Yeah this is mostly bullshit. First part of article is a bunch of non-sequiturs and red herrings strung together with a bunch of buzzwords that lefties find scary.
Once it gets around to actually discussing Uber itself, it... just makes shit up. The "three enhancements necessary for welfare" are actually not necessary for welfare, its just something someone made up. And even then, contrary to the "argument by assertion" (with no evidence) Uber actually passes these! It does make a profit, it does provide services at lower cost and it is competitive. Hubert Horan is not an "economist" but, let's see, "independent aviation consultant" (he does have an MBA) who writes on a blog. Then we get an assertion that Uber doesnt comply with GAAP, which is just nonsense.
I mean all public companies have to publish GAAP compliant numbers. Some also publish non-GAAP numbers because the market sometimes wants to see them. Its just a weird claim that implies he has no idea what he's talking about and is just trying to throw shade.
That is a ludicrously simplistic, and false accusation. If you took the time to read his work, perhaps you would have more serious – and accurate – criticisms.
For example, below is an excerpt from an article by Horan published in February on the Naked Capitalism website. He makes it clear that GAAP reporting is done by UBER, but that there are related problems.
"The graph above illustrates the gap between Uber’s reported net profit margin, and a net margin corrected to only include items related to its ongoing business operations during the reported time period. Uber overstated current P&L performance by 18 points in 2024 and 5 points in 2023, and overtime Uber rendered GAAP net profitability meaningless for any investor that was trying to track profit improvement over time. Even when Uber was producing massive losses its P&L did not have the huge volatility that its reported numbers suggested.
"Uber produced meaningless GAAP net profit numbers because they wanted investors and other outsiders to focus on its even more bogus “Adjusted EBITDA Profitability” metric, which measures neither EBITDA nor profitability.[3] Since 2019 Uber has excluded over $21 billion of expenses from this “EBITDA Profitability” metric other than interest, taxes, depreciation and amortization.
"This practice allows Uber PR to claim a “profit margin” 10-12 points higher than its corrected GAAP net margin in the last three years. Prior to the pandemic when Uber was desperate to mask how far the company was from GAAP breakeven it was claiming a profit margin 24-32 points higher.
"This PR strategy has been successful. Media and financial analyst reports almost exclusively evaluate Uber profitability based on the bogus “Adjusted EBITDA Profitability” and only mention reported GAAP net profits in passing."
Sorry to come late to this discussion. I obviously appreciate Edward basing his article on a a clearly written explanation of Uber economics. And anything that helps expose Yglesias’s hackery is very welcome. I’ll respond to other commenters below but this first comment focuses on Radek’s crude dishonesty
At no point in hundreds of thousands of words I’ve published about Uber did I ever claim, as Radek insists, that Uber’s SEC filings didn’t follow GAAP. The $32 billion in Uber losses I documented were GAAP losses. Radek obviously has no understanding of GAAP or corporate financial reporting and does not understand that companies have huge latitude within GAAP’s general guidelines, and my articles have pointed out a number of questionable Uber practices within those general guidelines. Are Uber’s incentive payments to drivers or promotional customer discounts an expense or an offset to revenue? GAAP doesn’t say and Uber has done both depending on the emphasis it wanted to place on top-line revenue.
In theory, GAAP and SEC reporting requirements are designed to help investors develop reasonable judgements about a company’s financial performance but don’t require any specific levels of reporting detail. Contra Radek’s dishonest claim that I said Uber was disobeying basic GAAP requirements, I argued that Uber never gave its investors any ability to figure out what drove reported P&L changes. Are they explained by price changes or demand changes? Did operating efficiency (unit costs) improve or get worse, and why? What was the relative impact of car services versus food delivery, or North American versus overseas operations? Is Uber taking a bigger share of customer payments? Was this because Uber forced drivers to accept a smaller share, or did driver compensation increase but not as fast as Uber’s? How did Uber’s “investments” in potential future businesses (Avs, scooters, flying cars, etc) affect the overall P&L? Uber has been publishing SEC reports that nominally comply with GAAP rules but don’t allow investors to answer any of these questions.
An especially problematic practice is Uber’s conflation of hypothetical value changes in untradeable securities from countries it doesn’t serve with operating revenue from current operations in the countries it did serve. Under historic GAAP practices these changes should have been shown on the balance sheet, not the operating P&L, but (as with hundreds of other accounting issues) there isn’t a black-and-white GAAP rule saying that an accountant who blesses SEC filings that don’t strictly comply will be disciplined. Uber first did this in its S-1 filing reporting the unverifiable increases in the untradeable foreign equities in the hopes of deceiving investors into thinking it was making major progress towards profitability. I’ve documented how this practice produced wild, incoherent P&L swings, so investors had no way of understanding how the actual financial performance of the core business was changing over time.
