The Uber Wars or: Why We Need a New Politics of Distribution

Uber is sparking Silicon Valley’s first major labor conflict. With the exception of online news, past “disruptive technologies” like file-sharing, internet search, and Apple’s various innovations haven’t had a major direct effect on working class jobs. But Uber is now permanently altering the cab industry, which has many visible workers already living close to the economic margins. With electric cars, autonomous cars, and 3D printing on the horizon, this may well be a harbinger of things to come.

As a result, it is worth thinking about how to address the distributive conflicts that are emerging. Current debates around Uber pose choices between regulation and markets, and between producerism and consumerism. In this post, I argue that the former is a false distinction, and that the latter doesn’t begin to capture the complexity of the issues. Spoiler alert: I don’t have any ready solutions to these challenges, though I do believe we need to start thinking about them differently.

One reason I love reading about this conflict—apart from my own background in labor law—is that it is such rich terrain for regulatory theory. For example, we have taxi drivers and companies capturing monopoly rents enabled by existing licensing structures; we have a standard regulatory dilemma moving into overdrive as a new technology threatens existing social practices and rules; we have the relationship between law and worker organizing on the ground; and we have lingering questions about passenger discrimination by Uber drivers.

That said, I think the cab drivers’ argument that Uber “isn’t properly regulated” is a complete political loser, for the simple reason that Uber is making the very same argument! In fact, they wear it like a badge of honor, arguing that their business enhances consumer welfare while highlighting the perversities of existing rules. (The argument that Uber is dodging taxes may be a different matter, but that has little to do with the underlying dispute here).

At the same time, let’s collectively call BS on Uber’s casting itself as the champion of competition and freedom over regulation and protectionism. For one thing, Uber is now playing a game of regulatory arbitrage, benefitting from the service gaps created or reinforced by existing regulations, while benefitting from consumers’ belief that car-hire services are relatively safe, which is in part a function of existing rules. Moreover, if taxi regulations were altered, Uber would face greater competition, at which point it would almost certainly seek public regulations to keep out competitors. Because that is what dominant market players do.

So the question isn’t between regulation and markets, but rather how to balance the various goals to be advanced through car-hire services within a particular area. Off the cuff, if one were designing a car-hire system from scratch, one would presumably want to ensure (a) a reasonable level and quality of services; (b) reasonable user costs; (c) equity in services (though anti-discrimination rules, guarantees of service to the poor, etc.); (d) other public goods such as safety and environmental protection; and (e) a decent livelihood for drivers.

Oversimplifying a bit for clarity, the cab drivers’ arguments build on a producerist ideology, one holding that policymakers should prioritize ensuring a decent livelihood for drivers, either because drivers have invested in particular forms of knowledge that give them a special claim to operate in a trade, or because decent pay ensures decent service. But both arguments disregard third-party effects on other possible drivers and on consumers. The validity of the latter argument, moreover, depends almost entirely on whether other background conditions are met—do drivers own their own cars, so that they can capture higher pay? Do regulations require them to keep cabs in good repair? Do they need to treat all passengers equally?

Uber and its boosters, in turn, appeal to a consumerist ideology, one holding that decent services at reasonable cost should come first. But they assume that decent service will tend to lead to decent pay, likely disregarding some of the economics of car leasing and operation; and they have little, if anything, to say about equity in services.

What set of rules would balance consumer welfare, equity in services, and fairness to drivers?

Well, given the inherent costs of owning and maintaining a taxi or Uber car, I suspect that regulations alone just aren’t up to the task. If the problem is that drivers can’t make a living, then perhaps policymakers should consider subsidies or transfers to help them do so. Indeed, perhaps we should treat car-hire services as public goods. After all, they fill gaps in exiting transit infrastructures. They enable more efficient business transactions. They enable consumers to avoid purchasing or leasing cars. They are essential for entertainment districts to thrive. Surely the net economic benefits of having such services exceed the price that consumers currently pay for them, so some of that benefit could be transferred to drivers by the state.

