The problem with ridesharing is simple.
Lyft and Uber are losing a lot of money.
They are doing so to increase market share: To drive taxis out of business.
That they are losing money, and the fact that they are highly valued means that they, and all their investors, expect that they will eventually stop losing money and start making it hand over fist.
In other words, having driven their competitors largely out of business, they will now raise prices.
Once they are an oligopoly, they will charge oligopoly prices.
They may be slightly lower than taxi prices in the end, because unlike taxi owners and drivers they don’t have to pay the capital costs (obviously not using that term in the way Silicon Valley does) of their vehicles, and they can pay near-starvation wages to drivers as long as the job market at the bottom end remains loose (ie. for the forseeable future. Despite the unemployment rate, the truth is, it’s still hard to get jobs near the bottom).
In other words, Uber and Lyft will squeeze additional profits out of their drivers and provide a very small decrease in prices (perhaps).
This, in manufacturing, is known as dumping: Providing something at less than the cost in order to drive competitors out of business, with the intention of then raising prices later. It’s generally illegal, though often not enforced, just as the simple fact is that most of what Uber and Lyft have done is straight up illegal–against most municipal tax regulations and much labor law.
So we’ll get cheaper rides, for now, in exchange for accepting an oligopoly which crushes it workers and provides little price benefit (and a lot less safety), later.
Doesn’t seem like much of a deal, or progress.
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Z
Wouldn’t be possible without Wall Street funding another labor crushing scheme. This one not only damages unions and decreases drivers’ pay, it also offloads capital costs on labor.
Not making any money? No problem, Wall Street got your back when you’re beating on labor. They’re always willing to invest in and reward that behavior.
Z
scruff
Basically the same thing Amazon did, IIRC; they spent something like a decade being unprofitable in order to damage the marketplace (and AFAIK their profitability came mostly from their web services, not goods delivery).
Not only is this behavior not punished by the legal system, Bezos is the world (verifiably) richest person!
Eric Anderson
I was speaking with a reagan republican boomer in my office the other day about the disappearance of anti-trust enforcement in the U.S. As an old marine pilot, the conversation kicked off due to him complaining about aviation cost over-runs and decreasing quality (think the boeing fiasco and the f-35). I mentioned, as I usually do in conversations such as these, the fact that the U.S. has completely abandoned enforcing it’s anti-trust laws. I mentioned that we’ve taken market efficiency to such an extreme that we no longer have efficient outcomes due to monopoly control. Basic basic basic economic arguments that have existed in this country forever.
He was clueless. He argued that we need more market efficiency to correct the problem. He simply could not, or would not, surrender any ground that sometimes (oftentimes in my mind but I didn’t go there) more government intervention IS the solution.
And, shoutout to Tony Wikrent if you’re reading: I also made your Alexander Hamilton argument for government as the catalyst vs. the Smith market efficiency stance. Again, he was completely clueless that such a debate might even exist.
Their pump has been so completely primed by Fox, Rush and Co. that they don’t even have the tools anymore to hold a reasoned debate. There is a cancer that has completely eaten the brains of a massive section of our olds in our country.
Bill H
@Eric Anderson
I believe you are exactly right. As the size of companies goes up and the number goes down we initially see the “economy of scale” effect, but then due to less and less competition we see decreasing quality and effectiveness. The Boeing 737 Max is a classic case in point.
One of my early bosses used to lecture us on respecting our competition. “It is they,” he would tell us, “who make us as good as we are. If we had no competition we could be successful shipping garbage. The better our competition is the better we have to be. They are the reason for our excellence.”
gnokgnoh
So, the end game for Lyft and Uber is not just monopoly control, it is autonomous vehicles. Eliminate the driver. They want to be first to market in a world of autonomous vehicles, which they envision as a world where they own all the automobiles we use. https://www.bbc.com/news/business-45048264
It’s happening astonishingly fast. My neighborhood north of Philly is getting a 5G network, which is one of the precursors to making autonomous vehicles work. The fight is over state deregulation of antenna installations. The telecoms want to override local zoning codes. The antennas for 5G must be everywhere and much lower to the ground, in other words, on buildings. They also want to avoid any fees, permits, or other impediments to fast installation. https://www.pennlive.com/politics/2018/08/is_pa_ready_for_5g_not_yet_but.html
I used to think that the technology was decades away. Not so sure anymore.