My articles and website are totally transparent about my background. Note that Radek attacks them (40 years of experience in transportation economics) without telling anyone why he is qualified to say anything about the economics of Uber or any other company. One of Uber’s major PR narrative claims is that it was going to enhance overall efficiency by replacing the old taxi regulatory structure with pure laissez faire. My long, direct experience with the deregulation of other transportation industries was extremely relevant to refuting Uber’s baseless claims.
Nothing Radek posted represented an honest attempt to engage with issues Edward or I had raised. Since he has no facts or analysis that challenge what I’ve written about Uber’s economics, he resorts to dishonest slurs in the hope this will prevent others from even considering any of the criticisms of Uber that many have raised.
Edward did not base his article on "a clearly written explanation of Uber economics". Mostly he made scare noises about "fintech" and "venture capital" and something something "threats to democracy".
If youre upset that someone said that you said Uber didn't follow GAAP, then rather resorting to insults and calling me dishonest (crudely!) perhaps you should be mad at the person who wrote the following. Quote:
"Uber has a long history of publishing incomplete, opaque, and adjusted financial reports that do not adhere to generally accepted accounting principles (GAAP)"
Oh. That'd be Edward. The guy you just praised for a "clear explanation of Uber economics". Looks like its him being dishonest. Or maybe, its you, since your writing while perhaps never explicitly and unequivocally accusing Uber of not adhering to GAAP does all it can to insinuate it, imply it, suggest it and all but say it, perhaps with full knowledge that most people will walk away exactly with that impression.
Your enhanced welfare test seems pretty flawed because it doesn't engage with or account for the main reason uber and lyft are widely used and have largely displaced taxis: they're really convenient in a way that taxis never were or could be. That seems like meaningful innovation to me, and sidestepping it makes it hard to balance the rest of your objections
I just don’t think convenience matters more than everything else I listed (effects on political system, worker welfare, consumer predation, anti-competition, academic PR, etc.) but I hear you and in a future Uber’s Bastards piece I plan on talking a bit more about “consumer surplus” and related concepts
The convenience is an illusion though because unlike good public transit it's entirely at the whim of a private company and dependant on the availability of drivers who are willing to accept poor pay. If I can misquote Franklin: those who exchange long term reliability for short term convenience deserve neither.
The long term/short term thing is key because the (implicit in your post) claim of the regulatory arbitrage/investor subsidy/low profitability argument is that once they achieve market dominance, Uber will shift to extracting rents, leading to retrenchment of whatever consumer benefits they are currently delivering.
Ironically, that will most likely cause the restoration of the prior monopoly scenario. It's easy to envision ride sharing services being the chain letters of the early 2000s.
As a consumer, I do think that convenience matters more than everything else you listed, even if those things were factually true. I both disagree on the substance and resent having someone else try to tell me how to weigh these values.
Yes there is a healthy dose of “don’t believe your lying eyes” for those of us who were taxi consumers before Uber and can plainly see how much better Uber is for the consumer.
The primary pro Uber argument is that it made life much better for consumers—some by innovation and some by transferring value from taxi owners and drivers to passengers.
Ignoring that in the enhanced welfare section with a bunch of theory makes it a little hard to credit the rest of the analysis.
If anyone in a mid market city recalls trying to get a taxi in 2010, Uber was a game changer.
But the demands of growth and capital constrained the actual ingenuity of Uber, to the point that now, yes public transit is more or as convenient in a lot of places. In many cases, public transit just straight up offer an Uber-like on demand service that guarantees consistent service at consistent transparent prices.
If anything Uber is a case study in why many public services are becoming superior to private ones. Uber suffers from a lack of regulatory structure, which unfortunately has allowed it to slip into a bizarre level of unpredictable service at unpredictable prices. Locally, there are usually better alternatives.
Uber was great when they subsidized the rides to break the taxi industry. Now, the fares are the same as cab fares and often higher since Uber charges what it can get away with while taxis have regulated rates or a taximeter.
Uber also introduced taxi hailing using an app rather than calling a dispatcher which was nice since the app gives continuous updates about arrival times. Now that taxi companies use apps as well, they're often better priced and just as convenient.
Uber was also great when it was heavily subsidized since it paid drivers by the mile, so drivers could figure out what they were earning. I had a lot of interesting drivers including an MBA waiting for her real job to start and driving to figure out the business. Another was a veteran who gamed Uber to fund his incipient real estate empire.
