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Uber flexible or Uber confusion?

Uber’s flexible model provides a lot of benefits for their drivers, as well as customers.

Some new work by Jonathan Hall and Alan Krueger at NBER shows the value of that flexibility to their driver-partners. Uber drivers come in from a range of backgrounds, with most driving a few hours part-time rather than full-time. Rules requiring big licensing regimes for drivers can break that: the higher the fixed costs of being a driver, the more that Uber will look like a regular cab company with full time drivers rather than flex-time responsiveness.

Unfortunately, Parliament’s Transport Committee really seems to have not the slightest clue about the industry they are charged with regulating. MPs there seem never to have used the service and don’t get how it differs from traditional cabs. That is more than a little worrying when it’s their rules that will either let Uber work well here in New Zealand, or break it. And it’s worse than that. Maybe we could expect MPs to be ignorant. But they have staffs. There is a Ministry of Transport that should be providing background briefing notes to the members of the committee about the basics. And the Ministry’s lack of understanding of the system was strongly reflected in the draft legislation they’re putting up, which would require an app-based cab company to have its drivers keep paper logs of their times.

Every time you hear somebody say that we need government regulation to protect consumers because consumers are too dumb to make their own choices, point them to the Uber debacle. Consumers might not always get things right each and every time, but they learn. Parliament can be stupid for a very, very long time, and their bad rules can ruin everything. Be careful what you wish be regulated.

About Eric Crampton (88 Articles)
I'm Head of Research with the New Zealand Initiative.

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