The disruption of disruptive technology (Uber)

[Kjelt]

Perhaps in large cities, here in a small town cabbies replace their cars each three to four years most have luxury Mercedes to attract customers and I don't recognize this picture. I must admit that most clientele is businessman or tourists, most people that do not use their own transportvehicle will use public transportation.

[Mr. Scram]

That's the thing, being a protected monopoly they have long had absolutely *no* reason to provide anything resembling reasonable service, because if you don't like what they offer, what are you gonna do? Regardless of what one thinks of Uber, I'm happy to see some competition. The traditional taxi services *could* get their act together, implement a nice modern web/app hailing system, keep their cars clean and be friendly to customers. Unfortunately I suspect most of them will instead fight tooth and nail in a losing battle to stamp out the competition. They will not go down quietly, expect a constant stream of propaganda, lawsuits, political lobbying, protests, and slandering of alternate ride providers at every opportunity.

It's basically the music industry and news papers all over again. They've sat atop their thrones for decades or even centuries and start kicking and screaming when they suddenly find themselves irrelevant because they simply refused to change when the world did. Too bad money allows you to do a lot of damage on the way out.

[Rick Law]

If the protectionists had their way, technology would never advance. We'd still be riding around in horsedrawn carriages so the blacksmiths and carriage makers could earn a wage. We'd be using steam locomotives to keep the firemen employed. We'd be using candles for illumination to protect the candle makers, etc. That's not to say there shouldn't be *some* protection to give people some time to adjust, but adjusting to changing realities is just a part of life. The taxi companies have enjoyed their cozy little monopolies for far too long and I welcome a change.

I agree with your point here about protectionism in general.  However, two different issues are rolled into one.  Dumping is the other issue.

Dumping is the process of selling below cost to kill an industry, then, with the competition dead, you control the price.

For the purpose of discussion, here we are not talking facts and real numbers but made up just for discussion of dumping:
- Country X can manufacture steel at 20% cheaper than Country Y.
- Country X subsidize and export steel to Country Y so it sell at 50% Country Y's cost of manufacturing.
- Steel plants in Country Y cannot compete, it starts to close
- Infrastructure to support steel plants in Country Y starts to wither and dying as well.
- Country Y totally lost the factories and infrastructure to product steel.
- Now Country X increases price to a point where it controls the market (enough but not enough for Country Y to restart from scratch)

Now back to the real world.  In my view, protection against dumping is a good idea.  Otherwise, industries in a country could be picked apart.  On an on-going basis, being economically isolated is not a good idea for any country

Things like health care shouldn't be free market, there is no (reasonable) alternative. Things like a taxi service almost ideal for a free market, many alternatives exist and competition benefits the consumer. A taxi service that is not profitable will go out of business and one that tries to cut too many corners to boost profit will lose either customers, employees or both and the situation will correct itself.

First, thank you for bringing in "other disruptions".  My OP really wasn't to talk about taxi/uber per se.  I was reflecting on how major change changes life.  This 5 suicide in 5 month is just stunning to me to actually see it in the raw.

Health care is another one like the "$700k medallions".  Government regulation made the disruption.  Left to itself, there would have been some disruption but not as significant.  When it was free-market driven, there was health insurance, health maintenance plans, and catastrophic insurance.  Now it is reduced to just health maintenance plans.  You can't by health insurance against the unexpected - it must cover certain things even if it is expected and planned.  Same for catastrophic coverage - it is near extinction.  By-and-large, we are left with only costly health maintenance plan that covers everything - whether you need it or not.

* * *

But, let's just focus on disruptive technology and disruption - there is disruptive technology in the winds for health care outside of governmental stupidity.  Health care, along with legal profession, are likely going to be significantly affected by robotics and AI.

Legal profession is almost entirely rule driven.  Legal research used to involve a lot of "remembering" (finding) prior cases one can leverage on for legal precedence, or examples of innovative invocation of certain rules and regulations.  AI can do wonder with that.  What would happen to that profession when a "print out" basically outline the entire case strategy making the lawyer merely just a presenter in front of the judge?

What a doctor do in diagnoses as much direct judgement than symptom/pattern matching.  He has this, his face shows that, his MRI looks like this...  So it is illness X.  So treatment is Y.  Perfect for AI to handle.  Oh, the best doc is in the south pole, but worry not, remote control robotics means Dr. Best can do your surgery by remote...

So this wave of disruption of easy-communication & technology will continue with a lot more yet to occur.  It will go beyond sending X-Rays for overseas-doctor interpretation report, or annual income tax-return send overseas to be done.  Heck. I don't even know what real value in-store Pharmacist has anymore in the USA that an AI machine can't do.

[james_s]

I agree with your point here about protectionism in general.  However, two different issues are rolled into one.  Dumping is the other issue.

