Serious Tuesday Question: Price Surging Edition

Related Post Roulette

424 Responses

  1. Avatar Jesse Ewiak says:

    Well, here’s the thing. At the end of the day, it’s still about values.

    So, what’s better. Twenty people, who happen to be the only 20 people who can afford the $150 to get out of the area, get out of the area. Or only ten people get out of the area, but it’s much more of a broad section of society getting out of the area.

    Now, even though I believe in the latter, I don’t think beveling in the former makes you a bad person. It also doesn’t make you absolutely correct because it makes economic sense. The world just isn’t an economic formula.Report

    • Avatar Kimmi says:

      Jesse,
      Would you hotwire a car to get out of a disaster zone?
      I accept that if a truly large-scale disaster was to hit my city, I’d stand a good chance of winding up dead.Report

    • Avatar Will Truman says:

      Jesse, I would agree with this, except that in this case (as opposed to, say, price gouging) the price has a direct bearing on supply. Having surge pricing likely convinced drivers who otherwise wouldn’t have to venture into the CBD.Report

  2. Avatar Jim Heffman says:

    The assumption behind price surging is that everyone in a city is a potential Uber driver and they’re only a price point away from signing up.

    I kind of doubt whether Uber has actually done research into this. Do they, in fact, see a meaningful increase in the number of drivers in response to surge pricing?

    ******

    As for the moral dimension, I dunno. Morality is in the eye of the beholder. I can say that it seems an example of depraved indifference to present yourself as a driving alternative in metro areas and encourage people to rely on your service, and then raise prices without warning and claim that you’re only responding to market conditions.

    People complain about cab regulations being onerous, but when you think of it more like a public utility it makes plenty of sense. The power company doesn’t get to quadruple rates when it gets cold outside.Report

    • Avatar Kimmi says:

      Jim,
      at least UBER shows up! And they’re pretty clear about raising rates during “traffic times”

      The drivers aren’t making enough to do it for a living, so far as I can tell — they make less than minimum wage. It’s a way of recouping sunk costs in car ownership, and getting some cheap entertainment.Report

    • Avatar Will Truman says:

      I don’t know that it was to convince drivers to sign up. Rather, I think it was to convince existing drivers that were maybe skittish about going to the CBD to decide to do so in this case, and more generally to make an effort to be available at times of high-demand.

      Isn’t the price made available on the app? If the price isn’t determined at the time you ping for a ride, that is indeed a problem. Does anyone here use Uber know?Report

  3. Avatar Kimmi says:

    “there are valid moral and ethical considerations that should override economics in certain circumstances”

    Yes. One of my moral and ethical considerations is that I should take responsibility for my own welfare. That I do not go through my day blinded to the numerous deaths that spread out before me. If you, the grasshopper, fail to take into consideration the numerous deaths and other miseries, I should help you learn to be more economical.

    This should not be extended to the point of “no, you don’t get a vaccination, you anti-vax morons.”

    But I have nothing against someone going through a bit of privation because of mass human stupidity (JIT!).

    Did you know that most people’s fire insurance is so shoddy that they’re generally ruined after a house fire? Yes,yes, the bank says you need insurance, but people buy the minimum possible.

    And that’s their fault. I’d rather we spend our money trying to help those who are in most need, and have been the least foolish — if nothing else, my money will go farther.

    “there are valid moral and ethical considerations that should override economics in certain circumstances”
    Yes, but you should not make laws, but merely use shame and other vehicles of social disapproval to discourage people being total dicks. [Laws, in any case, are least likely to be effective during widespread societal breakdowns.]Report

  4. Avatar j r says:

    Price surging during a crisis and purposefully admitting to it just gives most people more evidence that uber has an asshole problem.

    Maybe it’s just my heartless devotion to capitalism speaking, but this strikes me as just the opposite.

    In general, surge pricing is just superior. In certain situations, the biggest problem is that there is too little supply of some good or service that is in high demand. Raising the price does bring more supply to market and does make people think twice before trying to horde. Saul gets this right.

    During a terrorist attack, however, I can accept the premise that surge pricing may not be the best response. No matter how logical it may be, so many of your customers and would be customers will be turned off by this response that you’ll end up losing business in the long run. If there is ever a time to shun logic and play the good corporate citizen, then a terrorist attack is probably it.

    And play the good corporate citizen is exactly what Uber did. If my understanding is correct, Uber has an automated system that raises the prices when demand jumps up. That happened in Sydney and the prices went up. Someone then Tweeted, probably some 22-year old social media manager, the reason for the prices going up. Not the smartest move, but people make mistakes. Within about an hour of that first Tweet, Uber sent out another Tweet, not just reversing the surge pricing, but giving everyone free rides.

    Here we have just such a situation where a private company let moral and ethical considerations drive a business decision that not only led to them leaving money on the table, but actively losing money. What exactly is the beef here?Report

    • Avatar Michael Drew says:

      No matter how logical it may be, so many of your customers and would be customers will be turned off by this response that you’ll end up losing business in the long run.

      However, if firms consistently calculate that this won’t happen, are proven right, and so go ahead with it and reap the benefits, then… we’re good with it? (Honest question.)Report

    • Avatar Saul Degraw says:

      @j-r

      I understand the events a bit differently.

      1. Price surging went into effect.

      2. Uber tweeted that they did this purposefully because of the terrorist attack and it was not automatic.

      3. People got mad.

      4. Twitter had to backtrack.Report

      • Avatar Will Truman says:

        JR is correct that surge pricing is typically automatic. Maybe they did it manually here, but I haven’t seen the alleged tweet saying so.Report

      • Avatar Michael Drew says:

        Uber had to backtrack? Or it was so bad Twitter actually distanced itself from the tweet?Report

      • Avatar Michael Drew says:

        …Also, this seems incredibly tone-deaf to me. I give credit for transparency, but I don’t think there would have been anything wrong with saying, “We are all concerned with events in CBD. We are encouraging more drivers to come online & pick up passengers in the area.”

        I guess it’s up to them what their p.r. strategy relating to their pricing practices dictates they say at an given time, though.Report

      • Avatar Kimmi says:

        Michael,
        yeah, exactly. Plus a “the extra money is for the drivers, dammit. we’re not taking a bigger cut — we simply run a flat rate surcharge.” (assuming this is actually the case, and I believe it is).Report

      • Avatar Will Truman says:

        I did see that tweet. It’s not clear to me whether the bump was automatic and they’re explaining it, or they’re explaining why they manually bumped it.Report

      • Avatar Michael Drew says:

        I mean, call me crazy, but Uber is a billion-dollar company, no? (Or no?) They could have announced that they were offering subsidized premiums to drivers to go to the site, where said drivers would receive high fares from the company in exchange for rides that would be free or inexpensive (or even just typically priced, though this is part of the problem with floating auctions – what’s a typical price? – but that’s a separate issue) to the riders. I mean, they could have done that. Wouldn’t have been that expensive. Apparently that’s not what they wanted to do, though.Report

      • Avatar j r says:

        @saul-degraw and @michael-drew

        They could have announced that they were offering subsidized premiums to drivers to go to the site, where said drivers would receive high fares from the company in exchange for rides that would be free or inexpensive…

        That is exactly what they did! If your beef here is that it took them an hour to come to that decision, then may I suggest that you are being more than a little petty.

        And again, who knows how that initial decision was made and who knows who sent that Tweet. I am going to take a wild guess and say that Uber doesn’t have senior-level people working their Twitter account. To characterize one Tweet as “their p.r. strategy” grossly mischaracterizes what Twitter is and how companies use it.Report

      • Avatar Michael Drew says:

        That’s what they did after an uproar about the fact that that’s not what they did, and since no one has an obligation to be fair to a company that at least initially went ahead and charged spike fares to get people away from a Danger Zone – to the point of sending out a tweet announcing that company decision – it’s hardly a surprise that that’s not the story people heard.

        To characterize one Tweet as “their p.r. strategy” grossly mischaracterizes what Twitter is and how companies use it.

        Well, first of all, I didn’t characterize it as their p.r. strategy. I characterized it as something their p.r. strategy apparently dictated that they do – or failed to dictate they not do. And when your company’s name is Uber and it works almost exclusively via smartphones the way Uber does, no I don’t think it mischaracterizes what Twitter is and how companies (a company like Uber, anyway) use it to assess that tweet’s importance as I did.Report

      • Avatar Will Truman says:

        Yes. If the criticism is that they did not immediately respond by offering to take losses, they are guilty as charged.Report

      • Avatar Michael Drew says:

        In fact, I didn’t even characterize it as something their p.r. strategy apparently dictated that they do or failed to dictate they not do. I characterized it as something their p.r. strategy relating to their pricing practices apparently dictated that they do or failed to dictate they not do.Report

      • Avatar j r says:

        @michael-drew

        What “Danger Zone?” This was one guy in one place, not some coordinated terror attack targeting multiple places. I have a FB friend in Sydney and the guidance that she received from the local authorities was to shelter in place. There was no coordinated effort to evacuate downtown Sydney.

        If this were a catastrophic weather emergency or ISIS was conducting a sustained assault on the city or Godzilla was walking up into Sydney out of the Tasman Sea, then yes, you could make an argument that holding people hostage for exorbitant prices is unethical.

        If people felt like they didn’t trust the guidance of the local authorities and wanted to get out of the area anyway, that’s fine, but Uber has not responsibility to take them. The only thing that Uber is guilty of in this case is a momentary lapse in keeping up appearances.Report

      • Avatar Michael Drew says:

        It was capitalized because it was somewhat tongue-in-cheek. I thought it would be humorous to invoke Kenny Loggins there.

        But, I mean, it was an area people felt unsafe in, so wanted to 86 their other business and get the hell outta. Doesn’t really seem that off to me.

        Which points to my point about p.r. around their pricing strategy. This will be very muddy for them under auction pricing – people get spooked; doesn;t mean a dirty bomb just went off. So when do you respond with “Never fear, we’re on the way!” and when with “Yeah, we’ll take those profits.” I’m assuming cab companies have been dealing with this for years (figuring out when to send cabs to emergencies to give free rides out of community spirit and good p.r.. But they don’t face the p.r. downside risk of the gouging perception because fares is fares. That, and Uber’s profile as a with-it, modern, plugged-in company, make it a much more volatile question for Uber.Report

      • Avatar Michael Drew says:

        Maybe you think we’re on different pages here when we’re not. I haven’t said they did anything wrong here other than p.r. malpractice. That’s what they did wrong. They want those profits, they can go ahead and take ’em. I’ll get my revenge via p.r.

        Though, I did ask you if they did. Meaning, if they just adopt a policy of always taking the surged revenues regardless because they calculate that’s where the $ is, and then through running their service at full cost through a variety of disasters are proven right about that, have they done anything wrong? I haven’t said they would have, but I also asked you. You said you needed an example. You can always provide your own, you know.Report

      • Avatar j r says:

        Yeah, I got that Archer.

        I’ll ask the question again: does Uber have some ethical obligation to help evacuate people from an area because those people are spooked? If the answer is no, then we should be able to agree that there was nothing even close to an ethical breech in this case.

        Maybe it’s a case of bad PR, but even that seems to be largely in the eye of the beholder. I see a case in which a private company reversed its initial policy within under an hour and started giving away free rides. I’m just having a hard time understanding why people are focusing on the initial case of questionable judgment and not on the position at which they ultimately arrived. Sometimes people exercise bad judgment, which seems to me all the more reason to applaud people who reverse their bad judgment rather than double down on it.Report

      • Avatar Michael Drew says:

        @jr

        I asked you first.Report

      • Avatar Tod Kelly says:

        “Yeah, I got that Archer.”

        Lana.

        Lana… Lana… Lana…Report

      • Avatar Michael Drew says:

        “Yes. If the criticism is that they did not immediately respond by offering to take losses, they are guilty as charged.”

        No. From my perspective, the criticism is for not having thought out ahead, “what do we do when something scary happens and fares spike?” If they’d not said anything, looked at fares for an hour, and then decided to cut them to zero, I doubt there would be nearly the outrage. Ideally you’d like to know what the right move is a little quicker than that, but okay. An hour. Pretty slow to do anything when you’re a cab company. But okay.

        Instead, they sent out two tweets that changed company policy in such situations 180 degrees inside of an hour in the middle of an ongoing situation. And the first one implicitly announced that the company endorsed the capture–price-spike-revenu approach to these situations. This confirmed the sense that they had no idea what they were doing regarding situations like this, and had no initial sense of what the right (PR) think to do was – but that they did have a lot of confidence in the overall awesomeness of their pricing mechanism, and in how awesome people generally perceive it to be (even though they keep having to work through PR disasters on account of it).

        The resulting PR disaster from such a failure to consider an issue that cab companies have been dealing with for decades is entirely deserved.Report

      • Avatar Will Truman says:

        PR aside (and I agreed they fumbled the PR), they are either guilty of:

        (a) Not immediately offering drivers more to encourage them to go out there, or
        (b) Not offering to take the losses.

        Personally, I see neither of these as particularly worthy of criticism or, as Saul would have it, unethical. I think criticizing them for (a) is unproductive or counterproductive (if bumping rates does indeed increase the number of drivers, and (b) as either entitled or selective prosecution (who else was ethically bound to provide services at a loss?).

        If you want stable pricing in cases of emergencies, take a cab. If you can’t find a cab… well, then.

        I agree that the PR was bad, and that their initial stance was bad from a PR standpoint. I think that says more about us than it does about them, though.Report

        • Avatar Michael Drew says:

          c) sending out really dumb tweets?

          PR failure is never on us. That’s the whole point of PR. I’m not concerned about what people’s responses to bungled PR “says” about them. The point of PR is to get the response to be good for the company.Report

      • Avatar Will Truman says:

        I should add, I have no problem with reliable pricing models. I tend to favor them, in fact, both sentimentally and with my pocketbook. Likewise, I don’t blame people for looking at this situation and saying “You know what, I don’t want to use this service to get from Point A to Point B if getting back to Point A might cost four times as much.”

        This is actually a discussion I get into with people all the time when they believe that companies won’t take a loss over here in order to achieve price reliability.

        But Uber has gone a different route, and one that has its own efficiencies. I think there’s something to be said for that model to, and I don’t think they have an ethical obligation to either deviate from that model in these sorts of circumstances, or abandon the model altogether.Report

      • Avatar Will Truman says:

        I said PR failure (meaning the tweet) aside and agreed with you that they fumbled the PR. I am not as convinced as you are that PR is the scope of the failure. If they hadn’t lowered the prices on, most of the people angry would still be angry. Which means that underlying the (true) observation that the PR was bad is a complaint about the actual surge pricing itself, which brings us back to A or B.Report

      • Avatar Will Truman says:

        … unless you’re arguing that the failure to increase driver pay or take a loss counts under the “PR failure” tent. I could see why it would (it’s still bad publicity), but to the extent that anything other than A or B is considered a PR failure, regardless of what is tweeted, then I maintain my belief that is indeed on us.

        Not sure if you’re making that argument or not, but wanted to put that out there.Report

      • Avatar j r says:

        @michael-drew

        So, Uber’s main offense is that they didn’t have a sufficiently elaborated plan of what to do in case of a terrorist attack?Report

      • Avatar Michael Drew says:

        I don’t feel like “PR aside” makes any sense in our conversation. The discussion is about the PR. Is anyone here saying that if they’d just blasted through charging the surge fares, they’d have committed some actual moral sin? Even if someone is, that’s not what we were talking about. We were talking about the PR. To some extent were were talking about whether they deserved their PR woes, but that doesn’t turn on whether some of their underlying conduct was really immoral; it turns on whether their PR practice was okay and they just got unlucky, or bad.

        I don’t disagree that a part of the PR failure relates to the pricing itself. That goes back to my larger point that their pricing model in general presents them with a real PR problem on its own – and that they seem to think the opposite is actually the case. But without the tweet, I do think this post would probably not exist.Report

      • Avatar Michael Drew says:

        @jr

        I can’t really say what “the” criticism is. It seems clear they don’t have a very good plan about how to handle price spikes from a PR perspective in general. I would criticize that. Further, it’s clear that they didn’t have a sense about how to handle spikes caused by adverse situations causing public distress is an aggravating extension of that, which seems even more worthy of criticism to me.Report

      • Avatar j r says:

        @michael-drew

        You keep saying that despite the fact that they did the very thing that you said that they ought to do. The complaint is that it took them an hour to do that.

        There’s two possibilities. One is that the initial response was in line with their company policy, but if that’s the case the fact that they changed company policy so quickly should be a credit. The other possibility is that whoever sent the first Tweet was acting against company policy. So yeah, the 22-year old social media intern made a mistake. What do you think is the suitable punishment for him or her?Report

      • Avatar Will Truman says:

        The post itself is about the pricing structure, not that they sent out a tweet. So to the question of whether anybody is saying that failure to do A or B is a problem, I’m pretty sure Saul is.

        I don’t know whether we would be here discussing this or not without the tweet. That would depend on if anybody got traction saying “I wanted to get away from Sydney CFB and THIS is how much they charged me!” Which I consider a distinct possibility, given that people have done that before with less of a news vehicle to tack it on to.Report

      • Avatar Michael Drew says:

        No, the problem is their tweet confirming their intent not to, followed by their tweet reversing that. As Will says, the hour might have been a problem on its own, and if it were, I’d criticize the hour too, since, yes, if they’d had a plan, it wouldn’t have taken the hour, and not having a plan is on them. Will thinks without the tweet but with the hour the PR issue would have been fairly close to what it is; I think it would be a bit more calm sailing for them if not for the tweet. But we’re basically in accord.

        Either way, the larger point is they deserve what they’re getting because unprepared.Report

      • Avatar Michael Drew says:

        Saul presents more of a… There are two sides to this, what do we think kind of view from where I sit, but okay.

        But our conversation was not necessarily about exactly what Saul was talking about. I thought it was about their PR deserts. I guess MMMV.Report

      • Avatar Michael Drew says:

        ….And I’m not buying 22-year old intern theory. For all we know David Plouffe himself sent that tweet. I’m inclined to think it was higher up the chain myself.

        Changing policy in the middle of a storm to buy an umbrella only barely mitigates how much criticism you deserve for not planning for a storm.

        And no one should be fired or punished. They just deserve what they’re getting here – the company, that is.Report

      • Avatar j r says:

        At this point, it is pretty obvious that Uber did nothing unethical in instituting surge pricing in this situation. For argument’s sake, let’s say that its Tweet was tone deaf and more than a bit insensitive to users who wanted to get out of Sydney.

        Generally, when someone does something wrong, what we want them to do is to (a) admit what they did was wrong, (b) stop doing the wrong thing and (c) make restitution to anyone who was wronged.

        In this case, Uber realized that the original response was not the appropriate way to go; that’s (a). They reversed the pricing decision and started offering free rides; that’s (b). And they reimbursed anyone who had been charged; (c). And the company did all of that within an hour.

        If people are still mad after that, I have to start believing that people either already have a bone to pick with Uber or people just like getting outraged on the internet.Report

      • Avatar j r says:

        Fine. It’s decided:

        Uber is an insensitive company with an insufficient terrorist attack policy in place.Report

      • Avatar Michael Drew says:

        And yet, people are still mad, or more accurately, broadly a story about how Uber charged spike fares and tweeted that it was their intent to do so is the story that is going around about this, rather than that they gave free rides out of the Danger Zone Down Under. Not sure people are mad, but it’s not a good episode for Uber, I don’t think. And it could have been.

        Generally, people don’t regard company failures to figure out what the right thing to do and do it the first time as positive. If it takes a blowback to figure it out, the PR upshot is that you didn’t do the right thing when you had a chance – it took pissing people off to do it. The upshot of then reversing is, well, congrats for not being irredeemable idiots and doubling down on pissing off your customer base.

        It could have been different; they could have had a plan. You’re in business and you fail to plan, I think you deserve what you get (which in this case is going to be a barely perceptible blip on revenues, if that. Nevertheless, they are getting bad PR from it and they deserve it.) All I’m saying.Report

      • Avatar Kimmi says:

        jr,
        of course people love getting upset on the internet.
        If you wanted to respond to an actually useful piece, well, you’re perfectly welcome to write one.
        Maybe one on the current state of North Dakota and what that has to do with Saudi Arabia.Report

      • Avatar Will Truman says:

        Not just the hour, but a failure to implement A or B at any point during the surge. Ultimately, I think this is more about A and B than C. If they had done B without the tweet, I agree there would have been a lot less volume because they did do B, which I think is nice but shouldn’t be required.Report

      • Avatar Michael Drew says:

        “The hour” just is the time it took them to decide to do (b), though, isn’t?

        I think I’m not following exactly what your (a) is, though not sure it really matters.Report

      • Avatar Will Truman says:

        I’m saying that they had to either (A) Decline to raise driver pay or (B) Eat the cost of raising driver pay. They did B after an hour, and absent the tweet that probably would have been enough. But they had to do A or B, or I believe there was a very good chance this story would have gotten traction and would have resulted in negative publicity with or without the tweet.

        I apparently left you with the impression that I was just talking about that hour. I wasn’t limiting it to that. Limited to that hour, I agree with you that the tweet is a critical part.

        I think the expectation of (A) would have been counterproductive, and (B) is entitled. And any negative publicity (at least in terms of their actions being unethical or greedy) they experience on that basis is, in my view, undeserved.Report

      • Avatar Michael Drew says:

        So A is “turn off the pricing mechanism.” Which, right, means, since they don’t actually command a fleet, no extra cars go there. To me, that’s not the end of the world, but I’d prefer they send the cars. But I’m not responsible for the natural p.r problem their ingenious pricing mechanism presents to them on a regular basis through a variety scenarios. Doesn’t matter, since for both market and probably p.r. reasons they in fact did want to get cars there.

        So then they’re left charging surge prices in an emergency. I mean, I don’t think it’s entitled to have a “that’s gross” reaction to that, since going in, it was always an option to have a plan for scenarios like that. It raises the question in people’s minds, ‘Just how amoral are these people? This feels like an emergency to me; would they just keep doing this no matter how serious the emergency is? This is just what they do?’ If anything, what’s entitled is to expect people to drive into dangerous places and pick them up for any price. But that’s what Uber wants its drivers to do (apparently), so how is it entitled?

        Anyway, so what if it’s entitled? Their whole business is creating the impression among their clientele that they are entitled to better service than standard cab companies can provide. They do this partly using auction pricing, but that leaves them with the problem of how to market their prices. That’s a p.r. problem. Who cares if a negative reaction to surge pricing in an emergency (or ever) is entitled? – that’s the feeling their whole business model depends on to begin with!

        Entitled or not, it’s a pretty predictable reaction, given that surge pricing has already caused them PR problems in non-emergencies! But instead of realizing this and planning for it, instead they elect to send out a tweet formalizing a view that this is the best thing to tell people you think is the way your company responds to situations like this. You think that if they had just charged the surge fares and shut up they still would have faced a reaction, but I doubt how strong it would have been. Uber has faced issues with surge pricing PR before, but they’ve largely weathered it, and certainly there have been situations in which scary events have caused fare spikes. But here, they sent out a tweet essentially saying how proud of it they are. (I don’t know, maybe they’ve done that before, too. Some things are random.) I tend to think that without the tweet, this would not have been noticed more than most other spikes have been, which is to say, maybe a bit, but not very significantly.Report

      • Avatar Will Truman says:

        When someone says “Company W is being a jackass for doing/notdoing X!” I appraise how reasonable the expectation of X is. In this case, I find the actions of Company W to be entirely defensible. To the extent that a lot of people are saying “Company W is being a jackass for doing/notdoing X!”… then I think it’s the people, rather than the company, that is actually being unreasonable. If I find X to be unreasonable. I find “I demand services during surge times provided at non-surge prices and I demand you to eat the losses” to fall into this category. There really isn’t much I see in Uber’s history and model – which very much involves surge pricing at surge times, and non-surge pricing at non-surge times – that has invited this sense of entitlement.Report

      • Avatar Michael Drew says:

        It would have been perfectly defensible to charge the surge pricing, but that doesn’t mean they’re entitled to good PR out of their choice. we don’t know who “demanded” they provide the service – if they’d said, hey we think it’s dangerous down there & we’re not sending drivers, people might have said, “Wow, okay.” What people reacted to was that they charged (lots) extra in this threatening, unforseeable situation. People are perfectly willing at this point to pay the extra at times when it’s understood there will be high demand. After concerts, bar time, rush hour, etc. Even when unexpected rushes come. What they’re not prepared for is the unexpected rush they couldn’t reall yhave been prepared for that’s due to people feeling unsafe. The extra profit element and the ability-to-pay element seems unsavory to people. I don’t think that’s entitled, in the sense that they think Uber has done something wrong to them by not providing regular pricing at a sudden peak time. It just doesn’t create good feelings about the company. And then tweeting about that action in a way that seems to take some credit for being civic-mided cnifirms those feelings.

