Taxis, Uber, and Public Services

How to Bust Unions and Skirt Regulation with the Technohipsters

Taxi drivers across Europe went on strike on Wednesday, June 11, in protest of Uber, a popular startup connecting commuters with folks who need a ride. The contests chafes at the edges of public services and private property.

Uber, allowing boutique shoppers to avoid working-class, licensed cab drivers and municipal safety regulations since 2009.

Uber, allowing boutique shoppers to avoid working-class, licensed cab drivers and municipal safety regulations since 2009.

On Wednesday, June 11, taxi drivers across Europe blocked the streets, refused service, and formed long chains of slow-moving cars nicknamed escargot in an effort to raise awareness over the hardship the popular startup Uber has caused them. Drivers in London, Paris, Berlin, and Madrid clogged the streets and brought much of city life to an hour-long standstill, demanding that Uber drivers be subject to the same rules, testing, and regulations that their cities and transportation agencies be subject them to.

Cab drivers in London clarified that Uber was not the sole source of their discontent. Transport for London, wrote one driver, “are failing to impose their own rules and regulations” on startups like Uber. The “big boys from the states,” meaning startups like Uber, “rolled into town and the TFL have just rolled over,” abdicating their responsibilities to regulate and train drivers under standard safety regulations. In London, vehicles have to be specially outfitted, drivers must pass difficult tests demonstrating a knowledge of important streets and buildings, and drivers undergo extensive training in safety protocols. Moreover, Uber drivers are allowed to use their phone’s GPS as meters, while taxi drivers must use specially designed and regulated meters.

All of these regulations were designed to protect riders from fraud, poor service, and injury. Few dispute that these regulations are necessary. Yet, the backlash is focused on the age-old technology versus unions debate, with a splash of private property versus public services thrown in for a kick.

In the many diatribes against the driver strike, commentators generally miss the mark. In one example, Matt Warman of The Telegraph titles his opinion piece, “An idiotic taxi strike over Uber: Striking taxi drivers are denying our digital age.” To him, that taxi drivers and Uber are regulated different is a “technicality,” himself believing that drivers want to be regulated differently, apparently ignorant that drivers are the only ones regulated in this scenario. The rest of his article is a paean to the wonders of technology eliminating old ways of transportation.

But Warman’s sentimentality toward the hip new digital age masks his real concern that cab drivers are actually using their bargaining power to exert pressure on politicians and the industry to affect his beloved free market. He uses a tail of the taxi industry’s own app, Hailo, which has its own, complex story that he boils down to anti-union platitudes. The app “incurred the wrath of the drivers it serves … and the word ‘scabs'” was written in graffiti across the company’s offices after a fight. He then assures readers that drivers are being emotional because the know their days are numbered. His argument is standard anti-union rhetoric capped off by the tired teleology insisting that drivers will again be challenged by a service undercutting them.

To say that he misses the point is overly generous. Drivers aren’t wrong to insist that apps like Hailo and Uber allowing private drivers to skirt costly vehicle modifications, licensing and training, and knowledge and safety tests, are profiting off of “scabs.” By skirting these regulations, the companies effectively weaken cab drivers’ bargaining power by reducing their customer base, subjecting them to stricter regulations, fracturing their membership, and profiting off of all the rules and regulations that San Francisco-based Uber doesn’t have to follow. Drivers aren’t demanding special treatment. They’re demanding a level playing field.

But I think this strike opens up a legal issue with far-reaching implications for tech startups. We live in a society with regulation, especially with regards to transportation. At what point does one’s right to give whoever they want a ride with their private vehicle become subject to transportation regulations? Is it at the point of sale? Or is it after so many rides? Uber currently profits off of this legal ambiguity by denying its existence: their drivers are private citizens, and Uber merely connect them to other private citizens. All they ask is a little off the top. This strategy has allowed them to effectively erode public services by establishing a decentralized empire of smaller, private services.