Dumping is the process of selling below cost to kill an industry, then, with the competition dead, you control the price.

Dumping can be a problem, however the way I see it, once the status quo as been disrupted it is then much easier for additional competition to come into play. The thing about the Uber/Lyft model is the infrastructure is lightweight, it's really just an app/back end service that any couple of decent software engineers could build in a matter of months. Once services like this become the norm, free of draconian regulation that makes breaking into the market nearly impossible, more of these services can pop up overnight. If Uber prices themselves too high, someone else will show up with a better deal.

[metrologist]

It's really difficult for me to respond to the discussion as there seems to be a disingenuous presentation of the elements. I do not perceive a tech advantage, but rather a social one. The gov is not enforcing the same rules, regulations, and costs to each market segment. This is an artificially biased environment not born from technologically advantageous parameters.

All the rest of philosophical, why not keep it in the Gregg Spriggs thread, that was closed by Dave on principle?

Talk about USPS and email seems a more relevant analogy.

[vk6zgo]

It's really difficult for me to respond to the discussion as there seems to be a disingenuous presentation of the elements. I do not perceive a tech advantage, but rather a social one. The gov is not enforcing the same rules, regulations, and costs to each market segment. This is an artificially biased environment not born from technologically advantageous parameters.

All the rest of philosophical, why not keep it in the Gregg Spriggs thread, that was closed by Dave on principle?

Talk about USPS and email seems a more relevant analogy.

I agree, the Technological advantage is more perceived than real.
The only "tech" in the manual Uber cars is a smartphone "app" for Pete's sake!

I can pick up  my home phone, call a taxi company & a recorded voice asks me " Do I want to order a taxi to come to my home address?"(which they mostly know because I've used them before)

If I'm not careful they will send one straight away, unless I select a later time.
In any case, after a while, a clean taxi turns up, driven by a friendly, competent driver, who takes me where I need to go.

Why would I want to fart around with a silly "app" on my non-existent smartphone to get some bloke in his own car, who may or may not be competent or insured to carry passengers for hire?

Of course, if I was a young person half or fully intoxicated out at 2am Saturday night, it may be hard to get a taxi, but how easy would an Uber car be at the same time?

[Kjelt]

In some crowded cities with traffic jams the company can detect that the requested route is jammed so they  should sent a motor instead of a car, now that would be ingeneous improvement.

[EEVblog]

Why would I want to fart around with a silly "app" on my non-existent smartphone to get some bloke in his own car, who may or may not be competent or insured to carry passengers for hire?

Because you are one of the few people who don't spend their entire lives glued to a smartphone.
That's why Uber exists, Tinder works, and Apple and Facebook are worth squillions of dollars.

[Marco]

It's basically the music industry and news papers all over again. They've sat atop their thrones for decades or even centuries and start kicking and screaming when they suddenly find themselves irrelevant because they simply refused to change when the world did.

I scream, you scream, we all scream for ice scream.

Music industry loudly complained about piracy, which was and is illegal and where the government consequently does have a responsibility to ensure effective policing ... making them fully justified in being loud and they have had quite a bit of success in doing so.

Whether the the NY taxi drivers are justified in complaining about Uber and local government hinges on a semantic argument. Is Uber a taxi service. In the EU it is by law ... so it's not a prima facie absurd argument to make. I for one agree with the cabbies, they got unjustly screwed by government by unilaterally reneging on a contract granting them a monopoly. If NYC wanted to allow Uber they should have bought out the medallions at the then current market prices.

[james_s]

Why would I want to fart around with a silly "app" on my non-existent smartphone to get some bloke in his own car, who may or may not be competent or insured to carry passengers for hire?

I too have been guilty of rejecting new technology in favor of something I'm used to, but this sort of attitude is what leads to things like the music industry and taxi industry getting caught with their pants down and not recognizing the need to adapt until it is too late.

Someone could (and probably did) say something like "Why would I want to faff around with my non-existent MP3 player to listen to some song that may or may not be legal or of good quality when I could just stick in a CD or plop a record on my turntable?" Well, quite simply because that's how a substantial and rapidly growing portion of society expects things to work, and if you refuse to adapt you will be left behind. Not that there's anything wrong with staying behind, but recognize that most people, especially younger crowds have different expectations and being accustomed to using an app on their smartphone for all manner of things, having to actually dial a number and interact with a person or recording is going to seem very quaint, like using a physical card catalog to locate a book at the library. Nothing wrong with using a card catalog if any libraries even have one still, but ask a typical 20-something to do that and they'll likely look at you like you just asked them to walk to school barefoot in the snow uphill both ways. If you want to compete on the market with a product or service, you HAVE to adapt and keep up with the expectations of the customer or you will lose.

