Way back in the olden thymes, I was chatting with an acquaintance, who owned a number of small niche publications. Each had five to ten thousand subscribers, who paid $50 per year for the publication. These were monthly hobbyist type things. Printing, postage and content costs ate up most of his revenue, but he was still able to take an upper middle-class salary from the business. He was never going to get rich from it, but he liked the action and it let him turn hobbies into a nice career.
At the time, he was telling me about his plan to move all of his magazines to the web. This was in the 90’s so it was the new thing. Newspapers and magazines were putting up websites hoping to reach a broader audience. He was very excited about it because he saw the cost savings. Printing and postage were his big line items so going digital meant a potential windfall. I remember asking him how he expected to charge people when he was putting his content on-line free of charge. He responded, “Hits. We’ll get more hits and then we can sell advertising.”
At that point I knew he and many others were about to commit suicide. I’ve been inside many banks and none of them ever accepted hits or site traffic as payment. The people rushing to shovel their content on-line simply had no idea why they were rushing to give their product away, but they were sure it was going to be glorious. The result has been the death of newspapers and many magazines. The New York Times, for example, loses money every quarter and only survives because a Mexican billionaire wants access to the American ruling class.
I get that same feeling when people talk about Uber and self-driving cars. From the perspective of an outsider, I see no reason why cities would sanction Uber or any of the other off-the-book taxi services. There’s nothing in it for the municipality. Similarly, why would any of the car companies sign off on robot cars? There’s no advantage for them to do it. Of course, taxi fleets of self-driving cars is about the nuttiest thing imaginable as it just means the death of a number of industries, namely car makers and car insurance firms.
Think about it. Your car sits unused most of the time. You take it to work where it sits all day. Then you take it home where it sits all night. You have a car for convenience, mostly. Pubic transportation,where available, is not good for running errands, going shopping or other tasks. Cabs are fine for some of it, but hailing a cab in the rain sucks compared to walking into the parking garage to get into your car. There’s a reason why rich people have car services and limos. They get the flexibility of their own vehicle with the convenience of a taxi service.
Now imagine that anywhere you are you can order up a Johnny Cab, having it pick you up and take you where you wish, at a low fee. All you do is pull out the phone and order it up and it comes by to haul you to work or take you to the market. It sounds wonderful, especially for old people and alcoholics. The question is, why own a car when you can get the service of a car, without having to own it, store it and maintain it? Hobbyists would still want a sports car or off-road vehicle, but most people have cars for practical purposes only.
Do a little math and you see that you use maybe ten percent of your car’s useful capacity. The hour commute to work and the hour home means two hours out of a day. Throw in some driving on the weekend and 90% of the time your car is sitting idle. Even assuming inefficiency, one care could serve the needs of five people, which means a world of Johnny Cabs is a world with about 80% fewer cars. That means 80% fewer car sales for the car makers. It also means 80% fewer insurance polices, tax stickers and all the other things that are based on people owning cars.
If you are in the car business, the plan should be simple. Buy enough politicians to kill off Uber and the robot car people. For their part, the pols should require little bribing as it is in their interest to kill the robot cars too. Instead, all of the car makers are announcing plans to produce robot cars aimed at the for-hire business. Uber is doing a test run in Pittsburgh with a fleet of driverless cars. Like those newspaper and magazine guys of the 90’s, the transportation industry is fashioning a noose for themselves out the new technology, so they can destroy themselves. Karl Marx must be laughing in Hell right now.
A car’s life is the miles, not the length of time you own it. A self driving Johnny Cab doing 60K miles a year has to be replaced much sooner than the casual driver’s 10K a year car. Additionally, self driving cars could increase total miles driven, so more cars would be made.
http://koin.com/2016/05/15/will-robot-cars-drive-traffic-congestion-off-a-cliff/
http://www.newgeography.com/content/005024-preparing-impact-driverless-cars
The problem I have with Uber (Lyft, ect) is they want to have it both ways. Taxis have high (business rate) insurance costs. Uber plays fast and loose with both insurance companies and their drivers. Many states (and if the vehicle crosses state lines, the feds) require regular drug testing for drivers. Uber doesn’t like that either (it was major reason Austin TX banned them).
Uber wants to claim ”our drivers are ‘independent contractors’ not employees” but then impose requirements on when, where and the equipment (if your car is more than 5 years old, no driving for Uber for you) that ‘contractor’ uses. Before his site went dark Denniger was quite critical of Uber over these and other things.
I do look forward to their ‘driverless car’ test in Pittsburgh however. Particularly from Thanksgiving to Easter. Granted, San Fran has it’s famous uneven terrain but it also has very mild weather.
I’m still gonna have a car even when it drives itself. I don’t know what the percentage of younger people who will and that is where the money will have to come from for the auto makers employees. If they don’t want to own a vehicle of their own then the employees of the auto makers are screwed, not the auto makers. Robots will make the driver less cars and the damn things will drive themselves out the plant door.
