Uber is an awesome startup from San Francisco whose premise is immediately attractive. They designed a great iPhone app that you download. You open the app, hit a button, and within minutes a car comes to pick you up. It takes you to your destination, and you just get out -- the app already has your payment info, so they can charge you automatically. They have also created an awesome backend and give iPhones to black car drivers who can pick you up. Their algorithms for sending people to the right places are remarkably better than what most Limo companies currently use, and so through their use of technology they make people much better off.
But, as this NYT article discusses, regulators have been fighting back against Uber. They've been forced to shut down certain operations in some cities, and may soon be made to close entirely. Of course, excuses are always made:
Services like Uber, Airbnb andCraigslist can cut out the middleman and lead to more efficient markets. But regulators say they could also put consumers at risk.
One example they cite of "harming consumers" is particularly interesting to an economist. Regulators cite how for busy nights like New Years Eve or in the aftermath of Hurricane Sandy, Uber was "price-gouging" by raising their prices quite a bit. It's obvious from a moment of thinking about it that this is an efficient and good thing: by raising their prices, they prevent themselves from facing a shortage and inability to provide cars to those that ask, and instead allocate them to those who value them the most and are willing to pay, rather than just a random selection of first-come, first-served. Regulators though prey on the general public's misunderstanding of such phenomenon cast Uber as an evil, greedy organization that threatens to upset the important infrastructure of ride-for-hire transportation.
I'm hoping Uber comes out on top, but with Taxi services so entrenched and regulators so thoroughly captured by monopolistic companies, I'm not necessarily hopeful.
Update: Today, however, a major victory for Uber in Washington DC. So it's not always bad! Sometimes the good guys lobby well enough to win!
Update: Today, however, a major victory for Uber in Washington DC. So it's not always bad! Sometimes the good guys lobby well enough to win!