Now I myself am rapidly approaching 40 and I resisted having any kind of mobile phone until I was 30 but I have gradually embraced it and now use my smartphone heavily although only rarely to actually talk on the phone. Honestly I've never liked talking on the phone so the new paradigm of text messages and apps actually suits me well. The biggest perk of an app like Uber is I don't even have to know where I am, it utilizes the GPS in my phone and it lets me keep a list of saved addresses so I can be anywhere and just open that app, select Home, and it will dispatch a ride to pick me up and take me home. Sometimes there's a nearby pickup location that is cheaper in which case it will provide walking directions to the pickup location and it shows the car approaching in real time. I was really quite impressed, it's expensive but so is a traditional cab, there are situations where it could really be handy though.

[james_s]

Music industry loudly complained about piracy, which was and is illegal and where the government consequently does have a responsibility to ensure effective policing ... making them fully justified in being loud and they have had quite a bit of success in doing so.

Complaining about piracy is well and good, but their response was to try to stamp out the technology rather than embracing it. Cassette tapes came out and they tried to crush it, campaigning that it was enabling piracy and was killing music. They succeeded in effectively crushing several promising technologies like DAT and MiniDisc by insisting they be crippled by DRM schemes that greatly reduced their usefulness. They kicked and screamed and fought the digital revolution when they could have instead embraced it and offered digital music for sale. The thing is, people wanted the convenience of digital downloads so with no legal avenue, a culture of freely sharing and downloading music online developed. This culture was well entrenched by the time that Apple finally managed to twist enough arms to start selling music digitally and their smashing success absolutely proves that given the option people are willing to pay for downloadable music. Had the industry embraced this early on they could have headed the piracy revolution off at the pass but they didn't. They fought and fought and kicked and screamed and moaned and fought some more, and they lost.

There will *always* be piracy no matter what, but if you focus on providing a product that is at least as convenient as the black market offering and you adapt as needed, most people are quite willing to pay for the products and services they use. If like the music industry or the taxi industry, you are used to having your customers over a barrel then be ready for them to revolt as soon as something comes along that allows people an option to escape from your clutches. It's as simple as that.

[Red Squirrel]

Maybe it's the laws that need to adapt.  Taxies are ridiculously regulated which makes their jobs/investment much more difficult.   Maybe it's time to ease on the regulations so they have a better chance at making a living without drowning in red tape.

[Cerebus]

Maybe it's the laws that need to adapt.  Taxies are ridiculously regulated which makes their jobs/investment much more difficult.   Maybe it's time to ease on the regulations so they have a better chance at making a living without drowning in red tape.

The counter argument to that is a bit like the counter argument when people advocate for relaxing human rights laws because they have some consequences that aren't politically convenient. (For the avoidance of doubt, the parallel is only to the counter argument.) Vis, "Which regulations would you like to live without? Criminal background checks? Vehicle safety requirements? Universal service obligations?".

Really, which regulations are you referring to? In what way are those regulations antiquated/surplus to requirements/overly onerous?

[EEVblog]

Maybe it's the laws that need to adapt.  Taxies are ridiculously regulated which makes their jobs/investment much more difficult.   Maybe it's time to ease on the regulations so they have a better chance at making a living without drowning in red tape.

You mean, become Uber? 

[james_s]

The counter argument to that is a bit like the counter argument when people advocate for relaxing human rights laws because they have some consequences that aren't politically convenient. (For the avoidance of doubt, the parallel is only to the counter argument.) Vis, "Which regulations would you like to live without? Criminal background checks? Vehicle safety requirements? Universal service obligations?".

Really, which regulations are you referring to? In what way are those regulations antiquated/surplus to requirements/overly onerous?

I think the obvious one is the requirement of a medallion that costs as much as a nice house. You can't possibly be suggesting that a criminal background check, vehicle safety requirements and universal service obligations justify a cost of $700,000 per cab?!

It should be a license you renew each year for a few hundred bucks max, a written and road test and vehicle inspection, pretty simple really. And get with the times and provide a smartphone app for ride hailing because that's what an entire new generation is expecting.

[Kjelt]

It's kind of a job safety, 700k$ is extreme but look at what students nowadays pay for a 4yr education in an Ivy League university just as extreme

[james_s]

Surely if you spend $700k on an Ivy League education you wouldn't be a cab driver?? For that kind of money you could be a doctor or a lawyer, or any kind of engineer you wanted, etc with money left over. The cost is absurd relative to the sort of job. I don't know how much a cab driver makes but it has to be less than any number of other careers out there with a far lower cost of entry.

[Kjelt]

You might be mistaken there, half of the fares are under the table , no taxes.
I once met a guy who sold stuff on fleamarkets in the weekend, he grossed more in a weekend than I do in a month.