If drivers for Uber in the UK were subject to the same municipal codes as city cab drivers, the firm would probably be much less successful. They realize this, which is why much of their public tone is mired in the same rhetoric of technology and progress. They criticized the London Taxi Drivers Association of being “stuck in the dark ages, … intent on holding London ransom.” In the same message, they boasted that they saw an 850% increase in signups that day, declaring a victory for themselves, an “own-goal” for striking cab drivers.

For them to be victorious, they would have to get away with replacing the TfL while being completely free of the regulations and restrictions synthesized over decades of regulatory reform. So far, they have been successful in dodging those regulations, but there will be a court case emerging out of this between Uber and the LTDA over whether or not what Uber is doing counts as metering. No matter the outcome, if the case goes to court it’s a win for drivers. Their goal was to force the issue rather than see Uber go entirely unregulated while their own livelihoods withered out over a decade.

And if Uber wins? It seems to me that all transportation regulation goes out the window, and most drivers will probably switch to Uber, a huge loss for consumer protection and safety but a boon to investors. Cities in the US have been confronting this issue in the past year in the face of Uber flagrantly defying city law and trying to opt out of legal responsibility, with mixed results. Time will tell if corporate responsibility will prevail.

Unions and Public Companies

A Ballad of Exploitation

“Union” has become a pejorative in American political discourse. Here is why that is a bad thing, especially among employees of public companies.

Americans have largely fallen for the right’s revisionist accounts and media fear mongering about how the unions supposedly destroyed Detroit or Hostess. Discussions of unions on the internet and in most news outlet must be prefaced with the obligatory “I’m not categorically for unions, but…” to be taken seriously. In the late 2000’s, the number of Americans represented by a union is at an all time low.

Bygone days when labor was well-represented in U.S. politics.

Bygone days when labor was well-represented in U.S. politics.

This is bad, and here’s why.

Our businesses are setup in hierarchies, for better or worse. Almost uniformly, the way we judge the success of a business is by its profits. If a business reaches–or especially if it exceeds–projected profits, share prices soar. This works similarly for public or private companies. Even though they don’t have publicly traded shares, when profits soar for private companies, management gets richer through bonuses, pay raises, and the increasing worth of their business (meaning, if they choose to go public or sell out, their shares will be worth much more). This means that people at the top of a business get paid based on the profits of the company.

That doesn’t mean that management gets paid less if the company is not profitable. CEOs don’t generally get bonuses or pay raises when their company isn’t successful, but they will still be making much, much more than their employees.

Contrary to management, employees are paid based on whatever metric the company uses. Aside from a few exceptions, this tends to be at the discretion of management, rather than by seniority, loyalty, or productivity. Why? Because in the quest to drive up profits and run a successful business by our definition of success, labor costs must be treated as part of the cost of doing business. There thus tends to be incentive for management to stabilize or drive down wages to the lowest costs possible, making the minimum wage (if it exists) the wage floor.

Due to our expectations of what makes a successful company, employers must drive down the working conditions and wages of their employees to levels where productivity is not substantially altered so that profits remain high. Employers are thus pitted against employees.

But employers are at a stark advantage: they own and control all of the business’s property. They can set the terms of work, the wages, and the benefits because they can deny employees employment. (Incidentally, this is also why supporters of unfettered capitalism see a 0% unemployment rate as a bad thing–to function like this, they need a constant supply of people ready to fill in for their former employees on the cheap.)

More perversely, the United States has a tax code that is setup to promote this conflict in interest between labor and management. Remember the heart-warming reporting in the mid-2000’s amidst the financial crisis of CEOs taking $1 pay in order to right their sinking ship? This was a stroke of brilliance that exploited a nice tax loophole. CEO’s could take a $1 salary, but be paid in stock options worth millions. Because it’s far easier to exploit loopholes in capital gains tax rates (paying as low as %20) than if they were paid a salary (nearly %40). Moreover, such incomes are exempt from paying into Social Security and Medicare. Even if they weren’t, the ridiculously small cap on taxes paid to those programs would be met early in the year.