        And it’s clear how Uber creates the sense of entitlement to their service. Their whole pitch is about how clunky and unresponsive standard taxi services are. People therefore expected it to be there for them when they wanted it – based on the track record of being there, and based on that being their pitch. Then they reacted to highly elevated pricing in a threatening, unforseeable circumstance. The entilement comes where they simply expect them to be there. That’s the company’s pitch, though. Reacting badly to a billion-dollar company accepting extra money to shuttle people who feel threatened out of a (temporarily) dangerous area isn’t entitlement, though, it’s just a natural human reaction to feeling taken advantage of when scared – or to seeing that happen. As Uber’s reversals acknowledged.Report

      • Avatar Will Truman says:

        Uber’s reversal was, in my opinion, nothing more than an acknowledgement that they weren’t going to win the argument. Companies often don’t give in to public pressure even when they’re wrong… but they also give in to public pressure even when they have done nothing wrong. That’s pretty much how I view this.

        The tweet was stupid, but not unethical. Taking the stance they took turned out to be stupid, but was not and is not unethical. The critics who are claiming the moral high ground here, in my opinion, simply do not have it. If Uber was in error, and at least in a way they were, it was for thinking that it mattered.Report

      • Avatar Michael Drew says:

        You’re kind of all over the place. I haven’t said that Uber did anything wrong apart from managing PR poorly. So I didn’t say that Uber is an acknowledgement of having done something wrong other than stioking bad feelings about itself – that’s what I’m saying they did wrong. But I bet you this: I bet you Uber does think its clientele’s opinion of their pricing in this scenario is reasonable.

        A company can be a jackass without doing something unethical.

        People can feel a company is being a jackass even while the company has not done anything that is not defensible – and not be unreasonable in feeling that way.

        There’s no “someone has to be wrong here,” except inasmuch as it’s wrong for a company to necessarily expect people to be cool with what they do as long as it isn’t indefensible.

        Uber can perfectly defensibly charge the surge pricing during an emergency, and people can perfectly reasonably be grossed out by that. They’re not even necessarily entitled if they feel that way, as long as they would have understood if a driver hadn’t been there for them.

        Uber’s reversal was an acknowledgment of all this.Report

      • Avatar Will Truman says:

        You may not be alleging anything unethical, but those who think it’s gross are.Report

      • Avatar Saul Degraw says:

        @will-truman @michael-drew

        I do think it is potentially unethical. At least price surging/gouging seem to strike against an innate sense of human fairness and decency about how to act in a crisis. There are always calls against “profiteering” during times of real human need. Now arguably this was not necessarily a time of significant need but what if Uber did this during a really bad natural disaster like a really big Earthquake or much more significant terrorist attack?

        Gut Instincts are not always right but I am not not willing to dismiss them completely. I do think that people can be good at having base judgments about the morality or ethics of an action and there is something work exploring and potentially right in the “Uber was being gross” reaction.Report

      • Avatar Michael Drew says:

        “Unethical” seems like a threshold standard of some kind to me, and it’s not clear to me that “gross” is necessarily a charge that the behavior is on the other side of it.

        You seem to be asserting manichaeism in assessing corporate behavior: “unethical” or “you can’t say a bad word about it.” I may have that wrong, but that seems like where this assertion has to come from as it’s not attended by any other argumentation. But it’s not true.Report

      • Avatar Mo says:

        @kimmi Uber gets a flat percentage, so they get 20% of a bigger base during surges.Report

      • Avatar Tod Kelly says:

        @saul-degraw Out of curiosity, what do you believe would have been the reaction — both by those criticizing Uber now and you yourself — if it had come out that they refused to pay their contract drivers more for dangerous work and as a result people were left behind?

        I ask because this very much feels to me like a conclusion in search of a supporting narrative. And as I said above, I think that Uber themselves are responsible for being in a position where people are trying to do this, but I can’t shake the feeling that no matter what they had done we would be having the same conversation here, with the same people denouncing those actions as unethical.Report

      • Avatar Saul Degraw says:

        @tod-kelly

        That’s a good question. There are probably going to be some people who criticize it because there are people who can criticize anything. But I don’t think normal pay rates would cause most of a controversy. What I think would cause a controversy is if Uber forced their drivers to put themselves in harms way or less pay or no pay. So if Uber said “We are going to deactivate you unless you spend hours rescuing people for reduced rates or free”, that would be controversial. Just like it was controversial when Kmart and Wallmart threatened to fire people for not working on Thanksgiving.Report

      • Avatar Will Truman says:

        You do have that wrong, but I don’t care anymore. You win. I’m done.Report

      • @saul-degraw

        Now arguably this was not necessarily a time of significant need but what if Uber did this during a really bad natural disaster like a really big Earthquake or much more significant terrorist attack?

        You could apply that question to anybody. If there’s a terrorist attack, would I go risk my life to save someone? Would you? If there were a natural disaster, would I share all my food to help others even if it wasn’t clear when or whether the next food supplies would come in? Would you?

        I think we need a case or controversy before we can actually try convicting someone of wrongdoing.Report

      • Avatar Michael Drew says:

        @tod-kelly

        And as I said above, I think that Uber themselves are responsible for being in a position where people are trying to do this, but I can’t shake the feeling that no matter what they had done we would be having the same conversation here, with the same people denouncing those actions as unethical.

        I’m not clear who’s said the surge was unethical. And I tend to think if they’d been smart enough to very quickly move the price to “zero” during the siege and not send out any tweets suggesting that wasn’t their intention, we might be having a different conversation today, not the same one.

        But by all means they are in general going to have to deal with extensive complaints about what they charge even if they do the PR work great: the business they chose is jacking up the price of cabs when people want them most! That’s just how it’s going to be.Report

      • Avatar Brandon Berg says:

        @michael-drew They could have announced that they were offering subsidized premiums to drivers to go to the site, where said drivers would receive high fares from the company in exchange for rides that would be free or inexpensive (or even just typically priced, though this is part of the problem with floating auctions – what’s a typical price? – but that’s a separate issue) to the riders.

        Why should they? Let’s say for the sake of argument that Uber is obligated to give away some of their profits. Under what moral calculus does it make sense to do that by subsidizing taxi fares for middle- and upper-class Australians in an n-meter radius of a gunman taking hostages?

        You can say that maybe it would be a smart PR move, but the idea that it’s just The Right Thing To Do and they should be condemned for failing to do so sooner strikes me as nuts.Report

      • Avatar Michael Drew says:

        You can say that maybe it would be a smart PR move

        Yes, and I have chosen to.Report

      • Avatar Kimmi says:

        Michael,
        sure, they jack up prices when people want them most. But you have the option of waiting a bit (not long), and the prices go back down. Do we bitch when bus systems do the same thing? (Commuter-time pricing…)Report

      • Avatar Michael Drew says:

        Kimmi,

        I’m not personally bitching about Uber’s pricing. I’m fine with it. And yeah, people can wait for the price to go down. But that’s not gonna stop them from bitching about 3X, 4X, 5X multiples on $20 rides.

        I haven’t seen commuter-time bus pricing higher than 2X a base rate of $2.50 or whatever, so, no, people don’t bitch about a $5 bus ride. It’s five bucks. (Well, actually, yeah, they do bitch, but you don’t hear about it because generally city transit services aren’t going for a big, positive presence on social media as hip, with-it new-economy innovators.) If Uber wants to start charging $5 for rides at peak times, they’ll tamp down displeasure with there pricing, too.Report

      • Avatar Brandon Berg says:

        @michael-drew Ah, sorry. I typed that comment out before work, before you had clarified your position, and forgot to submit it. Then I came back, saw that I hadn’t submitted it, and clicked the submit button before catching up on the thread.

        Still, my first inclination is to lament the unwarranted sense of entitlement on the part of the public that makes this a bad PR move. If I were a shareholder, I guess I’d be mad at Uber for not handling it better, but being financially disinterested, I’m more disappointed that they caved to the bullying.Report

      • Avatar Michael Drew says:

        @brandon-berg

        Still, my first inclination is to lament the unwarranted sense of entitlement on the part of the public that makes this a bad PR move.

        Aye, that seems to be where opinions are dividing on the question.

        I’m more disappointed that they caved to the bullying.

        As it happens, Uber had already massively caved on pricing in emergencies to pressure stemming from its prices during Hurricane Sandy (to the extent they had a principled position on which they caved, rather than an unconsidered position that they gave consideration to, that is). The pressure in that case came partly from The Law, though The Law was in turn under pressure from the public.

        Coming out of that episode, they had a policy & practices to implement it all set up, in fact. They just didn’t apply them past the borders of the United States. But it turns out consumers across the culturally Western world, if not further, often have similar reactions to similar kinds of business practices, whatever we think of them. So their policy didn’t head off the PR debacle it was crafted to forestall, despite being devised in response to a situation with basically similar dynamics. (Though you could argue that the Sydney siege situation never would have been categorized as the kind of emergency that would have triggered the U.S.-based Uber policy coming out of Sandy. If that’s the case, it’s just further demonstration of the way that Uber’s pricing approach represents an ongoing PR challenge for the company in and out of special circumstances of various kinds. It’s simply a challenge on its face from a PR perspective.)

        I actually hadn’t heard anything about the Sandy stuff, whereas I heard about the Sydney episode. I don’t know if the Sydney episode actually was a bigger PR hiccup for the company than was Sandy thing, though to me, (kind of obviously) it seems like it was. If that perception is right, I don’t know what to attribute that to.

        Report

      • Avatar Mike Schilling says:

        The economy would run so much more smoothly if it weren’t made up of people.Report

    • Avatar j r says:

      @saul-degraw

      Surge pricing changes in response to the demand. It’s not a static thing, which means it is, by definition, automatic. I doubt that Uber has a “Surge” button somewhere that they press whenever a particular event happens.

      Maybe I am wrong though and it takes some sort of executive decision to implement surge pricing and somewhat at Uber Sydney made that decision in this case. If that is the case, then my point gets even stronger. It means that a company overrode a previous financial decision based almost purely on social media feedback and the company did that in about an hour. When was the last time that you heard of any large bureaucratic institution responding to its customers with that sort of agility? You can waste an hour on line at the DMV or on hold with your bank and still walk away with your problem not fixed.

      This is a pretty clear case of you getting exactly the sort of behaviors from firms that you want, but you’re still finding something to complain about.

      @michael-drew

      It does not make any sense to answer that question in the abstract. An example would help.Report

      • Avatar Michael Drew says:

        I don’t follow. We’re working from an example to begin with. How Uber approaches the inevitable spikes in demand for transport that will come with urban emergencies.Report

      • Avatar Michael Drew says:

        I have an old monitor I use that has vertical of lines of different colors running unevenly across the screen, and it so happens that a line happened to run straight through the capital S in jr’s “Surge” there, making it read “$urge pricing.” I actually thought he wrote that for a second and was astonished, then realized, Oh, lines. I found it amusing and appropriate.Report

      • Avatar Kimmi says:

        “When was the last time that you heard of any large bureaucratic institution responding to its customers with that sort of agility?”

        Power Company? Phone Company? There are plenty of large bureaucratic institutions which know how to respond quickly and agilely. Because we built them that way.Report

      • Avatar Jesse Ewiak says:

        I don’t have to pay $25 to see a teller if the line at the bank is long. I just have to wait longer.Report

      • Avatar Kimmi says:

        Jesse,
        Time is money. I’m not sure how much time it takes if the line is long, but it does cost you something.Report

    • Avatar Tod Kelly says:

      @j-r “Maybe it’s just my heartless devotion to capitalism speaking, but this strikes me as just the opposite.”

      I think there’s a different lesson to be learned here about the importance of PR for a private business.

      If Uber had taken better care of its PR capital over the past year, it wouldn’t be defending itself right now because people would be listening to what they were saying. But Uber hasn’t really done that. They almost seem have gone out of their way to build up bad PR in the interests of having individual execs looks cool and edgy. And now they’re in a position where the really do believe they are doing the right thing, and people look a them like… well, like they’re the company they’ve spent the past year announcing themselves to the public that they were.

      If you want to playing the market place, then you have to be willing to play the whole game — and that includes caring what your potential customer base thinks of you. That they’re getting negative pushback now after their previous PR decisions feels pretty much like free market capitalism to me.Report

      • Avatar Michael Drew says:

        “PR capital.” There’s a concept I’m new to – or at least a term.Report

      • Avatar j r says:

        @tod-kelly

        I agree with this point about Uber in general. And I’m not shedding any tears for the company.

        In this case, however, a company exercised bad judgment and then immediately changed that judgment in reaction to market pressures. In what universe is this an example of unethical behavior?Report

      • Avatar Saul Degraw says:

        “I think there’s a different lesson to be learned here about the importance of PR for a private business.”

        It is just like a risk manager to say this! 🙂

        “They almost seem have gone out of their way to build up bad PR in the interests of having individual execs looks cool and edgy. And now they’re in a position where the really do believe they are doing the right thing, and people look a them like… well, like they’re the company they’ve spent the past year announcing themselves to the public that they were.”

        They have also gotten in trouble for Hurricane Sandy and some price surging during a winter storm in NYC last year.

        I think Uber are sincere believers in their ideology of pure free market economics and that price surging is good and will always work. They are running against the problem that most people are not full on believers in free market economics and they don’t have a response. I think that a lot of the big issues between Tech 2.0 companies and the general population is that Tech 2.0 companies like to exhibit a lot of paternalistic and counterintuitive free-market isms and most people disagree on an intuitive level. The tech companies do not know what is best for us anymore than someone else.

        I think the Uber CEO is on record for being a huge Ayn Rand devotee.Report

      • Avatar Stillwater says:

        Good comment Tod. I agree. Uber not only missed an opportunity to get a bunch of good publicity by offering rides at a loss, their actions reinforced the negative impression they’ve created for themselves. Sure, there is a narrow analysis under which they did the economically correct thing by raising prices, and there’s narrow analysis under which they did the normatively correct thing as well. But on a broader analysis they shot themselves in the foot. Again.Report

      • Avatar Tod Kelly says:

        @j-r Yeah, I get that.

        My point is that one of the flaws I see a lot (and hear a lot, on talk radio) is the idea that when people get any with a corporation for doing X and decide they don’t wan’t to buy their product or service anymore, that this is somehow people being foolish and not allowing the free market to work.

        @michael-drew Really? Huh. I’ve always been taught that it is as important (and in some cases, more important) than the actual product or service you sell.

        @saul-degraw Is that true about the Ayn Rand bit? I did not know this. If it is (or even if it isn’t, but that’s the public perception) then it’s something they are going to have to deal with.

        @stillwater Exactly.Report

      • Avatar Chris says:

        The people who are less likely to use Uber in the future than they were prior to this simply don’t recognize that Uber understands the free market better than they.Report

      • Avatar Jim Heffman says:

        The problem is that Uber wants to be ubiquitous, but they also want to be an unregulated private company.

        Which, as the phone companies have long known, is really not something you can do.

        If you want to set yourself up as a viable alternative to owning your own car, then you have to accept that there will be times when people get into situations where they absolutely need to be in a car right away–and, if you’re taking advantage of that (or even seem to be taking advantage) then you’ll have problems convincing people that your unregulated private activity is acceptable.

        Verizon does not suddenly start charging triple fees for cell phone calls when there’s an emergency.

        That said, you might not be able to make a cell phone call at all if network demand is too high.

        That also said, it’s not as though Verizon would bank the money from surge pricing and use it to build out a network that wouldn’t have outages.Report

      • Avatar j r says:

        The problem is that Uber wants to be ubiquitous, but they also want to be an unregulated private company.

        I don’t know how true that is. Uber and AirBnB and Lyft and everyone else, pretty much want to turn a profit and become a successful company. If the existing interests in any given city were not so keen at blocking sharing services for fear of their own profits falling, it’s likely that Uber et al would be more than willing to submit to any existing regulatory structure that allowed them to operate profitably.Report

      • Avatar James Hanley says:

        There are 4 distinct questions running through this page.

        1. In general, does price surging actually have the effect it’s supporters claim?

        2. Assuming it does, is the sum of its total effects ethically positive?

        3. Did it work in this case?

        4. Assuming it has the effects it’s supporters claim, is it a wise or foolish decision for a business?

        I would submit that these questions have to be addressed separately, and not muddled together.

        (Posting this as a response to Tod’s comment is not intended to imply that Tod had muddled them in his comment.)Report

      • Avatar Michael Drew says:

        @tod-kelly

        Not sure about your puzzlement. PR important? Of course! “PR capital“? I’ve just never heard the term before, is all. From your context, it sounds like basically what I hear being referred to as “brand” or “reputation,” but again, I just haven’t heard the term so I’m curious about it.Report

      • Avatar Chris says:

        Unfortunately, 1 and 3 are questions only Uber can answer, and if the answer is that it doesn’t work as it’s supposed to, or didn’t in this case, Uber has no motivation whatsoever to do so.Report

      • Avatar James Hanley says:

        The people who are less likely to use Uber in the future than they were prior to this simply don’t recognize that Uber understands the free market better than they.

        Or perhaps they don’t understand that they’re demanding that someone else cover the cost of their need/desire, rather than have to bear it themselves.

        Speaking of ethics…Report

      • Avatar Chris says:

        I was highlighting Tod’s point, that regardless of whether Uber understands supply and demand, a failure to understand that their short-term decisions may cost them revenue long term is a failure of market understanding.Report

      • Avatar James Hanley says:

        Chris,

        #1 is a theoretical question–lots of folks other than Uber can answer it.

        #3 is probably researchable from outside Uber, but, yes, they can certainly answer it with the least effort. It would be interesting to know the answer, and if it’s “no, it didn’t work,” to discover why (with my seat-of-the-pants and probably all-too-obvious hypothesis being that Uber drivers were as scared as everyone else, although that could just mean a greater price surge was needed).Report

      • Avatar James Hanley says:

        Chris,

        Sorry, I wasn’t really criticizing your point, just riffing off it I’m still thinking about the OP’s placement of ethics on one side and markets on the other. (And so probably created the same muddle I just warned against.)Report

      • Avatar Chris says:

        Which one’s a “theoretical question”? I mean, they’re both obviously empirical questions with theoretical implications, but I’m not sure what “theoretical question” means in this context, so I might be missing something you’re getting at.

        I took #1 to be referring to Uber specifically, and as such it is an empirical question about the effect of Uber’s surge pricing. There’s no theoretical reason, is there, to believe that surge pricing will work in every domain, is there? I mean, if there were, we wouldn’t need Uber at all, as you note, and we’d already know the answer to the question anyway.

        And Uber has the data: they know how many drivers are online at any time, and they know what their demand is. No one else does, because their data is proprietary. So no one else can answer the empirical questions, particularly the one about this particular instance.Report

      • Avatar Chris says:

        No worries. I’m not sure what the ethical question is here, even. I mean, if we were in a situation in which getting out of that area was truly life or death (it wasn’t, even if people felt it was), Uber was the only or best way out (it wasn’t the former, and I’m not sure it was the latter), and Uber’s surge pricing got people killed who could have lived had Uber both increased supply and maintained its non-surge prices, then someone could probably make the case that Uber acted unethically, even if acting ethically would have involved sacrifice (some might argue that acting ethically always does). However, none of that was the case, and this appears to be a case of Uber shitting and stepping back in it, not by surging prices, but by acting as though they were doing people a favor when they did. Now, it might be the case that some people got rides who otherwise wouldn’t, but a.) they paid for those rides, so obviously they weren’t being done a favor, and b.) saying “We’re doing ya’ll a favor by raising prices drastically in a time of crisis” is just stupid PR regardless of whether a few people got rides who wouldn’t have without the price raise.Report

      • Avatar Saul Degraw says:

        @tod-kelly

        One thing that I’ve noticed recently is that there is a percentage of the population that seems to thrive and succeed when the market or whatever else is completely chaotic and anarchistic. Tech 2.0 seems to embrace this with the idea of the cult of disruption and that they are committing positive goods by ignoring current regulations and promoting the sharing economy. People on the left seem to think that the sharing economy is just another word for a race to the bottom substenance economy and it will not make us richer or help pay the rent:

        https://www.jacobinmag.com/2014/09/against-sharing/

        “Uber is part of a new wave of corporations that make up what’s called the “sharing economy.” The premise is seductive in its simplicity: people have skills, and customers want services. Silicon Valley plays matchmaker, churning out apps that pair workers with work. Now, anyone can rent out an apartment with AirBnB, become a cabbie through Uber, or clean houses using Homejoy.

        But under the guise of innovation and progress, companies are stripping away worker protections, pushing down wages, and flouting government regulations. At its core, the sharing economy is a scheme to shift risk from companies to workers, discourage labor organizing, and ensure that capitalists can reap huge profits with low fixed costs.

        There’s nothing innovative or new about this business model. Uber is just capitalism, in its most naked form.”Report

      • Avatar James Hanley says:

        Which one’s a “theoretical question”?

        My bad. I meant #1 as “in theory, does price surging produce more supply?” Obviously that’s not what I wrote. What I did write is actually a better question–the theory’s not really in doubt, but how generally it holds in cases of sudden demand increases–not just Uber’s–matters. Sorry for the confusion.

        There’s no theoretical reason, is there, to believe that surge pricing will work in every domain, is there?

        Hmm, I’m shy of making absolutist claims, but I think there’s reason to believe it probably does except in some really unusual cases offering some very distinct characteristics that would thwart the normal supply/demand relationship. We’re not talking about Veblen goods obviously, so what other unusual characteristic would you suggest might hold in some cases?

        < i>I mean, if there were, we wouldn’t need Uber at all, as you note,

        1. I don’t think I noted that.
        2. I don’t follow. Uber was the case of price surging working, the only transport service, probably, that could immediately raise fates, so I’m not sure how “there’s reason to believe price surging always works in every domain obviates the need for Uber (or something like it).

        And Uber has the data: they know how many drivers are online at any time, and they know what their demand is. No one else does, because their data is proprietary. So no one else can answer the empirical questions, particularly the one about this particular instance.

        You’re a social scientist; you could devise a research design to figure this out.Report

      • Avatar Will Truman says:

        Capitalism in its most naked form has, more than once, allowed me to see my extended family. I cannot leave the dog alone for days at a time, and kennels are backed up around the holidays for obvious reasons.

        So I go on DogVacay and voila, I have someone to take care of my dog.

        But this is terrible, of course, because there are kennels that are licensed for our collective benefit and DogVacay, the host, and myself are all greedily subverting the system for such trivial concerns as spending Thanksgiving and Christmas with extended family instead of hanging around the house.

        Capitalism in its most naked form indeed.Report

      • Avatar James Hanley says:

        One thing that I’ve noticed recently is that there is a percentage of the population that seems to thrive and succeed when the market or whatever else is completely chaotic and anarchistic.

        Creative destruction: Schumpeter.
        The nature of markets is to be anarchistic (no top-down organization), but that’s not the same as chaotic, and I’d argue these markets are much less chaotic than appears to folks like you and me.

        But under the guise of innovation and progress, companies are stripping away worker protections, pushing down wages, and flouting government regulations. At its core, the sharing economy is a scheme to shift risk from companies to workers, discourage labor organizing, and ensure that capitalists can reap huge profits with low fixed costs.

        Markets are for the purpose of satisfying customers, not workers.

        You know, I’m taking a trip to NYC soon, and I almost rented a place through Air B n B. It didn’t work out, but the person renting it had just moved to another city, had someone else taking over the ease in a few months, and was trying to cover some of her rent until then.

        You make it sound like she’s being exploited. She sounded like a smart entrepreneurial personal.

        That screed might just be a bit overbroad–it lumps all those folks into a single class deprived of any agency.Report

      • Avatar Chris says:

        Here’s what I suspect we see in most cases with Uber’s surge pricing:

        In Austin, the downtown bars close at 2 am. So at 2:01 am on Saturday and Sunday mornings, the demand for Uber rides suddenly spikes. This almost always results in surge pricing (on days when downtown is even businer than usual, like Halloween, it can result in a $12 ride becoming a $300 ride!). The drivers know this, of course, so at 1:55 there are likely very few Uber drivers who are logged in and listing themselves as available. In fact, I’d bet that at 1:55, maybe even at 1:30, there is a fair amount of surge pricing, just not 2:01 surge pricing, because drivers are all waiting for the bigger surge. This means Uber’s prices spike drastically at 2:01, and a bunch of Uber drivers who were sitting downtown waiting for the spike log in.

