If it's such a good idea, Jeremy, set one up...

The leader of the Labour Party has been talking about business (while smiling benignly at his youth wing who want to nationalise Greggs). He tweeted this:

Imagine an Uber run co-operatively by their drivers, collectively controlling their futures, with profits shared or re-invested.

Splendid. There are some great worker-owned businesses - John Lewis, Arup and so forth - although none of them started that way. But the implication of Corbyn's comments sound a little more sinister - even a hint of some form of nationalisation for dear old Uber.

But seriously, if it's such a good idea to have a ride share co-op, Jeremy, why not set one up? No-one's stopping you (except maybe the Mayor of London and his Black Cab mates).

....

Let's not let politicians get away with crying 'immoral' to justify their prejudices

It is always a worry when politicians start invoking morality in the promotion of their particular policy or prejudice. It doesn't matter much which side you're on, the objective is always to try and make out that those who support what you oppose are bad people. This applies as much to William Hague going on about the moral case for low taxation as it does to the latest piece of moralising from Labour's 'business spokesperson', Rebecca Long-Bailey:

Ms Long-Bailey told Today: "I don't personally use Uber because I don't feel that it is morally acceptable but that's not to say they can't reform their practices."

She added: "I don't want to see companies model their operations on the Uber model."

The objective here is to make you feel bad when you choose to use Uber - or, by implication, any other business using the 'gig economy' model. Obviously, Ms Long-Bailey has every right to choose the (usually) more expensive option of a hackney carriage or traditional private hire, but when she claims this makes her morally superior she is changing the argument entirely. Where we had an argument about working conditions and business models, we now have one based on making people who don't agree with Ms Long-Bailey feel bad.

Morality is a tricky area for politicians - after all arguments based on morality kept homosexuality illegal, brought in prohibition in the USA, helped keep women out of the workforce, and resulted in the unwarranted stigma of illegitimacy. In this case the appeal to morality is based on an assumption that Ms Long-Bailey knows precisely the minds and motivations of those people who drive for Uber.

The thing is that we know one thing that makes Ms Long-Bailey's argument false - no-one is forcing anyone to be an Uber driver. More to the point, the employment basis of most taxi and private hire drivers is pretty much identical to that of Uber drivers - they are self-employed. And Uber across most of the UK is licensed in the same manner as a private hire vehicle. This company is no more exploitative of its drivers than the typical Leeds, Bradford or Manchester private hire business.

What Labour and Ms Long-Bailey are saying is that it is morally wrong for a new business employing people on pretty much the same basis as the businesses it competes with to charge less money. This is about is protecting the local authority taxi monopoly and the excess rents earned by that monopoly and its employees - this is not about morality but about competition and the desire to protect one section of the market. All at the expense of the consumer - you and me.

Labour are entitled to make the argument for this protectionism using grounds such as safety, tradition, market stability and so forth. I think these sorts of arguments are wrong but that's an opinion. What is wrong here is that Ms Long-Bailey wants to make out that my opposition to her position on the technological disruption of public transport is somehow immoral. It clearly isn't.

This approach represents an unhealthy trend in recent left wing politics. It used to be the conservative right that would invoke morality as justification for policy but today we find this moral imperative used by socialists like Ms Long-Bailey. Whether it's the defence industry, disruptive digital technology, online distribution or Brexit, elements of the left turn quickly to an argument based on morals. We see this starkly with Ms Long-Bailey's unjustified attack on Uber but it's familiar to those who've witnessed arguments for 'ethical' procurement or investment, arguments based not on a real moral code but on the translation of political credo into an ethical platform. If I oppose 'Fairtrade', fossil fuel disinvestment or bans on tobacco advertising then I am a bad person because such policies are 'ethical' - opposing them makes me, in effect 'unethical'.

We need to start kicking back. Using Uber is not immoral, the 'gig economy' business model is not unethical, and to say so is to corrupt the meaning of ethics and morality by twisting it to serve a political ideology. Ms Long-Bailey's argument cannot be allowed to stand there without challenge, to become the presumed truth about self-employment in the UK because it is simply not true that it is immoral to use Uber, it misrepresents the business model and rather insults the folk who earn a decent crust driving for that company.