I will repeat what I posted over at Lion of the Blogosphere.
Under their present model, Uber and Lyft transfer all the capital and operating costs (the car plus gas, maintenance, etc) to the drivers. In the new Uber model, Uber itself would have to absorb those costs. Moreover, they are likely to be much higher than the costs the drivers currently incur, because the new technology will add significant new costs to the cars, and the significant new costs will be much higher than expected because of short production runs (economies of scale matter). The new model only makes sense if the added costs to Uber/Lyft are much smaller than the fees they currently pay to drivers. I seriously doubt that.
This is an excellent point and one I wanted to get into but I was running long. I’ve done the Uber math before and it is clear they are just playing a game of cost shifting and tax avoidance. If I get a free pass on robbing banks, my new bank robbing company will make a fortune. Putting that aside, the car makers need scale. A world of bespoke electric robot cars is mathematically impossible. Until the cost of robot cars drops by about 95%, these things are mostly publicity events.
I remember when the first DVD burners came out. They cost over 1000 dollars, but now they cost under a 100. They will drop 95%.
“Pubic transportation,where available, is not good for running errands, going shopping or other tasks.”
Couldn’t agree more! You can only carry a girl cowgirl-style for so long and it’s not hands free either! Public beats pubic in those situations.
I am probably the only person here who hasn’t used Uber, so can’t add to the discussion.
But I have used tinterwebz, and can recall from its early days it being obvious the only people who made money from it were the people who made the tools for it. Coders, for example. It was like the Gold Rush: the real money was not in nursing dream but in selling spades, picks and mules. It avoided the hard work of digging and you actually had money in the bank rather than a bad back.
Some of us would rather have a car or three, one of which is a truck. Same with my neighbors. Sorry, I don’t agree at all.
Of course you would, and so would a great many others. But that never stops the elite. What do we do when they decide private ownership of vehicles is no longer allowed?
your analysis makes the same mistaken assumption the energy grid bureaucrats make: we need only provide for the average use of the grid throughout the day. The reality is there are peak times of use when everyone is on the grid or in their car, regardless that 90% of the time that full capacity is not being used. There is no substitute for for a carrying capacity that works during peak load. We need that full capacity even though it sits idle much of the time.
Let the market place work out how many cars we need.
If Municipalities are about the people and not the leaders on the take and their major donors then why shouldn’t municipalities support the Ubers?
Taxis suck. We banded together in Portland Oregon to overcome our idiot leaders of the city to bring Uber in because we hated the local taxi companies and their crappy businesses, crappy cars, crappy drivers, and even worse customer service.
The people have voted and taxis lost because they deserved it.
I’m across the river from you. I’ve had to use Uber a few times when the truck was down. When I call a cab, they tell me it will be about an hour. If I call Uber, it’s there in less than 15 minutes. And it is cheaper. Regulations drive up prices. If they want cabs to be competitive, get rid of the regulations
Right. When I use Uber, I can track where the car is, so I know I haven’t been forgotten about, the car arrives faster, is cleaner, and the credit card reader is never “broken.” The taxi companies have made their bed with years of crappy service and are now complaining that the time has come to lie in it.
That is great! Competition is great! But should tax payers, people who don’t use taxi’s have to pay for your choice of transportation? Let the Uber business model prove itself on it’s own merits. Then leave it up to traditional taxi companies to step their game. Sounds a lot like Detroit in the ’70’s when Japan was eating their lunch. They got fat, dumb and complacent until someone starting eating their lunch.
I keep seeing references to Uber being subsidized by the taxpayer. My backward southern city just approved Uber, and I didn’t catch any kind of subsidy, tax break etc, other than perhaps not buying business license(es). (Not sure about this.). Please enlighten me on how taxpayers subsidize Uber.
26 states list “truck driver” as their number one occupation. The pay is pretty good for unskilled labor, and that’s why the elites want to kill it. They wish to keep that money for themselves. They haven’t thought this out long term. They haven’t figured out who will buy their products once nobody has a job, but that day is still a long way off, and there is money to be made today by putting truck drivers out of business.
The only reason capital pays labor is because capital needs labor to a) do things and b) not revolt. If capital doesn’t need labor anymore, because they’ve replaced labor (people) with capital (machines, computers, and robots), then labor is up shit creek without a paddle. Capital can still produce things for themselves, labor cannot.
Imagine a hereditary feudal system, except the aristocracy doesn’t need commoners to produce food, crafts, trades, etc. They’re just there, scrounging on whatever the aristocrats throw their way. That’s the future—just throw in a little genetic engineering and round out the welfare state.
I had a history teacher once say that revolutions don’t happen when the poor is fed up: they happen when the middle class perceives their standard of living to have collapsed. Disemploying a large share of the middle class via immigration, outsourcing and automation could do that.