        Unless Uber has procedures in place to prevent this sort of withholding of supply in order to artificially inflate the supply:demand ratio and therefore cause huge surge pricing spikes. Perhaps they do? Does anyone know?

        Technically this is supply and demand, of course, but it still doesn’t feel theoretically kosher, right?Report

      • Avatar Kazzy says:

        @chris

        I wonder if it’d be possible to give a higher payout to drivers who’ve been logged in longer. So everyone benefits from the surge — thereby ensuring that supply is sufficient — but those who are not “gaming the system” so to speak benefit more. If you’ve been giving rides all night and stick around for the late night surge, bully to you. If you wait it out, you still make a nice piece of change, but not as much as the other guy who’s hustling.Report

      • Avatar Chris says:

        Kazzy, that makes sense, but the surge does not last very long. It’s likely over by 2:30 or so, certainly by 2:45. So you can get in a few rides at most. If you’re out on a pre-surge ride when the surge price hits, you’re likely going to lost money. So, unless the surge wages for drives who’ve remained logged in are a hell of a lot higher, it’s likely that the incentives would still result in most drivers staying offline until 2:01.

        The price changes are seriously dramatic. You can get a ride from downtown to a home 5-10 miles away (that encompasses most of the city core) for a few bucks at 1:30 am, but at 2:05 am it very well might cost you over $100, and during a big event — party holidays, festivals, Formula 1, whatever — it can cost you hundreds. So drivers are making many, many times more money for surge fares than they are for pre-surge fares, and have no incentive to take pre-surge fares when they know a surge is coming soon.Report

      • Avatar Will Truman says:

        Yet another government regulation failure being blamed on private industry! The problem here is that all bars must close at 2:00.

        (I’m not exactly joking, but my tongue is in my cheek. If that makes sense.)Report

      • Avatar Chris says:

        Yeah, I’m not saying it’s a failure of private industry so much as a, let’s say heterogenous variable that can make Uber’s market behavior vary from otherwise sound supply-and-demand models/functions. And it’s not merely an issue of government regulation. Uber drivers have access to the internet, so they have some sense of when, say, Formula 1 events are going to end. Even if they don’t know the precise time, when the time gets close, there will likely be many who gamble on what time it will end and stop being available for rides at a certain point, causing a drop in supply that will only be accounted for when the prices surge enough that it’s clear the event is out and they can make a bunch of money (relative to non-surge times) really quickly.

        Seriously, I’d bet that if you go to any big event in any city, you’ll find a bunch of cars sitting around or circling that are occupied by Uber drivers that are offline, just before the event ends. Unless, that is, Uber has some way of dealing with the predictability of demand surges.Report

      • Avatar j r says:

        Unless, that is, Uber has some way of dealing with the predictability of demand surges.

        My guess is that Uber likely has some sort of shift requirements for its drivers to make sure that there is always some level of supply. That is just a guess thought.

        By the way, this:

        I’m not sure what the ethical question is here, even. I mean, if we were in a situation in which getting out of that area was truly life or death (it wasn’t, even if people felt it was), Uber was the only or best way out (it wasn’t the former, and I’m not sure it was the latter), and Uber’s surge pricing got people killed who could have lived had Uber both increased supply and maintained its non-surge prices, then someone could probably make the case that Uber acted unethically, even if acting ethically would have involved sacrifice (some might argue that acting ethically always does). However, none of that was the case, and this appears to be a case of Uber shitting and stepping back in it, not by surging prices, but by acting as though they were doing people a favor when they did.

        just about sums up it. I wish that @saul-degraw had encapsulated this in the initial post. It’s a much better starting point for a conversation about both Uber’s actions and the economics/ethics of the sharing economy and surge pricing.Report

      • Avatar Kimmi says:

        jr,
        I can assure you that they do no such thing.
        It’s still more reliable than getting a taxi round here.Report

      • Avatar Kolohe says:

        “. Uber not only missed an opportunity to get a bunch of good publicity by offering rides at a loss”

        They wouldn’t have been able to build up any PR capital, unless, maybe, and a big maybe they were giving them away for free.

        Scenario 1: They maintain a normal rush hour price schedule and/or discount all of them, but don’t draw attention to it. Result: No one notices and no one cares.

        Scenario 2: They maintain a normal rush hour price schedule and/or discount all of them, and *do* draw attention to it. Result: Everyone criticizes them for tacky promotion in the wake of tragedy, a la Spaghetti-O’s Pearl Harbor.Report

      • Avatar James Hanley says:

        @chris

        You’re forgetting that consumers can think, learn from experience, and plan ahead.Report

      • Avatar Chris says:

        Consumers think? You’ve obviously never been to Sixth Street on a Friday night!

        Seriously though, the predictable price spike is a real thing. What I’m ignoring, to an extent, is that their pricing is dynamic, so the rapid increase in the number of drivers will quickly reduce prices. What I suspect, though, is that it won’t reduce prices enough to keep waiting for the surge from being the optimal play.Report

      • Avatar James Hanley says:

        Chris,
        I didn’t say it wasn’t real. I said people can learn and plan. If the price spike is common knowledge–which it soon will be if it’s not now–then consumers aren’t getting ripped off because they know what’s up and can figure out how to respond. If they don’t plan after learning, then they’re signaling their continued willingness to pay. Complaining about that is like complaining about long lines outside a retail store on Black Friday.Report

      • Avatar Chris says:

        Not complaining, just describing.Report

      • Avatar Brandon Berg says:

        @chris The drivers know this, of course, so at 1:55 there are likely very few Uber drivers who are logged in and listing themselves as available. In fact, I’d bet that at 1:55, maybe even at 1:30, there is a fair amount of surge pricing, just not 2:01 surge pricing, because drivers are all waiting for the bigger surge. This means Uber’s prices spike drastically at 2:01, and a bunch of Uber drivers who were sitting downtown waiting for the spike log in.

        If this is correct, it strikes me as a problem with Uber’s surge pricing algorithm not being smooth enough, not a problem with surge pricing in general. That is, the pricing function should take into account the fact that by picking up a passenger at 1:55 AM, a driver is forsaking the opportunity to pick up a passenger at 2:00 AM for a significantly higher price.

        This problem could be solved—and for all I know already is—with a more sophisticated algorithm that predicts future demand by analyzing past demand, and pricing the predicted demand for the near (next hour or so) future into current rates. This kind of thing is pretty standard in finance, where expectations of future changes in supply and/or demand for an asset are factored into the current price.

        Whether Uber’s algorithms are actually there yet, I have no idea. I mean, I assume they’re not stupid, and it seems feasible, but I’m not entirely sure how complicated it would be.Report

      • Avatar Brandon Berg says:

        Actually, maybe it doesn’t even need to predict future demand. Maybe they could just base prices on the combination of the number of drivers logged in and number of passengers seeking rides at that exact moment. That seems like it might work out reasonably well, but I haven’t fully thought it through.Report

      • Avatar Mike Schilling says:

        Why is there any prediction at all? Allow drivers to bid for jobs and let the market do its job.Report

      • Avatar Stillwater says:

        Mike, I agree. Personally, that’s where I think the whole venture will end up. Or should end up. That or flat rate/fixed-tiered pricing. Once competition emerges the whole Uber model will get blown up, seems to me.Report

      • Avatar Chris says:

        Brandon, remember there has to be lag in the pricing, because a rapid drop in pricing soon after a surge would discourage drivers from responding to surge prices in the future. In other words, the surge wouldn’t increase supply like it’s supposed to.

        I assume Uber has ways of dealing with this, but it’s probably not in the pricing algorithm. Which is sort of my point.Report

      • Avatar Will Truman says:

        Having individual bidding systems is probably too far off the complication scale. Even Uber wants some price reliability.

        I could see them (or a competitor) having more success with a more reliably priced tiered system. Not flat rate, but based more on time of day based on aggregate likelihood. If they can load balance.

        Does anyone know how Lyft differs, if at all?Report

      • Avatar Stillwater says:

        I dunno Will. It seems easy in theory to write software that enters bid driver prices to a customer over a certain time frame and let the customer decide which fair he wants to pay. Just a few more lines of code, afterall. The reason Uner wouldn’t want to do this is because their model (apparently!) is based on demand only. Not supply. They have no incentive – yet – to revise the model.Report

      • Avatar Mike Schilling says:

        Once competition emerges the whole Uber model will get blown up,

        Surely you mean “disrupted”.Report

    • Avatar Mo says:

      @j-r I would not that there are two industries that change prices based on demand and have been doing it for a long time, airlines and hotels. Based on what airlines and hotels do and what Uber does, it appears that the former has learned something over decades of experience that the latter is learning. You can shift prices a bit to account for demand, but it really, really pisses off your customers once you leave a certain range. At that point, shortages are superior because you are not playing a one shot game with your customers, but a multiple run game. Also, those industries do something that Uber doesn’t do and they lower prices off peak. I also doubt that Uber would have done this were they not in a middle of an atrocious run of bad press (they didn’t do this during other states of emergency in other places).

      The problem with the “let prices sort it out” is that it assumes a customer base of homo economicus rather than homo sapiens. (And I say this as someone generally supportive of dynamic pricing).Report

      • Avatar Kimmi says:

        Uber, unlike hotels and airplanes, can always say “if you don’t like the pricing, take the city bus.” (I’m not counting Amtrak as an alternative to airplanes, simply because it can’t run on time — though the price of oil may change that)Report

      • Avatar Mo says:

        There’s only one hotel/airline? The comparison is not Uber and hotels or airplanes the proper comparison is Uber and Starwood or Delta.Report

  5. Avatar LWA says:

    Are we assuming that the best way to move people around in emergency situations is the private market?Report

    • Avatar Michael Drew says:

      It’s not really a comparative question. You’ll inevitably have both, unless you stand in the way of one of them, and why would you do that? Why would the private market not be a plus-up to the aim of moving people away from a dangerous area in an emergency situation over and above whatever the government can provide, plus whatever altruistic efforts are going on to help as well?Report

    • Avatar Will Truman says:

      It seems to me that surge pricing is particularly optimal at a time like this because it keeps Uber’s drivers out there. This isn’t even a case of trying to conserve a limited resource, like price gouging. How much Uber drivers are paid is in some sort of relation to how much they are paid to be there.

      Should we create additional scarcity just for the sake of “fairness”? Uber was asked to either do this or eat the cost themselves. Either way, paying drivers extra in a case like this seems like a no-brainer. So if you’re not actually desiring for fewer people to be able to find rides at all, I don’t see how people aren’t mostly just demanding that Uber spend money for others’ benefit.Report

      • Avatar Will Truman says:

        That should have been a general response and not a response to LWA in particular.

        Though LWA does actually seem to believe that the optimal thing is for people to have less transportation as they wait for the government to respond.Report

      • Avatar LWA says:

        Not so, and counterintuitively I am not opposed to Uber’s surge pricing here.

        It depends on what we are trying to achieve and what thebest way to do it is.

        Is this like a hurricane, where we need to evacuate everyone to save their lives?

        Or is this just a case where we want people to back away from the scene, and some people opt to leave the city entirely?

        In other words, is what Uber is offering an essential service, or a consumer convenience that we can do without? Is it more like basic health care or more like a boob job?Report

      • Avatar Saul Degraw says:

        @will-truman

        Are we sure that it gets drivers on the road?

        My question is really not about which is the correct response. I am more interested in why there is a seemingly unbridgeable divide between the pro and anti price-surging camps and the failure to comprehend where the other side is coming from. Both sides do have points and there is a reason why I consider myself a mixed-market guy when it comes to economics. I just Capitalism and the profit motive for a decent amount or many things. I don’t trust it for all things and some things should simply be above the profit motive especially when it comes to legal rights, access to the courts and legal system, and healthcare.

        Price Surging during a terrorist attack or an emergency situation does not impress me morally or ethically. I am further not impressed because a decent amount (but not all) of the defenders of price surging tend to be very big jerks about it. Uber is especially has an asshole problem as do many tech 2.0 businesses. They remind me of some kids I used to do government club with in high school, these kids were seriously able to say stuff like “The problem with fascism is that the right kind of people don’t get put in charge.” The right kind of people being the guy saying such quotes of course. This is somewhat forgivable at 15 or 16 but ceases to be forgivable after you are 18 or 19 if that.Report

      • Avatar Michael Drew says:

        I think it’s legitimate to fear that a greater profile for private firms in emergency response could allow policy makers to be a bit less aggressive in responding with services that won’t cost the poor a relative arm-and-a-leg in order to be provided with safety and relief in emergencies – or could give ideologues an argument about why the government should hesitate to provide such services.

        But the response to that is to make the affirmative case for government action in these scenarios, not question whether the private sector can make a contribution (even if that’s by moving out affluent highest bidders out first, which indeed is never going to look good or sit well with people as a contribution, even though it is).

        I guess in that sense it actually is not wrong for LWA to ask whether we’re assuming that the best way to move people around in emergency situations is the private market, because while I don’t think people here are, some people could be, and I agree it would be wrong to do so.Report

      • Avatar Kazzy says:

        @will-truman

        This makes me think of incentives offered in struggling school districts to attract teachers. Would people object to this if it got more/more talented teachers into failing schools?Report

      • Avatar Will Truman says:

        Saul, when I took calls for the satellite company, they offered people extra money (sometimes a lot of extra money) to entice people to come to work. I think they did this because it encouraged people to work on a day that they would otherwise have off.

        I don’t believe it would convince people to necessarily sign up to become Uber drivers for the occasion. But as an “all hands on deck” sort of thing? Convincing people who otherwise might have taken a couple people to keep working? Yeah, I think monetary incentives matter.

        I don’t have any problem whatsoever with paying people extra to show up when you need more people. Logistically, ethically, or morally. Even if people defending the notion are sometimes jerks.Report

      • Avatar Jim Heffman says:

        “Are we sure that it gets drivers on the road?”

        That’s what I’d really like to know. Uber could push back on this whole thing by showing the number of active drivers before, during, and after the surge price was in effect. Also the number of rides, which would address complaints about the market pricing people out; if the rides-per-driver ratio stays the same or goes up, then Uber has a good argument that surge pricing is necessary because it’s allowing the market to clear.Report

  6. Avatar Damon says:

    What has “morals and ethics” ever had anything to do with demand and supply?

    Now as to a terrorist attack, you may rest assured that I follow the “being chased by a bear” maxim. I don’t have to be faster than the bear, just faster than you. If that means slashing your hamstring and leave you for a snack, rest assured I’ll tell your wife and kids you died well.Report

    • Avatar Saul Degraw says:

      Because humans are social creatures and everything we do has to do with morals and ethics. As much as the economists would like to exempt their field from morality and ethics, it cannot be done.Report

      • Avatar Damon says:

        Human behavior may be ethical and or moral, but markets, and demand and supply curves, are not humans. They are the mathematical translations of that behavior. They have no innate morality or ethics. They just are. Nor are they tainted by the underlying motivations of those who created them.Report

      • Avatar Road Scholar says:

        The Naturalistic Fallacy in all its glory.Report

      • Avatar Mo says:

        @road-scholar Is it the Naturalistic Fallacy to recognize and adapt to human nature? That seems to be more about recognizing the playing field and adapting policies accordingly (for a more sinister version of this, think freemium games like Candy Crush or Farmville). Heck, that’s one of the biggest critiques of communism. “It works on paper, but doesn’t work with human nature.”Report

    • Avatar North says:

      Of course if the other person is a rationalist like you Damon they will also attempt to disable you at the same time and as you both devote your energies to disabling each other the bear likely catches and kills you both. Ah prisoners dilemmas.Report

    • Avatar James Hanley says:

      Damon,

      See my comment below. Morals and ethics may not be the motivators in a market transaction, but market outcomes are part of the overall ethical structure of society, so supply and demand have a lot to do with ethics.Report

      • Avatar Kimmi says:

        So, to pull a real question here: What do you think about the King of Saudi Arabia taking the opportunity to undercut his competition and drive them out of business? [Note: I understand that this has broader “war” implications, and I’d like to leave them out of this question.]Report

      • Avatar Kolohe says:

        The House of Saud needs to maintain five thousand princelings neck deep in Benzes to keep political stability more than the United States needs to maintain good blue collar jobs in North Dakota to keep political stability.Report

  7. Avatar Kazzy says:

    I had a friend once tell me that you never want to be in the business of needs, only wants. This didn’t make sense. “If people need something, you have a guaranteed customer base.” “Sure,” he responded. “But you’re going to be regulated.”

    While some people may be firmly in the “No regulations ever” camp, I’m sure most of the rest of us* would agree that needs can be most justifiably regulated and/or justify greater regulation than wants. The question then becomes what is a need and what is a want. Unfortunately, this is a very hard question to answer. Especially since the answer for a particular item/service can change — either over great periods of time (e.g., internet/cell phone access increasingly being seen as a need) or more acutely (e.g., Uber service may be a want most of the time but during a situation wherein quick transport out of a dangerous area is necessary, it could become a need).

    * This came off more dismissive of these folks than I meant it. I simply wanted to make clear that some people are going to object to regulation inherently and thus this way of thinking is unlikely to appeal to them.Report

    • Avatar Tod Kelly says:

      “Sure,” he responded. “But you’re going to be regulated.”

      As someone who bought his house selling things people needed, here’s a point your friend (and most people) never stop to consider:

      So are all of your competitors.Report

      • Avatar Kazzy says:

        A fair counter, @tod-kelly . To our credit, I believe we were in high school or early in our college career when we had this conversation.

        However, I think the broader point still stands. You can absolutely be successful selling needs. But it might be harder doing so while working in a regulated market place than an unregulated market place. Of course, I might just be pulling that out of my ass.Report

      • Avatar LWA says:

        @kazzy
        I guess that means there isn’t much money in the highly regulated fields of law, medicine, or banking? That the real money is in the unregulated worlds of avant-garde theater and poetry?Report

      • Avatar Tod Kelly says:

        @kazzy Think of all the occupations you can think of that you associate with being obscenely wealthy. (FTR, here are the ones I automatically think of: Banking, stocks and commodities trading, energy/oil baron, commercial insurance, telecommunications, pharmaceuticals, transportation manufacturers, aerospace and defense contractors.)

        Now think of all the occupations people do that almost always pay terrible wages but people do because they love those occupations. (Again, off the top of my head, I’m thinking writer, actor, musician, mime, truck driver…)

        Now ask yourself, which of those two groups is heavily regulated?

        The notion that heavily regulated industry = industry that can’t make money is largely a myth.Report

      • Avatar Jim Heffman says:

        It’s harder to make huge profits, but easier to just muddle along staying in business at the same level.Report

      • Avatar Kazzy says:

        Very fair points, @tod-kelly and @lwa . I should clarify my position just a tad before ultimately putting my tail between my legs.

        My argument is not that you can’t make money in a regulated market. You prove that definitively you can. My argument is that when one offers a good or service that is deemed a *need*, however we define that, and which is regulated in such a way as to guarantee access to the masses, it is harder to make money. Not impossible. But harder.

        And yet even there I might be wrong.Report

      • Avatar Damon says:

        Heavily regulated industries also engage in regulatory capture so, in a sense, control their own destinies. By maximizing the barriers to entry, they in a large way, become monopolies-ish, thus increasing their wealth and power. A nice circle.Report

      • Avatar Kimmi says:

        Kazzy,
        oh, it all depends on You! If you’re a scammer, a marketteer, someone who can swindle a fish out of water — then you want to sell what people Want, rather than what they need. Everyone already knows what they need.

        If, however, you’re one of those dour and dreary STEM folks, who couldn’t talk a thirsty camel into drinking out of a brakish stream, well…. you want to be in the business of what people need. It’s easier and simpler.Report

      • Avatar Tod Kelly says:

        In that, I think it’s just a question of preference.

        Because of my career-industry, I tend to look at your friend’s and your question from this point of view:

        Would I rather sell commercial insurance to companies that *have* to purchase it every year, or life insurance to people who may or may not want it?

        For me, it’s a no-brainer. If rates go up — or if the government puts a new tax on my product — I would rather be selling something someone *has* to buy, knowing that if my prices are going up thanks to rates or taxes, so are my competitors’. That seems much better to me than selling life insurance, where I have to convince people that it’s worth it and then might be screwed if rates jump too high one year.

        Likewise, I’d rather be selling commercial real estate to a company that has to have a location for their factory than I would sell second homes or time shares for people who don’t need a pre-paid vacation place to stay, but might want one.

        But as I said, as to which you’d rather sell — well, that’s more personal preference thing.Report

      • Avatar Kazzy says:

        That was my line of thinking initially, @tod-kelly . I imagine the preferences might dictate different paths and outcomes. The “need” path probably has a higher floor but lower ceiling once one has established him/herself in the market. The “want” path probably has a lower floor and higher ceiling. It’d be hard to do what Facebook did while selling commercial insurance. But for every Facebook, there’s a MySpace. Probably hundreds or thousands of MySpaces, actually. I doubt the failure rate is as high in those other fields.

        But, yea, I’m barking up the wrong tree here.Report

      • @tod-kelly

        “(Again, off the top of my head, I’m thinking writer, actor, musician, mime, truck driver…)”

        Not to dismiss your general point, but my understanding is that truck driving is very heavily regulated. (But maybe I’m wrong. If so, Road Scholar–or anyone else who knows–might jump in and correct me.)Report

  8. Avatar North says:

    First off I think the terrorist attack / Uber thing is not really equivalent to genuine disaster pricing in that it’s mostly pretty small.

    With regards to disaster pricing in general I think Jesse hit the basic point on the head: how much premium are you willing to pay to ensure impartial distribution? Which is better? 10 units of disaster relief impartially distributed or 15 units of disaser relief going to those willing to pay to get it? What if the gap is only 2? What if the gap is 10 or 20?

    Of course impartial distribution has its own drawbacks. Are we distributing this resource wisely? A person may be willing to stand in a queue for plywood for windows if they can buy it cheap but only the ones who really believe they need plywood will try and buy it if the price is dear.Report

    • Avatar Saul Degraw says:

      I would be open to the government refunding people X amount during price surging situations like Hurricane Sandy but I would want it to be a quick refund.Report

      • Avatar LWA says:

        Being the hard-core socialist that I am, I am going to advocate right here, right now, that we form a state- no, wait- Federal agency, that manages emergency services, and provides direct assistance for essential services like evacuation, water, power and first aid.

        Yeah, you heard me.Report

      • Avatar North says:

        Uh don’t we have one of those?Report

      • Avatar Jaybird says:

        A better one. One run by Top Men this time.Report

      • Avatar Stillwater says:

        I have to say that despite all the local griping the federal/state response to the Lyons flood was pretty impressive. Hickenlooper bargained with the Feds to expedite funds, folks were on the scene pronto, they had the town’s utilities up and running in a few weeks, as was road construction and etc. Sure, there was a downside dealing with FEMA (they permanently rezoned whole swaths of town), but that seems incidental to the effectiveness of the response.Report

      • Avatar Stillwater says:

        And they rezoned in a way that libertarians would appreciate: to require private, rather than public, flood insurance.Report

      • Avatar Jim Heffman says:

        I kinda think libertarians would take issue at the “require” part of that.Report

      • Avatar Stillwater says:

        Jim, Heffman,

        Yes, you’re right about that. The requirement was based on two things. The first was as a condition on taking FEMA money to repair flood damage: if you took the cash, you had to get flood insurance. The second was wrt zoning and such: they effectively put the entire river corridor into the flood plane, which means that future mortgages will most likely have to be insured against flood damage. All of this stuff is designed to wean the public off the fed’s long standing policy of bailing out folks who live in flood plains. The legislative change occurred under Clinton and has only slowly taken effect (incident by incident, so to speak).

        Here’s a linky:

        http://www.fema.gov/media-library-data/20130726-1749-25045-2092/95buletn.pdfReport

    • Avatar Michael Cain says:

      …to ensure impartial distribution?

      Define impartial distribution, please. To make that easier, let’s use the example of 4×8-foot sheets of plywood a couple of days before the hurricane arrives. My perception is that available supply divided by total demand would work out to everyone getting a small fraction of a sheet. Clearly, that does no one any good. What kind of other things go into impartial? Limits on how many sheets can be purchased? Requirements to show that the plywood you’re buying matches your windows (ie, you’re not going to resell at a profit)?

