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3 reasons to cheer Uber and the sharing economy - Fortune

Discussion in 'TNC News' started by TNC News, Jul 20, 2015.

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  1. TNC News

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    3 reasons to cheer Uber and the sharing economy
    Fortune
    The latest case was perhaps last week when Democratic presidential candidate Hillary Clinton criticized the sharing economy for its sometimes poor treatment of freelancers, and Uber is currently locked in a heated battle with New York Mayor Bill ...
    The Uber Election: 2016 Candidates Are Finally Talking About the New ...VICE
    Marco Rubio: Hillary Clinton's Criticism Of Uber Shows She Is "Trapped In The ...RealClearPolitics
    On the road to a new economy, with Uber at the wheelThe Globe and Mail
    Columbus Dispatch -Washington Free Beacon -The Australian Financial Review
    all 17 news articles »


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  2. ClevelandUberRider

    ClevelandUberRider
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    I think Uber and Lyft have both done a great service to our country.
     
  3. Harry Flashman

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    Many drivers that have sustained heavy fare reductions will surely agree with you.
     
  4. ClevelandUberRider

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    I meant "overall". Almost everything an individual or a company does is bound to hurt some and benefit others. The key is, overall, are "utilities" being created in the economy by that economic activity.
     
  5. Harry Flashman

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    Sorry but I cannot see the benefit in destroying an industry by reducing rates so far that it us unstainable to make any reasonable money and exploit so many
     
  6. ClevelandUberRider

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    The total happiness of a society, according to the boring people from the dismal science, is the sum total of all the "consumer surplus". Say you derive a $50 benefit from buying and consuming a particular product (in other words, you are willing to pay up to $50 for that product), but since the market equilibrium price is (just an example here) only $20, you therefore derive a $30 "consumer surplus" out of buying and consuming/using that product. Consumers normally would not pay a higher price than the benefit they can get from a product. If an UberX trip brings $5 of benefit to a grumpy pax and the price is also $5, then that pax will be grumpy because he/she is not gaining any "consumer surplus" at all from that transaction. On the other hand, an appreciative, rational pax who normally used cab service before at $25 for that trip, suddenly today he hailed UberX at $10 but got an UberSelect car give him the ride, which to him is worth $30 because it is a much newer and cleaner car than he used to get in a cab. This rational businessman's "consumer surprise" from "purchasing" and "consuming" this Uber ride is $20 ($30 - $10 = $20). The average "happiness" (i,e., "consumer's surplus") created from each UberX ride, I want to posit, is typically the same or higher than the net fare the UberDriver receives from Uber. That, is a huge consumer's surplus. Rarely seen in most kinds of market. Of the above two types of consumers illustrated, I would say the latter type is more common. When we add up all the latter type of passengers' consumer's surpluses over one year, that is a huge benefits that Uber and Lyft have brought, and continue to bring, to cities that they serve.

    But of course, the drivers are getting the short end of the stick.

    I am talking about the overall impact of the TNCs.
     
  7. Harry Flashman

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    and the overall impact of the TNCS has been to a loss to the drivers. As the fares reduce the quality of service and safety to the consumer will diminish, this is not a good thing or a benefit to society
     
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  8. Harry Flashman

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    so are you a driver as well as a rider?
     
    #8 Harry Flashman, Feb 7, 2016
    Last edited: Feb 7, 2016
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  9. ClevelandUberRider

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    Agreed. As I have wrtten extensively in the past, the race to the bottom has caused better drivers to mostly either quit or "upgrade" to a higher-priced, higher-earning platform. For example, from UberX to UberXL or UberrSelect, from UberSelect to UberBlack.

    This leaves the consumers (riders) of the cheapest options in the rideshare (TNC) market (namely, the Lyft and UberX ride options) with worse and worse drivers, less and less safety, worse and worse conditions on the cars. The deteriorating of the manners of the drivers, the grumpiness of the drivers, the lack of English-speaking skills, are but just some of the most common observations arising directly from the race to the bottom, the "commoditization" of the cheapest ride option (UberX and Lyft) in the THC market.

    But an economically-underserved and economically-challenged rider will likely still find quite some "consumer's surplus" from the cheapest and unsafe-est of ride. For example, an economically-challenged rider from a city may in the past find it impossible to get a cab to come unless they have previously promised a cab driver he/she personally know a $20 tip on top of the $15 fare, may now get a semi-economicall-challenged UberX driver to drive him/her for $5 fare. The consumer's surplus in this illustrative example is at least $30, even though the UberDriver receives barely half of the $5 fare.

    Overall to the drivers, the lowering of the fares is a very bad thing. Nobody is questioning that. In the above example, to get about half of that $5 fare from Uber, the driver likely in the end of the trio loses money in the tune of $1 to $2 (i.e., the costs of operating his/her vehicle of about $3.50 to $4.50 for that short ride, minus the net fare of about half of the $5 the rider pay, from Uber). So, the overall gain to society in this particular hypothetical illustrative example is at least $30 minus at most $2 = at least $28.

    Therefore overall to society the ride brings benefits to the society.
     
  10. ClevelandUberRider

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    With the race to the bottom, increasingly there is a converging of the characteristics of the drivers and riders--that is, they are becoming more and more alike.

    In college towns, if drivers are getting sick and tired of driving college kids, more and more, the profile of UberDrivers in college towns will be more like the riders there--college students themselves. In other words, college town riders (the college students, mostly) will be driven more and more by drivers just like themselves-- also college students themselves.

    Similarly, economically-challenged and economically-underserved riders will be driven more and more by semi-economically-challenged and semi-economically-underserved drivers. The biggest difference between the drivers and the riders in these underserved and economically-challenged markets is that the drivers have a car and a clean driving record.

    All these, whether we like it or not, has been happening in the past one to two years. With the ScarySaturday rate cuts, it just accelerated the trend. It is happening as good, better, drivers are either leaving the TNC market outright, or transition to higher ride option such as UberSelect, UberBlack, or UberSUV.
     
  11. ClevelandUberRider

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    I am just a rider. I will be a TNC driver sometime this year, unless they further cut the UberSelect rates.
     
  12. ClevelandUberRider

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    In almost every market, there is always this huge group of consumers (the mass market) who wants the cheapest product offering as long as a certain minimum threshold of the product quality is met.

    Go to the typical, mass-market chain of grocery stores. Most of my foodie friends wouldn't want to eat most of the produce sold there if they have the choice. Most of them don't taste like what those produce are supposed to taste in nature. Look at the fast food people are buying. Look at the media "products" people are consuming. Look at...almost every market, and you will see a huge mass market class of consumers in that market, using their mass market consuming power to dictate the necessary "race to the bottom" by the suppliers of the mass market, cheapest possible products who still want to cater to these bottom-fishing consumers and survive in that particular segment of the marketplace.
     
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