S Brennan
The often told lie that Boomers flocked to Reagan is just that…a lie. Income [and the perceived potential income] was the determining factor…that and ,Jimmy Carter was actually the guy who began the dismantlement of the FDR era. If you retell each other lies that seek to divide good people from one another…you do the Devil’s work for him.
Ronald Reagan Republican 489 43,901,812
Jimmy Carter (I) Democratic 49 35,483,820
John Anderson Independent 0 5,719,850
AGE 18-21 Pct.6 Carter-45 Reagan-44
22-29 Pct.17 Carter-44 Reagan-44
30-44 Pct.31 Carter-38 Reagan-55
45-59 Pct.23 Carter-39 Reagan-55
60 & over Pct.18 Carter-41 Reagan-55
nihil obstet
For now, we need decent, enforced labor and licensing laws. For the future, we need to think about alternative means of developing and providing access to goods and services. I’m seeing more and more movement towards the idea that competition is the answer to problems, and the right wing has certainly picked up on it to privatize common services. Charter schools are touted as competition to genuine public schools. The ACA was sold on the idea that competition would improve health care (the sales pitch never mentioned that the ACA was about for-profit medical insurance, not health care). There are many areas where single provider seems to make sense. In those areas, predatory oligopolies will come.
RobotPliers
Bill H:
“I believe you are exactly right. As the size of companies goes up and the number goes down we initially see the “economy of scale” effect, but then due to less and less competition we see decreasing quality and effectiveness. ”
Interior volume increases faster than surface area as physical objects scale, and it seems to me that there’s a similar relation for the size of companies–larger firms have proportionately less of their mass exposed to external market forces which, if functioning properly, provide an external check on activities/decisions. And then there’s the problem of massive firms simply using their weight to distort markets and government checks on their power, allowing for positive feedback to growth to start at some point, lasting until public outrage at the resulting incompetence and disasters is enough to push for reform.
Tal Hartsfeld
It’s the age of contractors and contract workers.
Goodbye to professionalism and to knowledgeable professionals dedicated to their craft. The mercenaries have fully taken over.
Y11
It was essentially the same deal with Youtube et al–they seemed to have some sort of magic Teflon coating that meant they could never be sued for hosting copyrighted material so all the media companies had to be Serious [TM] and enter into licensing deals instead. Try to be Youtube without the magic Teflon like MegaVideo did and the result wasn\’t pretty. (Same thing too now re Twitter and laws concerning personal harassment.) The crowning glory was the court decision that basic made Google the de facto copyright owner of any work whose authorship can\’t be determined.
This sort of lawlessness really took hold in earnest under GWB, before then there was at least the pretense of consistency.
S Brennan
To Y11’s point; “lawlessness really took hold in earnest under GWB”, I concur. When Bill Gates helped Bush [the 2nd] get elected, Bush [the 2nd] repaid the favor by having his DoJ dismiss the pending anti-trust case against Microsoft…and there were no complaints from [D]’s. One of America’s greatest pieces of legislation, accomplished by a Roosevelt [Teddy] administration was deep six’d without so much as a whimper by today’s “liberal” class.
different clue
A reason for people to do their own personal decency-solidarity living and spending is for such people to find eachother and recognize eachother. Perhaps they can brace eachother up into becoming a “culture”. Perhaps they can build and grow a strong enough “culture” so as to be able to support a “movement” on it.
The culture-evolving American Black Americans first evolved their Black Church. That became a strong enough platform to be able to shelter and hold the weight of a Civil Rights Revolution Movement. Could that be a model for culture-building behavior by would-be Square Deal- New Deal- Fair Deal Restorationists?
