The True Cost of Uber

Uber, like the cowboy socialists of the West, talk all about private, individualized effort that makes America great. And like those cowboy socialists, Uber also relies on the government for everything, effectively socializing their business model on the rest of us while doing everything possible to escape paying the taxes that would contribute its fair share to those services. A government starved of resources then has to turn to private companies to provide basic services. A vicious circle results:

Compare this with the dire state of affairs in which most governments and city administrations find themselves today. Starved of tax revenue, they often make things worse by committing themselves to the worst of austerity politics, shrinking the budgets dedicated to infrastructure, innovation, or creating alternatives to the rapacious “platform capitalism” of Silicon Valley.

Under these conditions, it’s no wonder that promising services like Kutsuplus have to shut down: cut from the seemingly endless cash supply of Google and Goldman Sachs, Uber would have gone under as well. It is, perhaps, no coincidence that Finland is one of the more religious advocates of austerity in Europe; having let Nokia go under, the country has now missed another chance.

et us not be naive: Wall Street and Silicon Valley won’t subsidise transport for ever. While the prospect of using advertising to underwrite the costs of an Uber trip is still very remote, the only way for these firms to recoup their investments is by squeezing even more cash or productivity out of Uber drivers or by eventually – once all their competitors are out – raising the costs of the trip.

Both of these options spell trouble. Uber is already taking higher percentages from its drivers’ fares (this number is reported to have gone up from 20% to 30%), while also trying to pass on more costs related to background checks and safety education directly to its drivers (through the so-called safe rides fee).

The only choice here is between more precarity for drivers and more precarity for passengers, who will have to accept higher rates, with or without controversial practices like surge pricing (prices go up when demand is high).

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The broader lesson here is that a country’s technology policy is directly dependent on its economic policy; one cannot flourish without the active support of the other. Decades of a rather lax attitude on taxation combined with strict adherence to the austerity agenda have eaten up the public resources available for experimenting with different modes of providing services like transport.

This has left tax-shrinking companies and venture capitalists – who view everyday life as an ideal playing ground for predatory entrepreneurship – as the only viable sources of support for such projects. Not surprisingly, so many of them start like Kutsuplus only to end up like Uber: such are the structural constraints of working with investors who expect exorbitant returns on their investments.

Finding and funding projects that would not have such constraints would not in itself be so hard; what will be hard, especially given the current economic climate, is finding the cash to invest in them.

Taxation seems the only way forward – alas, many governments do not have the courage to ask what is due to them; the compromise between Google and HM Treasury is a case in point.

There’s really no way out of this outside of vigorous taxation and investment in social services. Of course, that’s the opposite of where most American elites are today, with former Obama advisers now working for Uber and of course Republicans hating any public services.