      I don’t live in hurricane country. Can someone who does answer the question as to whether chains like Home Depot strip their plywood stocks in other areas and truck it into the hurricane’s path because of the windfall profits? Do third parties do it?Report

      • Avatar North says:

        Well yes, I touched on how complicated “impartial” actually gets briefly towards the end but felt that going down that rabbit hole would detract from my point.

        That point being if you allow a market then more emergency supplies will be available than if you slap a price ceiling on it.Report

      • Avatar Saul Degraw says:

        @north

        We already have markets.

        No one seems to be addressing a point I raised down to Will below or was trying to address in the main post.

        There is seemingly an innate human reaction against price gouging/surging. It strikes us in our guts as fundamentally unfair and wrong. I don’t necessarily think that this gut reaction is wrong.Report

      • Avatar Saul Degraw says:

        And because I don’t find the innate reaction against price gouging to be wrong, I don’t think that laws against price surging are inherently bad or misplaced.Report

      • Avatar LeeEsq says:

        @saul-degraw, economists don’t care about innate human reactions.Report

      • Avatar Stillwater says:

        Lee,

        How ’bout responding to incentives? Is that innate? Phrase it how you want to, but the idea that people respond to incentives is innate.Report

      • Avatar LWA says:

        Price gouging/ surging is ethical or unethical depending on circumstances;

        The basic premise is that all humans possess dignity, and their lives have equal worth; so essential services and life/ safety concerns are to be distributed to all equally, while consumer goods can be ethically rationed by price. If essential services have to be rationed, price is not an ethical deciding factor.

        Which is why I was asking how essential the Uber services were; what happened to those left behind? Were the drowned or shot, or were they merely inconvenienced?Report

      • Avatar North says:

        @Saul Degraw Yeah people have innate reactions against things that are against their singular narrow interests in any point. People feel an innate negative reaction against paying for some expensive object they want. People certainly feel an innate negative reaction against having to pay a lot for some normally inexpensive object that suddenly everyone wants.Report

    • Avatar gingergene says:

      I think another factor is the likely outcome of not getting a “unit of distaster relief”. For instance, in this current example, people were voluntarily leaving the area as a precautionary measure. Those who didn’t or weren’t able to leave were inconvienenced and probably at least a little scared, but ultimately physically unharmed. In the case of a hurricane or a tornado, the effect of not being able to leave might be severe injury or death. I can see people being more willing to accept inequality of distribution in the former case but less so in the latter.

      IOW, people might be ok with surge pricing for plywood (worst case outcome for the have-nots is property damage), but not for drinking water (worst case outcome is disease and/or death). I think that even if I *knew* that it would maximize the number of people who had access to it, if I saw someone refusing drinking water to people during a disaster because they couldn’t afford it, I would be sorely tempted to resort to extra-legal means for distributing that person’s water supply.Report

      • Avatar Kimmi says:

        gingergene,
        People left New Orleans with piles of crap (including pets) rather than take their neighbors. The more people who make it out, the less issues the rest of the folks have (including having to ration the scavenged food/water).Report

  9. Avatar James Hanley says:

    The price surgers tend to bang up and down that people just simply don’t understand economics by opposing price surging but isn’t there an argument that economics is not everything and there are valid moral and ethical considerations that should override economics in certain circumstances?

    OK, let’s talk ethics. What’s our ethical goal in this case? Get as many people out of the danger area as fast as possible, even if it means treating people inequitably? Or treat everyone equitably, even if it means getting people out of the danger area more slowly? Assuming the inequities are not too great (“we’re going to use these folks as a human shield so these folks can get out), the first strikes me as superior.

    Now the purpose of the price surge was to draw in supply. What that means–assuming it worked in practice–was not just that rich people got out faster than non-rich people, but that the rich weren’t taking up as many seats in the pre-Uber-surge total transportation supply, thus making more seats available in that supply, allowing the non-rich people also to get out faster.

    Is that not an ethically desirable outcome? Is it acceptable to get some Ritchie’s out quicker than the non-richies if it means the non-richies (at least some of them) also get out faster than they otherwise would have? Perhaps not (although I think so), but doesn’t a good analysis require taking that into consideration?

    One of the fundamental mistakes I see is in the repeated contrast between moral/ethical considerations and markets. Markets create outcomes that can be examined as ethical/moral outcomes, and while they will not always be so, neither will they always be ethically/morally objectionable. You can’t do good ethical/moral analysis if you begin with an ethics vs. market framing–you’ve already biased the outcome. You have to give serious critical thought to whether the market outcomes are ethically desirable, and to do that you have to dig deeper into the market effects, so you’re accounting for all it’s effects, not just that one that–standing in isolation from all others–strikes you as undesirable in and of itself.

    Or speaking more generally about price surging (thinking about plywood after hurricanes, etc.), I’m not aware that hoarding is considered ethical behavior, but price surging is a strong deterrent to hoarding. I’m not aware that price-surging in the resale market is ethically desirable, but a simple ban on retailers increasing prices could simply produce that outcome, achieving no net improvement.

    The price surgers tend to bang up and down that people just simply don’t understand economics

    Well, yes. If folks don’t get that markets, like all human organizations, are ethical systems, not just something which can be opposed to ethics, I think the price surgers are right. If people are going to look at one aspect of a market in isolation without considering its whole effects, again I’d say they’re right. I know it’s hard for all of us to recognize the gaps in our knowledge, but it’s easy for the initiated to recognize others’ gaps, just as you would recognize gaps in a layperson’s legal knowledge. The price surgers aren’t just saying that to be mean, or because they’re uninterested in ethics, but because the arguments of the anti-surgers nearly always reveal the actual gaps in their knowledge. Those gaps aren’t evident to the anti-surgers because–like all of us, most of the time–they aren’t aware of what they don’t know (in the normal case we become aware of what we don’t know only after we begin to study a subject intensively).Report

    • Avatar Damon says:

      Good points. See my comments above re ethics.Report

      • Avatar James Hanley says:

        @Damon,

        I agree that curves are not ethical things, and that the morality of decisionmaking in the market does is frequently disconnected from, and irrelevant to, the value of the outcome. It was those outcomes’ ethical values that I was focusing on. So I don’t think we’re very far apart.Report

    • Avatar Jim Heffman says:

      “What that means–assuming it worked in practice–was not just that rich people got out faster than non-rich people, but that the rich weren’t taking up as many seats in the pre-Uber-surge total transportation supply, thus making more seats available in that supply, allowing the non-rich people also to get out faster.”

      The assumption here is that the “pre-Uber-surge total transportation supply” had not been depressed by the existence of Uber.

      That is, you’re assuming that there was only a small number of people who had earlier said “I don’t need to take a car because I can just take an Uber hire instead of dealing with driving and parking”.

      And sure, we can reply “well duh, those people should have factored the risk of an Uber price surge into their travel plans”. But the counter-reply is “do we know enough about the probability of a surge, or the likely degree of a surge, to be able to realistically estimate that risk?”Report

    • Avatar trizzlor says:

      @james-hanley : “Now the purpose of the price surge was to draw in supply.

      I think this is the crux of the question: was the purpose of the surge to increase supply or to increase profits for Uber far above their usual take. If it’s the latter, then Uber has made a business decision to profit off the stress and desperation (whether real or imagined) of people in an emergency. We shouldn’t expect Uber to be a charity, but I have a hard time rationalizing taking advantage of someone’s unexpected bad luck for extra profit. That’s especially true in this situation, where hoarding is likely a non-issue.Report

      • Avatar Stillwater says:

        Excellent trizz. That’s also exactly what I think the issue is (tho you said it much more concisely than I could have) irrespective of which side you take on it. For my part, I tend to think that the price surge was entirely the latter which produced (if it in fact did!) a secondary effect of drawing in more supply (which also increases revenues).Report

      • Avatar James Hanley says:

        Trizzlor,

        As Damkn noted, the mitivation doesn’t matter. As Adam Smith famously said, it ain’t from benevolence that the brewer provides your beer. What matters is the outcome. Focusing on whether people are providing services out of money desire or out of the goodness of their heart. I understand where that concern comes from, but in all truth I think it’s a short-sighted approach that deceives us and leads us to misguided ethical claims.Report

      • Avatar Saul Degraw says:

        I think motivation matters depending on the product and situation. Brewing beer and other consumer goods is an area where I think a complete free market is largely good for people. There has always been regulation of common carriers and services that are necessary as described above.Report

      • Avatar trizzlor says:

        But I am talking about outcomes. Let’s say I’m selling batteries during a power outage and I have three options:

        1. Jack up the prices to X. Some of my batteries don’t get sold (i.e. available power goes wasted) but I make a huge profit.
        2. Jack up the prices to Y. All of my batteries get sold (i.e. no available power is wasted) and I make a smaller (but unusually high) profit.
        3. Jack up the prices to Y and reinvest my profits into getting more batteries. More power is distributed but I don’t make an unusually high profit.

        That’s the order in which I would rank the goodness of a seller, with (1) being substantially ungood as to warrant criticism.Report

      • Avatar James Hanley says:

        Another way of viewing this is that the value of the product has increased significantly, and that value is going to be distributed in some proportion between seller and buyer. Your approach says the ethical outcome is that the value gets distributed as consumer surplus, or more specifically, that seller must make no claim on that extra value so that the consumer can claim it all. I’m not persuaded. I think you’re using a traditional approach that has misled us in our thinking for far too long.Report

      • Avatar James Hanley says:

        There has always been regulation of common carriers and services that are necessary as described above.

        I recommend Hernando de Soto’s The Othet Path. He has a chapter on buses in, iirc, Lima, Peru. The officially approved and regulated bus services are regularly outcompeted by illegal bus services that provide more regularity and lower fares. That is, the unregulated sector of their common carrier industry serves people’ needs better than the regulated sector does.

        I’ll also repeat, as a former cab driver, that cab regulation serves the cab industry, not consumers.

        When you trot out the “always been regulated” line, it’s clear that you’re using the existence of regulations as evidence of the regulations’ justification. But we’re talking about industries that are very cartelish, so the regulations ought to be viewed skeptically, with a rebuttable presumption that they are in fact protective regulations.

        I’m not the guy who argues that there should be no regulations, but in my experience a lot of people view regulation with far too much naïveté.Report

      • Avatar Saul Degraw says:

        @james-hanley

        Sarcasm and Pot Shots are not exactly the best rhetorical devices to convince me to come over to your side.Report

      • Avatar Stillwater says:

        Saul,

        Funny you should say that since I was just about to commend James for expressing himself without sarcasm. I think his point is pretty damn solid.Report

      • Avatar Saul Degraw says:

        @stillwater

        Commented to the wrong point. The comment was above as a response to Jaybird. I didn’t even respond to Jaybird’s question.Report

      • Avatar James Hanley says:

        Saul, what do you think is sarcasm and potshots there? I’m serious as the plague.

        If you want my sarcasm, that’s down at the bottom of the page, in response to JB, but not here.Report

      • Avatar James Hanley says:

        Oh, ok, that was sarcastic. But only kind of. Because JB and Gabriel made damn good points.

        Nonsarcastically, I think you are morally wrong. I think you are wrong in a way that would put lives at risk by deterring increased services at a time of need. Saying people shouldn’t have to pay extra when in need is meaningless when the consequence is that they can’t get the service at all–“at least nobody gouged them” is not going to be a satisfactory moral argument in response.

        Again, you began this by phrasing it as morality/ethics vs. markets. But I refuse to accept that biased approach that began by tilting the playing field in your direction. Markets are morally neutral, but they create a variety of outcomes, some of them morally desirable. By setting markets against morality, you make it impossible to fairly analyze a market outcome as a moral one. And in thus case it means, IMO, that you are asserting a morally inferior position.Report

      • Avatar Kimmi says:

        Trizz and James,
        I do agree that the seller should be able to recoup some of the extra profit… I do think that, in the case of large disasters, some amount of “For Charity” would be nice — both as a PR stunt, and because… “you didn’t really set up your business to need that money”

        I might think a bit differently if I wasn’t considering Uber as a quasi-monopolistic company.

        Our taxi system (however regulated) doesn’t work around here. You call, they say they’ll come — and they don’t. Our mayor did about 6 calls to try and get a cab, and they didn’t show up once (note: he didn’t id himself as the mayor, obviously).Report

      • Avatar Stillwater says:

        I’m gonna revise the view I expressed up there about the ethics of the price spike. First, price surges are part of the business model. Second, it appears that they had a policy in place preventing price surges from taking effect during emergencies (or whatever) in the US, a policy which hadn’t extended to other countries. Third, it appears that they did in fact cap prices after about an hour. Fourth, the internal logic of the company appears to be that increasing the price leads to more supply, which in turn can satisfy more demand for rides, so I got that wrong when I said that the price surge was driven merely by a desire for profits (I learned this from reading the Uber tweet about Sydney Saul linked to which he thought was decisive evidence of the firm’s exploitative intentions).

        At this point, if I had a criticism of Uber it’d be based on whether or not there is a feedback loop within their own system by which price isn’t determined exclusively by demand, but also by available supply. This gets to Chris’ point made elsewhere on this thread. But I’m not sure even that criticism would carry much weight since (as far as I can tell) Uber requires customers to actively agree to the specific surge-based price before completing the service agreement. It’s not like customers don’t understand what they’re on the hook for. Then again, if a competing service enters the game we’d theoretically see surge prices go down. Or not, depending on whether people continue to agree to pay them.

        All the other stuff about Uber destroying this or that doesn’t make much sense to me.Report

      • Avatar Stillwater says:

        Also, credit to Hanley (primarily, others too) for making clear, dispassionate arguments supporting his views. I’ll admit I didn’t have many views going into this, tho, other than Uber being a sorta PR fiasco lately.Report

      • Avatar trizzlor says:

        @james-hanley : Your approach says the ethical outcome is that the value gets distributed as consumer surplus, or more specifically, that seller must make no claim on that extra value so that the consumer can claim it all. I’m not persuaded.

        Yes, this is a good way of summarizing it. And to reiterate, I’m talking about the market in the specific case of an emergency, where the buyer is under duress. Simply based on outcomes, scenario (1) means fewer people are getting the emergency supplies that they need so that the seller can make an unusual profit: the seller has himself become the hoarder. An active decision by the seller with a short-term monopoly to limit the emergency goods that get distributed increases suffering and increases the disparity of suffering. I see no way in which such a decision could be considered ethical.

        Getting away from outcomes, the simple premise is that individuals should alleviate the suffering of others if they have the opportunity to do so without much additional stress. In what way does this mislead our thinking?Report

      • Avatar James Hanley says:

        An active decision by the seller with a short-term monopoly to limit the emergency goods that get distributed

        That is factually wrong as a description of what happens.

        Note first that Uber’s decision was purposefully intended to increase the distribution of the service in a time of emergency.

        Note second that in the classic plywood/hurricane example, the total distribution of the plywood is at worst the same, and by the increased price may actually increase the supply (it becomes cost effective to send trucks with more plywood diverted from other stores). All that may change in terms of distribution is how broad or narrow is the segment of the population which shares in the distribution, and the price increase actually serves to broaden that segment by limiting consumers’ desire to hoard/overpurchase.

        So I think you’re actually basing your ethical conclusions on an empirically inaccurate interpretation of the process.Report

      • Avatar trizzlor says:

        I was still referring to the example I had outlined in this comment (https://ordinary-times.com/blog/2014/12/16/serious-tuesday-question-price-surging-edition#comment-964078), where one extreme option is that a seller explicitly chooses to set the price of a product so high that some goes unsold (but not profits are higher). I.e. the plywood store sets it’s prices to $1 million so that only Mr. Rich gives in and buys plywood and the rest sits on shelves. Would you consider that ethical?

        As for Uber, do we actually have a sense of how much of the additional surge premium goes to drivers (to motivate supply) and how much goes to Uber. Let’s say 100% of the surge prices went to Uber, is that substantially different from the $1M plywood scenario? Is there any % where what Uber is doing is no longer ethical?Report

      • Avatar Roger says:

        Trizzlor’s initial comment framing of the issue contains the following flaws:

        1). He assumed somewhat of a zero sum dynamic. Economics is based upon intended win win interactions. By aligning higher profit with increasing demand both sides win. The system works by incentivizing profit to those meeting the demands of the emergency. If you reject this framing, economics won’t make sense.

        2nd, and even more importantly, he is missing the hidden losers in this. And those losers are consumers.

        From an economic perspective what happens is that in the absence of surge pricing — as Saul mentioned — demand and supply signals are out of whack and consumers don’t properly consider alternatives, and suppliers don’t bring forth additional supply. The net result is fewer positive sum interactions occur and they don’t go to those of highest demand considering the dynamically available alternatives. Value is destroyed from the perspective of consumers and producers (drivers and the firm).

        With surge pricing more positive sum interactions occur benefitting drivers, firms and consumers, though the value added on net, though positive, is less to the consumer still lucky enough to get a ride.

        The unseen part is that those not familiar with economics see only the higher net fares and assume consumers lost. Not true. What they don’t see is all the consumers who did not get a ride because demand failed to increase. Consumers are empirically harmed on net.

        However it goes from a seen harm of a lower win/win rather than the unseen harm of a win/win not realized.

        The real conflict here — the hidden one — is between consumers getting a ride at an artificially low rate and those not getting one at all. The non riders are the hidden losers which those untrained in economics or business don’t see.Report

      • Avatar Will Truman says:

        @trizzlor

        Mo, I believe, said that Uber’s take is 20% across the board, which if true means that drivers capture 80% of the surge premium.Report

      • Avatar James Hanley says:

        Trizzlor,

        OK, that’s fair. But can we specify that you’re talking about an unusual case?

        As to Uber and how much of the surcharge it shares with drivers, I what matters is whether they successfully incentivized drivers to increase supply. It’s not about the proportion they share, but about whether it’s sufficient to invoke the desired response. And if it doesn’t, then Uber’s not selling rides and not profiting as desired. That should work itself out.Report

      • Avatar trizzlor says:

        @james-hanley : OK, that’s fair. But can we specify that you’re talking about an unusual case?

        Yes of course. I was trying to establish an extreme scenario where hoarding/price-gouging is clearly unethical (or at least unseemly) on one end, a disaster relief charity on the other, and see where Uber falls in that spectrum. My preferred Uber policy would have been the following: during an emergency, surge pricing goes into effect to motivate supply, but Uber sets their share at a fixed amount corresponding to their average daily take (with the remainder going to the driver). I think this is sort of what Kimmi was proposing with “your business wasn’t set up to make money this way”. With such a policy, Uber isn’t making crazy surplus just because a bunch of people are trapped under a hail of bullets, and the price/supply motivators function even more smoothly because they’ve limited their cut as a middle-man. That seems to me the kind of car-service we should encourage Uber to become.

        @roger

        It’s true I’m assuming that there are profit-motivated scenarios which are not win-win, but we are talking about an emergency after all, where market confounders – irrational buyer behavior, a highly non-uniform distribution of initial resources, monopolies, etc. – can become the norm. It seems to me like you and James are making an explicit assumption that the product cannot be sold at an artificially *high* rate, or that the market will eventually work everything out. If we were discussing a simulation that could be run infinite times, where transactions are frictionless, and new competitors can always come in to offer a more efficient service then I would agree with you. And even as a standard policy I don’t have any ill will towards Uber for optimizing these transactions however they see fit. But in an emergency those assumptions go out the window, and we have a responsibility to motivate businesses in the direction of win-win transactions.

        I’ll be honest that my opinion in this case is colored by the experience of living in the East Village during the Sandy blackout, where a bodega around the corner hiked their prices on all essential items to $20, with stuff mostly sitting on shelves and people periodically running in when they really needed something and swallowing the hike. I pretty much saw that kind of behavior as parasitic and so I’m suspicious of arguments that the market just tends to work things out during such situations.Report

      • Avatar James Hanley says:

        Trizzlor,

        Got it. I’m okay with all that.Report

      • Avatar Roger says:

        @trizzlor

        It basically comes down to whether higher prices would immediately encourage more rides and better conservation of rides (consumers considering alternative solutions). If so, then consumers are better off at the higher price. It optimizes the number rides, each of which is considered a value to both the producer and consumer.

        Consider it this way… Each ride fulfilled solves a problem. If the higher demand is converted into more rides, then more problems are solved for humanity.

        It is critical though to consider all three parties. Two of which are obvious and one of which is unseen. The first party is the producers. The second is people who get rides. If in times of emergency, the only effect of higher prices was more profit for the same number of rides it would be kind of perverse. This is what most people see. It seems like a Zero sum game where producers benefit in times of emergency.

        An economist would encourage us to see the critical unseen third party. This is the group of people who would have gotten rides at the higher price. The higher price creates value on net for these people.

        Über drivers respond to higher prices. This creates more rides and total utility for consumers is optimized.

        That said, they still seem like dicks to those not trained in economics. Thus it is still stupid. The “selfish” thing for uber to do would be to take the bad PR to heart and cap surge pricing TO THE NET DETRIMENT OF CONSUMERS. Until they learn, consumers can benefit even as they get pissed.

        Ironic huh?Report

      • Avatar trizzlor says:

        If in times of emergency, the only effect of higher prices was more profit for the same number of rides it would be kind of perverse.

        I largely agree, and my point is really that Uber hasn’t really demonstrated that some amount of the perverse behavior isn’t happening. Uber is a middle-man and they can control how much overhead cost gets pulled out of the fee, which does not benefit the buyer or the driver except insomuch as it allows Uber to function.

        As you said, one way to convince the public that Uber isn’t profiteering is to put caps on the surge, which will indeed be to the detriment of the buyer. Another way would be to educate the customer, and show that surge pricing got more cabs out there than on an average day *and* that Uber didn’t make a killing relative to their usual load, it all went to the drivers. Uber chose the easier option that is also likely to be more problematic in the future. But then, this seems to be their MO in general.Report

      • Avatar Roger says:

        Yeah, if it was my company we would put caps on the surge pricing.Report

  10. “Economics” as a whole is not ideological, and economists will, to my knowledge, typically agree that other considerations can/should come into play. Seriously – there are no shortage of economists of any given political stripe, and on normative questions they disagree with each other strongly. There are boatloads of economic policy questions where there is nothing even remotely approaching a consensus amongst economists, and where you can predict their positions entirely by knowing their political stripe.

    But there are also questions where economists almost entirely agree. On those questions, they agree not because they all agree or disagree with the goals of a particular policy – some do, some don’t. Instead, they agree because, even where they have a different normative view of the policy, they acknowledge that the policy will or will not achieve its stated goals.

    In the case of the price gouging legislation here, the economists responding to the survey make clear that many (though by no means all) agree with the goal of the legislation. Their problem with it, in other words, is not ideological.

    Instead, the economists who sympathized with the goals of the legislation made clear that their objection is that this specific legislation did not solve the problems it purports to solve, that it is too vaguely worded, and could potentially make the problems it purports to solve even worse. The vague wording seemed to be particularly problematic. Also, other economists seemed to point out that the legislation was largely unnecessary, perhaps in light of the very research that the NPR piece references – in other words, their objection was that fairness concerns are largely already incorporated into the market such that suppliers concerned with their future business would not (and in fact do not) significantly increase prices, at least if the emergency was going to be relatively short-lived. Where things get hairy is when an emergency lasts a relatively long period of time – about which more in a second.

    Usually, anti-price gouging legislation is much more limited, specific, and defined, and I would wager quite a bit that you’d get a lot more diversity of opinion amongst economists on such legislation. The law in Connecticut prior to this particular piece of legislation was itself that energy supplies and certain designated necessities could not be price-gouged during an emergency, and that any price increase at all (other than an increase in cost to the retailer) was illegal during that emergency. Many other states, NJ included, have long had similar items on which price increases are specifically restricted during declared emergencies (IIRC, NJ specifically prohibits increases over 10%).

    The legislation that was the subject of the article you link covered just about any consumer item, had an amorphous definition of what would constitute an excessive price increase, and – importantly – also covered services, not just goods.

    In an emergency lasting any significant length of time or with long-lasting post-emergency effects, that’s a recipe for making a lot of stuff a lot worse, and quite possibly making fairness problems even worse.

    Price controls over the long run mean short supplies. They mean that potential suppliers will not get into the business, nor will suppliers expand their supply of a product/service if doing so would mean decreasing their production of something with a greater profit margin.

