The “Ridesharing” Value Proposition

It’s not that great, really

Here in Austin, Uber and Lyft have inflated a minor regulatory oversight disagreement into an existential question. Everybody likes the service they provide, and they threaten to remove it. But there are plenty of hidden drawbacks to their approach. So let’s look at the benefits and drawbacks of Lyft and Uber. How much should their threats scare us? Do they really contribute that much in the big picture?

For passengers:
 + much better experience than conventional taxis
 + cheaper than conventional taxis

For drivers in the system:
+ mostly pleasant work, modest income
 — lack of autonomy — your only choice is whether to be available
 — time pressure on fares encourages blocking lanes, illegal U-turns
 — app reports what you bill, not what you take home
 — company outsources most of insurance risk
 — company is very unclear about insurance risk
 — company insists your insurance is first resort 
 — in the event of an accident, lying to your insurance company is attractive
 — company blackmails you to take their part in political battles
 — illegal use of handheld wireless devices is pretty much mandatory
 — the companies’ stated intent is to replace you with driverless cars, soon

For public transit:
 + buses are less crowded
 — risk of cutbacks as demand for buses reduced

For insurance companies:
— fraudulent claims from commercial drivers with personal coverage
 — increase in accidents due to untrained commercial drivers
 — increase in litigation

For other users of the road:
 + decreased demand for parking
 — increase in traffic due to untrained drivers blocking travel lanes
 — increase in traffic due to empty cruising cabs
 — increase in risk due to untrained, distracted commercial drivers

For the city:
 + widened transportation options
 + better options for the creditworthy inebriated
 — a substantial economic force that has demonstrated contempt for the public will
 — profits shipped out of state

The upshot:
Nobody denies that these companies provide a much better service than taxis did. But the low cost is illusory. These companies have mastered not just delivering service but outsourcing costs to the commons.

Taxi regulations emerged for a reason. “ride-sharing” systems are not about sharing rides, they are about selling transportation services. The regulations on taxis, outdated though they may be, are intended to protect the interests of the city. The same rules should apply to anyone providing rides for hire, and cities have regulated these services for many decades for a reason.

Let them go

If the so-called “ridesharing” companies make good on their threat to leave, they can be replaced. It won’t be quick, but it won’t be overwhelmingly difficult.

What’s needed is a drivers’ co-op that has the support of the city and is willing to comply with reasonable public oversight. The drivers will be better off under an honest system. Costs may go up, but that will increase support for a genuinely creative solution to our problems.

We can keep most of the advantages without having to tolerate the disadvantages. The underlying tech can handily be built using Austin’s talent pool. If they leave abruptly, though, things will get a bit worse until we can build a “ridesharing” alternative. We’ll cope. If they do leave we should look for ways to keep them out for good. If driverless taxis are the way of the future (I think they are not, at least not as they are usually imagined) then let some more responsible corporate interest take us there.

Uber and Lyft provide a clear example of privatized profits and socialized costs. They have an army of lawyers and political operatives whose job is to prevent us from calling them what they are (taxi companies) and treating them accordingly.

This offensive blackmail of the drivers over a minor regulatory skirmish makes it clear what type of people we are dealing with. Selfishness is not what made Austin great.

UPDATE: My friend Steve Easterbrook of Toronto offers the following additional points:

For passengers:

• - Massive loss of privacy as ride data collected and harvested for patterns.
• - Loss of choice for passengers with accessibility needs (as a market segment they’re too small to matter, so they depend on regulated taxi industry)

For the city:

• - Loss of tax base
• - Loss of ability to regulate for passenger safety, accessibility, etc. (multi-national corporations wield far more political power than traditional taxi companies).
• - Loss of all supply-side management options.

For society:

• - Accelerates trend towards gig economy and lower wages for everyone
• + potential to increase trust in society by leveraging online reputation systems
• - drives out free ride-sharing schemes, as people come to expect payment for rides.

UPDATE: Also for bicyclists: