Home Business Yes, Of Course John Naughton Is Ill Informed About Uber

Yes, Of Course John Naughton Is Ill Informed About Uber

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Why would you think otherwise given that it’s John Naughton writing?

For Uber is a very naughty company given that it tries to classify its drivers as contractors, not employees. Tsk, eh, Tsk!

This “economy” is neoliberal because it embodies the idea that society consists only of markets and individuals.

Why, it’s even neoliberal!

And then he falls over because he’s not bothered to work out the facts of the case:

So much for the neoliberal lexicon. But the gig economy is also a racket because it’s based on a dodgy business model. Many of the companies burn money like it’s going out of fashion. Uber lost $8.5bn in 2019, for example. “We have incurred significant losses since inception, including in the United States and other major markets,” the company wrote in its SEC filing. “We expect our operating expenses to increase significantly in the foreseeable future and we may not achieve profitability.”

The reason Uber isn’t profitable is because its rides are cheaper than those of conventional taxi firms. And that’s a feature, not a bug: it’s a strategy to drive conventional firms out of business. The money it’s burning belongs to investors (such as the Saudi sovereign wealth fund) who are betting that once the company is the only one left standing, they will have a monopolistic asset on their hands. This is “creative destruction” at its most vicious.

The thing being that, well John, how to put this. Taxi drivers are contractors, not employees:

Andrew Girard pulls a green Yellow Cab Nissan into a gas station on Sebastopol Road in Santa Rosa after an all-night shift that lasted 14 hours.

“We all work for ourselves,” said Girard, who has been driving a cab for five years. Usually he drives nights from 7 p.m. to 7 a.m., including lucrative weekend night shifts. “We go anywhere.” One ride last year took him from Santa Rosa to Oregon and yielded a $1,500 fare.

Santa Rosa is in California.

“In Santa Rosa, I’m the only company left,” Neese said. “They’re not independent. They’re self-employed,” he said of drivers. “They have their own franchise permit with the Santa Rosa police department.”

And:

Taxi drivers are generally contractors. While many say they might benefit financially by making minimum wage and overtime plus benefits, they also fear their industry is so financially precarious that the additional expenses could make it collapse.

Seriously Naughton, couldn’t you be bothered to even find that out?

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2 COMMENTS

  1. Where taxi fares are regulated, they are a ceiling not a floor. Absolutely ANYBODY is free to charge whatever the hell they like as long as it is at or below that ceiling. Something that millions upon millions of traders have noticed for centuries, dropping your prices is likely to increase your sales; dropping your prices below your competitors is likely to get your competitors’ customers to shift to you. This isn’t even economics, it’s not even mathematics, it’s sums.

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