Maybe. My throw of the dart goes more towards the tech lobby looking for another “problem” at which to apply their great technology. “Gee, look what we can do!” Never mind the issue of who really wants that or is it really a problem. As for those who don’t understand why City Sanction of Uber is required? My guess it is because Uber is not profitable as it is an unproven business model and the owners have figured out a way to get local tax payers to “fund” a big part of it thus giving municipalities ‘power’ over it. Otherwise it would just be normal bureaucracy and tax raising schemes by the cities.
Why would a city sanction Uber? Why does it need a city’s sanction? It is not illegal, and should not be. If it’s the background of drivers, require background checks. Cities don’t exist to extort revenue from substandard businesses to whom they grant a monopoly in return for swag. Taxi’s are dirty, run down, dangerous, the drivers are rude talking on the phone, listening to music I don’t like. I have to put up with all of that so the local politicians can get some extra money?
Auto mfg have to think of themselves as transportation companies. If they try to impede sharing of automobiles instead of support it, someone else will do that and get the benefit of serving customers better than they do. It does not matter if record labels refuse to put their music online in an attempt to preserve their revenue, Apple will do it and get a cut of their profits.
In Chicago, the young professionals who gentrified the inner city demanded Uber and Lyft. It’s perfect for them. The city needs it’s gentry more than it needs its cab companies. I know because I drive for Uber there. I don’t think we’re replacing cars. We’re replacing cabs and pub. trans.
Because I get to choose the one I want and can afford, own it, control its use and it is available when I want it. Fans of johnny cabs and such seem to be folks who live in crowded cities run by control freaks who resent the fact that people are free to get in their car and go when and where they want. I’ve been lucky enough to avoid such hellholes. I like to head out to the countryside often and I doubt that the Municipal Car Utility will be set up to let me do that. If my chief recreation was getting drunk in clubs I might change my mind on the subject, but I have other hobbies.
Zman, I don’t think this is the libertarians, I think that the greens, centralizers, and statists are pushing this one. It fulfills all their dreams: fewer cars on the road, less pollution, fewer green house gasses, more small freeholders on the dole, more control, especially more control. If it’s snowing, someone at city hall can flip a few bits and presto, no vehicle can go more than 25 mph. Since there will likely be only one or two providers, charging rents is a breeze. Lots of “campaign donations” from the providers. Plus it keeps all of those crackers from driving around in their pickup trucks and sports cars, which will gladden the heart of every campus totalitarian.
They’re not trying to change the economy. They’re trying to seize power. Lenin and Mao are in hell kicking themselves in the ass because they didn’t think this scam up.
Did somebody say; “more power”? We have a winner. .gov said; “Yes, you will help to destroy your own industry. You wouldn’t want your children to suffer a visit from the Clinton’s handyman would you?”
Speaking of being visited by henchmen, It’s probably the only way Detroit can meet the CAFE standards. Without getting out my thermodynamics text, I’m pretty sure that the only way to meet the legally mandated future fuel efficiency requirements is to put everyone in America on mopeds. Maybe the auto industry thinks that if they get a significant chunk of vehicles off the road, they can get CAFE repealed and concentrate on higher margin business like trucks. Just spitballing here.
The image of third world cities full of mopeds and tuk-tuks comes to mind. The Greenies would be happy to drive the economy back to that in the name of Gaia. And once we get there … well, of course, emissions from all those little engines with no smog controls will then be the next problem.
Karl Marx must be laughing in Hell right now.
I hope not.
Eh, Onkel Karl must love it down there. It’s the ultimate workers’ paradise — from each according to his ability, to each according to his need (yeah I know, that’s Lenin, but still – it’s not that great a joke to begin with, and pedantry never helps).
Why would that be the case? Were approaching a time when the whole concept of “worker” is going to be meaningless. Marxism will be as out of date as the hunter/gatherer society.
Driverless taxis work up to the point the first drunk throws up inside, or decides to treat it as a public convenience in general. If it’s my car, I know what’s inside it (and can leave stuff only wanted on the voyage in it); adding autopilot is just a bonus.
So here is where you get my libertarian streak up. I see no reason why cities ought to care about “sanctioning” any kind of business.
You may not see it, but the cities see loads of reasons why they should sanction businesses. You’ll also note they never ask you for your opinion.
Neither does the mafia – they run a similar racket with less corruption.
and way more efficiency 😛
I award you no points for your blatherline…. Of course it has the advantages of being both not funny and not true and not original.
It’s because every business consumes resources. It’s reasonable for a community to expect a return for that consumption. Why should I let you build an automated factory in my neighborhood? You won’t be providing any jobs or income. I will be forced to enhance the power grid to support you, and a host of other utilities such as roads, for your automated trucks, I will also be expected to dispose of your waste in a landfill. Why would I do any of that when you offer absolutely no value to my community. You can build your factory in the next town over, and I can purchase your products just the same, without any of the hassle.