    Over the long run, it means some individuals will take advantage of first-come, first-served policies to hoard goods, which they will then sell on the black market at seriously gouged prices. The traditional solution to this problem in emergencies is government rationing aimed at restricting demand; that has its own problems, but in particular emergencies you can probably get at least some economists to go along with it on fairness grounds. But the CT proposal was so vague and broad as to even make government rationing impossible outside of the few items that already could be rationed under the preexisting law.

    In other words, the reason economists so overwhelmingly opposed the legislation was that it would have done little or nothing to address fairness concerns (or may even have made them worse), despite its intent to the contrary, even as it would have done much to prevent enough supplies to enter the market to either permit people to get through the emergency, or to expedite the end of the emergency.

    The objection was not that fairness should play no part at all in the equation, nor is it the case that economists as a group reflexively object to any considerations of fairness.

    The objection was that the best intentions in the world do not mean that a policy will achieve its goals.

    One last thing – your assumption that economists as a group opposed the Bloomberg “soda” tax is almost certainly incorrect, particularly to the extent you’re saying that the objection would have been that the tax would not have “worked.” In fact, economists were pretty much split on the issue of whether it would have “worked” – http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_b8XjwMayOL0r58V

    I’m also not sure how you can say that the soda tax would have worked on similar logic as the rationale for opposing broad price-gouging laws. Yes, it relied on principles of supply and demand, but that’s true of any market regulation. The reason some economists, in addition to objecting to the soda tax on personal, normative grounds, thought it wouldn’t have achieved its stated goal was that they believed people would have largely just substituted the calories from decreased soda consumption with other calories, not that they believed soda consumption specifically wouldn’t decrease – I assure you that every economist would have agreed that, on net, a soda tax would reduce soda consumption.

    The arguments for and against the Connecticut law would have no parallels to the question of whether allowing price gouging would just mean consumers substituted the goods/services in question – indeed, part of the purpose for prohibiting price gouging on such a broad basis is to prevent consumers from even having to think about finding substitutes, even though the actual effect of such a law would, in an emergency of any significant length, be to make the need to find substitutes even greater.Report

  11. Avatar Saul Degraw says:

    @will-truman

    Moving downthread. I am not completely against the sharing economy but I do think there is a lot of self-serving ideology from the sites and that for most people involved are not going to have to worry about driving down wages. Driving down wages is considered a natural good by those whose wealth increases by driving down wages.

    http://thebillfold.com/2014/10/my-day-interviewing-for-the-service-economy-startup-from-hell/

    Here is another example of general sharing economy startup cluelessness.

    Another critique about Tech 2.0 is that most of the companies are not really producing tech. They are putting out aps that solve the social and laziness problems of well-to-do and usually urbanite 20 or 30 somethings. I know a woman who graduate from an Ivy League MBA program fairly recently and remarked that most elite MBA start-ups revolve around the social and laziness problems of well to do 20 and 30 somethings because most MBA grads are well-to-do 20 and 30 somethings. They grew up in houses where having a regular cleaning done by outsiders is the norm. I think I’ve shocked some people by saying I do my own cleaning instead of hiring an outside maid. I’ve been shocked when people tell me that their start-ups offer cleaning services as an employment perk.

    I think the same thing that I discussed with North re rental control applies to discussion about the sharing economy as well. It does represent serious downward mobility for people and it seems like those who benefit the most from the sharing economy are already relatively well off to extremely well-off and for everyone else it is a tough draw. There are often seemingly large overalps between people who argue for the sharing economy and people who dismiss concerns of income inequality and stagnant wages:

    http://www.nytimes.com/2014/11/30/magazine/the-business-tycoons-of-airbnb.html?_r=0Report

    • Avatar Kimmi says:

      Saul,
      you haven’t worked at a job where you don’t go home for a month, have you?
      In that case, cleaning services are about as useful as “we will feed you” in encouraging people to “Fix the Bugs, Dammit!”

      Tech 2.0 sounds like what happens when you get MBAs asking what is the internet Good For.

      Actual technology is still happening, and is pretty much booming. But it doesn’t hire people, it hires robots.Report

    • Avatar j r says:

      I am not completely against the sharing economy but I do think there is a lot of self-serving ideology from the sites and that for most people involved are not going to have to worry about driving down wages.

      Says the guy who posted links from pandodaily and Jacobin.Report

      • Avatar James Hanley says:

        I have to second this. Is our author claiming that folks on his side don’t have a lot of self-serving ideology driving their arguments?Report

      • Avatar Michael Drew says:

        He wouldn’t need to be denying it to be right about sharing economy business owners. Leftists ideologues tend to not pose as not being ideological (even if they won’t cop to being blinded by their ideology), I think Saul would say, whereas I think Saul’s contention is that these business owners tend to pose as non-ideological pragmatist business owners just doing what makes good common, business, and consumer sense.Report

      • Avatar Michael Drew says:

        …As the Meta-Ideology Wars rage on.Report

    • Avatar North says:

      That really feels like Bull Saul, sorry. Expensive unpleasant cabs are good for poor people? I don’t see it. Having to grovel and fight over a handful of rent controlled apartments or pray to win the apartment lottery is good for poor people? I just don’t see it.

      If we’re talking about self-interest let’s consider your average educated thoughtful middle class liberal or intelligent educated but low income liberal student, classic supporters of rent control. Both have decent shots at gaining employment in one of the rent control regulatory bodies, both of them have the literacy and language skills necessary to navigate through the regulatory steps necessary to maximize their odds of benefitting from rent control and both of them are the most likely to have the network connections necessary to obtain a sublease or handoff of a rent controlled unit. Of all the people rent control fishes over (and it fishes over a lot of people) liberals are probably the least fished over of the group. The wealthy? They don’t care, they’ll just pay whatever price for an uncontrolled unit (or six) and convert them into a luxury residence (and that’s more housing off the market, hooray). The poor, the poorly educated, those who have English as a second language and those who don’t have a grandmother or Great Aunt who got in on the rent control in the fifties? They’re the ones who’re commuting an hour in from Jersey or whatever.Report

      • This, this, this. Except that you should have said “expensive, unpleasant cabs that refuse to go anywhere near minority neighborhoods are good for poor people?”

        And in what way is lowering the barriers to entry so that people can make a supplemental, part-time income during hours of their own choosing bad for poor people or cause downward mobility?Report

      • Avatar Kimmi says:

        Mark,
        When you’re making about $1.00 an hour, I gotta ask — is it worth it?
        UBER drivers routinely make under minimum wage…
        (note: most of them around here are doing it for a lark).

        I have NO confidence that UBER is going to go into minority neighborhoods either. Or the nasty suburbs.Report

      • Avatar Kolohe says:

        “UBER drivers routinely make under minimum wage…”

        That seems…unlikely. (unless you’re pro-rating dead time, in which case they’re defeating the entire ostensible point of their type of employment)Report

      • Avatar Will Truman says:

        I’m not sure I disagree with Kimmi about minority neighborhoods. That does seem to be a point of concern as drivers have a lot more leeway on where they’ll take fares than cabbies.Report

      • Avatar Saul Degraw says:

        @mark-thompson @north

        Anyone who thinks that the sharing economy really creates lower barriers of entry that really allow more people to get higher incomes and become independent business people is absolutely deluding themselves. It will be nothing more than an even further race to the bottom with more people working multiple jobs on very little sleep or free time while the few with capital connections succeed. The only way to profit from Air B n’ B is if you can do it without need and have access to capital to lease or own multiple dwellings. This simply takes more housing stock off the market. But you know who the real villains are, social workers with 35,000 dollar a year non-profit jobs who managed to get a decent priced apartment or an artist who has resided in her loft for 40 years. Fuck those guys.

        Etsy has not created thousands of people who can support their families from selling crafts on-line. It has created a system where crafts end up usually being made in China or you have amateurs who end up doing it in their free time and underpricing goods which cuts into the ability of people to do it for a living:

        http://www.slate.com/articles/podcasts/slate_money/2014/12/slate_money_on_art_basel_etsy_and_maurice_sendak_s_estate.html

        The reason you see young hipster types driving for Lyft (Uber drivers seem to be those that would normally drive for cab companies in SF) is that they simply don’t have good job options here or anywhere. And I do think that corporations are getting more and more sophisticated about shifting the burden of cost from themselves to their employees. This happens at places like Starbucks that can afford fancy computers that predict low points in the day and you can have a manager tell extra staff to take off early. So a low wage barrista gets the shaft and a huge company saves some money.

        The only people who are going to benefit from the sharing economy are the venture capitalists, the founders and high level employees, and upper-middle class consumers who will now have to pay slightly less for a cleaning service potentially. The cleaners themselves will not benefit and now will also probably be responsible for buying and bringing their own supplies as well.

        I distrust market fanaticism as much as I distrust religious fanaticism. I reject the idea everything must be done to reduce wages as much as possible because it benefits the consumer. Reducing wages does nothing to reduce the cost of necessary things like rent and healthcare which seem to go up, up, and up. So I think all market fanaticism is doing is creating a world in which most people get paid less, a few make a great deal more, and the majority can’t afford the rent or their health insurance payments.

        But hey, people at clubs at 2 A.M. have more ways to get home so the consumer wins, am I right?

        Welcome to the New Gilded Age.Report

      • Avatar Saul Degraw says:

        @north @mark-thompson

        The difference seems to be whether we are talking about what is good for people as consumers or good for people as wage-earners. Right now I am more concerned with what is good for people as wage-earners than as consumers and I don’t think this is incorrect.

        http://www.theatlantic.com/business/archive/2014/12/millennials-arent-saving-money-because-theyre-not-making-money/383338/Report

      • Avatar Saul Degraw says:

        @kolohe

        Probably way more than Kim says but certainly not as high as the companies claim:

        http://www.vox.com/2014/12/17/7402311/lyft-driver-payReport

      • Avatar James Hanley says:

        Why are we wage earners except to be consumers?Report

      • Avatar Michael Drew says:

        unless you’re pro-rating dead time, in which case they’re defeating the entire ostensible point of their type of employment

        This is a basic problem with cab driving. There are times you don’t make jack. You have to be in the car ready to take a call to make money (which I define as work), but there’s no guarantee you’ll get loaded. Of course cabbies frequently don’t clear minimum wage. Other times they do much better.Report

      • Avatar Will Truman says:

        I would note in the case of the OP, “surge pricing” means increasing driver earnings and the expense of rider-consumers.Report

      • Avatar North says:

        And you know we’re deluded because…? If Uber and other sharing apps were not lowering barriers to entry then people would not be getting into the taxi business using Uber. You say it doesn’t, yet we see people doing it. It looks like you are incorrect on this. If people did not find driving for Uber to be worth their time then I strongly suspect they would elect not to drive for Uber. You say it’s not worth it and that people should instead simply not have that employment option yet people out there are electing to do so and appear to wish to do so. You know better presumably but I would assume the people using these new options would have some choice words on your opinion and they’d probably violate the commenting policy.
        • Air BnB turns a couch or a spare bedroom that would otherwise sit unused into a place someone can use at a modest fee. The available sleeping space in any given community thus is increased but you are appalled… why? Because people can’t make a living renting out their couch? So they should be forbidden from doing so? People need more housing so let’s make less housing for people? People need taxi’s so let’s make less taxi service for people? People need cleaning services so let’s make less cleaning service providers for people? I maybe understand the emotion but I completely don’t understand the reason.
        • People taking advantage of rent control are just following their incentives. It’s the people who argue that Congressmen should have sub rate market apartments or that we should create a new landed class of people based on the virtue of them getting onto the rent control wagon at the ground floor or that urban slums and blights and reduced housing stock is a small price to pay to protect those privileged few that constitute a new kind of extra market aristocracy that I don’t understand. Left Liberals used to have unkind words to say about housing systems where you could only get a home based on who you know, not if you can pay; now you want to lie down on the railroad tracks for that kind of system? I don’t understand Saul, sorry. Economists stand in pretty much unified denunciation of rent control but all you have is that sometimes numbers don’t matter? What does; intentions?
        Now there’s stuff that the new tech is doing that seems downright shitty, especially the sophisticated scheduling systems. It’ll be interesting to see how that system stands up as the economy recovers and unemployment declines. If it doesn’t then maybe something may have to be done.
        This isn’t market fanaticism, it’s numeracy. You keep dodging the numbers questions. How much less should society overall get to serve these other goals you have in mind? What is better? Fifty people making ten bucks each or four people making twenty five bucks each? I’d answer the former, you assert the latter because apparently it only matters that four people are making a “living wage” and those other 46 people? They can eat social justice when the revolution comes or something? I just don’t see how throwing in with taxi medallion owners, urban blight and hotel chain executives parses with liberalism in your mind Saul. I don’t get it.
        You also act like lowering prices benefits consumers less than increasing wages. If your dollar buys you more that’s effectively the same as getting a raise; so yes, lower prices for better service helps everyone; not just the rich. In fact considering that the marginal value of a dollar is greater for a poor person lower prices help the rich –considerably less- than they help the poor.Report

      • Avatar James Hanley says:

        Saul,

        That whole screed? There’s a reason I bitch about people talking about economic issues without taking the time to learn the subject, and that encapsulates it perfectly.

        You seem to think you can really understand the economics just from casual observation and reading some left-wing critics who also are predominantly engaging only in casual observation with no real background in economics.

        Do you think people can talk about the law with insight while doing nothing more than reading some media reports of legal proceedings? If so, why’d you waste time on the special training that cost so much? If not, then what makes you think economics is different?

        And let’s not go into that “economics isn’t everything, there’s ethics, too” business, because if you don’t actually understand what’s going on economically then you can’t make an accurate ethical assessment of it–good ethical arguments are not based on impressionistic understandings about what’s going on.

        You can believe whatever you want, of course, but your rock-solid confidence that this is all a slide to hell in a handbasket isn’t persuasive in the least. Chicken Littleism has been a constant refrain from at least the dawn of the industrial era–we’ve been constantly warned that doom is imminent, and yet doom never happens and we’re materially vastly better off than we were, despite ups and downs. It’s like fundamentalist Christians repeatedly predicting that the rapture is upon us…for 2000 years. “But this time it really is doom!” is about as persuasive as “But this time the rapture really is coming!”

        Is doom possible? Sure, but it’s going to come from some catastrophic resource shock or some phenomenally bad policies, not from free-er markets. Thus has it ever been and thus is it likely to ever be.Report

      • Avatar Michael Drew says:

        Will,

        Yeah, the drivers who actually get to the people willing to pay the multiples probably do well that day. That doesn’t mean that Kimmi is wrong that Uber drivers routinely don’t clear MW. That’s not to say on average they don’t make MW; cabbies probably do that too. It means quite often they don’t.Report

      • Avatar Will Truman says:

        My comment was not directly related to Kim’s comment.Report

      • Avatar James Hanley says:

        throwing in with taxi medallion owners

        Taxi medallions don’t even help the drivers much–the firms that own the medallions are the primary beneficiaries of the restricted supply, as they set the price a cabbie pays per day to use the cab.

        It’s a sign of how little understanding of how this market works that someone upset about the business owners benefiting at the employees’ expense implicitly supports a restricted supply system that actually benefits the business owners rather than the employees.

        I hated driving a cab, but I hated the cab company most of all. I swore if I ever drove a cab again I would just be an illegal gypsy cab driver and take my chances with the cops. I wanted an alternative like Uber, so it really rings false to me for someone who’s never been in the business to say Uber’s harming the drivers. I have a suspicion that Saul is taking a wholly legitimate “that’s not for me” position and transmuting it into a “that’s not for anybody, and certainly not for society” position.

        Along the way, he clearly implies that screwing consumers is just fine. That I, as a consumer of taxi services, should be forced to pay more for the service than Jane Doe is willing to offer it to me, so that John Smith can make more funny. So in helping Smith, he’s willing to harm both Doe and Hanley. And that’s the ethical position.Report

      • Avatar Kolohe says:

        From NPR, What it’s like to be an Uber driver

        (apologies if this has been posted already and I missed it)Report

      • Avatar Glyph says:

        I feel bad for Uber drivers ever since they did that deal with Spotify, where passengers get to pick the music playing for the ride.

        I know if it was me, it’d be nothing but that Dominick the Donkey song and “You’re A Mean One, Mr. Grinch” on a loop the whole time.Report

      • Avatar Will Truman says:

        Also, Tim Lee reports what it’s like to be a Lyft driver.Report

      • Avatar Will Truman says:

        Glyph,

        Yeah, that alone would talk me out of being an Uber driver, if I were otherwise so inclined.Report

      • Avatar Jesse Ewiak says:

        @north, the point you’re getting is most people aren’t driving for Uber or renting their bedroom out on AirBnB because they _want_ too, but because they _need_ too. Saul & I would rather have a society where people didn’t need too rent out their spare bedroom or pick up a few shifts on Uber to afford their rent or student loan payment. Even if it means you have to pay $20 extra for a hotel room.

        I have no ill will toward the guy or gal driving for Uber or renting out their spare bedroom. I have the ill will toward the policies of the past 30 years that have created the situation where people have to rent out their bedrooms or drive drunks around to pay the rent.

        As for the “lower prices create better service” argument, so I suppose you’re making the same wage you were ten years ago, right? Or, wait, I get it. You’re special. You deserve a higher wage, but everybody else hasn’t magically proven their worth in the eyes of the almight market and thus, must remain underpaid and rent out their spare bedroom, right?Report

      • Avatar Michael Drew says:

        I would note in the case of the OP, “surge pricing” means increasing driver earnings and the expense of rider-consumers.

        My comment was not directly related to Kim’s comment.

        Everyone understood that fact already. So what were you noting it in regard to?Report

      • Avatar North says:

        @Jesse Ewiak I don’t know how the breakdown is between whether people are renting out their spare bedrooms because they need to or because they wish to. What I don’t understand is how saying these sharing options companies are bad because they provide that option. I certainly don’t understand how anyone would want to stand up for the corporate welfare moochers that’re having their cozy little oligopoly applecart tipped over by it. Do you carry a brief for medallion owners and the Hilton’s?

        As for creating prosperity so that people don’t have to involve themselves in sharing companies? I’m down with that but I don’t see how tilting at the sharing companies and championing rent control helps.

        As for your last paragraph, I don’t think I’m getting your point? Are you arguing that the sharing companies provide lousy service and people are only using them because they’re cheaper? Are you arguing that the sharing companies pay fewer wages to more people and that’s bad? Out of curiosity which do you prefer; fifty people getting ten bucks an hour for wages or four people getting twenty five bucks an hour?Report

      • Avatar Will Truman says:

        @jesse-ewiak Even granting your diagnosis, attacking Uber and Airbnb is attacking a symptom. Not even that, since getting rid of Airbus arguably hurts the person who needs it.

        I know you want to attack the disease but can’t because Republicans and our system of government, but how does going after Uber help?Report

      • Avatar j r says:

        @Jesse Ewiak

        @North the point you’re getting is most people aren’t driving for Uber or renting their bedroom out on AirBnB because they _want_ too, but because they _need_ too. Saul & I would rather have a society where people didn’t need too rent out their spare bedroom or pick up a few shifts on Uber to afford their rent or student loan payment. Even if it means you have to pay $20 extra for a hotel room.

        So, if we all just paid $20 extra for hotel rooms and $10 extra for a shirt at the department store and $5 extra for a cab ride and $2 extra for a fast food meal, our economy would be running at full employment? Is that contention underlying your statement?

        I have no ill will toward the guy or gal driving for Uber or renting out their spare bedroom. I have the ill will toward the policies of the past 30 years that have created the situation where people have to rent out their bedrooms or drive drunks around to pay the rent.

        That’s fine, but explain to me how you make people who have limited choices better off by further limiting their choices?

        ps – I posted this elsewhere in the thread by mistake.Report

      • Avatar Jaybird says:

        explain to me how you make people who have limited choices better off by further limiting their choices?

        Whether they are better off in a meaningful way or in an illusory way is based primarily on my perception of them.

        If I do not see them making choices that I consider to be sub-optimal, I no longer perceive them as not being in need of being better off.Report

      • @saul-degraw If your concern is with the wages of cab drivers, then maybe you should rethink your position:
        http://www.washingtonpost.com/blogs/innovations/wp/2014/05/27/ubers-remarkable-growth-could-end-the-era-of-poorly-paid-cab-drivers/

        I’ve seen some contrary anecdotal claims made to that article, but even those claims acknowledge that it’s no worse than the pre-existing system.

        If the complaint about Etsy is that people aren’t able to make a full-time living selling through it, and that there’s a lot of cheap Chinese stuff on there, well….how is that different from what already existed? How many people, really, were able to make a full time living making crafts 10 years ago? By contrast, how many people are now able to supplement their income a little bit doing something they love who in the past would have had to give that stuff away?

        As for Airbnb? I’d really love to see how an argument can even be made that this is bad for people who put their spaces up. The best argument against Airbnb is that its users don’t pay hotel taxes, which is something that is easily rectified (indeed, I had to pay city taxes when I used it this Spring). You’re talking about a small to very nice supplemental income, depending on where you live, for virtually no work.

        Honestly, the complaint doesn’t seem to be that these services are making things worse. At the very least, you’ve presented no actual numbers to support that claim. Instead, the claim seems to be that these services fail to live up to an unrealistic and idealized vision of a past that never existed.Report

      • Avatar Chris says:

        My brother paid his rent (and some other bills) doing Airbnb for about a year and a half. He finally stopped when he got a permanent job (he was working as a temp, which meant his employment was spotty at times) and after 2 bad experiences: 1.) someone complained about things in were mentioned prominently in the listing (specifically his dog, which is kind of intimidating I gotta say), then refused to pay, which led to dealing with Airbnb on a much more in depth, and less pleasant level, and 2.) despite NO SMOKING being featured prominently in his listing, a lodger decided to smoke on his porch in the middle of the night, and then put the butt into a flower pot, which resulted in the burning of the flower pot, the plant in it, and a small section of the porch. Fortunately the smoker was paying enough attention to put the fire out when it had spread to the porch, but had the home burned down, the costs would have been entirely on my brother, and he decided it wasn’t worth the risk. If he is desperate for money again at some point in the future, he might try it.Report

      • Avatar Kimmi says:

        Kolohe,
        This was what I got — from an UBER driver, in terms of “net money” after factoring in depreciation of cars, gasoline, all that jazz. (that is: under minimum wage). Granted, he was taking fares while on the golf course (so not during evening rushes, I assume).
        http://www.businessinsider.com/uber-drivers-say-theyre-making-less-than-minimum-wage-2014-10
        Enjoy.Report

      • Avatar Kimmi says:

        Mark,
        yeah, the downsides to Air BnB for owners should be easy to understand. It’s like insurance. Generally everything goes well. The times it doesn’t? can be horrid. I can cite some instances about dog crap or cat pee (related to renting), but… this is the same business model.Report

      • Avatar Michael Drew says:

        Broadly I agree that these services probably can’t be consistently worse than cab driving in terms of driver income. Cab driving is just such a crapshoot that it would be really remarkable if somehow the new service was somehow consistently worse.

        It does seem to me that there is a concern about driving down margins for a traditional low-wage employer, leading to lost opportunities for the marginally employed. To me it looks like being an Uber driver actually has higher barriers to entry than does cab driving. You want to be a cab driver, unless you’re in a city with a strict medallion system, pretty much you go down to the cab company, and if they’re looking for drivers, you get your license in order, lease the cab (or whatever the arrangements are), and you’re on your way. You’re basically labor.

        In the stories about success at Uber driving, it looks to me like the people who do well have nice cars – but in any case you need a reliable car of your own of some kind, and a smartphone just to get started. That’s not an option for someone just trying to get on his feet for some reason or another.

        The argument against this is the familiar response to concerns about the eclipse or transplant of traditional employers: consumer benefit/creative destruction, which is fine. But if we’re talking about worker benefits, to me it looks like the issue with Uber is not that drivers don;t do well, but that the bette roof you are coming in, the better you do – that is if you even have the capital it takes to get into it to start out with.Report

      • Avatar Kimmi says:

        Michael,
        Most people buy cars they don’t need, and then treat the car as a sunk cost. I just cited a link about UBER drivers netting less than minimum wage.Report

      • Avatar Michael Drew says:

        Kimmi,

        Right, but people having a tough time of it often have difficulty buying cars they don’t need.

