Earlier today Daily Beast reporter Olivia Nuzzi decided to engage in some half-assed trolling of the web by defending the awful union-busting car service Uber and their decision to jack up prices in response to a armed stand off in Sydney Australia. Nuzzi asked me to explain why I thought her piece sounded like the idiotic ramblings of the annoying libertarian in a first-year con law class. So in response to that request I’ve provided my quick analysis below.
NB: I’m an American attorney so I’m not going to begin to pretend that I know or understand how Australia chooses to treat Uber or their actions regarding surge pricing. Therefore I’m going to provide you analysis from an American perception.
As a cafe in Sydney, Australia came under siege by a hostage-taking gunman on Monday, those nearby attempted to flee the area. Many of them turned to the popular ride-sharing app Uber, causing the demand for cars to skyrocket and in turn, the company’s so-called “surge pricing” to go into effect, with fares rising to four times the usual rate. The backlash was immediate and aggressive. It was also aggressively wrong.
Literally every state in this country disagrees with you about what constitutes an illegal and unconscionable form of price gouging, but good start.
The fact that Uber allowed surge pricing during a hostage crisis may lead you to believe that the company doesn’t care about you, and you would be correct. But Uber does not have a responsibility to care about you. Uber is not a government entity, and it is not beholden to the general carless public during an unwelcome drizzle of rain or even a time of great distress.
Uber is a stripped down, regulation skirting fad company that is designed to get its original investors filthy rich before the government (rightfully) legislates it out of existence. In order for the company to be profitable it uses city roadways, state highways, and federally funded interstates- all of which means that the company’s actions are thoroughly within the jurisdiction of any of those levels of government regulation. The fact that Uber isn’t a “public entity” is an irrelevant issue in the face of the law.
I’m old enough to remember a time before Uber––about four years ago––when people somehow managed to get from point A to point B. It’s hard to believe it judging by how some react when they can’t magically summon a car with a few taps of their fingers, but Uber has only existed since 2009, when it was founded as UberCab in San Francisco. Its mobile app launched the following year, and since then it has rapidly expanded from the Golden City to hundreds of cities in 53 countries around the globe. Surge pricing was not unveiled until 2012.
Uber exists because of a general lack of enforcement within public agencies in charge of preventing economic abuses by corporations. In truth that company is frequently flouting laws regarding proper livery registration (which directly serve the public interest in making sure only qualified drivers are on the road), ADA requirements (disability advocates worked for years to ensure access for ALL passengers in Taxis only to see Uber fuck that right up), and Unionization efforts (people fucking died to unionize Taxi’s- an industry made up of large portion of new immigrants- and now all that work is for not). So to be succinct: this company is one massive lawsuit from being litigated into the graveyard of bad ideas from the neo-gilded age.
The premise of the program is simple supply-and-demand: when demand for cars increases and supply decreases, Uber’s algorithm inflates the fee for rides accordingly, which the company claims encourages more drivers to work, which puts more cars on the road when people are requesting them most.
This sort of algorithm is explicitly illegal for registered taxis and similar car services because it is fucking abhorrent to take advantage of a disaster like this (again if this is cool with you why isn’t the Home Depot allowed to jack up the price of plywood when a hurricane is approaching?). All Uber is doing is using a (hopefully) temporary blind spot in the law to enrich it’s putrid investors.
Surge pricing happens during rush hour and when it rains or snows; it happens on holidays like Halloween and New Year’s Eve; and it has happened during states of emergency like Hurricane Sandy in 2012, after which the New York Attorney General stood Uber down and made them agree not to hike up fares during natural disasters––and he was as wrong as any of Uber’s customers who complain about their inflated fares.
He “made them” do that because their actions violated a long-standing law put in place to protect consumers from awful practices like this. He wasn’t doing it to be a dick.
Agitated Uber passengers often respond to surge pricing by posting screen shots of their astronomical fare estimates or receipts to social media as a means of shaming the company.
Why do you hate capitalism? Bitching about horrible shit that companies do is an essential tactic of consumers to force non-governmental change.
