is the symbol of Kim Davis. But even when we restrict the term to corporate action, it is no less absurd. It is nothing less than an attempt to build a fanbase prior to violating the law, and then appeal to that base as justification.

There is also much debate over Uber’s defiance of labor law. Most interesting was the California Labor Commission’s decision in June, classifying Uber drivers as employees of the company rather than as independent contractors. This, predictably, has outraged some of Uber’s more passionate defenders. Jared Meyer only touched upon this subject briefly, noting as criticism that many Uber drivers are young and work part-time. This is very nearly a non sequitur. Many employees of other industries are young, and part-time work has plagued our recovery since the 2008 financial crisis. These other industries have thus far been unable to weasel out of labor laws in this way.

But if the Uber debate were a poker game, outrage at the CLC’s decision would be the crucial tell. By any reasonable standard the commission’s decision was sound. Uber has strict control over the number of rides drivers can and need to accept, and has full firing rights. Far from merely providing a service to independent drivers, Uber controls the process at every turn. But while I certainly believe Uber’s drivers deserve to be classified as employees and compensated accordingly, that’s not really the central issue here. More worrying are those who concede this, but argue that paying back wages is an existential threat to Uber’s financial model.

I am skeptical. Are we to believe that Uber — supposedly far and away a superior model to traditional taxi services — can only succeed in the market by shifting the costs of doing business onto its own drivers? But the alternative is even worse: if Uber’s defenders are correct, and its business model relies on flouting labor law, then this business model is corrupt to its very core. To be clear: there is nothing intrinsically wrong with the way Uber controls its drivers’ activities: that’s how businesses work. But part of being a business — or, indeed, an individual — is following state, local, and federal laws and regulations. The rest of us do.

At this point a predictable counterargument is that local taxi monopolies themselves are interfering with market competition, and so Uber cannot compete without its attempts to nullify regulations and labor laws. This is not entirely wrong, of course, but it is deeply misleading. Taxi companies may have some institutional advantages, such as lobbying. Meyer notes, for example, the $550,000 campaign contribution to New York City Mayor Bill de Blasio by taxi companies. It is interesting that Meyer made no mention of Uber’s lobbying capabilities: it now spends more on lobbying California politicians than Wal-Mart, Wells Fargo, or Bank of America. Nor did he mention presidential candidate Jeb(!) Bush’s promotional Uber ride. Indeed, if we pivot from individual politicians to the industry as a whole, Uber has thus far spent almost four times as much on lobbying in 2015 than has the taxi industry’s trade group.

Of course, this hypocrisy does not undermine Meyer’s concerns about financial influence by taxi groups. But these groups also face regulations that Uber does not and play by rules that Uber seems to think are below them. Whatever we may think of local taxi companies, Uber and its ilk are far from having the moral high ground. As Olivier Blanchard writes of the “sharing economy” in general:

“‘Ride sharing’ services need to pay the same fees as the cabbies. They have to apply for the same licenses and permits. They have to submit to the same requirements in regards to driver qualifications, vehicle inspections, insurance coverage. They have to pay the same fees.  If and when they start to do that, you’ll have a level playing field, and may the best business model win.”²

Indeed, although I don’t want to spend too much time on it, there are a number of serious concerns about Uber’s practices that are quite separate from the broader economic and regulatory issues I’ve discussed above. Its lack of serious attention to driver qualifications, for example, keeps costs low while endangering consumers. Its data-collection practices raise serious privacy fears. And Uber doesn’t just violate regulations that protect “entrenched companies,” as Meyer put it. It has responded to a lawsuit contending it discriminates against the sight-impaired by claiming that as a tech platform it is not bound by the Americans with Disabilities Act.³

And that’s really what’s at the core of this whole debate. Uber wants to have its cake and eat it, too. Laws and regulations are written to protect businesses, workers, and consumers. Sometimes those laws are crucial to ensure checks and balances between the market, the state, and the public. Sometimes those laws are inefficient or counter-productive. It’s not that Uber’s views on laws and regulations are always incorrect, but they’re not always correct, either. Perhaps we do believe that many traffic, urban planning, and hotel regulations — all threatened by Uber’s rise — should be repealed. Perhaps we do believe that companies should not be required by labor laws to provide certain benefits to their employees, or prevented from discriminating against the disabled. A healthy debate over what sort of practices we want is essential to determining what kind of society we want to live in, and I thank Meyer for his contribution to that debate.

But Uber wants no part in this debate. Rather than make its case for a new economy, Uber would prefer to simply ignore the laws and regulations it does not like in the name of its own financial interests, then wage public relations battles against the authorities and activists who call them out. That is not disruption. That’s just cheating. Ironically, Uber calls for us to embrace the free market, but it rejects of the marketplace of ideas. And if Uber doesn’t think that its business model, and the economic and regulatory consequences, can win on the strength of their arguments, what does that tell us about the world that Uber wants us to live in?

 

[1] http://www.washingtonpost.com/news/innovations/wp/2015/07/27/why-uber-is-winning-in-china-where-most-u-s-tech-companies-have-failed/

[2] http://olivierblanchard.net/stop-calling-it-the-sharing-economy-that-isnt-what-it-is/

[3] https://www.documentcloud.org/documents/1996572-gov-uscourts-cand-280572-1-0.html

Featured image courtesy of bloomberg.com.


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2 comments

  1. 0
    Stephen Lacaze says:

    Where are all the uber shills with their scripted platitudes? Or do they realise that this readership is a wake up to their hysterical rantings?

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