Uber Translated: Better Service for the Underserved

By Lydia White

It’s not news that free-market visionaries provide better service than their corrupt competitors, but big government advocates are reluctant to admit it, even when such enterprise benefits their causes.

Ride-hailing services like Uber and Lyft provide cheaper, timelier, and higher quality rides. They better serve those with lower incomes and disabilities. They give Portland residents a local source of income. They also better comply with city regulations.

Uber serves high- and low-income communities equally; taxis underserve poorer neighborhoods. Ride-hailing services connect the disabled with handicap-accessible cars; taxi companies force disabled users to wait and hope for one to eventually pass by.

The Portland City Auditor claims the Portland Bureau of Transportation (PBOT) isn’t doing enough to “monitor the quality of service by ride-for-hire companies” and ensure riders from low-income communities or with disabilities are fairly served. Yet PBOT found that while Uber and Lyft provide a plethora of data (too much, in fact, for PBOT to analyze), taxi companies fail to comply with the Bureau’s requirements. Moreover, Uber’s internal rating system provides its own system of accountability—including cleanliness and efficiency.

The free market is forging ahead with 21st-century technology. While cronyism befell taxi companies, Uber and Lyft created an innovative alternative.

Proponents of big government should embrace the free-market sharing economy, especially if they truly wish to help traditionally underserved minorities.


Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Voters Decided to Leave Themselves Stranded by the Side of the Road

In the month since voters in Austin, Texas upheld new city regulations on ridesharing companies like Uber, the law of unintended consequences has been confirmed.

Austin’s highly regulated taxi industry got the city to impose strict regulations on their competition, but Uber and Lyft threatened to pull out of the city rather than comply with rules they said would be bad for them and their customers. The ridesharing companies backed an initiative to repeal the regulations.

As one pundit noted, a majority of voters decided “…to leave themselves stranded by the side of the road frantically searching for a ride. Well, that’s not what they’d say they did. Strictly speaking, they voted to stick it to corporate interests—by supporting political interests who favored other corporate interests.”

The unintended consequences of that vote included about 10,000 ridesharing drivers losing their employment, bars losing business as people had fewer ways to get home safely, and disabled residents looking for new ways to get around the city.

The market responded quickly with unregulated “black market” services such as Austin Underground Ride springing up to meet demand.

Austin voters may not have realized that the only way big corporations become big in a free market is by meeting consumer demand. In this case, Uber and Lyft may become a little bit smaller, but everyone in Austin lost some of their transportation freedom.

Where Did President Obama Stay in Cuba?

This week, Barack Obama became the first U.S. President in nearly 90 years to visit the country of Cuba. While security concerns may have prevented him staying in a private home rented through Airbnb, he would have had some 2,700 such homes to choose from in Havana alone.

The amazing thing is that Cuba is a communist country, yet it allows short-term room rental services to operate, while some major American cities such as Atlanta, Denver, and Los Angeles do not.

While the American President likely rode through the streets of Havana in his own armored limousine, he apparently could have ridden in one of those iconic 57 Chevys if the driver had one of the still rare and expensive Cuban email accounts. Such ride-sharing services are also allowed in Havana, while Uber and Lyft are still fighting powerful taxi monopolies in some American cities.

We can have legitimate disagreements about normalizing diplomatic and economic relations with Cuba; but we should applaud the movement toward private home ownership and use, and the entrepreneurial opportunities its communist government now allows.

It will be ironic if Cuba comes into the modern free-market era at the same time that some American politicians try to impose more government restrictions on the very economic freedoms that many Cuban refugees risked their lives to achieve by coming here.

Uber and Portland: “The Future and Its Enemies” Clash in the Rose City

The Portland City Council has voted 3-2 to let ridesharing companies Uber and Lyft operate permanently in the city. The normally “progressive” council members’ split decision revealed a conflict of visions that does not fall along ideological lines as much as it falls along lines revealing how they view the future.

Author Virginia Postrel wrote a book in 1998 that virtually foresaw the conflict Portlanders and others around the world are wrestling with in the new sharing/app economy – an economy that didn’t even exist until 2008. In The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise, and Progress, Postrel argued that the opposing world views of “stasis” and “dynamism” are replacing “left” and “right” as we struggle to define our cultural and political debate in the twenty-first century.