As Uber has tightened the screws, I've noticed fewer and fewer drivers can speak much English. Some speak none at all. Driving for Uber is a low end immigrant job like field work. The better immigrant drivers formed their own car companies. I used to use one founded by Congolese immigrants. With the upcoming engineered recession, I expect English skills to rise.
I still use Uber from time to time, but I usually use a taxi or a car service.
I addressed your biggest error earlier. You can’t argue that the artificially low fares and higher service levels enhanced welfare by making things better for consumers. As $32 billion in losses demonstrated they were always unsustainable.
Your claim that “Ignoring that in the enhanced welfare section with a bunch of theory makes it a little hard to credit the rest of the analysis” is false. You’ve attacked my analysis without reading it. My argument was overwhelming financial and operating data. If you want to dismiss my argument that companies need to demonstrate they can sustainably produce enough revenue to cover costs as excessive abstract theory that should be ignored by all means lay out that case.
Uber’s PR argument that it was transferring wealth from the “evil taxi cartel” to consumers was always completely unsubstantiated and complete nonsense. Taxi medallions were somewhat dubious but these only existed in a handful of cities, and the things that made traditional taxis unpopular existed everywhere. There were no taxi companies making supra-competitive profits so consumers gained nothing from new competition from Uber unless they could sustainably produce taxi service at lower cost and pass some of those efficiency gains to consumers. Uber’s PR argument that its meteor growth was due to its “innovative technology” was also completely unsubstantiated and complete nonsense. My published articles explain why these arguments were nonsense at great length. No independent party has ever produced a shred of credible evidence showing any material efficiency gains from Uber’s “innovative technology” or demonstrated how other companies profitably exploited it. And it is totally irrelevant if some secondary innovation saved a few dollars in one area when the company as a whole was losing billions.
Your comments grossly distort Uber’s actual economics and history.
Uber was not popular because of technological innovations that made it more convenient. It was popular because of tens of billions in unsustainable predatory subsidies designed to drive all existing competitors out of business. It set fares fare below what was needed to cover its costs. It flooded markets with services that traditional taxis hadn’t provided because they were staggeringly unprofitable. This is a major reason they produced GAAP losses of $32 billion. It is not surprising that a company that sells dollar bills for 80 cents would become popular. It doesn’t mean that it is improving overall economic welfare.
Yes, Uber was one of the first to introduce an easy to use ordering app. But this was easily copiable technology, not something that could produce a power competitive advantage or could possibly explain meteoric demand growth or huge valuations. A local taxi company here in Phoenix introduced an app with all of Uber’s functionality. They failed because they had to charge fares that covered their actual operating costs while Uber attracted passengers with fares that fares fell billions below their actual costs. If Uber’s app was really a powerful welfare enhancing efficiency, where are all the other companies that generated over $100 billion in corporate value after adopting this technology?
The convenience of ordering a taxi through an app does nothing to challenge my economic welfare arguments. Uber was popular but was staggering unprofitable until 2023-24 so it fails every possible efficiency/welfare test. Uber’s recent profit recovery was entirely due to the fact that its predatory practices established an impregnable quasi-monopoly power and full immunity from competition. That power allowed them to raise all the prices and eliminate most of the service that had made them popular pre-pandemic. It was also due to massive political expenditures eliminating any possibility that drivers could receive even rudimentary labor law protections. A company that used predatory subsidies to massively distort markets, regularly disobeyed laws that competitors had to follow, and spent hundreds of millions to thwart regulations designed to limit driver exploitation is not enhancing overall economic welfare. Even if you happen to like its ordering app.
As an UberLyft driver of some 8 years, I found some of this eye-opening; some of it was shoulder-shrugging.
The thing that got most of my attention was what I have always called The Jump Ball; a rider not sent directly to me. Now I know what makes a Jump Ball. What you hinted at is there's some jiggery-pokery at who wins a Jump Ball. I only Jump on a Jump Ball if the $ looks good for the distance to service it. But, I have enough 'points' where I see the $ I'll make, the pick up address and the drop off. Some people may not be keeping their points up.
I have always believed, from Day 1, I was being treated fairly and happy with my wages overall. If you ever want to hear things from driver's POV [there was very little of that in the article. I say that as a former-investigative journalist and TV News writer.] , try to find me on social media (Bluesky) and we can exchange particulars.
As an aside: The late-morning passenger fall off has been like falling off a cliff the last 3 weeks.
The old saw of whether fish know they're swimming in water applies to networked computing power decades on. It has bent our perceptions to the point that we seem largely unaware of how it has "driven" these business models.
To whit: rent-seeking is a feature of the Internet, not a bug. You can operate from anywhere and place yourself firmly in the middle of any and all market transactions between a buyer and a seller for, say, transportation services. But that's just one example.