        I’m not really that worried about Uber putting cab companies out of business (though maybe I should be), but it does seem like something that works best for fairly successful people going through transition, etc., not so much a viable option for the truly struggling. Which is great – I’m happy that it works for those people.Report

      • Avatar Saul Degraw says:

        @james-hanley

        I’ve run into people on the net every now and then who seem to think that making everyone study Macro and Micro economics will turn everyone into techno-capitalists. I’m not sure I buy this assumption. But I see your point on needing to know more economics.

        @north

        I’m with @jesse-ewiak, I don’t decry the Uber driver or the Air B n’B host. I decry the system that has let wages and benefits drop for the past thirty years so many people feel the need to pick up extra shifts or rent out their sofa in order to pay the rent or make their health insurance premium because god forbid we ever have anything even slightly approaching universal health care in this country. The ACA is okay but not great.

        I am not necessarily to lower prices but I do think we need to work on policies that increase the chance of allowing people to save more (including higher interest rates on savings accounts) and real and serious pension reform instead of the 401(K) write off which doesn’t seem to work.

        And I do think something needs to be done about systems scheduling but I don’t expect anything to be done considering that the jobs that seem to be coming back are lower-wage jobs or lots of freelancing. Plus for somereason the Obama admin decided to side with Amazon in the wage-case and Sotomayor and Kagan even suggested that the unanimous decision was because the Obama admin decided to side with Amazon. Why they did this, I don’t know.

        @will-truman

        You are correct in your analysis with @jesse-ewiak. I suspect that many people are turned off by tech because they always manage to be rather arrogant and disgusting. I think every decade or two has its group of people who are self-declared “masters of the universe”. In the 1980s, it was young guys on Wall Street. In the mid-aughts, it was young guys on Wall Street again. For us and now it is the tech scene and they always seem to get into issues like why can they afford nice perks for their engineers but the bus drivers are contract workers without benefits? Why does it seem like every week I hear about another tech company that gets hit with a massive race and/or sex discrimination suit? The Uber higher-ups get pushback because they are jerks and seem to think like acting like jerks is a virtue.

        There is a very small percentage of the population that can seemingly earn lots of money in their 20s and early 30s. There is nothing wrong with this in principal but they often seem very unaware about their own economic wealth. Like I said, I’ve shocked people by saying I clean my own apartment instead of getting someone to do it. So I can afford to go out with friends more or I can afford to pay someone 80-90 dollars a week to clean my apartment. There are apparently a good number of youngish San Franciscans who don’t need to make this choice. I am currently kind of seeing a woman who is much more credentialed than me and did the whole consulting and now tech thing. She’s great but when I talk to her about parties and stuff it is a whole different world. I hang out with my friends at moderately priced bars and restaurants. She goes to work parties at places that rich venture capitalists keep as a “party house.” She is sweet and kind. There are lots of guys in tech who are kind of big dicks about going to these parties and having access to a lot of VC. So that is the pushback.Report

      • Avatar Kimmi says:

        Drew,
        it works well for someone falling out of the middle class.
        Take an example: “You were working at a bank and then got let go for being a stupid putz on company time.” — you have a car (many people do in my city), and aren’t terribly employable after that … incident. So you take up UBER.

        Perhaps it looks a little different in NYC or LA, where the car ownership rate is a lot lower.

        Actually, what was I thinking… we’re above LA:
        http://en.wikipedia.org/wiki/List_of_U.S._cities_with_most_households_without_a_car
        wowsa.Report

      • Avatar Michael Drew says:

        Exactly, Kimmi. And nothing wrong with that either, but it’s not really just “Cab driving, but better pay!”Report

      • Avatar James Hanley says:

        I’ve run into people on the net every now and then who seem to think that making everyone study Macro and Micro economics will turn everyone into techno-capitalists.

        Fuck ’em. Don’t listen to them.

        I decry the system

        I think systems should be understood before they’re decried.Report

    • Avatar Damon says:

      That sounds like a typical start up. It was similar to my experiences, although the founder in the article had less experience, and we were started up by some large corporations so there was none of the questionable “harassment”.

      Amanda’s take of it was quite interesting. Loved the “privileged” attitude she copped about Aja’s privilege. But who in the hell doesn’t ask about pay? After all, she needed the money. Suggests an entitled kid but I can’t square that with “worked retail part-time throughout school so I could afford to pay $200/month rent splitting an un-air conditioned house in Atlanta with three other people.” Maybe she’s just angry at his “privilege”.Report

    • Avatar j r says:

      @jesse-ewiak

      @North the point you’re getting is most people aren’t driving for Uber or renting their bedroom out on AirBnB because they _want_ too, but because they _need_ too. Saul & I would rather have a society where people didn’t need too rent out their spare bedroom or pick up a few shifts on Uber to afford their rent or student loan payment. Even if it means you have to pay $20 extra for a hotel room.

      So, if we all just paid $20 extra for hotel rooms and $10 extra for a shirt at the department store and $5 extra for a cab ride and $2 extra for a fast food meal, our economy would be running at full employment? Is that contention underlying this statement?

      I have no ill will toward the guy or gal driving for Uber or renting out their spare bedroom. I have the ill will toward the policies of the past 30 years that have created the situation where people have to rent out their bedrooms or drive drunks around to pay the rent.

      That’s fine, but explain to me how you make people who have limited choices better off by further limiting their choices?Report

  12. Avatar LWA says:

    Speaking of Uber, what are the thoughts about this item from TPM, analyzing its business model?

    http://talkingpointsmemo.com/edblog/understanding-the-economics-of-uber

    I can’t speak to the technical details, but his point #9, that Uber is waging a political war as much as a business enterprise, jumped out at me.
    I can’t recall many businesses whose mission was so closely tied to a political program- one of the reasons we are having this thread today in fact.Report

    • Avatar James Hanley says:

      That’s interesting. I don’t have any idea what to say about it that would sound intelligent, but it deserves the kind of thought that might produce an intelligent (sounding) comment.Report

    • Avatar Michael Drew says:

      That’s quite a tome.

      I wonder whether part of the valuation is just the sense among analysts VC people that, hey these guys were smart enough to come up with and get it valued at $1B+; it stands to reason that even if they can;t get Uber itself, or Uber-as-ride-sharing-business to be worth $18B, if they have access to the capital they’ll probably come up with ways to spin off other businesses that will do that. I.e. it’s just pure speculation on their entrepreneurial acumen, not the potential value of the service itself.Report

    • Avatar Saul DeGraw says:

      That was interesting.

      I really liked the point about how Uber sells the experience over what Amazon did. They would not be the first or last company to do so but it does seem integral to tech 2.0 that you are cool and hip and with it for using Air B n’B, Washio, Uber, Lyft, whatever. Down to the twee pink mustache identification for Lyft.Report

    • Avatar Kimmi says:

      Stillwater,
      Well, unless they feel like bombing the Sauds into oblivion.
      A smart king in Saudi Arabia isn’t just a danger to Russia, of course.
      But, hell, we get Free Money!Report

    • Avatar Tod Kelly says:

      See? This is just another case of the liberal-controlled lamestream Rubles, devaluing themselves even though they know Putin is a better leader than Obama.Report

      • Avatar Tod Kelly says:

        Jokes aside, that’s really scary news. I have a hard time imagining Putin not using really frightening tactics to keep the nationalism going strong enough to keep him in power.Report

      • Avatar Kolohe says:

        I don’t think he necessarily needs to spin up nationalism right now to keep him in power, the next Presidential election isn’t until 2018 and the legislative one (for whatever that’s worth) is in 2016.

        True, he will be blaming stuff on foreigners to deflect attention and blame, but it’s a completely different dynamic than the game he’s played so far. His main claim to legitimacy is that he has brought order forth from the chaos – if things return to chaos on his watch, it’s not the idea of Greater Russia that will save him, it will just be raw police power.Report

      • Avatar Stillwater says:

        Tod,

        Yeah, it’s really bad news. Corey Flintoff of NPR is in Moscow and he just told me that as far as he can tell Russian’s aren’t blaming Putin for any of this and his support in the country remains as strong as ever.

        WHich is makes what you and Kolohe have said doubly scary.Report

      • Avatar North says:

        It’ll work for a while but if oil prices remain low that excuse will peter out in effectiveness in short order.Report

      • Avatar Patrick says:

        Jokes aside, that’s really scary news. I have a hard time imagining Putin not using really frightening tactics to keep the nationalism going strong enough to keep him in power.

        Yes.

        On the other hand, if Russia has one fairly common transferal of power tactic, it’s that the folks with the money and the power get upset when people get in the way of their money, and they usually respond by having the guy getting in the way of their money have a sudden need to retire to a nice place on the Black Sea for health reasons.

        So while it’s scary, it’s also the most reliable indicator that there might be political change in Russia because Putin’s rallying populism doesn’t help the folks who run Gazprom make money. It makes Putin popular with the folks who don’t have much political power in Russia anyway, except through mob tactics.

        If this keeps up, Putin has to change course or purge. And he better decide before the folks who used to be the Politburo resort to putting him in a dacha in the countryside.Report

      • Avatar Kolohe says:

        “On the other hand, if Russia has one fairly common transferal of power tactic, ”

        It seems to me that the one common transfer of power tactic in Russia is that they don’t transfer power that often. The Romanovs ruled for over 300 years, the Ruriks for 750 years before that, the Bolsheviks for over 70, and now Putin for almost 15. The only other people to have ever lead Russia are Yeltsin, Kerensky, and one or two guys that may or may not have had control of the government for less than a year and don’t even rate the two thousand dollar clue in Double Jeopardy.Report

    • Avatar Mike Schilling says:

      I’ve seen the argument made that what destroyed the Soviet Union in the early 90s was none of the usual suspects, but a big drop in oil prices.Report

    • Avatar Mike Schilling says:

      At least the ruble is still gaining against Bitcoin.Report

  13. Avatar Saul Degraw says:

    @gabriel-conroy

    More serous situation:

    Something like a serious Earthquake (SF 1909 or 1989 will do) or an incident that makes it harder to get somewhere. Say a snowstom strands several hundred kids at an elementary school because the roads are in bad shape and everything is going very slowly. Or a terrorist attack that hits a suburb and also takes down a bridge or train station so people have fewer options to get home and check if their families are alright.

    I don’t think we will be applauding uber for their tweeting during either situation or laying praise on price surging.Report

    • Avatar Jaybird says:

      We’ll complain more about the guy who goes in to save someone for 5 bills than the guy who says “I’m not going to go in there”?

      There’s no downside to not going.

      Now there’s no upside to going.Report

      • Avatar Jim Heffman says:

        Do we really want to encourage amateurs with no training to drive commuter automobiles into a natural disaster zone?Report

      • Avatar Glyph says:

        Only if we also outfit them with cameras, for a reality show called CABS.Report

      • Avatar Will Truman says:

        That’s one of the funny things about this. I actually sort of understand the “as a matter of public safety we don’t want drivers going in there” argument more than “paying drivers who go in there extra is wrong” argument.Report

      • Avatar Jaybird says:

        Do we really want to encourage amateurs with no training to drive commuter automobiles into a natural disaster zone?

        How else will we get professionals with tons of experience at driving commuter automobiles into natural disaster zones?Report

      • Avatar Glyph says:

        How else will we get professionals with tons of experience at driving commuter automobiles into natural disaster zones?

        Recruit obsessive Grand Theft Auto players?Report

      • Avatar Jaybird says:

        “How many drops is this for you, Lieutenant?”
        “Thirty-eight… simulated.”Report

      • Avatar Kimmi says:

        Glyph,
        Have you ever been in a car with someone who is attempting to fire missiles at the person trying to pass them?? (note: missiles did not exist — I am not the person who gets into cars that have missiles attached to them).Report

      • Avatar Michael Drew says:

        “paying drivers who go in there extra is wrong” argument

        No one made that argument. No one had a problem with Uber paying the drivers more. It was charging people who could pay high multiples to get them out of a dangerous and being proud enough of that impulse to tweet it out that people had a problem with. And as I’ve been at pains to say, I’m not aware who said it was wrong. It clearly made people uncomfortable and not favorably inclined toward Uber.

        If Uber, as it eventually decided it wanted to, wanted to pay people a lot of money to go in and help, people weren’t going to raise a stink about that, I don’t think. By the way, I didn’t realize this as I commented yesterday, but Uber already had a policy of capping prices during emergencies since the summer (not sure if they surge driver pay in order to help out or not), but it was only in effect in the U.S. So they were on the right track, they just didn’t scale the policy up to their global reach in time for it to do them the good they needed it to do them when the emergency situation that was going to catch people’s attention hit.

        Though I agree with you guys, I’m not 100% without the kind of reservations you guys have about sending individual autos driven by for-profit hacks (technical term) looking for single-person (not always but often) paying riders into evacuation situations, either.Report

      • Avatar Will Truman says:

        I’m sure you’re absolutely right, Mike.Report

    • But I’ll have to reprise my question: you’re asking for something that requires generosity and courage. And the proof of that is in the doing. I don’t know what uber would do in those situations. I don’t know what I would do.

      I do get that you’re aiming your critique at a business model that you believe makes things worse at the margin (to put words into your mouth) when disasters or other bad situations happen. And I suppose I can indeed imagine a scenario where something like surge pricing gives some people the wrong incentive to do the wrong thing. But even then, in those types of situations, doing the right thing requires the type of wherewithal that I, for one, am not confident anyone can say they have ahead of time.Report

    • Avatar James Hanley says:

      I don’t think we will be applauding uber for their tweeting during either situation or laying praise on price surging.

      Who’s “we”?

      The public? Would that prove anything? How deeply has most of the public thought about it? They’ll react emotionally. Sure this “feels” bad, but what does that really tell us?

      Or is “we” intended to include all of us here? Because count me out. If Uber surged its prices and in so doing drew in more drivers and saved more lives, I’d applaud them. A hell of a lot more than I’d applaud someone who didn’t go in to save anyone but instead sat down to write a critique of Uber.

      Is it better somehow if Uber bears the cost themselves? Maybe. But does ethics require that? I haven’t seen anything on this page that looks anything like a serious argument for that. There emotion, insinuation, and assertion, but not what I’d call an actual developed argument.

      I think this whole line of argument falls into my standard screed against moralism. In my revolution, the moralists will be the first to go. 😉Report

      • Avatar Saul Degraw says:

        I think that tech-libertarians talking about the superiority of the free market and no rules system is just as moralizing (and self-serving!)

        We does not mean everyone but I think it can mean many people.

        And yet no one is answering my question. Is there any libertarian who is capable of providing even the slightest critique of Capitalism? What is it that makes libertarians seemingly invincible to any form of doubt?Report

      • Avatar James K says:

        @james-hanley

        In my revolution, the moralists will be the first to go. 😉

        The best part is that no one will be in a position to condemn you for it afterward 😉Report

      • Avatar James Hanley says:

        Is there any libertarian who is capable of providing even the slightest critique of Capitalism? What is it that makes libertarians seemingly invincible to any form of doubt?

        Why would anyone bother to answer it when you begin with such a biased framing?Report

      • Avatar Jaybird says:

        And yet no one is answering my question. Is there any libertarian who is capable of providing even the slightest critique of Capitalism?

        And how come biologists don’t spend more time critiquing sex?Report

      • @saul-degraw

        Is there any libertarian who is capable of providing even the slightest critique of Capitalism?

        Probably anyone who has critiqued regulatory capture, for example. In that, they join, for example, James Weinstein, or Gabriel Kolko.

        Or perhaps by “Capitalism” you meant “free markets”? Here’s my answer: any libertarian who insists that we change “free markets” to “freer markets,” or who admit that the state has a legitimate role in addressing negative externalities, or enforcing contracts, or providing things the market won’t by itself provide. That’s not all libertarians, but it’s a heckuva lot of them.Report

      • Avatar Damon says:

        “Is there any libertarian who is capable of providing even the slightest critique of Capitalism?”

        Do you mean “Capitalism” in the sense of type of markets we have now in the US? If so, that ain’t capitalism, it’s corporatism.

        Or do you free market, Adam Smith, pure free markets, type capitalism?Report

      • Avatar Kimmi says:

        James K,
        no, we’ll just kill him off like every other shmuck without 100 acres, 10 guns, and 9 very good friends.Report

      • Avatar j r says:

        @saul-degraw

        Is there any libertarian who is capable of providing even the slightest critique of Capitalism? What is it that makes libertarians seemingly invincible to any form of doubt?

        There are so many half-formed assumptions baked into those two questions that I am not quite sure where to begin. For one thing, what do you mean when you say “Capitalism?” When I say capitalism, I mean the private ownership of the means of production. Are there grounds to critique that arrangement? Of course there are, but you have not even come close to doing that here. Rather, you’ve made some comments about a situation which actually proves the opposite of your point, a company that voluntarily chose to leave money on the table

        When you say that libertarians are “seemingly invincible” to any form of doubt, I submit that it seems that way to you, because you don’t spend much time reading any actual libertarians. I could be wrong about that, but whenever you link to something that relates to libertarian ideas, it is generally some leftist critiquing those ideas. There is nothing wrong with critiques, but your understanding of libertarianism would probably be enhanced if you went to the primary source material. What would you think of me if I were continually offering critiques of the progressive position based on what I saw on Fox News last night?

        One last thing. You keep talking about moral intuitions and that is a fair thing to do. Why stop there, though? Why is it enough just to say that surge pricing might violate our moral intuitions and let that stand as your argument? You are the big proponent of the liberal arts education. I am assuming that at some point in your own education, you took a philosophy class or some other class that provided a basic understanding of normative ethical theories. Even if you never did, you must have taken some kind of legal ethics class. Why not put that to use and offer a substantive ethical critique?Report

  14. Avatar Jaybird says:

    Here’s a question. You hear that there’s a shooter downtown. Are you (YES YOU) going to drive downtown to help people get away from downtown? Is it more likely that you will say “Oh, I’d better not go downtown then”?

    If you choose the latter, what if I say “would you go downtown and help someone get away from downtown for $200?”

    If you still say no, are you more principled than the guy who says “okay, I’ll risk it for $200”?Report

    • Avatar James Hanley says:

      Yes, because his refusal to help is principled, and he won’t cheapen it by selling it away.Report

      • Avatar Saul Degraw says:

        I got the comment wrong. Mea Culpa.

        If I was called onto help, I would help without asking for a profit motive. If there was an emergency need to volunteer my car to ferry people across the Bay Bridge and the Golden Gate Bridge, I would help.

        And I wouldn’t need surge pricing.Report

      • Avatar James Hanley says:

        You might get shot. No hesitation? If no, my hat’s off to you. I’ve several times been in a situation where getting shot seemed like a real possibility, and I’ve gotten the heck out of there. Would I have gone back in to help someone? Maybe–can any of us know until we’re in that situation?

        But set that aside. Maybe you’re a lot nicer and more generous than others. Does your generosity go any distance toward proving that the Uber driver who only goes in because of surge pricing is unethical/immoral?

        And assume that we do agree they’re unethical/ immoral, what then? If we need them and they aren’t going to be motivated by generosity, do we quit moralizing and let their motivating factors into play so we can get their help? Or do we say this is an absolute moral principle, and if they won’t help for the right reasons we’ll go without their help despite needing it?Report

      • Avatar Jaybird says:

        “If called upon”.

        Do you mean “by someone I recognize as an authority”?

        If so, what were the authorities saying during the crisis? “Stay away from downtown”?

        If that is, in fact, what they were saying (and I’m pretty sure that “shelter in place” is telling people “don’t go downtown”), then we’re talking about a situation where you admit that you would not have deemed yourself called upon in the case we’re talking about.

        Have I gotten that wrong, at all?Report

      • Avatar Patrick says:

        If I was called onto help, I would help without asking for a profit motive. If there was an emergency need to volunteer my car to ferry people across the Bay Bridge and the Golden Gate Bridge, I would help.

        Saul, I like you very much, but this is a very weird comment bordering on nonsense.

        There are entire religious movements calling upon people to give up their worldly interests and go help people. There are folks right now recruiting for Doctors without Borders, Americorps, American Near East Refugee Aid, Catholic Charities, International Medical Corps, etc. etc.

        Figuratively speaking, people are screaming at you all the time to go help folks in need.

        I may be wrong here, but I don’t recall you actually signing up for an ongoing stint.Report

      • Avatar Kimmi says:

        Patrick,
        He may not be, but I currently put a lot of my income towards charity work. (I am rather fortunate in my ability to do so, of course.) I am not going to feel guilty for helping someone smarter and more talented than I am, leverage their intelligence into saving lives around the world — simply because I’m not putting in the work myself.Report

      • Avatar Michael Drew says:

        Patrick,

        Are they screaming for Saul to come someplace and help with an acute emergency in Saul’s city where his car would be of use for a day or so? Because that’s what he’s saying he’d do. That he doesn’t drop his life and join Americorps for a year doesn’t say anything about that.

        Jaybird,

        Let’s say they were not asking for people to come to the area in Sydney to help: let’s say they were asking for people to stay in place. How is that going to be any kind of hindrance against Saul’s inclination not to like surge pricing that sent more people into the area, which is the question at issue?Report

      • Avatar Patrick says:

        Are they screaming for Saul to come someplace and help with an acute emergency in Saul’s city where his car would be of use for a day or so? Because that’s what he’s saying he’d do. That he doesn’t drop his life and join Americorps for a year doesn’t say anything about that.

        Maybe he might if there was price surging.Report

      • Avatar Michael Drew says:

        Irrelevant.Report

      • Avatar Chris says:

        I just imagined a Sci Fi novel in which Uber built a time machine, went back to 1914, and started charging surge prices to ferry reserve soldiers from Paris to the Marne front. This results in a serious drop in demand, Germany winning the First Battle of the Marne (now renamed just The Battle of the Marne), advancing to Paris, and winning the war by early 1915.Report

      • Avatar Will Truman says:

        So what you’re saying is that Uber would have (ultimately) spared us Hitler.Report

      • Avatar Jaybird says:

        How is that going to be any kind of hindrance against Saul’s inclination not to like surge pricing that sent more people into the area, which is the question at issue?

        It seemed to me that Saul’s problem was that the people who went into the area weren’t doing it for free, not that they were doing it against the wishes of the recognized authorities.

        Am I misinterpreting that?Report

      • Avatar Michael Drew says:

        I can’t speak for Saul, of course, but my understanding is that it was not that they were not doing it for free, but that the people who were being transported out were being charged much higher rates for it essentially because of the danger of the situation. Meaning, if Uber wanted to pay drivers to go help in a dangerous situation without charging special rates (or indeed without charging anything, as they ultimately did), Saul wouldn’t have a problem with that. (In truth, to me it’s not clear that Saul has a problem with any of this, and isn’t just exploring the question of why people had the reaction they did to Uber’s actions.)

        Whether he would do it for free came up when others (oh, it was you!) pressed him on whether he thought ti was more principled not to go in at all than to do it for money. He never said he thought that, but when asked, he said he would go downtown if there was a call to do so. (You did basically give him that option by asking if he would be be likely to go, without making clear whether he would actually have reason to believe it would be helpful if he did. So he clarified that if it was made clear it would be helpful and there was a call for people to do it, he would go without need for payment.)

        So then you raised the possibility of what if, in fact, the call was for people not to go. Well, then he wouldn’t have gone. And then, indeed, a bunch of Uber drivers going down there to “help” wouldn’t have been something Saul viewed as a social net good, whether they did it for money or for free.

        We started out with a situation where Saul (perhaps?) viewed the fact that people were being charged a bunch of extra money by basically contractors to get them out of (what they felt was) a dangerous situation with suspicion. But there was at least the presumption that private transport going in and moving people out would be a good thing if it was done at a price to the evacuees Saul was okay with.

        If in fact the public call was for people not to go into the area, but still what was happening was that contractors were defying that call and going in, and then charging fares Saul didn’t like to move people out on to of that, why would that change of context – that the drivers weren’t even helping the situation at least by the authorities’ lights – make Saul dislike those fare rates any less? They’re charging people too much given the context and they’re not even welcome to be moving into the area from the authorities’ perspective to begin with!Report

      • Avatar Jaybird says:

        Well, shouldn’t we ask, then?

        Is the problem that drivers were taking people out of the area despite the recognized authorities asking that people shelter in place?

        Is the problem that rich people were able to pay people to drive them out of danger while poor people couldn’t afford to be driven out of danger?