Many large cities, including Portland, have regulated the taxicab industry for over 100 years. Regulating prices and limiting the number of taxis on the road has resulted in a small group of crony capitalist companies benefitting at the expense of their passengers, and often at the expense of their own drivers.

It got so bad in Portland, that for over twenty years beginning in 1976 not one new taxi company was allowed to enter the market. And regulators wouldn’t even let one new cab on the streets unless an owner could prove the demand existed for that vehicle; something that was almost impossible to do even as the city’s population grew.

In 1998, Cascade Policy Institute helped a group of Ethiopian immigrants win approval from the city to start Green Cab, the first new Portland cab company allowed in more than two decades. Regulators agreed, not because the proposal made sense (which it did), but likely because they knew that the libertarian public interest law firm Institute for Justice would go to federal court to protect the economic liberty rights of those wanting to earn an honest living by providing transportation services to consumers.

Once smartphone apps emerged in 2008, the “stasis” of the transportation marketplace began giving way to the “dynamic” future that Uber pioneered in 2010. Thanks to the mobile devices most of us now carry in our pockets, the future of transportation and many other fields are quickly changing for the better…at least in the minds of the dynamists.

Once Uber entered Portland without city approval on December 5, 2014 and thousands of Portlanders put the app on their smartphones, city officials may have realized that most of these folks were also voters. They struck a temporary deal with Uber and agreed to develop new rules that would let it operate permanently in the city.

Even the city commissioner once seen as Uber’s biggest foe, Steve Novick, now says he never understood why the city should have a limited-entry system in which a small number of taxi companies were given a sharply restricted number of permits to operate cabs. He says the taxi companies had a sense of “entitlement” after being treated like a city utility for the past century. After being given authority for taxi regulation by the Mayor, Novick ended the strict limits on taxi permits, and the city increased the number of permits by 64 percent.

Novick set up a Task Force to suggest rules for both taxi companies and ridesharing firms like Uber. Traditional taxi drivers quickly became disappointed that “The Future” wasn’t going to include protections for them and strict limits on their new competitors. On December 2, 2015 Novick joined two other commissioners in voting Yes for dynamism, while two voted to keep the stasis that is quickly becoming transportation’s past.

The foremost opponent of the plan to let Uber operate permanently was commissioner Amanda Fritz. She prepared and read a ten-minute statement before voting No. She delineated several issues she believed were unfair to existing taxi companies and that could be harmful to Portlanders, including relatively low insurance limits for ridesharing drivers when passengers aren’t in their cars. One part of her statement clearly puts her on the side of “stasis” and denies the liberating power that the free market and technology provide for drivers and passengers alike:

“New taxi companies will no longer be scrutinized by the grueling public vetting and approval by City Council in an open public hearing. I feel so sad for my friends in Union Cab, supported by the Communication Workers of America Local 7901. You worked so hard to win approval. You offer dozens of immigrant families not only a chance at the American Dream, but an opportunity to belong to an American union, part of the united American Federation of Labor movement. You achieved the dream, in winning approval of your franchise. And now the majority of Council is telling you you’re an expendable casualty in the free market – the free market that is grinding the working class and the middle class into the servants of the billionaire corporations.”

Contrary to Fritz’s charges, the free market is liberating people worldwide from grinding poverty. In Portland it is allowing several thousand people to work for themselves as full- or part-time Uber and Lyft drivers. It is giving passengers new, cheaper, and quicker options to travel around the city.

The free market and technology are combining to help mold a dynamic future. Those trying to stop this future, including city commissioners who voted against it, are clinging to a stasis that cannot and should not prevail. “The Future and Its Enemies” is playing out right now in the City of Roses. Thankfully, The Future is winning.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

 

Steve was interviewed about this topic on KUIK’s The Jayne Carroll Show on Wednesday, December 9, 2015. You can listen to his interview here.

TeachersPayTeachers Creates Learning Entrepreneurs

The debate over the sharing economy often revolves around the well-known players such as the room rental company Airbnb and the ridesharing company Uber. These firms have harnessed the liberating power of technology to unleash billions of dollars of so-called dead capital, while turning millions of people around the world into entrepreneurs, serving their fellow man and making a profit at the same time.

As the sharing revolution evolves and matures, it promises not only to improve the lives of countless individuals, but it may also help to revolutionize a critical part of our lives that for too long has been dominated by status quo lobbies such as teachers unions and the governments they influence—education.