I have never once used a Uber or a Lyft. Nor will I, as long as cabs exist. Whenever people tell me to take a Uber, I tell them I don’t believe in Uber. And I make a point of pronouncing it ” Yoober” to show my disrespect. Am I the only one who does this? Well, I don’t have to be. Every single person reading this comment could reject Yoober and Liffed if they want to. Unless they live somewhere where cabs have already been exterminated.
Similar logic applies to electronic billpay versus landmail pay-by-check. I mail in my checks to do my part to keep the US Postal Service alive in the face of long range plans to exterminate it . . . in order to privatise the profitizable pieces and let the rest die.
bruce wilder
I am not sure that the leadership of Uber & Lyft quite believe any part of the various stories they have told or are telling: the great efficiencies of the sharing economy enabled by sophisticated smart phone apps, the dominant market position Uber would have once it drove taxi companies out of business, the automated self-driving cars that would let them replace the most costly part of the ride-share equation — the driver.
Each story is more preposterous than the last.
And, as Ian notes, Uber and Lyft have lost tons of money.
That last might be proverbial feature that is not a bug.
The availability of vast sums from venture capitalists for crazy schemes proposed by charismatic but unstable “entrepreneurs” created a business opportunity for being an entrepreneur — the business equivalent of being famous for being famous.
The end game for Uber & Lyft is to find the greater fool to hold the bag and leave him there . . . holding the bag of nothing.
I do not think there’s much real risk that Uber and Lyft will survive as profitable oligopolists — it is remotely possible, I suppose, that at least a remnant of one of them may survive as a fairly unprofitable oligopolist trying to protect “platform” ip while denying that employees are employees in the interest of not paying for resources used, probably ruthlessly fighting off more efficient local co-ops with better political connections and commodity software. A survivor will have stiffed a lot of investors and lenders, but that’s business.
The great damage done to the economy in our era of mega-giant universal banks, mega-giant media conglomerates, uber-monopolies like Google, Facebook and Amazon is that there’s no oxygen left for a genuine entrepreneur. The “platforms” are siphoning off the revenue, eliminating all the risk, while using their access to “free” money from loose monetary policy to flood the market, every market with crazy plus crap.
scruff
Nah, this wasn’t the mercenaries’ idea, this was their employers’ idea, and the employers are the ones who have taken over.
Bill Hicks
I can’t believe the willingness of people to climb into a car with a total stranger. I know a woman who once told me she feels on edge in parking garages who uses these services regularly. Supposedly, the drivers are “screened,” but that is hardly the same as dealing with someone who is a full time employee of a company that won’t immediately disavow them if something goes wrong. You’re also just assuming the person is current on their insurance payments in case there is an accident, and that they haven’t been driving 15 hours straight trying to make money.
Using these services is crazy–and I for one never will unless the day comes that I have no other choice.
Tc
Not to mention all the infrastructure required to be paid for by the customer. You need a smart phone that costs hundreds of bucks and another hundred a month for service, then you need the right apps, etc… plus setting up payments via whatever (I have no idea, I’m too old and untrusting to let my phone be my credit card)
Ive got a dumb flip phone from 2008. I hope it lasts cuz I’m not sure they make them anymore. If I need a cab, I call the company in my contacts list.
But it’s getting to where a smart phone is required for almost anything. My gym won’t give me a new 5 cent key fob for entry, they dont make them anymore and expect you to use a barcode on your phoneInstead. So I have to wait for someone to look me up every time I go. They don’t care that it wastes their employees time, or that it encourages more idiots on the phone at the gym hogging equipment while they yap or check email. And everybody but the cranky old men are fine with it.
Frankly, death doesn’t seem as awful anymore. At least not as awful as being old in the future we are heading for.
someofparts
Odd personal anecdote –
Two people I know fairly well who always use Uber are well-off folks who swindle their employees and relatives.
A different friend who is poor, religious and right-wing only uses cabs and even gets to know his regular driver like an actual human.
It wasn’t that long ago that I honestly thought left-wing or right-wing signified something consequential. Now that way of framing things seems like a cheezy manipulation that I wasted far too much time buying into. These days, Veblen’s producer/predator framing is what makes sense.
Temporarily Sane
@ Eric Anderson
> There is a cancer that has completely eaten the brains of a massive section of our olds in our
> country.