During a blizzard in 2013, Jessica Seinfeld, wife of comedian Jerry Seinfeld, posted her $415 bill to Instagram with the caption, “UBER charge, during snowstorm (to drop one at Bar Mitzvah and one child at sleepover.) #OMG #neverforget #neveragain #real.” Recently a woman successfully crowdfunded to pay off a $360 trip taken on her 26th birthday.
Yes Jessica Seinfeld’s travails are entirely the same thing as people trying to escape a stand off with an armed and dangerous psychopath. Good hustle Olivia.
But Uber’s surges are not price gouging, as some have erroneously claimed.
Again how is this the case? All the elements to this illegal form of price manipulation (according to American law) were clearly demonstrated by their actions in Sydney.
Uber––which is actually not the only method of transportation on Earth, despite what it may seem like….
Those other forms are banned from price gouging by the way.
….warns passengers about the surge before it allows them to order a car, and if the surge is over two times the normal rate, the app forces users to type it in, just to make sure they really understand what they are getting themselves into.
Notice of price fixing is not a defense for the party engaged in it.
As the Sydney hostage crisis unfolded, Uber customers and observers alike took to Twitter to complain about the sky-high fares, calling the policy “Marxian” and “downright predatory.”
The person who said that this was “Marxian” is a moron.
Gawker sneered that Uber is “Ayn Rand’s favorite car service.”
This is true.
Uber responded to the PR nightmare by reversing the surge, refunding those affected, and doling out free rides. They shouldn’t have.
There is plenty to chastise Uber for––I am a frequent and enthusiastic critic of the company’s inadequate background check process––but price surging is not among its sins.
I’m going to assume you cited the background checks issue because you are disgusted by Uber’s intentional decision to disregard the safety of passengers so that they could avoid paying the extra costs associated with performing due diligence in hiring drivers. If that is the case…CONGRATS! You have successfully articulated a legitimate and well developed critique of why private corporation does not actually have unchecked discretion to do whatever the fuck they want in the pursuit of profits.
Now that we’ve established that assumption- why can’t you see how price gouging is a similar violation of the public interest? As Uber grows (by doing illegal shit) it will displace more regulated forms of transportation, thus forcing customers to abide by this disgusting form of gouging.
In his stand-up special Hilarious, Louis CK talks about this generation’s attitude of entitlement towards technology:
“I was on a plane once about a month ago, and they had high-speed wireless internet on the plane, and they had never done that before. They explained to us that we were like one of the first aircrafts. I opened up my laptop, and I’m online! I’m looking at YouTube and shit while we’re flying! And then it broke down, and the woman says, ‘I’m sorry, but we have to fix the internet, so it’s down for the rest of the flight.’ And the guy next to me goes, ‘this is fucking bullshit.’ Like dude, how does the world owe you something you didn’t know existed 30 seconds ago?”
Access to wifi only (arguably) amounts to an issue that has a substantial effect on interstate commerce, and therefore the powers of the government to make laws to require it are somewhat limited. The roadways that Uber uses on the other hand are subject to a broad swath regulation because Uber’s actions directly effect a “channel” of interstate commerce. Because of this direct effect, modern courts provide a significant level of “reasonably based” discretion to the state in their effort ensure equal and fair access for all. In other words the same legal reasoning that prevents segregation from existing are ALSO used to prevent price gouging.
How does the world owe you a private car, priced as you deem acceptable, that didn’t exist five years ago?
This is a non sequitur. People are asking that Uber be subject to the same laws that other car services must abide to in order to have the state’s permission (via a local licensing authority) to use publicly financed roadways.
If you don’t like Uber’s surge pricing, you are still welcome to travel by subway, cab, bus, camel, horse and carriage, or you can just fucking walk.
Please feel free to explain this to someone who doesn’t live in an area with reliable public transportation and would like to get home from their job/bar/friends house safely and legally.
If none of those options appeal to you, you might consider meandering over to a country with a different economic system.
Anarcho-Capitalism isn’t the economic system of this country (despite what the editors and investors of the Daily Beast might believe).