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To Fight Uber Bill De Blasio Hands Uber Monopoly Profits – Sigh

It’s quite obvious that there’s a parallel universe over there in progressive circles, where aims and goals are entirely different from anything actual human beings desire or demand. There’s a much greater problem though, there isn’t any different economics over there in that phantasm. Things still work like they do in the real world and yes, sorry, it’s reality which determines, not desires and not progressivism. Thus we’ve got the – well, we could call it hilarious, depressing or just plain out political – sight of Bill de Blasio, Mayor of New York, deciding to fight The Man at Uber by offering The Man at Uber monopoly profits.

My own wonder is whether de Blasio has risen far enough up to stupidity to realise this or he’s still stuck in progressive cretinism. For that is what he’s done. He’s decided that Uber drivers should have higher wages. In order to make this happen he’s to limit the number of Uber drivers there may be. But it’s also true that if you insist that a company limit output then you’re doing exactly the same thing a monopolist would do to maximise monopoly profits – limit output. De Blasio is insisting that the ride sharing sector gains monopoly profits. This all in the name of protecting the workers. Sigh.

No new vehicles will be able to join ride-hailing networks like Uber and Lyft in the biggest city in the U.S. for a year following just-passed local legislation.

The New York City Council voted on Wednesday on a group of bills related to ride-hailing, one of which pauses the issuances of new licenses for vehicles that operate for-hire. That means that Uber and Lyft and other companies won’t be able to expand with new cars in the city, because—unlike in other cities where Uber and their ilk operate—those vehicles must be licensed by New York City’s Taxi & Limousine Commission (TLC).

So, what do we think will happen here then?

New York has become the first major US city to approve a cap on ride-hail car licences and set minimum pay conditions for drivers.

One observation made by those proposing this action is that cars end up waiting without rides. That lowers driver income. So, let us limit the number of cars and thereby drive up driver incomes. This is an idea so stupid that Frank Field likes it:

Hence the troubling findings we have unearthed in a series of inquiries by the Commons work and pensions committee over the past two years, of different groups of workers taking home as little as £2 an hour, being on the receiving end of inhumane treatment, and struggling to feed their families despite working all the hours God sends (and occasionally even more). That might be about to change – this week, in the US, the fightback well and truly entered the political arena. The package of reforms approved on Wednesday by New York city council will set a gold standard for the protection of workers in the gig economy. It guarantees app-based drivers a living wage and deals with one of the chief causes of low and volatile earnings: the flooding of the market with a surplus of drivers.

This major development sends a clear message to the gig economy’s biggest companies: until now, you have not had to pay a fair price for the abundant supply of labour that is at the heart of your business model. This model has been subsidised by chronically low wages and appalling working conditions for too many drivers, riders and couriers. From now on that subsidy will not be available. If you wish to continue offering passengers a first-class service, you will need to make more efficient use of your drivers – under your present model, with such a large surplus of drivers, many workers spend prolonged periods of time in their car waiting to be allocated a fare. They are at your disposal but, as they are not being used, they are not being paid.

Such a radical change of approach in New York will revolutionise life at the bottom of the labour market, by offering tens of thousands of workers greater security of income, necessitating more efficient business models, and ensuring the taxi and private hire trade operates on a more level playing field. Innovation and entrepreneurialism will still be encouraged, but no longer at the expense of workers’ living standards.

Well, no, not really. Firstly, the companies now control entry into the marketplace. People who control market entry gain all the money. Even Marx got this right. When there’s a reserve army of the unemployed then the capitalists don’t have to raise the workers’ wages, do they? Which is a pretty good example of how damn stupid an idea this is, that it even manages to get Marx wrong. To limit the number of drivers who may ply for hire is an insistence that there are people out there who would like to ply for hire but aren’t as yet. If there isn’t you don’t need the limit, do you? And if there is then we’ve our reserve army. The ride share companies get to pick and choose among them and the choice will be those who demand the least wages for whatever level of performance is necessary.

Doubt that this will happen? It did under the earlier taxi licensing system, didn’t it? All the money went to the people who owned the medallions, the right to put a cab on the road. The drivers got to shuffle along on $11 an hour as the capitalist speculators gained all the cash from those restrictive practices.

Seriously, why does anyone think that limiting Uber numbers will turn out any different than limiting taxi numbers did? It’s the owners not the drivers who will gain the money. The reason being that if you’re a monopolist then you have the power to increase your profits by limiting your output. You want the technical description it’s here. A monopolist maximises profits by limiting output, to the detriment of consumers. So, if we forcibly limit output – to that detriment of consumers – then w’re offering the producer the opportunity to create monopoly profits.

That’s right, Bill de Blasio is, and Frank Field is stupid enough to approve of, insisting that Uber’s profits should be increased and that Uber gain more power over its workers so as to increase the workers’ wages. Man’s a buffoon, obviously, but then when hasn’t that been true of a progressive?

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5 years ago

We should all take a moment to recognise the (occasional) genius of the French. Details will be a bit off due to my memory. One city had few, expensive taxis. They wanted more but the owners of the licenses would strike and the local government didn’t want to fight it out. Simple, they tripled the number of licenses and gave each current license holder 2 free ones. The taxi owners managed to hold the line for a while but the incentives to be the first guy to sell some of his spare licenses (and the foregone profits from being the… Read more »

5 years ago

It is problematic contracting with a stranger on a dark city street. New York and other cities addressed this problem with a government-run monopoly and awarded medallions that are traded as property for prices pushing a million dollars. Then, a century later, Uber et al. came along and solved the problem, taking cash out of the transaction and adding individual rating by wiki. Of course, this threatened the racket, and DiBlasio and his council have stepped in to defend the racket. It will not only provide monopoly profits but ensure that a good chunk of them recycle as campaign contributions.… Read more »

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