So what we have is a system stacked to benefit employers to the detriment of employees. Labor unions used to be the great force of democracy for the workplace. Today, labor union membership is only 11.3%. Only 6.7% of employees in American businesses are in unions. The result? Record profits, rising CEO pay, stagnating wages, and increasing levels of inequality.

Caricaturing Capitalism with the Cato Institute

How Marian Tupy Misunderstands the Pope; and in the Process, Misrepresents the World

In yesterday’s The Atlantic Cato’s Marian Tupy caricatured the gains of capitalism by focusing on averages, rather than growing extremes to undermine the Pope’s focus on poverty. I can’t believe I’m doing this, but I have to side with the Pope here.

DJ Groethe is probably a libertarian. It hurts me to say it. I have long been a fan of his work spreading science education and critical thinking. But when someone tweets the level of garbage in Marian Tupy’s “How Pope Francis Misunderstands the World,” it’s clear that Groethe’s critical thinking apparatuses shut off completely at the point of libertarianism and neo-liberal economics.

Public Enemy Number 1 at the Cato Institute

Public Enemy Number One at the Cato Institute

In his recent article in, of all places, The Atlantic, Cato policy analyst Marian Tupy takes aim at the Pope for talking about a world that Tupy doesn’t think exists. He centers his article around the Pope’s belief that unbridled capitalism is enriching the few at the expense of the poor.

We have to remember that the majority of our contemporaries are barely living from day to day, with dire consequences. A number of diseases are spreading. The hearts of many people are gripped by fear and desperation, even in the so-called rich countries. The joy of living frequently fades, lack of respect for others and violence are on the rise, and inequality is increasingly evident. It is a struggle to live and, often, to live with precious little dignity.

Pope Francis

It comes as no surprise that a policy analyst would have a few numbers to go against the dystopia that Tupy disputes. Washington, Tupy writes, issues 81,883 regulations per year–9 per day!–according to a conservative think tank. He cites another conservative think tank’s iffy numbers about how more than 40 percent of all wealth produced in America is redistributed. Rich people pay the most of the tax, well in excess of “the biblical tithe,” Tupy reminds us. Furthermore, as China and India show, trickle-down works! Poverty in Asian capitalist countries are at an all-time low. Throughout the entire article, Tupy bombards readers with numbers about how swell the status quo is.

Tupy easily demolishes the strawman he set up. The Pope’s supposed “dystopia” is not some bombed out husk of a once-great city that only Snake Plissken can flourish in. It’s the gap between rich and poor that leads some of the most successful, economically vibrant countries to be the sites of the most desperate poverty.

In the 20th century, there was perhaps no better illustration of the wealth extremes facilitated by capitalism than Kowloon Walled City, in Hong Kong. The 6.5 acre mess of tenements, apartments, and shops was home to 33,000 people in 1987. That amounts to about 8.5 square feet of living space per person. Demolished in 1993, Kowloon was a hive of severe deprivation, poverty, and violent crime. Just up the road, some of the world’s wealthiest worked peacefully in their corner offices overlooking the sea.

This is the dystopia that Pope Francis is alluding to. Tupy slyly uses averages, life expectancy, and crime rates to try to make his point that the numbers are on the side of less regulation, conservatism, and the feeling that world is doing quite alright without the Pope’s morals getting in the way of Cato’s caricature of capitalism. “Pope Francis has a big heart,” he writes, “but his credibility as a voice of justice and morality would be immeasurably improved if he based his statements on facts.”

The Triumph of Libertarianism

Kowloon Walled City, The Triumph of Libertarianism

One need not dive deep to find evidence that Tupy’s numbers hide much more than they reveal. GDP per person may be on the rise, but over 80% of the world still lives on less than $10 per day and reside in countries where the income differential is widening. Of the 1 in 8 people on the planet suffering from chronic hunger, almost all of them live in the developing countries that Tupy cites as being uplifted by capitalism. The United States, the “paragon of free-market capitalism,” and issuer of nine regulations per day, is now at levels of income inequality not seen since the Great Depression. In 2007, the top 1% earned 23.5% of the nation’s income, and as of 2011, the top 1 percent control a staggering 40 percent of all of the nation’s wealth.

