Uber is a company under attack by politicians and the media. Many politicians, like Bill De Blasio, want to restrain its growth to protect incumbent cab companies. Others want to undermine its business model by requiring that its drivers using its devices be employees rather than independent contractors. The New York Times recently ran a story clearly suggesting that the company is using unfair psychological tricks to keep drivers picking up customers.
These complaints lack merit. Protecting incumbents against new forms of competition is a classic harm to consumers. Uber drivers do not meet the traditional criteria for employees because, among other factors, the company does not control their hours or place of doing business. And as Geoffrey Manne shows, the management innovations Uber introduces through the understanding the psychology of workers have benefits to consumers and drivers alike.
But the assault on Uber also ignores a hugely important effect of company and similar services: they reduce inequality— which these same politicians and mainstream media argue is the most important issue of our time. Uber improves both the material condition of the middle-class consumer and the lower-middle-class driver. First, the consumer gets a service that starts looking more like having a chauffeur than a taxicab driver. For instance, he can summon a driver without previous notice and within minutes by pushing a button on his phone in the comfort of home rather than hail a taxi in a storm.
David Brooks is in an angry and spiteful mood. Perhaps he’s even getting to be a bit unhinged, as history is putting his vision of American conservatism onto its rubbish heap.
The New York Times has recently portrayed Amazon as a workplace somewhere between the first circle of hell and a bad section of purgatory, with harsh supervisors and backbiting colleagues that are the inevitable consequence of the company’s management practices. I did not need Jeff Bezos’s demurral to doubt the accuracy of portrait. In a company this large, there will always be bad supervisors, intriguing colleagues and disgruntled employees that can support a lot of wild anecdotes. And the New York Times, a newspaper that even a former ombudsman has admitted is on the left, has an agenda of attacking business the better to justify an intrusive state.
But let us suppose for moment that the Times portrait is more accurate than Bezos’s denial that overall these anecdotes capture the reality of the company. Is it really any cause for concern? The employees chose to work there and can leave at any time: it is not a case of indentured servitude. The white collar jobs portrayed here pay good wages. And most important of all, we have a competitive labor market that serves the needs of employees and consumers alike. Even the Times’ description shows that many employees find the culture empowering and thrilling. Some employees stay for a long period. Others use the skills they learn to start their own businesses. It may well make perfect sense for some people to endure upfront unpleasantness—even of the kind that leads to occasional tears—to gain discipline and knowledge that will later stand them in good stead.
And the result is excellent for consumers. I am sure I am not alone in finding Amazon to be the emporium of dreams.