.....

Uberising home cooking...

****

I guess this works in a place where you've a lot of women at home with a kitchen:

Million Kitchen is an aggregator and delivery service by Delhi-based non profit Swechha that allows women to prepare and sell home cooked food to customers within a 5-7 km radius. The app-based service gives young working people the access to fresh and simple homestyle meals as well as empowers women to earn extra money by using their cooking skills. “Every dormant kitchen is a resource lying underutilized,” says Vimlendu Jha, Founder and CEO of Million Kitchen.

I'm sure there'll be the usual guffle about exploitation and workers rights but, hey, this is excellent!

.....

We are reminded that unions are not in the consumer interest

****

Izabella Kaminska - whose trendy lefty ignorance we've touched on before - says that the good folk who drive cabs for Uber need to unionise:

In the first instance, the Uber drivers working on these systems aim to withdraw supply en masse if rates go below their average break-even rates exposing customers to surge pricing more regularly. But the aim eventually is to gain collective bargaining power against Uber in all sorts of worker-rights disputes.

The point that Izabella is making revolves around here belief that Uber has too many (or rather allows for there to be too many) drivers or "ignoring the law of supply and demand" as she ignorantly puts it.

...Uber doesn’t really care about how many drivers are in the market at any particular time because the company is more concerned about taking a commission linked to total utilised capacity than ensuring supply and demand is ever properly matched. Nor do customers care about market imbalances since they are the temporary beneficiaries of the app’s arguably unsustainable cost structures.

The solution is for the drivers to unionise and to use this 'collective bargaining' to force Uber to place a limit on the number of drivers in any given taxi market. The argument for this this limit isn't consumer interest but a belief that somehow Uber's drivers are a special case in the 'being-exploited' stakes. And that this will happen:

The fundamental truth being ignored in the “sharing economy” is that exploited labour always wises up. That open-ended supply markets always form licensed communities to protect jobs and minimum wages. That unregulated markets inevitably self-regulate from the bottom up. And that workers always have an interest in aggregating and sharing the cost of risk and insurance between them, which is ultimately factored into the cost of service.

Or as Adam Smith put it:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”.

Indeed this is entirely what has happened in taxi markets - taxi operators and drivers, aided and abetted by local or national government, has placed expensive barriers in the way of market entry. And one of those contrivances - those conspiracies against the public - is the union. For the entire purpose of the union is to improve the lot of its members. For all the noble purposes laid claim to by unions the bare truth is that their purpose is seldom, if ever, in the interests of the consumers who use the services those union members provide or the products they produce. Indeed Izabella, in her lefty reverie concludes this too:

The core point really is that taxis can never serve customers as well as outright ownership of a private car in optionality terms — because taxis can never be perfectly supplied to meet peak rate time demand without somebody somewhere carrying the cost of off-peak idle capital. Nor can they, for that matter, ever be as cost effective as public transport.

If and when Uber drivers efficiently unionise to reduce the scale of oversupply in the market, we’ll finally understand that.

Let's leave aside the self-evident observation that this point is entirely contained in the fact that a train ride from Bingley to Leeds is less than a fiver whereas a taxi ride will costs you £40 or more. Instead let's consider what's being said here - essentially Uber, by not limiting how many drivers a market can hold, has pushed down prices. As a consumer this is excellent news - although the bus or the tube will still be cheaper, I'll take a 20% drop in fares as well as less reliance on surge pricing (because the increased demand for cabs on say New Years Eve means more drivers come out to meet that demand). If the drivers are unionised and succeed in 'reducing the scale of oversupply' the result will be a system more like the one we have.

It's clear that, wherever we look, unions - by promoting the interests of their members - act to raise costs, limit supply or otherwise act against the consumer interest. This is the case with doctors, lawyers and local government officers just as much as it is with taxi drivers. And this is why the activities of unions need to be regulated and limited - just as is the case with any rent-seeking anti-consumer cartel.

