Archive for April 17th, 2015

by William Skink

Before our eager MT legislators champion a bipartisan push to deregulate taxi service in Montana for Uber, they might want to read about the Uber battle in Madison, WI.

Here is a good description of the exploitive business model Uber and Lyft have taken advantage of. The municipalities fighting back are facing aggressive marketing campaigns:

Both companies claim to be “disruptive innovators” that shake up the status quo in the out-of-date taxi industry that still relies on human beings to do the work of matching people with rides through dispatch offices.

But there is nothing innovative about serving the function of an exploitative middleman.

In fact, it’s as old as the unregulated market itself.

In this unregulated market, workers can get exploited, price gouging can arise, and the risks to public safety can escalate.

Drivers sign up to be “partners” with Uber or Lyft and access customers through a smart-phone app. Customers give their credit card and social network information to the companies, and then sign into the app and request a ride from the nearest available “partner.” The company takes 20 percent of the charges off the top and the driver keeps the rest.

Drivers are responsible for all operational and maintenance costs. Most people who drive for Uber and Lyft do not carry commercial insurance and are, in fact, committing insurance fraud by not disclosing to their insurer that they are using their vehicle for commercial purposes.

If drivers are injured on the job, they are not covered by workers’ compensation. All the risk and capital investment are shouldered by the driver, while the fat cats at Uber and Lyft headquarters in San Francisco reap a risk-free reward.

In addition to exploiting labor by externalizing risk and vacuuming up profit, Uber drivers are sometimes not on the up and up. Surge pricing gauges customers, and sometimes even worse things happen than an obscene bill:

Uber claims to be matching supply and demand for rides through what it calls “dynamic surge pricing.” When demand for rides outstrips the current supply of drivers, the price for rides multiplies, sometimes up to 775 percent. That’s what happened to New Yorkers last winter during a blizzard, when at least one customer was charged $132 for a six-block ride.

On New Year’s Eve in San Francisco, a man who was allegedly logged in to Uber’s system and had passed a background check as a driver for the company ran over and killed six-year-old Sofia Liu. Her family is suing the company, which has denied any wrongdoing.

In other incidents in Washington and Los Angeles, Uber drivers allegedly kidnapped passengers. One driver took a drunk woman to a cheap motel and spent the night with her, according to the Los Angeles police.

Local and state governments are trying to find a way to deal with aggressive marketing by Uber and Lyft. California and Colorado have passed laws regulating the companies. Public service commissions in Nebraska and New Mexico, as well as the Virginia Department of Motor Vehicles, have placed explicit bans on their operations.

Some cities—including Baton Rouge, Chicago, Columbus, Detroit, Houston, Los Angeles, Milwaukee, Minneapolis, Seattle, and Washington—have passed local ordinances to govern them. Ann Arbor, Memphis, and St. Louis have taken a harder line, issuing cease and desist orders, impounding vehicles, and levying fines on drivers.

North Carolina went the other way and actually passed a law prohibiting municipalities from regulating what they call “digital dispatch” services. This effectively gives Uber free rein to operate anywhere in the state without having to abide by taxicab ordinances.

Twenty-one states have now issued consumer alerts warning the public that anyone who steps into an Uber or Lyft vehicle takes a big risk, and the University of California is considering barring employees from using these services during business trips citing liability concerns.

So how does Uber respond? They hire some lovely people to help them:

Uber is responding by bringing out the big guns. In August, Obama campaign manager David Plouffe joined Uber as a senior vice president of policy and strategy, and in mid-September former Defense Secretary Robert Gates signed on as chair of the advisory board to UberMilitary, a program to recruit veterans (and their personal vehicles) as “partners.”

In an attempt to build political support, Uber also sponsors big national conferences and offers discounted fares for attendees.

Last summer it sponsored Urban Shield, a weapons and tactics convention in Oakland. It also used Mothers Against Drunk Driving to promote its service over the Fourth of July weekend.

And the company is recruiting its customers to lobby on its behalf. Uber offers free and discounted rides to new users, and then tries to turn them into political supporters to fight the corporation’s battles with local and state government. Since there is actually no corporate office or local staff in most of the cities in which it operates, Uber exploits the time and energy of its “partner” drivers and customers to wage its ground wars on its behalf.

Uber’s strategy and ideology perfectly mesh with the rightwing attack on government regulation, and it makes no bones about that. It has joined forces with the Republican National Committee and Generation Opportunity, an astroturf group backed by the Koch brothers, to inundate social media with pro-Uber propaganda urging support of the free market and innovative entrepreneurs.

It has also gained the support of government-drowner Grover Norquist. In an opinion piece for Reuters’ website, Norquist explained why Republicans are so keen on promoting Uber. His piece was entitled: “Why Uber Can Help the GOP Gain Control of the Cities.” These new-fangled taxi companies “are favorites of city dwellers, which means most of the leading Democratic constituencies—including educated professionals, gays, minorities, single women and working mothers,” he wrote. “Cities may soon be up for grabs. For the party’s refusal to embrace the innovative technology and disruptive businesses that have greatly improved city life presents a challenge to Democrats — and an opportunity for Republicans.” He hailed the companies as shining examples of the post-union “share economy.”

Uber and Lyft entered the market in Madison, Wisconsin, this February, kicking off a major political battle.

“This is more than a discussion about taxicabs. It’s about place and values,” Paul Soglin, the mayor of Madison, said as he began his presentation to a city committee charged with exploring ordinance changes to regulate Uber and Lyft.

Reminding committee members that regulation exists to “bring equity to the marketplace and to ensure the health and safety of the public,” Soglin mounted a vigorous case for thorough regulation.

In case you missed it, let me highlight this part:

It has joined forces with the Republican National Committee and Generation Opportunity, an astroturf group backed by the Koch brothers, to inundate social media with pro-Uber propaganda urging support of the free market and innovative entrepreneurs. (my emphasis added)

Backed by the Koch brothers, huh? Normally I see our tech-savvy legislators on Twitter bemoaning the influence of the Koch brothers. Kind of awkward to see one of those legislators now cheerleading for the same thing a Kock-backed group is being paid to advocate for.

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