What's developed around these models is financial support for running in the red till you secure a specific market by undercutting the existing providers. With monopoly power eventually in hand, it's all over but the proverbial shouting.
With that comes the loss of jobs and income that were the purview of organized labor, replaced by batteries of independent contractors. Given the inexorable rise in the cost of housing, health care, insurance, food and so on, I'm very interested in seeing a comparison for the before and after of these hostile takeovers.
You probably need a little more education regarding the inextricable link between the trade union movement and the extension of the franchise in the UK.
Democracy is the tyranny of the majority. Before extension of the franchise, there was liberty in Britain (at least for English men), which produced the Industrial Revolution, also known as the only historical event that really mattered to ordinary people. What came after extension of the franchise was >90% income tax and state takeovers of major industries that imposed dreary uniformity, petty jobsworths' tyranny, destruction of high culture, and economic stagnation.
Never a better sentence written about Uber imo: "it is about the consequences of letting predatory firms rewrite our laws to maximize their profits and to maximize their ability to convert those profits into political power that can further boost said profits."
I could never understand why so many governments around that world, who had spent years policing taxi rules, suddenly seemed to throw their policies out when it came to Uber just because it had an app and an air of the new. And this mentality to bypass regulations and civic duty through the trojan horse of technology, is indeed spreading to all facets of life.
Thank you! And honestly, we still only have a few pieces of that story. The Uber Files were quite illuminating in how backdoor deals were negotiated, but Uber also has been quite adept at wooing unions, buying academic researchers, borrowing older lobbying techniques, and also grafting onto existing techno-optimism. There’s also the fact some people genuinely believe in this and don’t actually value the impact on drivers or consumers or society at large beyond producing more of a good/service.
One tangential note about Uber’s business model is that, if memory serves, a hugely disproportionate part of its overall revenue comes from three major cities (NYC, LA, SF), a large portion of which is composed of rides to and from the airport. They’ve actually run into a sort of strange challenge of monopolization of utilities, where they can’t exit certain markets even if they’re losing money because the service needs to be everywhere for the sake of the brand.
Yeah it’s NYC, LA, SF, London, and Rio. In their s-1 I believe they accounted for 24 percent of all rides and those are the cities where they have more than half of the market share consistently. Another thing I didn’t have the chance to get in is their subscription program, Uber One, has actually seen massive growth and is likely another site of fare squeezing/algorithmic discrimination that we see. Hoping we get some external research of that soon!
They are a godsend in small cities. I live in Fayetteville, AR, and no taxi service ever existed here before ride sharing apps. I own a car but still use Lyft from time to time, especially if going to an event in downtown that will suck up all the parking spaces.
This is like the Platonic ideal of a leftist screed: A long list of complaints about the system being critiqued--many legitimate, some less so--ending with a brief, hand-wavy claim that any problems with the author's preferred alternative (taxis) aren't worth considering. Plus some gratuitous ad homs for good measure.
Yglesias said Uber was better than the old world of taxi monopoly dominance. This article does not even engage with that argument. By refusing to acknowledge the reality of trade-offs, you ensure that you come off as the moron here.
You said that this article failed to engage with what Yglesias had argued. “Yglesias said Uber was better than the old world of taxi monopoly dominance. This article does not even engage with that argument. By refusing to acknowledge the reality of trade-offs, you ensure that you come off as the moron here”
Yglesias didn’t present a shred of evidence that “Uber was better than the old world of taxi monopoly dominance” None. Zilch. I am more than happy to respond to anyone who tries to counter my arguments with objective evidence and analysis. I have published tens of thousands of words on “the old world of taxi monopoly dominance” that explain, using financial and operating evidence why Uber’s PR claims that its “disruption” of the old taxi regulatory regime would produce massive consumer gains was complete nonsense.
How do taxi prices and service levels and driver compensation levels today compare to pre-Uber days? Yglesias doesn’t have an iota of hard data. My claims were based on extensive analysis about car service economics. The source of Yglesias’ claim was his rectal cavity. You’ve decided that I am a moron because I didn’t find fabricated, evidence-free assertions as convincing as you do.
Yglesias's whole thing is that he cares more about appearing to be a serious thinker than actually thinking seriously about any issue he covers. Hence why he calls his own work "economic analysis" and LPE's work something else.
How are these accounting practices legal? Aren’t there laws against publicly traded companies zhuzhing the books in a way that could mislead investors?
Short answer is that he's lying to you. Uber follows standard accounting practices and files all the paper work required by GAAP.