....

The 'sharing economy' is wrong because it stops rent-seeking by governments

****

This is the conclusion of one Dean Baker writing in the house journal of government planners and regulators (The Guardian):

"...the downside of the sharing economy has gotten much less attention. Most cities and states both tax and regulate hotels, and the tourists who stay in hotels are usually an important source of tax revenue (since governments have long recognized that a modest hotel tax is not likely to discourage most visitors not provoke the ire of constituents). Bit many of Airbnb's customers are not paying the taxes required under the law."

See what this man is saying? The rents that local government is able to claim from having regulatory authority, rents that go to pay for well-paid officials and the funding of critical (i.e. re-election sensitive) projects, are undermined by the fact that people have found a way to stay in a private flat or use a private car rather than an expensive taxi.

This 'sharing economy' isn't just disrupting the industries concerned - hotels and taxis - but threatens a crucial revenue for the city governments. You can understand how these interested parties might wish to regulate - so as to protect their shared interests. But it's a step further to suggest as Mr Baker does that such disruption is a bad thing (offers no 'net benefit' to the economy) simply because the new model falls outside existing regulatory regimes. And more to the point, that it is very difficult given the nature of mobile technology models, to find a way - should of an outright ban - to prevent this disruption.

Mr Baker is the director of a think tank - a "progressive" think tank no less. So I guess it's no surprise that the liberating application of technology - freeing us just a little from the rent-seeking of governments and their partner industries - is a problem to Mr Baker.  After all his think tank depends on these city governments and their client big business to provide its very comfortable Washington DC living. It is a case of the rent seeker protecting the rent seeker!

....

On the disruption of the taxi business

****

Plenty has been written about ridesharing and applications such as Uber that are disrupting the cosy taxi business. I take the view that, subject to insurance and roadworthiness, there shouldn't be barriers to entry - a view that the hackney licensing business (a nice earner for local councils and a fixed market for taxi companies) doesn't share.

However, I was fascinated by the response of London's Licensed Taxi Drivers Association (LTDA) to the decision by Transport for London (TfL) not to intervene in the use of the Uber application to set private hire fares. The LTDA argue that this is tantamount to having a taximeter, which would be illegal.

So the LTDA intend to take direct action and 'blockade' the city to protest at TfL allowing the use of Uber:

"Transport for London not enforcing the Private Hire Vehicles Act is dangerous for Londoners," Steve McNamara, LTDA's general secretary, told the BBC.

"I anticipate that the demonstration against TfL's handling of Uber will attract many many thousands of cabs and cause severe chaos, congestion and confusion across the metropolis." 

There are two possible reasons for this decision: either the LTDA believe direct action will work or else they know that taking legal action won't. Which is important because the complaint is about how TfL has interpreted the law and the place to establish whether they have acted properly should be the court not Piccadilly Circus.

....

How public monopoly prevents transport innovation

****

For perhaps the wrong reasons we're focused again on issues relating to public transport. And this is done knowing that the majority of Brits favour the nationalisation of the railways and, I assume, believe that mayors or councils should run the buses, trams and tubes.

The problem is that we're in a time of new opportunity and change that challenges the dominant idea that city transportation schemes need to be planned. That challenge sits in our pocket or our handbag.

Just as we've seen with financial transactions, governments and the agency businesses that feed off the granting of monopolies are resistant to the disaggregated and dispersed self-service models emerging as a result of the smartphone's growing ubiquity. And in doing so we do the public a disservice.

Before I talk about some specifics - drawing on US examples where the challenge to public transportation monopoly is more developed - here's a section of Boris Johnson's 'tribute' to union boss, Bow Crow:

"Whatever our political differences, and there were many, this is tragic news," he said.

"Bob fought tirelessly for his beliefs and for his members.

"There can be absolutely no doubt that he played a big part in the success of the Tube, and he shared my goal to make transport in London an even greater success. It's a sad day."