These numbers support Francis’ point that wealth inequality and global problems are still problems that we have a moral imperative to address. But Tupy completely misrepresents the Pope, arguing that he embellishes the situation. Francis is merely seeking to refocus international attention to economic issues and poverty, problems that not even Tupy would argue are remnants of worlds past.

If the CEO doubles his $100,000 dollars, and halves eight of his employees’ $20,000, he can still wallow in the triumph of averages. Cato is geared toward fudging numbers and misrepresenting facts to instill political complacency. The libertarian and neo-liberal project relies on using averages rather than medians to instill a vulgar pride in the true face of unbridled capitalism. Cato’s insidious tactic of bombarding people with facts is probably why the institute has been so successful with smart people like DJ Groethe and Penn Jillette, who should know better.

How to Intimidate the Opposition

The Civitas Gets Intimidation

North Carolina’s Republican arm is revealing the intimidation required to maintain power in the face of mounting unpopularity. Civitas, for their part, is “Pulling a Wisconsin” by FOIAing an academic.

Classic Greek imagery for an all-white audience.

The Civitas Institute, the fundamentalist ideology mill of Art Pope’s empire.

Let’s take a page from the manual of North Carolina’s Civitas Institute. What are they? According to their website, they “facilitate the implementation of conservative policy solutions,” which include “limited government, personal responsibility and civic engagement.” The latter, civic engagement, is debatable, since they’re the champion of legislation and politicians aiming to curb the franchise in the state, but they cling heartily to the rest. Like any conservative body, they aren’t run or funded by experts, intellectuals, the working-class, or academics. Rather, they’re funded by ideologues and the John William Pope Foundation, a network of money cascading from Art Pope, the Lex Luthor of North Carolina politics. Between his own donations and through his foundation, Pope almost single-handedly supports the state’s conservative wing–and lately, to great effect.

Civitas is playing a coy game with its opposition of late. Because its funded from entirely private sources, Civitas can get away with tactics that much of its opposition, such as people in academe, cannot: it can use the Freedom of Information Act to uncover the personal correspondence of its left-wing opposition who have .edu email addresses and work at public universities. In late November, Civitas requested the private emails of Gene Nichol, director of UNC’s poverty center and former dean of its law school. They also requested his phone records and calendar, presumably to make sure he’s not playing hooky to mingle with left-of-center politicians.

This tactic was used in almost exactly the same way by conservative groups in 2011, when historian Bill Cronon had his personal emails the subject of a FOIA request in response to his outspoken opinion about Wisconsin’s Republican Governor, Scott Walker. The action evinced harsh statements against the action by nearly everyone except those on the right.

It seems to fit conservative the mold, right? They value government transparency, and since folks like Cronon and Nichol are on the public dole by working taxpayer funded jobs, why shouldn’t their work activities be subject to a review?

But hold on. Aren’t they also against big government and for individual privacy? Isn’t such a request akin to spying on the activities of a professor? Would they feel the same way if employers began demanding that every employee’s emails were readable by every other person in the company to ensure transparency and that company dollars are spent wisely and efficiently? Perhaps, since the folks at Civitas seem to imagine a world made up entirely of middle and upper management. Yet, I would bet that if subjected to the same scrutiny due to their 501(c)(3) status, which prohibits them from supporting any candidate and limits lobbying, they would throw a quite the public fit.

Of course, that won’t happen. They’re privately funded, so even though their status as a nonprofit prevents them from (overt) political activity, it shields them from the same scrutiny public employees are subject to. Their chief donor, Art Pope, became the Governor Pat McCrory’s chief budget writer, cementing McCrory’s legacy as the most easily-bought politician in the state’s recent history, and ensuring that Civitas has more power than ever. This coalition is working tireless to undermine the power of the left by gutting its funding sources, creating new vulnerabilities for those taking public money, and exploiting existing vulnerabilities.

They are in charge, and they seem to get that it takes a full suite of suppression and intimidation to maintain power in the face of unpopularity.