Education is critical to human progress, but for too long it has largely been provided outside the market framework that makes everything better in our world.

Now, thanks to a small company called Teacher Synergy, Inc., and its online marketplace TeachersPayTeachers.com, educators are beginning to directly benefit from a free market in their intellectual property (IP). On the site they can buy and sell their own original lesson plans and related educational resources that up until now have benefitted their own students, but nobody else’s.

In the words of Jason Bedrick, a policy analyst at the Cato Institute’s Center for Educational Freedom:

“Words like ‘market’ and ‘competition’ or—worst of all—‘profit are considered dirty words in some circles, particularly in education. Perhaps that’s why some people prefer the more anodyne (if less accurate) term ‘sharing economy to describe how online platforms and apps are enabling people to monetize resources they own by connecting them directly with potential buyers.”

TeachersPayTeachers recognizes that not all teachers are the same. Some teachers are better than others at creating lesson plans that engage students and help them learn. So, for example, a teacher who is great at teaching math may not be so great at teaching geography. Why not let the good math teacher profit by selling his or her lesson plans to other teachers while she, perhaps, buys geography lesson plans from teachers who excel in that discipline?

Since its founding in 2006 by a New York City public school teacher, TeachersPayTeachers has allowed more than 10,000 teachers to earn $175 million from its 3.4 million active teacher members. Some teachers have earned over $100,000 selling lesson plans for just a few dollars apiece to thousands of their colleagues all over the nation, and even in other countries.

So, if teachers buying and selling lesson plans can benefit both teachers and students, who could be opposed? Well, just like existing taxicab monopolies opposed ride sharing firms like Uber for obvious reasons, those who currently control public school districts might feel threatened by teachers acting more like entrepreneurs and realizing the benefits of markets and capitalism.

Some districts claim that any intellectual property created by their teachers belongs to the district, even if created on the teachers’ own time. TeachersPayTeachers addresses this issue and concludes that teachers often do own their own IP in lesson plans. Even the nation’s largest teachers union, the National Education Association, has stated that “staff should own the copyright to the materials they create for use in the classroom.”

Jason Bedrick concludes that “[t]eachers tend to be less enthusiastic about market-based reforms to education, but perhaps some experience with the ‘sharing economy’ will show them how the best teachers stand to benefit greatly from Uber-ized education.”

While the best teachers will benefit greatly from Uber-ized education, other teachers can benefit also, and many students will benefit as their teachers have access to better teaching tools. Big picture, Uber-ized education can help create a diverse marketplace of educational options that will turn not only teachers, but students, into capitalist entrepreneurs. It can’t happen too soon.

Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

The Extinction of Public Transit

By Emma Newman

Uber and Lyft have recently gained over 50 percent of the taxi market in Portland. This is especially notable as Portland was initially hostile to ridesharing companies, to the point of filing a lawsuit against Uber late last year. This industry takeover is just one example of how private market innovation has upended government-regulated transit.

At a recent Metro hearing on the SW Corridor project, one of the main arguments for pursuing a costly light rail tunnel requiring the destruction of several homes was that ten years of disruption is worth 100 years of use. But considering the speed at which the transportation industry is changing, is long-term use of public transit infrastructure likely?

Public transit is rarely anyone’s first choice due to inconvenience, time cost, and lack of reliability—problems that personal vehicles rarely face. Overcoming these factors has made ridesharing companies more popular than traditional taxicabs.

The fact that private market solutions will increasingly outcompete public transit is evident not only with companies like Uber and Lyft, but with future technologies as well. Google’s driverless car being used on a wide scale may seem to be far into the future; but if costly transit projects are being justified by decades of potential future use, transit planners need to consider what the future of transit may actually look like.

Emma Newman is a research associate at Cascade Policy Institute, Oregon’s free market think tank. She is a student at George Fox University, where she is studying Economics and Computer Science.

What They Say vs. What They Do: How PCC Students Really Get to School

By Anna Mae Kersey, Emma Newman, and Thomas Tullis

TriMet is considering the construction of a light rail line from Portland State University to Tualatin, at a cost of roughly $2 billion.

