Uber Tales

  • Posted: June 27, 2017
  • Category: Blog
  • 1 Comment

Among the many announcements of breathtaking opportunities to save money on truly valued products in my email’s inbox a few days ago was an email from Uber. Uber’s emails come like clockwork every week, but this one really made me sit up and take notice. I should block all these commercial emails, but then I wouldn’t get any email. And every once in a while, Snorg has a really cool nerdy t-shirt for sale. But this email from Uber made my heart stand up and sing.

In the very near future, Uber will finally bring to market a groundbreaking enhancement their customers have been clamoring for. Starting soon, very soon, we will be able to tip our Uber driver. The tag line on the email notification announcing this long awaited innovation ended with an exclamation point! Like “Wow”, the world has been waiting for this. And now tipping is here, “Yay”!!!!

As you may have guessed, I am speaking ironically here, perhaps even sarcastically, my tongue so far in cheek that I am in danger of swallowing it. I have a strong animus against the practice of tipping service people for simply doing their job. I use the word animus, even though the word “hate” is a decidedly more accurate description of my feelings about the practice of tipping.

Hate is a word rapidly falling out of common usage among polite people. A large part of its fall from grace stems from the word, hate’s, emigration from the vanilla neighborhoods of verbs into the chic downtown high rises of a compound noun, i.e. hate speech. Thus to hate has become something of a social faux pas, unless of course it is used to justify another compound noun, social justice.

To return before we go too far down that particular rabbit trail, tipping is a reviled business practice of the American’s. Tipping is only slightly less irritating than our other innovation, being charged for the practice of being courteous to ones fellow passengers and checking one’s luggage. As a long-time and frequent business traveler, taxis were always near the top of my Top Ten List; “Most Dismal Experiences on a Business Trip”.

Uber brought a breath of fresh air, both figuratively and actually, into what had been an irritating necessity in the depressing experience of the urban business trip. Removing the bland hypocrisy involved in tipping the taxi driver was no small part of Uber’s pleasant alternative. But now that small bit of joy is going the way of boarding an airplane without undressing.

But Uber has much bigger concerns these days than its customers’ satisfaction. Somehow Uber has found itself squarely in the crosshairs of social controversy. Let it be said at the outset, that social controversy is never a good thing for customers. Instead of getting on with our lives, we must now make plain our deep concern and support for (put someone else’s pet cause here) whenever we buy something.

Uber has brought so many good things into the urban experience; a pleasant ride in a clean car from the airport into downtown, dependable passenger pickups with a price known in advance, a good source of income for people with time to spare. What’s not to like? Why does Uber have to be a concern of the SJWs (Social Justice Warriors)? Uber doesn’t use coal. Give Uber a break. Please!!

But Uber’s image has changed, not only in the mosquito infested fever swamps of social media, but also in the “serious” press. If one didn’t know better, we might think Uber to be an oil company or a company that built pipelines. Every day brings a business page headline highlighting Uber’s ugly side, the hateful (there’s that word again) business practices of Uber. While this is standard treatment for most businesses, it is very unusual for a Silicon Valley darling to get this treatment. Uber is now a man bites dog story.

How did Uber get to this crazy impasse? Silicon Valley is the latest iteration of Darwin’s Theory, red in tooth and claw. The Tech Titans of the West Coast have risen to power over the bleeding carcasses of ravaged enterprises and businesses. The list of their victims is long and varied; Wang, Sears, Polaroid, Encyclopedia Britannica, the yellow pages, Xerox, etc.

Perhaps no group of men, actually boys, in the long and brutal history of humanity has put more people out of work, ruined more enterprises and destroyed more existing wealth. At the same time as this widespread and ruthless rampage, these boys have amassed wealth and power that would embarrass even those reviled men who came before, Crassus, Carnegie and Rockefeller, etc. Kublai Khan, living in a city of gold built from the blood stained loot taken from the smoking city ruins conquered by the Mongol Horde, was a piker compared to the boys of Silicon Valley.

But rather than being reviled, these boys, these Tech Titans, are celebrated. They are cheered on when they grace the vapid circles of Hollywood celebrity. The Tech Titans are an updated version of Leonard Hofstadter (The Big Bang Theory) dating Penny. We may not say it, but we know deep in our being that these boys are the first wave of Homo Superior.

Of course we all love a winner. We all find it more pleasant to rub shoulders with rich ***holes than poor ***holes. But giving credit where it is due, these boys have created more jobs than they wiped out. They have built as many or more enterprises than they ruined and they have created more wealth than they destroyed. As an obvious and well-appreciated bonus, the losers from Silicon Valley’s revolution live in fly over country and are deplorable people, while the winners live on the coasts and are adorable people.

