Uber: Poster Child For Free Markets

 

Last night, my wife had a stomachache and asked if we could take a taxi home from work rather than the metro. I’ve had mixed experience with cabbies and — given the combination of high price and great unpredictability — I avoid taxis wherever I can. Still, I wasn’t the one with a stomachache, and a few extra dollars is a small price to pay for a happy and comfortable wife.

I was all ready to hail a cab when I remembered that I had a $20 credit toward my first ride with Uber, the online driver service/app, so I decided to give it a try. Result: I’m never taking a cab again.

Uber isn’t a taxi company, so much as a marketplace that directly connects willing drivers and clients. Its drivers are independent contractors, and — after passing a background check, an online customer service test, and showing proof of various documents — can begin taking clients through a mobile app, setting their own hours, and choosing clients wholly at their own discretion. Uber takes 20% of the fare, provides drivers with a special iPhone, and offers liability insurance. It’s currently available in 100 cities and has gotten itself into a number of highly public disputes with taxi companies and local governments that, depending on your point of view, either regulate the industry or unnecessarily restrict access to it.

What’s wonderful about Uber and similar services is how transparently entrepreneurial and voluntary they are. Uber drivers have full discretion in choosing their clients and no obligations with regard to the hours they keep. When an Uber driver responds to your request, you know he wants to be there and provide the service you requested within an agreed-upon price range (how those ranges are set has led to another controversy). The app is incredibly user-friendly: the fare was charged directly to the credit card I’d registered with the service, and I was automatically emailed a receipt that detailed the route, duration, and charge for the trip, as well as an invitation to rate the driver (a stand-up guy; I gave him five stars).

With the possible exception of eBay — though even it lacks the interpersonal nature of Uber — I can’t recall a more elegant and efficient demonstration of how free markets are supposed to work: one party is willing to trade money for a service while the other is willing to trade the service for the said amount of money. Then they both leave with something they valued more than what started with. Everyone wins.

As Elizabeth Nolan Brown argues in Reason, it’s just one of the more visible aspects of a growing trend of technology-assisted markets allowing more people to act like entrepreneurs even if they are — legally speaking — freelancers:

It’s fair to assume [that functional entrepreneurship] has increased, considering economic realities and all the attention paid to the rise of what’s often called the “sharing economy.”…

[A]n under-appreciated aspect of this economy is how it puts self-employment, of sorts, in many more people’s reach. Sure, companies like Uber, Lyft, and AirBnB (to name just a few prominent examples) are making things easier for consumers. And they often come with neat origin stories, too. But they’re also allowing individuals “to bring their marginal capital and/or labor into productive use,” as the R Street Institute put it. They’re granting more workers more autonomy.

And more kinds of workers, too. Since the entire transaction is logged, mapped, and date-stamped online — along with everyone’s name and contact information — Uber has a number of safety features cab companies currently lack. This not only appeals to female passengers, but also appears to have opened the driving industry to women.

Markets aren’t perfect, but they can do amazing things when allowed — both for those selling and those buying. Republicans could do worse than choose easy-to-understand examples like Uber when making that point.

 Image Credit: Flickr user Adam Fagen.

There are 12 comments.

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  1. Frozen Chosen Member
    Frozen Chosen
    @FrozenChosen

    I’m amazed by the disconnect many people – especially millenials – have between free market approaches like Uber and voting for politicians who are opposed to free markets.  I honestly believe that most folks just don’t pay attention to politics beyond whatever sound bite they hear or what their friends tell them while things like Uber directly involve them so they will spend time checking it out.

    If they really knew how deeply Democrats were invested in all of these crusty old paradigms that don’t work like taxi monopolies and teacher’s unions and import/export banks they would never vote for a Democrat again.

    • #1
  2. C. U. Douglas Thatcher
    C. U. Douglas
    @CUDouglas

    Frozen Chosen:

    I’m amazed by the disconnect many people – especially millenials – have between free market approaches like Uber and voting for politicians who are opposed to free markets. I honestly believe that most folks just don’t pay attention to politics beyond whatever sound bite they hear or what their friends tell them while things like Uber directly involve them so they will spend time checking it out.