Now I'm sure that these were nice words about the boss of a key London 'stakeholder' but it beggars belief to say that a union forcing costs up and resisting change or efficiency is in the interests of London's transport systems.

So to San Francisco where there have been a series of battles around what are know as "tech buses" - these are services, provided by Silicon Valley business, that take workers from the city out into the valley for work. And they are unpopular with users of existing (more expensive and less reliable) public transport systems. Resulting in a variety of bus-based class warfare:

This December, several anti-bus rallies were held in the Mission District by a group that called themselves the San Francisco Displacement and Neighborhood Impact Agency. The group blocked buses and held up signs with statements like “Warning: Two-Tier System.” One man made headlines by dressing up, and, after claiming he worked for Google, berating the protestors with appalling class rhetoric. But it turned out he was really just an imposter, having worked previously as an Occupy organizer. Another protest in Oakland led — as ones there often do — to bus vandalism.

Note the words 'two-tier system' - hipster techie folk who earn good money out in the valley get a lovely shiny bus service whereas the other folk have to make do with late, dirty buses. And it spills over into the Bay Area's gentrification rows:

“In case you’re wondering why this happened, we’ll be extremely clear. The people outside your Google bus serve you coffee, watch your kids, have sex with you for money, make you food, and are being driven out of their neighborhoods. While you guys live fat as hogs with your free 24/7 buffets, everyone else is scraping the bottom of their wallets, barely existing in this expensive world that you and your chums have helped create."

The problem isn't American capitalism though. The problem is the municipal monopoly - the unholy alliance between the city government and unions to deliver an inefficient, expensive and unresponsive transportation system:

Muni, the city’s local bus, rail, and cable car service, is similarly inefficient. A study last May found that its on-time ratings hovered around 50 percent due to rail cars that regularly broke down. These delays cost an estimated $50 million in productivity — yet Muni has California’s second-highest paid transit workers.

The government-run rail that follows a similar route as the tech buses is Caltrain. Today, its customers endure a plodding, 90-minute ride from San Francisco to San Jose. This same trip takes under an hour by automobile, helping explain why some companies now bus in their employees.

Those 'tech buses' are a response to a failed service monopoly (and that monopoly's owner - the city council - has got its rents from the 'tech buses' by charging them a fee to stop at a bus stop) that doesn't meet the needs of local commuters. Looking a little deeper we find that the San Francisco authorities want to stamp out any innovation - not just the 'tech buses' but the growing use of ridesharing, a business that threatens the lucrative taxi monopoly (a license in San Francisco is over $250,000, in New York the coveted 'medallion' sells at touching $1m).

Indeed the business threat of this 'sharing economy' (we've seen the same regulatory response to Airbnb, for example) is repeated across other US cities - Seattle, for example, has threatened rules that would limit the numbers of drivers using services like Uber and Lyft, and one Seattle councillor proposes that the cab drivers become 'unionized city employees'.

Back in San Francisco, where Uber started, the debate is stuck at finding ways to control these new private transportation systems, to force the 35,000 people using the 'tech buses' back onto the old creaking public system and to regulated cabs rather than find a neighbour to share your ride with.

For Britain (outside London) the situation remains more flexible with a mixed economy of provision as well as the widespread availability of mini-cabs as well as Hackney cabs. There are moves by public transport authorities towards more directed and planned models such as 'quality bus contracts' and local councils jealously guard the revenue generator that is the taxi trade. But what isn't happening - with one or two striking exceptions - is the exploration of new economy solutions to urban transportation. Indeed the debate, such as it is, seems to me moving more towards greater use of monopoly power to prevent innovation than towards actually meeting the transport needs of local residents.

But then, so long as we think union bosses like Bob Crow are part of the solution rather than an obstacle to better services we will be stuck in this dead debate. Even worse if we persist with the 'Big City Boss' approach to delivering those services that Boris Johnson (drifting ever nearer to Bloomberg's urban fascism) seems to prefer. The development of better transport really isn't down to pouring billions of borrowed money into the ground and cosy deals between union bosses and city mayors.

....