Over the past three decades, Silicon Valley has been a huge wrecking ball in the US economy. But it is important to remember that the wreckage was all in the private sector. All’s fair when the deplorables are getting slapped around. It’s just business. But unlike its fellow wreckers, Uber chose to make unleash its own creative forces of destruction on more dangerous turf, the urban environment, or the big city as it is known in flyover country.

To understand Uber’s impact, pause for a moment and contemplate a factoid. A New York City (NYC) taxi medallion was worth $ 1.3 million only a couple of years ago. These taxi medallions are now selling for $ 300 thousand. A little known fact is that each taxi in NYC, as well as other large urban areas, requires a permit known as a medallion. There are a limited number of medallions and if the transaction and buyer are approved by the city, these taxi medallions can be bought and sold. That approval by the city is of course a very big if and can be quite costly. Given that NYC has issued some 13,500 medallions, this might imply that Uber has cost the owners of NYC’s taxi fleet some $ 13.5 B, as in billion. Multiply that by other big city taxi fleets and we’re starting to talk serious money, perhaps $ 100B?

Now if that $ 100B belonged to Polaroid shareholders or caused the loss of jobs for Rust Belt factory workers that would be one thing. But this money belonged to another class of people. To understand the difference in the harm Uber hath wrought, to illuminate the very serious nature of the loss Uber is responsible for, we must briefly examine the way urban areas operate, particularly those dense metropolitan areas on the coasts, including of course the coast of Lake Michigan.

Cities of a particular size operate on patronage. Of course all governments operate on patronage, to believe otherwise is to believe that cars run on sunshine. It is just that the system of patronage is more open, more obvious, more blatant in city governments. The Romans gave us the word, patronage, and were the first to truly develop it into a sophisticated system of government. With development of the soft sciences, educated men and women called “Economists” sought to explain this mechanism by which governments operate. They came to call the system of patronage by another name, “rent seeking”.

Patronage, or “rent seeking”, is the real world application of market economics to the workings of governments and it describes how city governments work. The people in city government have jobs because they trade favors with people that can deliver votes and or money, preferably both. People in city governments keep their jobs because they trade favors with people that keep things running smoothly.

City governments control what, where and when things within the city are allowed to happen. This control is the currency that city officials bring to the marketplace of patronage. For instance, city officials often do favors for union chiefs who in turn ensure the garbage is picked up, the snow is plowed and their members vote for the appropriate city officials. In another example, city officials do favors for community activists who in turn deliver votes for the appropriate city officials or put angry people on the streets at the appropriate times and places. Of course city officials often share meals and fact-finding excursions with developers contributing money to campaigns and slush funds, and in their turn receiving inside information and preferential treatment. For patronage to work properly, it takes many different things. But a very important condition is that city officials have the ability to deliver on promises. Otherwise chaos rapidly ensues.

Uber badly upset the apple cart on both sides of the patronage system. City officials can no longer control the taxi business within their borders. As a result, city officials can no longer deliver on certain important promises. As a result, their friends and associates depending on them in the taxi business lost on the order of $ 100 B in a very short period of time. Obviously this makes some very serious people on both sides of the patronage engine very angry. These people are not used to the rule of the invisible hand of the market, in fact to bow to market forces is a nullification of patronage. Given the politics of big cities, these angry people are virtually all Democrats. Unlike the shareholders and employees of Polaroid and Kodak, they are going to fight back.

In fact, but for an unfortunate fact, Uber would have been put in its place long ago. But there is a problem, an inconvenient truth if you will. Uber is a large and influential member of Silicon Valley and Silicon Valley is the Democratic Party’s golden goose. In a by now ritualized rite of passage, national Democratic politicians must humble themselves, making a pilgrimage to Silicon Valley when they need money. This presents a tough problem, almost impossible to come to grips with.

Urban Democratic politicians know that Uber must be brought to heel or there will be hell to pay, but how? A large part of the problem is that the Democratic congress people like Uber because they have to get around in cities too. Sometimes these Democratic congress people forget that nearly all of the votes electing them to Congress are in the control of a city mayor wanting something done about Uber.