    If they really knew how deeply Democrats were invested in all of these crusty old paradigms that don’t work like taxi monopolies and teacher’s unions and import/export banks they would never vote for a Democrat again.

    I suspect the problem is that most don’t know what Free Markets are, what the definition really means. 

    • #2
  3. Fricosis Guy Listener
    Fricosis Guy
    @FricosisGuy

    As Jim Pethokoukis tweeted, David Plouffe has joined Uber. Sadly, the company has had to find someone to help them navigate the rent-seekers.

    I can just imagine Plouffe’s interview pitch: “Nice company you have here, shame if something happened to it.”

    • #3
  4. BD Member
    BD
    @

    Uber will probably run from any attempt by conservatives to adopt them.  These tech guys seem to be liberal on every issue but the ones that directly their businesses.   Even then, they usually back the liberal position (higher taxes, racial quotas) while quietly avoiding implementing it themselves.

    • #4
  5. Mike H Coolidge
    Mike H
    @MikeH

    Republicans: The party of Uber?

    Though, while Reps are better on free markets, most tend to be almost as technocratic as the blue guys.

    • #5
  6. Rawls Member
    Rawls
    @Rawls

    The RNC put up a “support Uber” petition earlier this month.

    http://www.gop.com/act/support-uber-petition/

    • #6
  7. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    I just read about Roost, a startup that’s like AirBnB, but for storage. People who have some extra storage space in their garage, attic, barn, etc, can sign up and offer the space up for others to rent.

    Traditional self-storage facilities can be expensive, and they’re often not in terribly convenient locations. If Roost takes off as well as Uber or AirBnB, you might be able to find available storage space closer to your home or business.

    http://techcrunch.com/2014/08/20/airbnb-for-storage-startup-roost

    (Apropos of nothing, but when I finally get around to renovating my summer cottage I plan on renting it out via AirBnB. When I finally move out of my condo and into a single-family home I’ll have a hard time deciding whether to sell the place or to rent it out.)

    • #7
  8. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Frozen Chosen: I’m amazed by the disconnect many people – especially millenials – have between free market approaches like Uber and voting for politicians who are opposed to free markets. 

    Do you have data that shows that the millenials who vote for politicians opposed to free markets are the same millenials that support companies like Uber?

    After all, as a group millenials don’t vote in huge numbers, period.

    It’s kinda like the common belief that college kids in the late 60s were against the Vietnam War, but polling from those years suggest that college kids were much more supportive of the war than were the older generations (who had already experienced war first-hand).

    • #8
  9. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Mike H:

    Republicans: The party of Uber?

    Though, while Reps are better on free markets, most tend to be almost as technocratic as the blue guys.

    Taxi companies can donate to Republican candidates just as easily as they can donate to Democratic candidates.

    In my town, there’s one company with a virtual monopoly over the taxi industry. Guess which company is the top donor to municipal politicians, regardless of their political affiliation. Go ahead, guess!

    • #9
  10. iWc Coolidge
    iWc
    @iWe

    I am staying in an AirBnB place now – and several over the next month. It is a HUGE win all around.

    • #10
  11. Nathaniel Wright Member
    Nathaniel Wright
    @NathanielWright

    Fricosis Guy:

    As Jim Pethokoukis tweeted, David Plouffe has joined Uber. Sadly, the company has had to find someone to help them navigate the rent-seekers.

    I can just imagine Plouffe’s interview pitch: “Nice company you have here, shame if something happened to it.”

     And here I think is the problem. Uber will now migrate from the free market into rent seeking activities. That didn’t take long did it? 

    • #11
  12. Susan in Seattle Member
    Susan in Seattle
    @SusaninSeattle

    iWc:

    I am staying in an AirBnB place now – and several over the next month. It is a HUGE win all around.

     I, too, have made use of AirBnB: fantastic. 

    • #12

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