        Because, honestly, it really seems to me that the problem was the latter and not the former. Maybe we can hammer that out if he explains.Report

      • Avatar Michael Drew says:

        You nailed it! As far as I can tell, that is. It’s absolutely the latter, though you hadn’t suggested that that is what it was until just then. But yeah, that’s it. I think. (Or not. I’m not Saul.)Report

      • Avatar Michael Drew says:

        …But as to whether it was that the authorities asked people to shelter in place… that was a detour you led us down. Saul was never saying that was the issue. There was no point to that detour, just like there was no point to asking if Saul thought he would be more principled to not go down at all than to go down for $200.Report

      • Avatar Jaybird says:

        I probably found the detour interesting because of Saul’s answer to the question “would you have helped people for free?” specifically involved being “called upon”.

        Which, seriously, strikes me as a fine example for the use of weasel words.

        I was exploring his criticism of what happened. There were drivers who went downtown because they were offered money to do so and they were being criticized for this (despite my deep suspicion that they wouldn’t have gone down there without the monetary offer). When asked whether he would have gone down there for free he gave an answer that certainly allows for the interpretation that he was saying “HELL NO!”

        My problem is that there are people who went into perceived (whether or not it was real) danger to help folks and that these people are being criticized for doing so just because they were rewarded monetarily and there would have been *ZERO* criticism for them staying safe in their basements… and, presumably, zero criticism for them leaping into (perceived) danger for free.

        When, it seems to me, that more people being willing to help is better than fewer, even if some of the more people helping are being rewarded for it.

        And it’s kinda tacky to complain about the people who were helping after admitting that you wouldn’t have helped in that situation.Report

      • Avatar Michael Drew says:

        There were drivers who went downtown because they were offered money to do so and they were being criticized for this

        No, they weren’t. Uber was being criticized for offering them (the drivers) the (extra via surge-priced) money of people who were scared as hell and wanted to get out of there rather than offering them (the drivers) Uber’s own money to get them down there to do that. That is, assuming the authorities wanted private cars coming into the area to shuttle people out for (regular fare) money at all. (And if the authorities didn’t, then maybe people would have criticized the drivers for doing it – maybe they did so criticize, I don’t really know! – but I don’t think people were generally focused on that aspect of it.)Report

      • Avatar Michael Drew says:

        When asked whether he would have gone down there for free he gave an answer that certainly allows for the interpretation that he was saying “HELL NO!”

        And this is complete BS. He basically said hell yes, so long as someone was putting out the message that it would be helpful if people would do that. So maybe you have a difference about whether it would be better for people to not wait and see if that’s the case, and just assume they should jump in their cars and go, or whether it’s better to find out if such a thing would be helpful before doing so. But that discussion simply has nothing to do with Saul’s critique (if it exists) of Uber’s actions (though in fact as it happens it might well be that that it’s a question that Uber might actually have been clearly on the wrong side of in this case).Report

      • Avatar Jaybird says:

        Uber was being criticized for offering them (the drivers) the (extra via surge-priced) money of people who were scared as hell and wanted to get out of there rather than offering them (the drivers) Uber’s own money to get them down there to do that

        And if Uber didn’t exist, then there would have been no criticism.

        We had no problem with the people who didn’t go down there.
        We only have problems with the people who wouldn’t have gone down there but changed their mind when someone offered them enough money.Report

      • Avatar Michael Drew says:

        …FWIW, I think that the question of whether it was right for Uber to be sending cars down there under the shelter in place order is an interesting one on its own that we could probably take a step back from all this and try to discuss cooly on its own merits. And when I say “we” I mean, “people who might have an insight into the question,” which actually excludes “me.”Report

      • Avatar Michael Drew says:

        You’er trying to speak for people and stubbornly not listening when they try to suggest to you what it is they’d like to say, Jaybird. It’s not a good look.Report

      • Avatar Michael Drew says:

        …Because this is not true, at least as far as I understand Saul’s position:

        We […] have problems with the people who wouldn’t have gone down there but changed their mind when someone offered them enough money.

        Saul says he would have gone for nothing. But if a philanthropist (which turned out to be Uber, and which Uber all along could have defined itself to be in these kind of circumstances, and now does to some extent) had offered people with cars $200 to go down and pick people up, I’m not aware that Saul would have had any criticism for those who (unlike him) wouldn’t have gone for free, but then did choose to go in exchange for the philanthropist’s money. Because the issue is the have/have not dynamic that’s created by the surge pricing on the ground in the midst of an emergency (as far as I understand what the issue is), and if a philanthropist is paying to get the drivers to show up, then surge charging the distressed amidst the emergency doesn’t have to occur (that’s what the philanthropist is paying to alleviate the need for).Report

      • Avatar Jaybird says:

        Saul says he would have gone for nothing.

        No, he didn’t. He said he’d have gone for nothing *IF CALLED UPON*. It seems odd to add that phrasing if he’d have gone for nothing whether or not he was called upon. That’s why it strikes me as weasel wording.

        As for your other point… So the problem was the lack of a philanthropist?

        Let’s say that we never resolve the problem of having enough philanthropists. Then what?Report

      • Avatar Michael Drew says:

        If he would have gone for nothing if called upon, then, yes, he would have gone for nothing. Being called upon to do something for free and doing it isn’t getting something in exchange for doing it. It’s just not doing a thing (for nothing) UNTIL you know there’s some value in it for someone, but then when you know that, in fact doing it for nothing.Report

      • Avatar Jaybird says:

        Well, in this specific case, it certainly seems that he wouldn’t have been called upon to go.

        As such, I’m jumping to the conclusion that he wouldn’t have gone based on what he said.Report

      • Avatar Michael Drew says:

        Then we keep criticizing big, rich institutions (like business valued at many billions of dollars such as Uber) that are in perfect positions to act philanthropically in certain situations – for example if they simply need to make a timely decision about how the flow of their funds moves (i.e. without need for any more logistical commitment than that) – when they fail to do so.Report

      • Avatar Michael Drew says:

        Why does it matter whether he would have gone if not called upon? Are we not conceding that it would be better if he didn’t go if it was preferred by the authorities that he not go? Whether he should have just gone rather than finding out if it was desired that he go seems like a completely different discussion from the rest of what we are talking about. Unless you’re saying that the value of Uber’s (or a philanthropist’s, as Uber became) offer to people to go down there that you want to focus on is the offer’s ability to get people who are willing to go for free to ignore the possibility that it would be better if they not go, and instead not try to find that out but rather just go. Rather than the offer’s ability to overcome people’s decision not to go even if called on.Report

      • Avatar Jaybird says:

        Mike Drew, it matters because I asked:

        Is Q True?

        In response, I was told: P -> Q is True.

        But P is Not True.

        As such, I still don’t know if Q is True.

        Now, we know that there are a number of people for whom R -> Q is True because we saw that R was True and then they Qed as a result of that condition being met.

        But given that P is Not True, being told P->Q is True in response to my asking if Q was True for Saul strikes me as weasel wording on his part especially since I think that the more people for whom Q is True the better and, as such, that’s why I support R being allowed to happen (given the number of people for whom R -> Q is true).Report

      • Avatar Michael Drew says:

        But Saul thinks more Q is better only if P. Which you can disagree about to say that Q is better regardless of P, but which is a different discussion from the one you were addressing by asking Is Q True. Which is why it was an irrelevant distraction to ask if Q was true from the beginning (if you were going to insist that it didn’t address your question if the response was P -> Q, at least). Which I alluded to above.Report

      • Avatar Jaybird says:

        I’m pretty sure that we hammered out that Saul likes the idea of Q too. Just not R -> Q. Which is why it’s relevant whether Q was true without P -> Q being true in the absence of P.Report

      • Avatar Michael Drew says:

        It sounded a lot to me like Saul likes Q only if P. You’re certainly making a big deal out of him saying so.Report

      • Avatar Jaybird says:

        Given that it seems to me that Q would have been acceptable without surge pricing (r->Q, perhaps?), it also seems to me that P has nothing to do with Q, making the answer of P->Q pretty irrelevant to the question.

        If he liked r->Q and disliked R->Q, asking “would you have done Q for free?” and getting an answer of P->Q is pretty much weasel wording right there, no?Report

      • Avatar Michael Drew says:

        If he doesn’t like Q if ~P then there’s no reason to think he’d like r -> Q if still ~P, because it would still involve Q without P. In that scenario he then wouldn’t like neither r nor R within [r (or R) -> Q].Report

      • Avatar Jaybird says:

        Pretty sure that that’s fallacious.

        If we know P->Q and we know ~P, we still don’t know anything about Q.Report

      • Avatar Michael Drew says:

        So you’re saying if Saul feels it’s best for no extra people to go downtown (even with cars looking to take people out) because the authorities say it’s best if they don’t, he might feel differently in the case of people who do it because they have a normal-sized Uber offer to do it?

        I mean, he might. I didn’t say he necessarily must not. I said that there’s no reason to think he will.Report

      • Avatar Jaybird says:

        I’m pretty sure that that’s not what I’m saying.

        I’m under the impression that he thinks that it would have been good for people to go downtown for non-surge pricing. (Am I wrong on that?)

        Given that he approves of r->Q but not R->Q, my asking about Q got an answer of P->Q in a circumstance where we knew ~P.

        I’m pretty sure that that’s what I’m saying.Report

      • Avatar Michael Drew says:

        I’m under the impression that he thinks that it would have been good for people to go downtown for non-surge pricing. (Am I wrong on that?)

        I don’t think he’s spoken to that, but I think you might be.

        First, you raised the point that there was a shelter-in-place order. I don’t think he was aware of that prior to that. (If that feels like it advances your case, well, that IMO just furthers my point that much of this sub inquiry into what Saul would do is an irrelevant detour that’s taken you don the wrong path.)

        But. Saul has said that his going for free would be dependent on whether there was a call for him to do so, which I am conjecturing a shelter-in-place order would answer in the negative. And we’re conjecturing that he has a problem with the charging of surge fares (presumably when he was not aware of the shelter-in-place order) (though I’m not sure he actually does).

        So if there was a shelter-in-place order (equals no call to go), and in that case we know he wouldn’t himself go because the authorities were asking people not to (and therefore presumably thinks others should not go), and we also are operating from an assumption that he wasn’t a fan of people being charged surge prices (though not under shelter-in-place, or not understanding that t was in place), then to me it stands to reason that he wouldn’t necessarily think that it would have been good for people to go downtown for non-surge pricing under a shelter-in-place order.Report

      • Avatar Jaybird says:

        And, once again, if we know P->Q *AND* ~P, we know nothing about Q.Report

      • Avatar Michael Drew says:

        No, we know P -> Q about Q, which is more than nothing if ~P (or P) is a contingent fact-possibility, which it is.Report

      • Avatar Jaybird says:

        Without his confirmation, we don’t know that.Report

      • Avatar Michael Drew says:

        As I’ve been saying, a lot of this is indeed conjecture about what his positions on these questions are, not considerations of what he has concretely said, yes.

        But I don’t follow exactly what you mean there. He confirmed our P -> Q as something that governs Q for him. But P itself is completely unconfirmed, for two reasons

        1) because the only question you asked that he answered was a general hypothetical, and presumably (to me it looked) meant for him to set in his own city since it asked what he would do in that generally-described scenario, So he was likely not thinking that the details were meant to be exactly like the ones in Sydney; and

        2) even if he had been considering the Sydney event particularly, I don’t believe he knew about the fact that the opposite of a call for him to go (a shelter-in-place order) had been given until you brought it up, which was after the last answer he gave.Report

    • Avatar Kimmi says:

      Jay,
      I’d say no. Not for $200 either.
      But mostly because I’m a bad driver, and I’d rather let someone else take the car and grab the money.Report

  15. Avatar James K says:

    Practically nay policy question can be decomposed into “is” and “ought” questions. It is important to separate these questions out otherwise you risk getting horribly confused.

    In this specific case the main “ought” question is: “Is it right for people who wish to flee a potentially dangerous situation to have to pay a premium to do so?” The “is” question is “assuming that it is not right, what is the best way (given society’s values) to preventing them paying a premium?”

    All the public argument tends to focus on the ought side, which makes sense because that’s the bit that most people can engage with, but people also tend to attribute disagreements on the “is” side to disagreements on the “ought”. I don’t oppose price controls because I’m a flinty-hearted capitalist who is indifferent to human suffering, I do so because markets serve a particular purpose and trying to turn them to another propose just breaks them, often with horrible results.

    This touches on something I’m planning to elaborate on in an Ordinary University series I’m slowly working on. Markets are a machine, think of them as a computer made of people. What they do is take a massive amount of distributed data about what people want, and how much it costs to make and turn that into a number that will allocate humanity’s supply of resources to the tasks that will do the best job possible of giving us what we want with what we have.

    Sometimes the machine breaks, and we in the biz call those “market failures”, but that’s not about anyone’s sense of justice, its how well the machine is working. If the market’s outputs violate your sense of fairness that’s fine, but you need to understand that just because things aren’t as you like them doesn’t mean the market is to blame. A car is no good if you want to travel from LA to Auckland, but that doesn’t mean the car is broken.

    The way to deal with policy issues that are unrelated to market failure is to solve it with non-market mechanisms. The first thing that springs to mind is to compensate the affected people after the fact. A second approach would be to have a government-run emergency service that would evacuate people in danger. I’m not saying I’d necessarily support either policy (there’s still cost-benefit tradeoffs to consider), but I wouldn’t respond to either with “you just don’t understand economics”.Report

  16. Avatar LWA says:

    Echoing what @saul-degraw said:”The difference seems to be whether we are talking about what is good for people as consumers or good for people as wage-earners. ”

    There is this weird form of argument where we separate our consumer selves from our wage earner selves; As if we are not the same people. As if what affects our worker selves has no effect on our consumer selves.
    More importantly, when time comes for us to determine policy, why one of our selves should take priority over the other.

    As wages continue to slide downward, I’m left wondering who exactly is going to take advantage of all this cheap consumer market. We see young people graduating from college with staggering debt and paltry earning potential, then wonder why they aren’t buying cars and houses, however cheap they may be.

    And could we please stop calling it the “sharing economy”? Or at least use the little trademark symbol?
    Because its really nothing more than a marketing gimmick to rebrand the old fashioned commodification of time, like taking in laundry or hiring oneself out as a delivery boy.Report

    • Avatar North says:

      Yes certainly yet at the same time people decrying low wages try and act like they can seperate their wage earner self from their consumer earner self. The two go together.

      Wages are certainly a complicated unhappy situation that no one has a good answer to but student debt.. I don’t think that’s a subject that’s going to have happy outcomes from a liberal university loving point of view.Report

    • Avatar Saul Degraw says:

      @lwa @north

      I concede that there are times that people are ignoring themselves as consumers but focusing on themselves as wage earners. I suspect because it is about which goods are getting cheaper and which goods are not getting cheaper. The Vox article shows that Millennials can afford houses but not in any area where Millennials want to live. Part of this is on Millennials but it also raises the question about whether late Generation Xers or Millennials would be able to get house affording wages in areas where they can afford houses.

      Can I afford a condo or house in the NYC-Metro or Bay Area on my salary right now? No. Would I be able to afford a house in Kansas City on my current salary? Yes. But what are the chances of me making a house affording salary in Kansas City? The answer for many 20 to early 30-somethings could be not that high. Same with expensive but not as expensive cities like Portland, Seattle, Denver, Boulder, Chicago, etc. Or whether there is the job-education match in those areas.

      Another issue is that the prices of certain products are going down but not all prices and one of the interesting things about national brands is the rise of uniformity of prices. J.Crew charges the same amount for a pair of cords whether you live in New York, San Francisco, Chicago, or Kansas City. Same with other consumer goods.

      The problem with housing is seemingly that banks have gotten a lot of property via foreclosure and banks have little need to negotiate a lower price. They can sit on the property until they find someone willing to buy it at their price.

      Now of course there are all sort of interesting socio-cultural-psychological issues in matters of who wants to live where and how. As stated above, I find the idea of someone owning a “party house” to be kind of distasteful. But I can also (and have) been seen as snobby for basically limiting myself to a handful of city-metro areas and even questioning some of those because of their smaller and almost non-present Jewish populations. I like living in an area that can be described as somewhat Jewish culturally yet I am told that this is something I should overcome from time to time.

      There are also all sorts of interesting issues about “Why do you need to like Marin more than East Bay, South Bay, etc?”Report

      • Avatar Kimmi says:

        “The problem with housing is seemingly that banks have gotten a lot of property via foreclosure and banks have little need to negotiate a lower price. They can sit on the property until they find someone willing to buy it at their price.”

        … you’re kidding, right? what bank in their right mind wants to hold property? Do you want me to link to the mosquito issues? Or the snow shoveling fines?

        http://www.calculatedriskblog.com/2014/12/mortgage-rates-back-to-pre-taper.html

        If people aren’t buying houses, the poor supply of mortgages might have something to do with it.

        Also: the issue with housing is too few places to rent, so the rents are Too Damn High.Report

    • Avatar j r says:

      @saul-degraw

      Can I afford a condo or house in the NYC-Metro or Bay Area on my salary right now? No.

      I don’t know what your salary is and I don’t know the Bay Area well, but I am willing to bet that you could afford to make mortgage payments on a condo or house somewhere in the NYC-Metro Area that was no more than an hours commute, using public transportation, from midtown Manhattan.

      Don’t know if you could afford a down payment, but I am willing to guess that if you put away ten percent of your salary for ten years, you could afford one.Report

    • Avatar James K says:

      @lwa

      The reason to separate workers from consumers is that the welfare effects of a policy are going to be different on each one. Naturally you need to add them back together when looking at the final outcomes for people, but it easier to start off analysing them separately.Report

      • Avatar Saul Degraw says:

        @james-k

        The problem here is that you end up having situations (often) probably where high-income and professional consumers benefit at the expense of lower-income workers. So we benefit from being able to get lattes at 11 PM and 6 AM but someone has to close at 11 and be the same person who opens at 6. Maybe we don’t need Lattes at 11 PM.

        So driving wages down is good for us as relatively high-income earners but it is bad for the people who serve us.

        So it is not quite good to separate because the people who are workers are often not going to be consumers for the same product during their off hours.Report

      • Avatar James K says:

        @saul-degraw

        1) My point was simply that it is analytically important to be able to distinguish between what is happening to workers and what is happening to consumers, even if they are often the same people.

        Having said that:

        2) Whether or not a thing is necessary is not the right standard to determine whether it matters if it ends. After all, we don’t need theatre, but if I pulled an Oliver Cromwell and suggested abolishing it, I suspect you’d object. The unnecessary things are what makes a civilisation.

        3) The welfare effects are often more ambiguous than you think. For example, taxi services are more useful to people who don’t own cars than people who do. Since car owners are generally richer than non-car-owners, lowering taxi fares may well be progressive, this is especially true since the people who really stand to lose from services like Uber are the owners of taxi medallions, who are not necessarily the taxi drivers.Report

      • Avatar James Hanley says:

        So it is not quite good to separate because the people who are workers are often not going to be consumers for the same product during their off hours.

        Well, that can take us strange places. I’m not a consumer of the product I produce, off hours or on.Report

      • Avatar LWA says:

        I completely understand why its important for economists to separate workers and consumers.
        I don’t think that logic should be allowed to drive policy making though.
        Part of the issue here is that for most of the people on this blog, posters and commenters, we are in that favored state where we can eat our cake and have it too.

        When I am at work, I earn First World wages and enjoy all the amenities of First World living; worker safety laws, mandatory holidays, all the bells and whistles of living in a highly prosperous regulated environment.

        When I walk into Walmart, I am shopping in the Third World, where the product I pick up was being assembled only a few days before by a worker in China or Bangladesh, who has none of the benefits I enjoy. So with my pockets full of First World wages, my consumer self is quite wealthy.

        Capital and goods flow effortlessly across the globe, but labor is artificially constrained; So some jobs are globalized, while others are constrained.

        Of course this is only temporary; at some point in time, I and everyone here will be competing directly with a Chinese worker, and forced to work for his wage.

        So what are we going to buy at Walmart then?

        Note that I’m not even saying this is a bad thing, when viewed from the 30 thousand foot level, across decades or centuries. Maybe on that day when corporate CEOs, Wall Street traders, and everyone else has to compete with 3rd World workers doing the exact same job, things will level out. The cost of living in America will decline to the level of Bangladesh, and wages in Shanghai will rise to equal New York.

        Maybe. Or maybe those who are threatened by that will rig the rules to make sure that some jobs remain globalized, while other localized.Report

      • Avatar Roger says:

        @lwa
        “I don’t think that logic should be allowed to drive policy making though.”

        I am afraid to ask who these Mandarins are who are driving policy — friends of yours perhaps?. This is where a classical liberal would talk about decentralized, emergent organization and bottom up planning, blah, blah, blah. Progressives would then roll their eyes and resist barfing.

        “I earn First World wages and enjoy all the amenities of First World living; worker safety laws, mandatory holidays, all the bells and whistles of living in a highly prosperous regulated environment.”

        Correction. We produce first world living standards. Government doesn’t create any of these via decree*. Your causation is backward. At best government can require these as forced moves once the producers produce them as viable options. See the difference?

        “Of course this is only temporary; at some point in time, I and everyone here will be competing directly with a Chinese worker, and forced to work for his wage. …So what are we going to buy at Walmart then?.”

        You answered your own comment later at the 30,000 foot level. Well done.

        “Or maybe those who are threatened by that will rig the rules to make sure that some jobs remain globalized, while other localized.”

        If they can protect themselves from change and competition they will. Roger’s rule of history.

        This is what unions, guilds, cartels, monopolies, regulatory barriers to entry and exit, minimum wages, outsourcing restrictions, limits on surge pricing, licensing requirements and tariffs, immigration restrictions, tax incentives and import restrictions do. They are all, in part or whole, attempts to restrict competition, rig the game and exploit others by using coercion to seek unfair rents.**

        Prior to 250 years ago the riggers were consistently winning and the human race faced a ten thousand year prisoners dilemma with most people choosing to defect. Lately we have on net overcome the exploitative tendencies of rent seekers to destroy our networks of reciprocity and cooperation. If we can continue for another 250 years the average worldwide wealth level will be greater than Gates’.

        The key is to ensure that they cannot rig the system. Here we oddly agree. Or do we?

        * government can of course add value by establishing and enforcing the rules of the game and by solving public goods and externality problems

        **there can sometimes be good reasons other than rent seeking for these of course.Report

      • Avatar Kimmi says:

        Roger,
        are you pro-child labor? What happens when we need to complete with children who have no other alternative? If you would like, I can suggest some Christmas gifts — fine glass crafted with child labor. I can even suggest the ones that didn’t result in injuring said orphans.Report

  17. Avatar Patrick says:

    The problem with price surging is the problem with market equilibrium, amplified.

    The folks with less wealth can’t compete directly, as they are priced out, and the folks with more wealth are generally competing well below their actual perceived value.

    That’s just what it is. There’s no big takeaways to pull from it, except that “market price is just a proxy for valuation”, which we knew already anyway.Report

  18. Avatar Chris says:

    Dunno if any of you saw this when it happened, but it was all over Twitter at the time.Report

    • Avatar Michael Drew says:

      Think she was legally able to consent to that fare?Report

      • Avatar Glyph says:

        If I go on a bender and go down to the Ferrari dealership and sign papers for a car, then try to return it when I sober up, can I claim that I was unable to consent to the contract I signed?Report

      • Avatar Chris says:

        Probably, but if you get drunk and run up a $300 tab at Ruth Chris, you’re just out $300.Report

      • Avatar Glyph says:

        That’s an…oddly specific response.Report

      • Avatar Will Truman says:

        Aren’t there buyer remorse laws specific to cars?Report

      • Avatar Chris says:

        Well, there is a Ruth Chris just off Sixth Street, so…

        But no, I was just trying to think of a well-known place where you could run up a $300 tab, and that popped into my head.Report

      • Avatar Glyph says:

        @will-truman – yeah, I think a lot of states have a three-day rule for cars. But that’s why I said “bender” (let’s assume it’s a 4-day one) – if we are going to focus on the idea that someone inebriated cannot possibly have legally consented to purchase something that they can’t afford, then the length of time until the buyer’s sobriety/regret isn’t really the core issue.

