Why Aren’t We Regulating Uber and Lyft?
Ride-sharing has been allowed to proceed largely as its practitioners wish, without a moment's thought to what it all means.
Like a giant steamship pulling into New York harbor to the cheers of teeming throngs back in the glory days of ocean travel, the initial public offerings this year of mammoth ride-sharing services Lyft and Uber were eagerly awaited by clamoring investors. They might as well have been lining Wall Street waving straw boaters in a dockside confetti parade as they gathered to welcome the boatload of cash that was meant to disembark.
Except then it was as if this towering liner of modern commerce suddenly exploded, sinking and killing thousands before a helpless and horror-stricken crowd. First-to-market's Lyft's stock tanked rapidly after its hopeful March IPO. In May, Uber's first public offering failed to even meet its projected price, much less exceed it, as the market prefers. Both scanned as tragedy for select Wall Street investment houses and the ride services' mega-rich (but suddenly not as rich as they'd hoped) owners.
Our thoughts and prayers are not nothing. But they'll do little to salve the bleak, aching sadness these poor souls will forever know as they ruminate over the billions they could've made if their IPOs for businesses that have never generated profit and remain nowhere near doing so had gone the way they were supposed to. Tech plays, which is what Uber and Lyft essentially are, weren't supposed to be expected to make money anytime soon, or so it seemed, which set an optimistic standard for valuing them and their stock. It's a market convention that understandably drives carmakers, whose shares aren't even as good as their last year's multi-billion-dollar profit, crazy. No doubt the ibankers and e-geniuses who somehow managed to get it wrong in the case of Uber and Lyft aren't pleased, either.
I was put in mind of the anomalies of the ride-sharing world when I spent last week toggling between two test vehicles, Toyota's recently refreshed Prius (in AWD-E form) and a GMC Yukon (the Chevy Tahoe twin). By coincidence, both are popular choices among New York City's ride-hailing owner/operators and they both do what they set out to do pretty well. Yet to state the obvious, they present different strategies for moving what are typically one person and the occasional piece of luggage around New York's five boroughs.
Let's get any question of bias out of the way first. That is to say, I'm totally biased. If you know anything about me, you know that for city transport I'd prefer a creamy-smooth Toyota (and I can't say enough about how much the Prius is improved following its recent refresh), one that staked me as many as 60 miles per gallon some days, as against a rough-riding Yukon that, one up, was lucky to top 14 mpg around town. Let's just say one of these objects—and it's not the one that gets 400 percent better fuel economy—does not make as good a taxi, environmentally speaking, as the other.
There are, too, my complicated feelings toward car services. I've been using Lyft lately, having deleted the Uber app from my phone a couple years back for a political reason that seemed valid at the time, though I can no longer recall it. But for the purposes of this discussion, let's assume the companies are pretty much the same as moral entities and in their impact on society.
Also I should admit, when I'm not driving myself in test cars, I take yellow cabs sometimes. And when traveling I use local taxi apps to call medallion cabs, as opposed to ride shares. You might think a lifetime of free test cars would have skewed my everyman perception. But rest assured, generations of plebeian forebears in my head tell me to give the worker whose profession fought for its right to a decent wage the nod.
I often use the subway, because it is not just the cheapest and greenest, but also often the fastest way to get from Point A to Point B in New York. And I also certainly appreciate the convenience of car services, because…who wouldn't?
I am less enamored, however, of the fact that the only way the proprietors of these start-up services manage to lose, in Uber's eye-watering case, only $2 billion a year, is by underpaying their drivers. Like so many other well-meaning participants in the gig economy, these drivers work practically nonstop to make ends meet, often—based on the testimony of dozens of drivers I've spoken with in my travels around the country—by driving long hours for both companies and holding down yet another job.
Not to worry, fans of laissez-faire. Disappointing IPOs aside, Uber and Lyft will be all right for now. They're not going anywhere, until they merge, à la Sirius and XM radio. No one is going to force them to pay anyone better anytime soon. But the fizz in their champagne is diminished. And so it should be.
Such services are an appealing patch on an ailing infrastructure and transport system, but it is ad hoc and superficial, insufficiently regulated, and not adequately keyed to the world's current environmental crisis moment. Not even close.
As has been amply documented, these call-a-ride vehicles already clog up city streets and dramatically increase gasoline consumption, air pollution, and CO2 emissions. They take a toll on bridges, highways, and roads, while slowing speeds for other road users. They also take fares away from public-transit systems which need more money, not less, if they are to be given a fighting chance to live up to their obvious potential to be the cleanest, most efficient, and safest means of transporting large numbers of people around a metropolitan environment. Furthermore, car services place downward pressure on cab-driver wages set by local law, pay though hardly extravagant that provided many practitioners and their families a viable living for the better part of a century.
But because they fall between regulatory cracks—nobody had even conceived of something like the Uber app the last time anyone seriously regulated anything—the public's interest in an issue of considerable impact has been neglected once again in the market's excitement over a new technology and its concomitant displeasure with and active hostility toward any regulation of that new technology. Just like radio and television, which came to you over airwaves that were once construed as something to be regulated for the public good, technological innovation has come along and rendered existing regulation of taxis as inapplicable or obsolete. So, like other so-called disruptive technologies, ride-sharing has been allowed to proceed largely as its practitioners wish, without a moment's thought to what it all means.
Why must it always work this way? New technology appears and suddenly the deck is reshuffled and the same fundamental space a regulated technology once occupied is significantly less regulated to the detriment of the public. Consider the mean streets of today's internet of false and messed-up things—also a public space that might have been treated like radio or television, monitored for safety, truthfulness, and the common weal—but no. Because freedom.
Leaving us still the freedom to get 400 percent better gas mileage out of our ride-sharing vehicles and to choose to take up less space when hauling our butts around town. It's a choice we ought to make.