Yup…and many of the younger men are under the thrall of an aggressively proselytizing alt-right that is increasingly going full on fascist. The progressive liberal/left is simply not resonating with the young white male demographic at all. Even just on social media, right wing stuff gets many, many more views and likes…and the lib/left counter arguments are shockingly terrible and get zero traction on the right.
Trump in America, centrist Trudeau hammered by a corruption scandal in Canada months before an election, Corbyn under sustained attack in the UK…and the far right doing well in Europe. A hot summer and some some sort of terror attack, a massive drought and another wave of refugees or perhaps the economy bottoming out again could set a off a chain of events that leads to serious craziness. Maybe this year, maybe in five years , who knows but it’s not getting any better.
What if the far-right in the Anglosphere and in Europe continues growing and outpacing centrist liberals and the left? It is a real possibility. Then what…a “choice” between neoliberal totalitarianism and some sort of 21st century ethno-nationalist fascism? Sections of the right are already talking of an inevitable “zombie apocalypse” and the end of democracy. As Rome begins to burn the liberal left fiddles blissfully away…
Hugh
The goal may be oligopoly/monopoly (Amazon, Microsoft, Apple, Google, Facebook, etc.) but I agree with Bruce Wilder that it is quite likely that these are greater fool scams pure and simple (Theranos).
Words like efficiency and competivity are just code for screwing over workers. They are not applied to corporations. A perfectly efficient corporation would have zero profit margins. Its inflows (sales) would exactly match its outflows (costs and investments). Monopolies and oligopolies are inherently anti-competitive. There are no competitors. Large companies, the monopoly and oligopoly wannabes, should either be broken up or regulated as public utilities.
Z
Not much barriers to entry in this Rideshare business either. If they start making much money then more competition would likely enter the field and Uber might ironically be forced to appeal to city governments to protect their market position. If the cities do that then they could be found legally liable for them, I’d imagine, and have to regulate them.
I don’t think they’ll ever make much money. They don’t have the leverage or platform power of an AMZN. The scheme is largely being supported by Wall Street, private equity, and hedge funds … folks playing with other people’s money. We know they can’t be expected to be prudent when they either win or someone else loses. I see the endgame for Uber being a cliff.
Z
scruff
The left has been co-opted by what is essentially a right-wing hate movement that hates white men, so no surprise there. I’m not sure there’s any more effective way of turning a demographic away from your political movement than to blame them for everything regardless of how much blame they hold for anything.
This neatly describes the past two decades-ish of my political wanderings online. The left view of right-wing counter arguments is much the same, though, when it has that much self-reflective consideration to it, anyway. Often I think to myself that we need another Chomsky (because we’re about to lose the one we have), but is that just because Chomsky was a central part of my own political awakening? If individual personalities can become that important to people then what are we in for when an entire generation of people raised on Ben Shapiro and Stefan Molyneux actually control things? I tend to find AOC remarkable in this regard, but then again I also think a lot of what makes her remarkable is the paucity of intellectual leadership of the puddle she stands out in.
Z
One of the ultimate keys to AOC’s overall success in transforming the democratic party is whether or not she’ll call out Pelosi. All kinds of traps are being laid for her to be polite and civil to Pelosi with major magazine covers threading her and Pelosi together under the flag of feminism and the rise of women in power. She has to know that Pelosi is an enemy of her effort to effectuate most of what she believes needs to be done. The sooner she calls out Pelosi as an obstruction, the quicker and cleaner the battle lines will be drawn.
I think Omar is more unhinged and hot-headed than AOC. That’s not a criticism, the times call for those qualities. Maybe she’ll call Pelosi out and AOC can go to her defense.
Z
BQF
If it\’s the security state that is ultimately behind the ″Vampire Castle″ then empowering the extreme right is likely seen as a feature and not a bug.
scruff
I really like this as a plan. Hopefully it’s what will happen.
I don’t know how I feel about this… on the one hand, I think it’s an error to attribute social movements to implicitly all-powerful behind-the-scenes actors; on the other hand it *is* precisely the way the CIA has handled other countries and also the way Russia has been handling the US lately.