But this isn’t a complete solution. For one thing, it would likely be impossible to graft driver subsidies onto existing regulatory and production structures without creating perverse incentives. In the U.S., wouldn’t car owners or medallion owners raise the prices they charge drivers to rent taxis and capture the subsidy? More generally, why are car-hire drivers worthy of state largesse when all sorts of other struggling workers are not? One could easily make public goods arguments about underpaid childcare workers, healthcare workers, and many others.

Those concerned about distribution need some new solutions.

We might begin by joining many feminists and welfare rights advocates who view distribution not just as a matter of the “real” economy of production and exchange, but also as a matter of unpaid care work and public services and benefits. Taking such a broader view may become especially important as unskilled work of all sorts disappears or becomes increasingly precarious amid technological change. And that seems quite possible today. Advanced robotics may dramatically alter fast-food production, building services, and retail; autonomous vehicles could eliminate millions of drivers, etc.

One promising idea would be an unconditional basic income in lieu of purely work-based or means-tested redistributive policies. That would greatly ease the burden on the unemployed and underemployed, and would make battles like those between taxi drivers and Uber drivers less fraught. This would require, though, a new sort of egalitarian politics, one that aims to ensure decent work for those who work, as well as a decent livelihood for those who cannot work or cannot find work.

Unfortunately, existing progressive organizations don’t seem up to this task just yet. Unions are both a highly effective redistributive mechanism, and a classic institutional backbone of redistributive politics. But that they are harder and harder to build in this economy and under existing laws. One can imagine a very different sort of labor movement, one that focuses less on formal representation and collective bargaining, and more on organizing and representing precarious workers as a political and economic force. But the labor movement also shows no signs of moving past producerism, and existing labor law probably encourages it to remain firmly in that space.

Alternatively, one can imagine a broad-based movement of U.S. for a decent quality of life for all, a movement linking together workers, consumers, the unemployed, and others. To their great credit, the welfare rights movement of the 1960s and 1970s started down this road, developing real alternatives to producerism and consumerism. But welfare rights advocates didn’t get much traction politically and were ultimately unable to build many lasting institutions.

As a result, an egalitarian politics that articulates real solutions to challenges of precarious work will probably need to be built out of new institutions. In one sense, this is unsurprising: social movements emerge and grow in unpredictable ways under particular historical and economic circumstances. I’m not optimistic that any such movement will emerge in the short term, but I do think these issues will become far more visible and acute as technology disrupts more and more existing work relationships.

(Note: this post has been edited to correct a few typos and to make the argument at the end more clear).

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3 Responses

  1. Michae says:

    Great and well-written article. Goes against the social media meme brought to you courtesy of the offshore-based uber.
    Clearly, uber is great to the same degree as crime pays while unpunished.
    Uber single-handedly destroyed thousands of small transportation businesses – not because of technology – but because
    these small businesses had to pay all municipal and regulatory expenses which Uber simply refused to pay.
    Innovation? No really. Cronyism and well-sponsored scheme orchestrated by offshore oligarchs standing behind ride-sharing.

  2. Brett Bellmore says:

    This might give the impression that the people Uber supposedly harms are the drivers. But, the drivers could, with their personal cars, make more money through Uber. It’s the medalion owners that Uber is hurting economically. The people who are making money, not by providing a valuable service, but by owning the privilege of providing it, and renting that privilege out to the drivers at an enormous markup.

    “but because these small businesses had to pay all municipal and regulatory expenses which Uber simply refused to pay.”

    Or, to put it another way, Uber gets people from one place, to another, cheaply, but does so without politicians getting their cut. And THAT is Uber’s crime. Not enough payola.

    • laughtiger says:

      What Uber and similar models do is push more of the cost and risk onto drivers. Yes, that can and does hurt them financially. As for medallion systems, those only exist in some cities, they are not typical of most taxi jurisdictions.