One routing option still on the table is to run the train down Barbur Boulevard, then build a tunnel to the Sylvania campus of Portland Community College. The tunnel would add $244 million in capital cost. It also would require moving several dozen homes and take at least two years to build.

To put this in perspective, for the price tag of the proposed tunnel, one could purchase approximately 23,094 Teslas, build 41 aerial trams like the one at OHSU, buy two brand-new cars per PCC-Sylvania student, or pay for 117,200,000 Uber rides from the PCC Sylvania campus to downtown Portland.

Such a hefty sum might be justified if there were a need for “high-capacity” transit at PCC-Sylvania, but such a need does not exist.

According to survey data released by PCC, 58 percent of Sylvania students drive to class, while 32 percent take shuttles or buses. However, travel surveys are notoriously unreliable, in large part because people tend to underreport their reliance on auto travel.

To correct for this, Cascade Policy Institute collected field data by going to PCC-Sylvania and counting every trip to and from the campus, at various times and on various days. The field observations tell a different story. Roughly 84 percent of students drove and only 15 percent took TriMet or the PCC shuttles during our observations, which covered nearly 7,000 trips.

During final exams week, when students really had to be in class, the split was even more skewed: 89% traveled via private automobile.

The difference between what students said in a survey and how they actually traveled is significant because it shows that college students are much less willing to forego cars and take transit than is commonly thought. For TriMet, this means the proposed light rail line likely will not have the increase in ridership that planners assume.

We can also learn from experience elsewhere, because one other PCC campus has been directly served by light rail for the past five years. The PCC Willow Creek campus is a single building located directly next to a light rail station on the west side. This is unlike the spread-out PCC Sylvania campus, where students would still have to walk a significant distance from the proposed light rail station to get to their classes.

Despite the convenience of light rail stopping right at the front door, at Willow Creek the field observations showed that 80 percent of students drove, 14 percent took light rail, and 5 percent took the bus. This is only a slight decrease in automobile use compared with Sylvania. Is it really worth spending $244 million to service a suburban college campus with light rail for this tiny difference?

Driving is the preferred method of travel for the majority of college commuters because it offers versatility that caters to their complicated schedules both in and out of the classroom. It seems that the complexities of student lives and lack of demand for transit are being overlooked in this decision.

PCC-Sylvania is already served by a rich mixture of college shuttles and TriMet buses. Those options are currently underutilized. Thus, there is no reason to spend $244 million and disrupt the serenity of this neighborhood to build a light rail tunnel.

Anna Mae Kersey, Emma Newman, and Thomas Tullis are research associates at Cascade Policy Institute, Oregon’s free market think tank.

Portland Rideshare Drivers Praise “The Land of Opportunity”

Call it the smartphone/mobile app economy. Call it the Free World of Ridesharing. Call it the future. Whatever you call it, Uber, Lyft, and a host of smaller innovative companies are quickly transforming the century-long, highly government-regulated transportation market in Portland and around the world. And this is just a subset of a much broader technology-enabled transformation process that paints a vivid picture of what economist Joseph Schumpeter called the essential fact of capitalism: “creative destruction.”

By far the largest of the new ridesharing companies, Uber entered the Portland market uninvited in December 2014 and then stepped back to allow the city government time to revamp its antiquated taxi regulations. In April, the city enacted a four-month pilot program that basically let Uber and its smaller rival Lyft enter the Portland market and removed many regulations from the existing taxi companies.

Now, half-way through the pilot period, the City Council received an interim report on the program’s initial results and held a public hearing on July 15. Nearly 70 taxi and ridesharing drivers were given two minutes each to either praise their newfound opportunities to make a living, or bemoan the cuts in their incomes due to competition they felt was unfair.

While the interim report was full of statistics, it was the driver testimony that really personalized the issues before the Council. Time after time, rideshare drivers explained how upset their passengers had become with traditional taxi service, because of either long wait times or poor service.

Once seen as ridesharing’s staunchest opponent on the Council, Commissioner Steve Novick noted that he thought the report showed that “the experiment was working pretty well for consumers,” but that he wanted to hear more about the impact on drivers. He specifically asked drivers to say whether they preferred to be treated as employees subject to minimum wage law, workers compensation, and unemployment insurance—or do they prefer to be treated as independent contractors?