StewartM
S. Brennan
AGE 18-21 Pct.6 Carter-45 Reagan-44
22-29 Pct.17 Carter-44 Reagan-44
30-44 Pct.31 Carter-38 Reagan-55
45-59 Pct.23 Carter-39 Reagan-55
60 & over Pct.18 Carter-41 Reagan-55
I’m sort of surprised by these figures, just basing my reaction of all our Young Republicans and YAFFers and Alex Keatons I met on campus back then. I saw the movement conservatives, argued with them and the libertoons. But mine was a demographic that didn’t vote Reagan after all.
Then again, you have to remember all those young white faces filled with hate along the roads lining the Civil Rights marches. Those (somewhat older) people were boomers too. The idea that all the boomers were anti-war and civil rights and campus activists is false; probably only maybe a third or fourth were aligned and the anti-war movement in particular had a self-interest component (witness how it lost a lot of punch after the draft went away).
StewartM
Uber and Lyft are just another examples of capitalism burning down the house in order to heat it. As Ian and others say, its cost advantage is that you’re not paying for any infrastructure maintenance.
Tc
But it’s getting to where a smart phone is required for almost anything. My gym won’t give me a new 5 cent key fob for entry, they dont make them anymore and expect you to use a barcode on your phone Instead. So I have to wait for someone to look me up every time I go. They don’t care that it wastes their employees time, or that it encourages more idiots on the phone at the gym hogging equipment while they yap or check email. And everybody but the cranky old men are fine with it.
This too is by design.
1) Phones wear out a lot faster than computers. Ergo, you continuously fleece the customer (and if they aren’t willing, you slow down your phones, a la Apple, to encourage them to fork over more dough).
2) They are deliberately made hard for the user to maintain themselves, unlike computers. Iphones in particular Apple attempts to wall off against the unwashed users replacing components themselves.
3) You’re not admin, just a dumb user, with a phone or tablet. That means that they, not you, control what it does. It can spy on you, it can undo any preference you make, and there’s nothing you can easily do to stop it.
By contrast, I run Linux computers, they are more than ten years old and still functioning well, I can and have replace the parts on them myself if need to, and why I can’t say that they are completely walled off against the surveillance state at least the OS isn’t a team player with it. I am more in control of them than any phone or tablet user is.
In short, there’s everything it for the surveillance state, for Big Brother and Little Brother alike. That’s why they are so relentlessly “pushed” on us. My company recently had an event and the schedule was only posted via phone, not by the event’s website, and I for the life of me can’t figure out why would be so.
Ian, this is one of the reasons I think “capitalism” is different than “the free market”. Most people would love to have more control over their devices, would love to have cheaper replacement options, and don’t want to be spied on. But the capitalists want it, all these things are against their profits, so consumers don’t get it. We don’t have a system that’s actually responsive to consumer wants and demands.
different clue
@StewartM,
I live a slow narrow life. I don’t have a cell phone and so far have never had one. By choice.
I don’t have a computer but that is just inertia. “Some day” I hope to get a real computer which squats proudly on the center of its very own desk. I have tried craptop computers and don’t like them, so I won’t get one of those.
I use whatever kind of computer they give us to work with at work, at the library, at wherever. My understanding of “Linux” is that it was and remains designed for people who love computers and computering, who love to play with their own programs, who love to play with the parts and pieces of computers. I hate that. I reject any system which requires me to be a computer-loving/ program-loving amateur computerologist to be able to use it.
If parts of the computer industry make rugged long-lasting non-obsolescing computers for analog-biased people like me, I will be very interested. If I have to be a computerologist in order to enjoy the benefits of controlling my own security, etc., I guess I will just resign myself to never enjoying these benefits.
StewartM
DC:
My understanding of “Linux” is that it was and remains designed for people who love computers and computering, who love to play with their own programs, who love to play with the parts and pieces of computers. I hate that.
Your understanding is largely wrong, with caveats.