It shouldn’t be that hard to crash Uber, an unfortunate choice of words that. But the most powerful of government’s levers used to force companies into favored behaviors, regulatory agencies and trial lawyers, are largely ineffective against Uber. But where there is a will there is a way. Uber is a faithful mirror to the rest of Silicon Valley, an almost perfect example of everything the modern Democratic Party is against. Diversity in Silicon Valley? Ha ha, you are kidding right? Fair Labor practices in Silicon Valley? Check out Amazon’s wage rates for warehouse workers and compare them to Walmart. Where in the Third World do all those Apple phones get made? Environmental compliance in Silicon Valley? Where do all those rare earth elements used in tech gadgets come from? Oh, mines located in China’s frontier provinces. Ah yes. The list goes on.

Actually in a perfect world, Silicon Valley should properly be vilified, just as those other despoilers of the Earth Mother, power companies, oil companies, McDonalds and Tyson Foods. But patronage works on a national scale as well as locally, just somewhat less blatant. Twenty years ago a bargain between the Democratic Party and Silicon Valley came into being. The Tech Titans from Silicon Valley would give high profile lip service to the Democratic Party’s agenda and a river of money would flow into Democratic treasuries. In return, the Party would give a lifetime “Get Out of Jail Free” card to Silicon Valley.

Not all of the interest groups involved in the Democratic Party thought this bargain a good idea, but as everyone understood, money talks and something else walks. National Democratic politicians realize that the cities must suck it up for now, that sometimes it is necessary to accept some pain in the need to achieve the larger good. If there was just a way that Uber could be isolated from the other Silicon Valley darlings . . .

Another tried and proven way to force change, to alter corporate behavior, is to savage the CEO in the media. Uber’s CEO is a guy named Travis Kalanick, a hard driving abrasive college drop out. By all accounts he is a sexist misogynist, fostering a “frat boy” culture at Uber that is hostile to people of color, the LGBT community and women. But then, that simply means he is a clone of almost every other Silicon Valley CEO, at least the successful ones. Yes, Travis Kalanick is a bit of a jerk, but have you read any of Saint Steven Jobs biographies? And as Bill Clinton has so charmingly demonstrated over the past thirty years, “frat boy” culture is only a negative if you are a Republican.

But then the wheel of fortune rolled boxcars. In a truly breathtakingly stupid move, Travis Kalanick agreed to serve as an economic advisor to Donald Trump. Has any other leader blundered so badly in modern times? Hitler’s decision to invade Russia comes to mind. Bad call Travis, really bad call. Some things can be forgiven. Nearly anything will be forgiven if you are a Silicon Valley CEO, but not all things.

Back in the engineering business, we lived with mistakes everyday. Mistakes are unavoidable. But we all knew there was a category called “Mistakes You Can’t Make”. These are the mistakes that are unforgivable. Travis Kalanick made one of these mistakes.

Perhaps he could be forgiven his moment of hubris. Travis Kalanick had moved from success to success. He was a Silicon Valley CEO, the CEO of a startup that in only eight years had grown from nothing to a value of over $ 70B. He had successfully faced down all comers. His company’s name had become a generic name like Kleenex or Xerox before them. He was riding a wave of public good will. He was at the top.

But he had enemies, enemies just waiting for the right chance to take him down. Virtually every city administration in the United States, even the world, was looking for the opportunity to take back control of passenger traffic in their city along with the patronage coming along with that control. Uber’s investors had wanted to cash out by taking Uber public, but Travis Kalanick had said no. Now they waited for the opportunity to force his hand. Of course the SJW’s ached for the opportunity to take a high profile scalp. They hated the tradeoff’s that came with patronage, even though city slush funds made up a nice perk for the SJW leadership. But they ached for high profile scalps to prove their power in the real world outside the University.

And then Travis Kalanick sat down to dinner with the Devil himself, Donald Trump. He had left the Silicon Valley herd in his hubris and he no longer was protected. And then the knives came out.

 

 

 

One Response to “Uber Tales”

  1. esbenshade says:

    I was in the truck sales business when the industry was deregulated in early 1980’s

    Each truck line was grand- fathered in from the 1933 Motor Carriers ACT each line had

    a permit to haul certain goods. Wash DC set the price on each freight item.

    The Teamsters controlled the drivers at every truck line The DEMS loved it, the

    Teamster gave time and money to elect their canadiates, The ATA American Trucking Association gave money because they always needed a rate increase on the freight.

    Under deregulation many truck lines went out of business, Teamster lost power and millions of members. ATA was no longer needed as each truck line set their own freight rates.As the cabbies those 1933 hauling permits were very valuable, in one day the industry wrote off $20 billion in permits.

    The American public will never understand how much freight rates dropped for all goods and how much people save even today.

    Please please tell this generation Govt is NOT the answer to anything.

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