        (As an aside, this concept has disturbing parallels to other conversations we’ve had around here recently, that I have no interest in getting into now).Report

      • Avatar Chris says:

        I have a friend who is, unfortunately, a pretty bad alcoholic. She drinks pretty much from the moment she wakes up until she goes to bed, and I’m not sure that in the 9 years I’ve known her I’ve ever been around her when she was completely sober. I suspect that pretty much every contract she’s ever signed, from her cars to her house to her marriage license, was signed while intoxicated.Report

    • Avatar Stillwater says:

      Chris,

      In the minimal research I’ve done (like, really minimal) I read that Uber requires the customer to actively agree to prices 2x higher than normal. I take it that means they’re requiring the customer to agree to a specific price, but if not, if they’re merely agreeing to whatever surge price exists at the time without informing them what it specifically is, then we’re talking about deceptive practices or something nasty. That’d be a different complaint than anyone on this thread is making, seems to me.Report

      • Avatar Will Truman says:

        I had the same question about price transparency. Per Dan Miller above, the price is set (and known) when you make the order. So I *think*they’re good on that score.Report

      • Avatar Chris says:

        I’ve seen what the process is during a price surge (though not 9x). It tells you that the rate is y times the normal rate, and you have to agree to it. That woman had to agree to her rates, too, though she probably didn’t understand what it meant (it sounds like she was rather drunk).

        The closest I’ve ever gotten to that is ordering food at Waffle House that I would never even consider ingesting when sober. The steak, maybe. I mean, they can’t even make it look good on the menu, so…Report

      • Avatar Will Truman says:

        Hmm, if there’s not a dollar amount, that should change.Report

      • Avatar Chris says:

        OK, looking at screen shots, I see I was wrong:

        http://blogcdn.uber.com/wp-content/uploads/2012/12/surge1-FINAL.png

        When I looked at it, it was on someone else’s phone, and I didn’t see the smaller per/min and per/mile prices, or the minimum, I just saw the giant surge multiplier. Or at least, that’s all I remember seeing, and as someone wrote on this very blog recently, memory’s a funny thing.Report

      • Avatar Will Truman says:

        Thanks for the swift correction!Report

    • Avatar James Hanley says:

      26 years old? Maybe this is the life lesson that makes her start acting like a grown up. But since she got other people to pay for her mistake, probably not.Report

  19. Avatar Saul Degraw says:

    @glyph @chris @will-truman

    There are laws about when you can get out of a contract if you were unable to consent because of incapacity including for being drunk.Report

    • Avatar Will Truman says:

      What kinds of contracts can it get you out of?Report

      • Avatar Glyph says:

        Asking for a friend, obviously.Report

      • Avatar Chris says:

        What kind of tattoos can one get removed with these laws?

        Er… I meant to email that.Report

      • Avatar Will Truman says:

        Actually! It involves my grandmother.

        I’m actually curious for a number of reasons. One, because I’d be surprised if it applied to things like rides and restaurants. But also because my grandmother, when she was losing her mind, was subject to numerous scams that it took a long time to untangle. In the end, it actually would have been easier just to pay them off, but it became a matter of principle for my aunt not to pay any of them a dime. I’m curious what legal recourse she would have had.

        (The most expensive one was a $200-per-week lawn care program, which went on twice before a neighbor alerted us to what was going on. Grandmother was hospitalized shortly thereafter.)Report

      • Avatar Glyph says:

        Cue people everywhere making sure they’ve had a few drinks before they get married.

        Just in case.Report

  20. Avatar Roger says:

    Oddly enough I kind of agree with much of what Saul wrote in his main post.

    Let me reframe the issue: surge pricing solves a problem of supply and demand but it does so in a way which offends our base intuitions. As such it involves tradeoffs.

    A firm can choose to use surge pricing but risk being seen as assholes. This exposes them to competition by kinder looking competitors who avoid surge pricing even though economists could argue that it is the consumers who are being hurt due to the inefficiency introduced into the market.

    In the end, surge pricing acts to take problems which are unseen and opaque and make them seen and clear. It does so in a way which oddly enough makes the party solving the problem look dickish.

    I will add on to what Economist James K said above. Markets are (imperfect) complex problem solving systems. If you mess with pricing signals, you make the system less effective at solving the problems of the domain. There may be reasons to do so though, especially to a firm concerned about competition or regulatory interference.Report

    • Avatar Stillwater says:

      Roger,

      I find myself in the uncomfortable situation of (gulp…) agreeing with you completely on these points. I think “dickishness” is exactly the right word to apply to how people are reacting to Uber; and I think they’re perfectly justified in saying that the price surge draws in more supply. Which is why, I take it, they capped the prices at some level below the maximum without giving those rides away for free.

      Personally, I think Uber is a really good example of a business practice that teases out a bunch of distinctions which libertarians and liberals classically disagree on. It’s been informative for me to read everyone’s views on it. For my part, I find myself not only accepting of Uber, but I think I see some of the logic inspiring its creation. And the logic ain’t bad.Report

      • Avatar zic says:

        It’s interesting to flip the problem around. Presuming surge-pricing means people are using the assets they have (money, in pricing), those with wealth will have more access to a scarce resource. What if, instead, someone used other assets; say force? Brute strength? Greater numbers of people? We would immediately think this a violation of private property rights, no? But in scarcity and emergency, when those resources might mean the difference between life and death, are we willing to say those with access to capital, and so with the ability to pay for resources, are the people who should survive? Because that, to me, is the issue at the bottom of the debate.Report

      • Avatar Kimmi says:

        zic,
        in my city, there are a lot of cars that students use… very occasionally. In the event of a disaster situation, I’d consider it a moral thing to do to hotwire one of these cars in order to get people out of the city.

        Wealth’s okay, force is okay — to some extent.Report

      • Avatar James Hanley says:

        Zic,

        Will those people be compensated afterwards? Or are we requiring them to take a loss for others’ benefit?Report

      • Avatar Roger says:

        Zic hits an Important issue.

        Surge pricing is solving the problem of who gets the ride. The scarce resource goes to those willing to pay most for it due to a combo of need and ability. There are other ways to do it. First come first serve. Based upon connections (knowing drivers or officials). Based upon class privilege. Women and children first. Brute force ( the strong get rides via coercion)

        In the case of prices, there are several positive externalities. One, markets incentivize mutual reciprocity. To get more you have to produce more. This envourages people to serve each other to serve themselves. It creates a virtuous cycle which generates prosperity. Wow. Cool huh?

        Second it incentivizes additional supply. Thus more rides are provided and optimizes total problem solving and human utility. It’s almost like magic.

        Third it encourages efficiency, conservation and alternative uses. Those able to find alternatives are incentivized to do so. Neat! Even greenies should love it.

        I will agree with Zic though that if we are talking survival in an emergency that sometimes we need to override markets… Carefully so we don’t throw out the problem solving capabilities with the bath water.Report

      • Avatar Kimmi says:

        Roger et alia:
        it seems like we might have a problem in evacuation situations, where people aren’t removing the optimal amount of people from the city, on a car by car basis (I must have pet rock!). If we had policemen photographing license plates, for future billing, then we (public funds/charity) might be able to pay folks for taking more people out of the city.

        What does this do to the calculation? is this a more moral idea than simply paying people? We can assume that the more socially-well-connected will get out of the city quicker… (and that perhaps some mysanthropic middle-class assholes might be stuck for a while longer…)Report

      • Avatar Roger says:

        I concur Kimmi.Report

    • Avatar James Hanley says:

      even though economists could argue that it is the consumers who are being hurt due to the inefficiency introduced into the market.

      This is part of the counter-intuitiveness of much of economics. People sometimes respond perversely to what others do, thinking they’re being harmed when they’re not. Or rather, seeing only the direct effect on themselves, rather than seeing the bigger picture and how on net the people collectively are better off. That’s not surprising, since we all see our direct self-interest more clearly than we see either our indirect self-interest or a more diffuse aggregate interest.Report

    • Avatar Michael Drew says:

      I like this comment, but I have this problem with it:

      Outside of collusion, how does a firm “mess” with pricing signals? Outside of perfect competition (wheat, nonorganic milk, etc.), firms try out different pricing strategies. They succeed or fail in differnt ways with them. That’s what they do. The aggregate of all those strategies (plus all the forced prices from perfect competition) comprise the broad price landscape, or the array of prices on various goods, which is where consumers receive the “price signals” that order their buying choices, which is how the market creates the distributional efficiency.

      One cab company charges flat rates (per whatever) regardless of demand (except it’s not like they have an absolute-fixed-price pricing strategy, they just adjust prices relating to what the market supports on a much less time-sensitive basis); another (like Uber) charges a price that floats with the demand by minute and location. These ar just different pricing strategies, not “messing with pricing signals.” Guess what? The majority of everyone selling anything anywhere in the U.S. have pricing strategies that arguably more closely resemble regular taxi pricing than Uber pricing. Who’s actually “messing with pricing signals” there? I’d argue nobody.

      Prices deriving from a variety of strategies go into the broad pricing environment that consumers encounter, which is where consumers receive price signals and respond to them. No one’s “messing with pricing signals” by having this pricing strategy or that one. Collusion or other unfair market practices? Sure. But not just doing pricing in a particular way (unless it falls in one of those verboten categories).Report

      • Avatar Roger says:

        @michael-drew

        I like your comment too. I think it is an awesome observation. In fact, I am not sure I can find a single sentence which I disagreed with. Well done.

        I especially like the parts on how different companies set different pricing strategies and how more time sensitive (uber-dynamic?) strategies may be more responsive than the more gradual pricing system most companies actually use.

        So let me try to back-step a bit. Non-dynamic pricing *interferes* (better term?) with short term supply and demand signals. Most companies have adopted less dynamic pricing because they find that the benefits (to the company) exceed the costs. The benefits have already been delineated ; dynamic pricing can offend customers, can cause confusion, uncertainty, and are probably extremely difficult to achieve with existing technology without introducing the hassle and inefficiency of haggling.

        Using newer technology in an extremely dynamic market, Uber has chosen to use a pricing strategy which is at the extreme end of this spectrum. And despite the technology, they are experiencing the back lash from consumers. Most companies are more concerned with not looking dickish, and would willingly interfere with pricing signals and market efficiency as a tradeoff to maximize their goals (or they may just not have the technology or institutions to pull it off).

        I am no economist, but I was responsible for pricing (not just the price level but the price structure) for products. Here is one trick I used to achieve dynamic pricing without changing prices. First, we would set a spectrum of good/better/best products. When we market the price we spotlight “good”. When offering features we would lead with “best” and then offer the other two options as discounts or savings from the initial offering.

        Marketers are well aware that customers love discounts and hate surcharges or increases. This despite the fact that any surcharge or surcharge can be repositioned or reframed mathematically as a discount off a higher base rate.* So one trick producers or retailers do is use discounts to price more dynamically and yet appear undickish. Uber could do this if they set a maximum surge price and presented every other rate (normal rates as a variable discount or savings off the surge price).

        I am rambling, but I will just conclude that most companies willing interfere (mess) with pricing signals for practical reasons. In saying this I am disagreeing with nothing you wrote. Remember I agreed Uber looked dickish.

        * side story. I once had the Marketing President ask me how large of a discount we could offer for good driving. I answered as large as she wants. By pricing our base rate off the worst risk (16 year old male with three DWIs) , we could position every other rate as a discount off this rate. “95% discount for good drivers who own a home!”Report

      • Avatar Michael Drew says:

        Roger, let me read that closely later today and get back to you.

        Broadly, though, though I frequently personally get annoyed at various pricing strategies that inconvenience me, from a general market efficiency perspective, I am skeptical of any normative claim about heterodox firm pricing decisions interfering with price signals – again, outside of recognized market malformations or malfeasance. They’re just more price information that goes into the pot. If it’s a bad strategy it’ll fail and go away (consumers will send a quantity signal back); if it’s a good strategy in that it works for the firm profit-wise, I need to be shown what we have to complain about from a price-signal standpoint.

        But as I say, I’ll look at this and get back to you.Report

      • Avatar Michael Drew says:

        …It strikes me that your example suggests the problem with your “messing/interfering with” framing. You set the base rate; you offer discounts off of it. Seems reasonable to me; how do you identify the strategy/number that would *not* be “messing” with signals there? And why would firms leave all the strategies that tinker with that approach on the table?

        Matt Yglesias talks a bit about this indeterminacy in “correct” (non-messed-with) pricing here:

        http://www.vox.com/2014/12/15/7394323/uber-surge-pricing-psychologyReport

      • Avatar Kimmi says:

        Michael,
        a firm can decline, as much as possible, from rapidly passing on pricing signals they’re receiving from their suppliers. If it goes on too long, of course they’re going to have to pass on the signal.
        I’m not alleging any malfeasance from “interfering with the pricing” (even though this may express itself in more profit for the middleman).Report

      • Avatar Roger says:

        Everyone seems oddly aligned here. I even liked Matt’s comments.

        Companies experiment with the strategies which they believe optimizes their results. Über is trying one approach and learning as they go along.

        My guess is they will learn it is best not to be seen as dickish so they will cap surge pricing or perhaps reposition it as loss of a discount, or follow Matts lead and give all the surge to drivers. This is good PR and large companies depend upon their brand. You know, like Chick Fillet, and Walmart.Report

  21. Avatar Jaybird says:

    Are there any stories out there about people who rose to the challenge and went down there for free to evacuate people who wanted evacuation?

    I’m curious.Report

    • Avatar Kolohe says:

      The Sydney event was likely too small to necessitate a sizable outpouring of resources, provided by whatever means (for-profit, organized charity, unorganized charity, or government).

      The Boston Marathon bombing had a pre-planned organized response by several government agencies & the Red Cross, an impromptu (charitable) response by Google (per wikipedia), and impromptu, charitable response from individual people

      A huge wave of strangers is greeting the many visitors stranded by the Boston Marathon bombings with a massive outpouring of support. “We figure this is the least we can do,” said Heather Carey, who offered a couch at the home near Boston University she shares with roommates. “I saw a website with many others offering their spaces like we did. It is awesome to see so many people helping.”

      There were also several notable charitable responses to 9/11, including somewhat famously the people of Gander hosting trans-atlantic stranded passengers for a week or so.Report

    • Avatar Kolohe says:

      The biggest disincentive for heading towards any kind of disaster zone at present is armed agents of the State shooting at you, with or without warning.Report

      • Avatar zic says:

        Taking Katrina as an example, 1,833 people died in Katrina; two people were killed by police, 4 others wounded.

        So statistically, I dunno. I’d guess that a lot more lives were saved, and had the response to the disaster been more immediate, fewer of those nearly 2,000 souls who died would have.

        Sandy, for contrast, and less than 300 deaths.

        So no, the biggest danger is not being shot by armed agents of the state in a disaster zone at present; at least not here in the US.Report

      • Avatar Kimmi says:

        zic, he’s talking about heading toward the disaster zone. aka being mistaken for looters.Report

      • Avatar James Hanley says:

        Also, he didn’t say it was the biggest danger, he said it was the biggest disincentive.Report

      • Avatar Kolohe says:

        “So no, the biggest danger is not being shot by armed agents of the state in a disaster zone at present; at least not here in the US.”

        And highway deaths kill over twice as many people as gun homicides.

        ‘shot by armed agents of the state’ vs every other cause is the not the comparison I am making. ‘shot by armed agents of the state’ vs staying at home is the comparison I am making. with the upside of going in being maybe being able to help and the upside of staying at home is definitely not making anything worse.

        Like kimmi says, the State does have a fair point and an interest on limiting access by an generally untrained public going into a situation where either the physical infrastructure or the social infrastructure, or both, are compromised.Report

      • Avatar Stillwater says:

        Using Katrina as as example, I think Kolohe’s point still stands. Folks were stranded in a handful of locations that po-po cordoned off preventing anyone from moving in or out – except media. The gov’t argument (infamously) was that water prevented emergency vehicles from entering those locations and the reason we knew this was because reporters had driven their vans to those exact locations to report on it. I’m not aware of any claims accounting for the government’s failure to aid those stranded folks other than the watery lie.

        Had citizens attempted to get folks out (and I think there were fleets of private buses and whatnot donated for just that purpose ) they would have had to cross a line established by the cops and risk reprisals.

        It was an utter fiasco perpetrated on a bunch of folks by Bush and the Boys for no readily apparent reason.Report

      • Avatar Kimmi says:

        Stillwater,
        You realize that New Orleans didn’t have an evacuation plan? Not a real one that would work, ever? This fiasco was planned — intentionally. (Granted, bush made it WORSE).

        The next time thousands (or millions) of people start dying, mostly remember, we could have planned for this. [Sometimes, people even get paid to plan to prevent genocide, only to see the damn plans thrown out.]Report

  22. Avatar LWA says:

    I think Roger had a good observation that surge pricing is offensive to people, even apart from its economic benefits.
    Because even if we grant the economic argument, the concept of people immediately trying to profit from a disaster violates the notion that in an emergency everyone behaves nobly and altruistically.

    Again, we can stipulate that having such an expectation is unrealistic and counterproductive; that profiting off an emergency may in fact be beneficial in the medium term. And in this specific case, it appears that what Uber is selling is a frivolous convenience, something that harms no one if it is unavailable.

    But long term, losing the bonds that tie us together- that sense that we each should be cognizant of the overall welfare of the group- could be the bigger loss.
    I’m not even talking in terms of some emotional response; If I don’t feel bonded to others in the group, recognizing their rights becomes optional.Report

    • Avatar James Hanley says:

      But long term, losing the bonds that tie us together- that sense that we each should be cognizant of the overall welfare of the group- could be the bigger loss.

      Nonsensical mythological thinking. You don’t have any bonds to 99% of the people in your urban area. You only have bonds to the idea of having bonds. Your worldview is, I think, essentially medieval.Report

      • Avatar LWA says:

        Do you really think I am alone in celebrating patriotism, society, group identity, the notion of community, that we are bonded to each other?

        I’m not asking you to accept those ideas- but do you think they may be held by a great many people, whose opinions drive public policy?Report

      • Avatar Michael Drew says:

        Ideas about levels of social capital (trust, willingness to cooperate, freely offer help, etc.) in societies are essentially medieval?Report

      • Avatar James Hanley says:

        No, LWA, I think there’s a great number of people who hold those mystical medieval views. But the number of people who believe an idea has no bearing on it’s truth value.Report

      • Avatar James Hanley says:

        No, Drew, emphatically not. Those are not the same thing as believing that we have bonds because we live in the same city or country.Report

      • Avatar Kimmi says:

        James,
        I’m sure you’re familiar with psychosomatic stuff.
        http://psycnet.apa.org/journals/gdn/10/4/272/Report

      • Avatar Michael Drew says:

        Baloney. In any case you’re nitpicking how how expresses it. Clearly what he’s referring to is social capital.Report

      • Avatar LWA says:

        But James, surely you have spoken to medieval peasants who hold that the basis of government should be a anarcho-syndicalist collective, based on a rotating board of governors chosen by the people!Report

      • Avatar James Hanley says:

        No. Patriotism is not required for social capital. Believing that you and I have “bonds” because we’re Americans is not required for social capital. It can feed into social capital, of course, but it’s in the nature of a golden lie to do so. LWA isn’t just arguing that we ought to trust each other, and work together–he’s saying that these bonds are there, because we share a city/country.

        The problem with his “our group” approach, though, is that it treats our group as more deserving of our concern and commitment than their group.

        Look, if you want to make an empirical argument that we’re better off with trust in each other, I’m fully on board. If you want to make a normative argument that we therefore ought to have, and develop, and promote, mutual trust, I’m fully on board.

        But if you want to make an empirical claim that we necessarily are bonded together because we both live in L.A., or Florida, or the U.S., then I say that’s mythology. And if you want to make a normative claim that our group comes before their group, I say that’s tribalism and I want nothing to do with it.

        Consider the story of the Good Samaritan. The parable relies on 1) the bonds of fellowship between two persons of the same people not being, empirically, strong enough to induce one to help the other, and 2) the proper concern being for the person and having nothing to do with these supposed bonds. That’s a lot better story than “we are bonded together just because we live within some artificial boundaries.”Report

      • Avatar James Hanley says:

        Clearly what he’s referring to is social capital.

        I’m always amused by this, and probably guilty of it myself. “He didn’t use the words I’m using, or the words you’re using, but obviously he meant my words-that-he-didn’t-use and you’re a really horrible person for thinking he meant you words-he-didn’t-use.”

        😉Report

      • Avatar James Hanley says:

        LWA,

        I get that you’re joking, but I don’t get the joke.

        I’m a humorless sunuvabitch, probably.Report

      • Avatar Kimmi says:

        James,
        it strikes me that libertarianism dovetails nicely with the whole “citizen of the world” thing.Report

      • Avatar Michael Drew says:

        I just think that it’s pretty damn clear that he’s not just in the ballpark of social capital, but, like, playing second base in it maybe slightly out of position for the particular batter/pitcher/baserunning/outs situation, so that if you’re jumping down his throat for not using your preferred vocabulary to express that, then that’s all you’re doing. And it’s something (jumping down his throat if not for barely misexpressing a concept) which you have made abundantly clear you love to do when it come to this one particular commenter. If you wanted to read his comment as referring to social capital, which would have been acceptable to you, it was right there for you to do that.

        But it seems you didn’t want to; it seems you wanted to read them as something odious backward to you. So you did.

        😉Report

      • Avatar Michael Drew says:

        As to what you are saying LWA is arguing in your longer comment (that I didn’t see), I don’t see hardly any of that anywhere in his comment.Report

      • Avatar James Hanley says:

        Well, no, but there’s no point in pursuing it.Report

      • Avatar LWA says:

        @james-hanley aw man, I even made a link and everything. It shows a medieval peasant articulating his philosophy of governance.

        @michael-drew
        Were I better versed in theory, I might have used the word social capital. But being just a Real American who wears barn coats and drives a pickup truck, I used words that the Palin clan might understand.

        But as long as we are here- I really find it mystifying how people who can be so eloquent and passionate about gay rights, women’s rights, who are so adamantly opposed to torture and war-making, suddenly develop this blind spot about human nature.

        As if human rights are somehow a separate detached thing, independent of the rest of the suite of human desires and aspirations.

        Our desire for liberty is universal and self-evident, holding true across time and geography, but the desire for brotherhood is a quirky fetish shared by only a tiny sect.

        I honestly just can’t grasp the logic that leads one to this place.Report

      • Avatar James Hanley says:

        LWA,

        Well, I like Monty Python, but I’m still not following you. Sorry, just write me off on that one.

        As to a desire for brotherhood, we’ve been over this ground before and you continue to misrepresent me. I’m not against brotherhood (although I’d prefer a less gendered term, if someone can hand us one). I’m against the myth that you and I are brothers because we both live in the U.S., but that the Syrian shopkeeper who fed me breakfast in his store the morning of the day I flew out of Syria, who called his uncle to come over and share it with us, and had him take a picture of us with our arms around each others’ shoulders, is less my brother than you because we don’t share a city, state or country.

        I don’t believe in enforced or assumed brotherhoods. “You live here, so you owe your allegiance to us.” I believe in voluntary brotherhoods.

        There’s the fundamental error you keep making, is to assume that my opposition to your vision of brotherhood is opposition to brotherhood itself. And I’ve said this enough times now that I can’t think of a charitable interpretation of your reason for continuing to make that error.

        I have brotherhood with the neighbor to the left of me, and to the neighbors in the two houses to the right of me. We like each other, we get along, and we help each other out with things. The woman across the street? Nobody in the neighborhood likes her–she’s not part of our brotherhood. Oh, we’ll treat her with human decency, we’d call the cops if we saw something suspicious around her house, and I tried to help her open her car door that day the lock was frozen, but not because I see her as part of my brotherhood–just out of general willingness to help folks, even if they’re Samaritans.

        But you? I’m sure you’re a fine neighbor, and if we lived or worked together we might be part of a brotherhood. Maybe as fellow OTers we even are part of a brotherhood. But you’re not my brother just because you’re an American. And that guy three blocks away whom I’ve never met and don’t even know exists, just as he doesn’t know I exist? We’re not part of a brotherhood, either.

        But I’m in multiple overlapping brotherhoods. Some of them even include people I don’t really like, but they’re family, or good friends of good friends, or–as my daughter says of a guy whose been on the same swim team for years–“frenemies.”

        So, please, stop trying to make this be about being against the human need for fraternity, sociality, and belongingness. That’s a very inaccurate interpretation of where I’m coming from.Report

      • Avatar LWA says:

        No, we just have 2 different versions of the word brotherhood.

        When 18th and 19th century writers used the word brotherhood, when unions use it today, which version do you think they meant? Voluntary or assumed?Report

      • Avatar James Hanley says:

        What do you mean, “no”! Your two types of brotherhood sound like the two types I just described.Report