I say I “run Linux”, but that’s a simplification. In reality, there are 300 or so releases of Linux (‘distributions’ or ‘distros’). Some of them, like Slackware or Gentoo, are incredibly ‘technical’, in Slackware you essentially compile and build your OS line-by-line on install (this allows a high degree of customization). Some of them are simple to install and use, in fact no more difficult than using Windows or Mac (maybe easier). Some are for modern, powerful, computers; some are for old or less capable computers and DSL (“Damn Small Linux”) can run on a 386 computer, if you can find one somewhere that still works! Linux in general requires only about 1/5th of the system resources of a Windows equivalent. Here is a ‘Top ten’ list:
https://distrowatch.com/dwres.php?resource=major
I have gotten people who know less about computers than you to use Linux (like ‘where is the Start Button in Windows?’). The reason I did this was not just for Linux advocacy, but also because these are the very people who click on links in email and unwittingly install malware; Linux by contrast is very secure (the NSA doesn’t use Windows, but its own version of Linux, for that reason; and it’s why Linux runs 80 % of the server market, because Microsoft’s server software is less stable and secure). Nearly all Linux distros can be run directly on your computer via a CD or DVD, you can start the computer from that and play around with it without installing it or touching your existing computer in any way.
Bottom line–you don’t have to be some sort of supergeek to use Linux.
If parts of the computer industry make rugged long-lasting non-obsolescing computers for analog-biased people like me, I will be very interested.
I have kept my laptop and desktop going for 11 years. I’ve had to replace a hard drive in the laptop, and have replaced a power supply in the desktop, but that’s about it. (Hint, you help yourself out a lot if you don’t buy the very cheapest WalMart computer you find and spend a bit more to get one with more robust innards). I can still get parts for both of these.
My next project, when I can save up the money, will be to rebuild the innards of my desktop with a new MB, RAM, CPU, and video card, but keeping some of the old original parts. That way I minimize the e-waste, and in fact I could maybe cobble together another computer from my leftover old parts + others taken off old computers to donate it to someone (again, here again I can put a lightweight version of Linux on it that will run just fine on a computer put together from old parts that could never run the latest Windows bloatware or Mac). I am no expert at building computers component-by-component, but I have friends who do this too so if I run into a pinch I can ask them, plus there is always Google and Youtube tutorials.
To your mention of not wanting to play around with computer parts I reply that if you want to truly extend the life of your computer there’s no way around replacing failed components–though there is online help and tutorials, there are doubtless locals or friends who can help, and it’s not that hard to learn to do yourself (I am sure you do many equally complex things, without a blink). In a pinch, there are businesses who do this. And once again I re-iterate your job is made much harder if you stick to Windows; if you buy a new part that is a better version than your old part but still compatible with your hardware, your old Windows may refuse to run it and insist you fork over more money for their newest $$$ version. Linux, by contrast, generally won’t care.
So to a large extent, I think I agree with you. I abhor the smartphone culture of being arm-twisted to buy a new smartphone over a few years just because the manufacturer starts slowing your old one down, or the Windows habit of forcing you to buy a new version of Windows anytime you have to replace or upgrade a computer. These are not fscking ‘great innovations’ that the Squealer capitalist advocates claim, the new versions usually have no great improvements (in fact, sometimes regression), it is simply plain extortion. My switch to Linux 11 years ago allowed me to get off this money treadmill and while I make no claims of having escaped the surveillance state (because once content leaves your computer, you have no control over that) like I said Linux allows me more control over what my systems do or not do to a much greater extent than any Windows, Mac, Android, or Iphone user.
I could rant on about what I perceive to have been the mis-steps of the Linux community, especially of Ubuntu, when I thought there was a real chance of Linux taking a large chunk of the desktop market and later on, the phone market. That is largely a failing of what Paul Rosenberg (Open Left) called the ‘liberal billionaire’ donor class that expects to have their ‘progressive’ projects make money right out of the start gate. This is unlike their conservative billionaire counterparts; Rupert Murdoch was content to see Fox News lose money year after year, and many other right-wing propaganda outlets also lose money, because for them a shift in policies is more profitable. It’s why we still have Fox News and Air America goes off the air.