[Cerebus]

The counter argument to that is a bit like the counter argument when people advocate for relaxing human rights laws because they have some consequences that aren't politically convenient. (For the avoidance of doubt, the parallel is only to the counter argument.) Vis, "Which regulations would you like to live without? Criminal background checks? Vehicle safety requirements? Universal service obligations?".

Really, which regulations are you referring to? In what way are those regulations antiquated/surplus to requirements/overly onerous?

I think the obvious one is the requirement of a medallion that costs as much as a nice house. You can't possibly be suggesting that a criminal background check, vehicle safety requirements and universal service obligations justify a cost of $700,000 per cab?!

It should be a license you renew each year for a few hundred bucks max, a written and road test and vehicle inspection, pretty simple really. And get with the times and provide a smartphone app for ride hailing because that's what an entire new generation is expecting.

But that's just New York City - see above for my summary of London's Taxi and Private Hire licencing scheme which is, I expect, pretty typical of most city's regulations. Red Squirrel, said that "Taxies are ridiculously regulated...", implying all of them.

[Bassman59]

The counter argument to that is a bit like the counter argument when people advocate for relaxing human rights laws because they have some consequences that aren't politically convenient. (For the avoidance of doubt, the parallel is only to the counter argument.) Vis, "Which regulations would you like to live without? Criminal background checks? Vehicle safety requirements? Universal service obligations?".

Really, which regulations are you referring to? In what way are those regulations antiquated/surplus to requirements/overly onerous?

I think the obvious one is the requirement of a medallion that costs as much as a nice house. You can't possibly be suggesting that a criminal background check, vehicle safety requirements and universal service obligations justify a cost of $700,000 per cab?!

The reason for the high cost of the medallion is to limit the number of cabs allowed to operate in the city. Again, read up on the history of the medallion system and why it was implemented. The medallions were a solution to the problems of oversupply, dangerous driving and the refusal of many drivers to take passengers to those "bad" parts of the city.

Again, again, most of the medallions sold in the last many years have not come from the NYC T&LC directly, but were sold at auction, and as such the profit from the sales does not go to the city but rather to the previous holders of the medallions. Nobody was putting guns to the heads of the medallion buyers, either.

[a59d1]

I mean holy cow, $700k! That's enough to pay for a full ride through a top notch university to earn a degree in anything imaginable, with enough left over to buy a modest house in some areas.

Yes, but the expectation was that the medallion could be re-sold. You can't exactly redeem your $250k literature degree from Harvard at auction.

[EEVblog]

I think the obvious one is the requirement of a medallion that costs as much as a nice house. You can't possibly be suggesting that a criminal background check, vehicle safety requirements and universal service obligations justify a cost of $700,000 per cab?!

It should be a license you renew each year for a few hundred bucks max, a written and road test and vehicle inspection, pretty simple really. And get with the times and provide a smartphone app for ride hailing because that's what an entire new generation is expecting.

That's the trick though, they can't just drop the $700k system, there are over 13,000 people "invested" in that system.
But it kinda reminds me of the time Altium "permanently" dropped their price by 75% overnight. Tough titties to those who just paid the previous price. There was some uproar, but it wasn't people's entire life savings on the line so they got away with it.

[Red Squirrel]

I guess it's similar to when you buy an expensive appliance at an appliance store (or any big purchase) and then they go on a huge blow out sale a week later.  Some stores do offer some kind of protection for that though. 

Another thing they should get rid of is the price fixing.  Taxis have to charge a set fee and arn't allowed to set their own prices to try to be competitive.   They can't charge higher, or lower.  For example a taxi service in my town wanted to offer rides anywhere for a fixed price on new years eve to encourage people not to drink and drive and they were not allowed. They MUST use the meter.   Similarly a random person posted on FB that they were offering rides for anyone and they were told they can't. Why not?  Anyone who has a driver's license should be allowed to give people rides.   Obviously as a user of that it's a risk you should be ready to take.  If the person turns out to be a rapist, well that's already illegal and deal with it if it happens. 

[james_s]

That's the trick though, they can't just drop the $700k system, there are over 13,000 people "invested" in that system.
But it kinda reminds me of the time Altium "permanently" dropped their price by 75% overnight. Tough titties to those who just paid the previous price. There was some uproar, but it wasn't people's entire life savings on the line so they got away with it.

Sure they can, I mean it sucks but nothing lasts forever, and sooner or later change is coming. We will have a whole new generation of people to whom the existing taxi system is seen as an anachronism from a past era. Sometimes things that were once incredibly valuable become almost worthless overnight. It sucks for those who are invested in it, but investing so much in anything is a large risk.

[VK5RC]

Society has to have some protection built in for those who can't fight for themselves. Older people who cannot use a smart phone have to have some protection, the taxi system use to offer some protection. Uber side-stepped many of these and Uber drivers are probably getting screwed ' to some degree. The feedback system is good but other parts of Uber suck.