Novick’s question to drivers was in the context of a recent decision by the California Bureau of Labor that one specific Uber driver should be considered an employee even though ridesharing companies treat all their drivers as independent contractors who are able to set their own hours, use their own vehicles, etc. Uber has appealed the ruling, and has already prevailed in at least five other states in keeping its definition of drivers as independent contractors.

The way Novick phrased his question, it seemed he was hoping to hear many drivers testify that, sure, they would prefer all the guarantees and benefits afforded to employees over being independent contractors. Not one driver gave him that response. Time after time, rideshare drivers made obviously heartfelt statements about how thankful they were for the flexibility that being an independent contractor afforded them and their families.

Some drivers were caregivers for family members and so needed to be home when required. Others had been laid off elsewhere and appreciated the flexibility of driving while having time to seek other employment. Some had other jobs and used driving for Uber and/or Lyft as a way to generate extra income to pay their mortgages and other bills.

One woman told the Council how driving for Uber let her get off food stamps and become more independent. More than one noted that they had been entrepreneurs who had fallen on hard financial times and saw driving as simply one more entrepreneurial activity affording them much needed income.

One driver urged the Council to continue allowing ridesharing, noting that “this is the land of opportunity.” Another said, “I don’t work for Uber. I work for myself!” Still another noted, “We must all adapt to the world around us….Dinosaurs did not adapt!”

When one traditional taxi driver told Novick that he, too, preferred to be an independent contractor because of the flexible hours, the Commissioner told him that employees could be offered flexible hours also. Even with that information, the driver said he would be neutral as to his employee status. Not one driver at the hearing said they clearly preferred employee status over working for themselves as independent contractors.

There surely are individuals who prefer the benefits and safeguards afforded to formal employees. But obviously, many recognize and value the opportunities and the freedom of being independent contractors, now better enabled by smartphone technology. Let’s hope that Portland City Commissioners and Oregon’s Labor Commissioner all recognize these preferences and are willing to protect them. Otherwise, we risk going backward to the government-protected monopoly taxi industry that stopped working for many passengers long ago.

Time to “Uberize” the Transportation Economy

This week marks the beginning of a 120-day “pilot project” by the City of Portland to allow private car-sharing companies such as Uber and Lyft to legally compete with cab companies. Given the consumer demand for such services, there is little doubt that the Portland experiment will become permanent.

Cab services have long been heavily regulated. Detailed rules governed every facet of operation, including rates, dispatching, and―most importantly―the number of cabs allowed in the city. Although justified as “protecting the public interest,” the system was really designed to protect cab companies from new competition.

This model is now being swept aside by the dual forces of technological innovation and entrepreneurial success. Goodbye taxi cartel, hello freedom.

Unfortunately, the roads that we all use are still run as a government monopoly. As with the old taxi cartel, if state officials decide that no more highways will be built, consumers are stuck with a shortage of service. And in fact, that decision has already been made. The last new highway in the Portland region opened in 1982. There are no plans for a new one.

Ultimately, this model can’t work. As Portland grows, we will need new roads. Encouraging the road-building “Ubers” of the world to provide these services is the next logical step in the growth of the regional transport economy.

6358946399_e18fb90c25_z

The Regime Trembles at the Sight of a Smartphone

“The regime trembles at the sight of a smartphone.”* That quote comes from Portland-based independent journalist and world traveler Michael J. Totten. One might guess that he wrote it about Portland’s city government and its aversion to ridesharing services like Uber that rely on smartphone apps to put riders and drivers together. But he didn’t.

He wrote it about the Cuban government after his visit to Havana last year. He summed up his observations in a lengthy piece he titled “The Last Communist City.” Hopefully, now that President Obama is taking steps to liberalize relations with Cuba, Havana may not be a communist city much longer.

But as we celebrate a new year, Portland still seems mired in the past. City regulators first tried to fine Uber for picking up passengers without official permission in December. Then the Mayor agreed to form a Task Force to revise its antiquated taxi regulations. Uber agreed not to initiate rides within city limits until April 9, by which time the City hopes to figure out how to accommodate the modern app economy.

Still, given how upset Portland officials were when Uber entered the city unannounced, the next question one might ask is:

Which city will welcome Uber and other ridesharing companies to serve their citizens first: Portland, Oregon or Havana, Cuba?

* Letter from Cuba: To Embargo or Not, Michael J. Totten, “World Affairs,” March/April 2014

1 2