They also put out *other* financial metrics which financial analysts can use *if they want to*. This has led some, like this "Independent Aviation Consultant" guy he quotes to spin it all into some wacko conspiracy-theory-but-for-the-left about how Uber is not following good accounting practices. They are.
"Not actually breaking a law" = "that's how its legal"
Thanks for the very deep coverage of the Uber scam. There's nothing wrong with Yglesias: neoliberalism, now rebranded as Abundance, is his religion. Sola fides.
Ante-Uber Chicago had a terrific cab system. I never had to wait more than a minute for a cab. Post-Uber, I haven't been able to hail a cab for years. Uber also continues to benefit from regulatory preferences. I serve as an election judge. After the polls close we have to take the ballots, etc., to a collection station. We're prohibited from taking a bus or a cab. But not from using Uber.
As a black person who lived in the south side of Chicago and have family who live there, taxis would literally never come. It was widely known that they would openly discriminate against black people and whole area codes. Uber has been significantly better in that regard. Of course if you live north of the loop you never had a problem getting a taxi. But you probably never had a problem getting anything else.
I fully accept that people of color suffered discrimination from traditional taxi drivers. But the problem of lousy taxi service in large portions of every major city was only partially a function of race. The larger problem is the “empty backhaul” problem that every mode of transportation faces in some form. There are parts of every city that are somewhat compact, have a lot of wealthier people and/or entertainment venues (restaurants, hotels, airports, etc.) Taxi drivers that focus on those areas will make more money because it is much easier to find a new fare after you drop someone off. If you take a fare to a more distant, lower density neighborhood, the driver will inevitably return downtown empty.
New York’s Taxi and Limousine Commission did a number of studies in response to racial profiling concerns. They explicitly acknowledged there was no way to eliminate cases where a driver ignore a black passenger to pick up a white one, but refuted claims that race drove most cases where a driver drove away after a black passenger asked to go to a black neighborhood. It found that drivers were driving away whenever passengers asked to go to distant neighborhoods where there’d be no return fare. It also found that perceptions of crime rates were irrelevant. Driver refused trips to distant very low crime neighborhoods at the same rate as distant neighborhoods with higher crime.
Uber’s business model did nothing to solve the empty backhaul problem. In its early days Uber aggressively promoted the idea that they were providing much better service to neighborhoods (and ethnic groups) that traditional taxis had not served well because its strategy was to grow ridership volumes as fast as possible. But it was losing huge amounts of money serving these neighborhoods, and when Uber was desperate to cuts its losses, all of this highly publicized service was largely eliminated. Uber originally hid passenger destinations from drivers so they couldn’t reject fares based on the socio-economic nature of the destination. But all of that has been eliminated as well.
There’s absolutely no evidence that in 2025 Uber is providing better service to less wealthy, lower density, more distant neighborhoods than traditional taxis offered in 2012. And today’s fares are much much higher.
Pretty absurd that you’re not given an exception for Uber! I wonder who came up with the idea to do Election Day partnerships at the company, it has proved to be a brilliant PR move for them—helps cement the image of them as something better than public goods.
Well, it is Chicago. Where Mayor Richie Daley auctioned off the city parking meters to a "hastily formed investment group — the creatively named Chicago Parking Meters LLC" for $1.1 billion in exchange for a 75-year lease. Except, of course, there was no auction. And the estimated value of the contract was in excess of $2 billion. So I assume a certain number of skids were greased.
Did you know that Daley now works for the law firm that negotiated the 08 parking meter deal (Katten Muchin Rosenman) lol (well I say now like it was recently but i only learned about this a year or two ago and it’s so incredibly cartoonishly corrupt)
The problem that muddles the discussion around Uber is that if we frame it as Uber vs Taxi, it is basically the story of the fight of Evil against Evil, but Uber being a more modern, agile and convenient evil for its users.
Most people don't really care about higher order effects, can't relate them to Uber, or think the trade-offs are acceptable.
Very few people, including politicians, are interested in analyzing Uber systemically.
I understand that Uber broke a lot of regulatory structure. But that structure had been captured by special interests and deserved to be broken.
Who got paid millions of dollars for medallions, and what value did they provide? You can't write a serious article on this topic with addressing the distortions, abuses, and outright dysfunctions of the old system.
In the short term, Uber is obviously great for consumers. It is also obviously good for the drivers, or else they wouldn't do it. Nobody is forcing them. Many of them have other jobs. Many others are recent immigrants who don't speak English and can't do much else.
There is no long term. Self-driving will take over, and all these gig workers will be out. There will still be jobs, but they will be with companies that sell cars, batteries, AI chips, software, cyber tools, electricity, minerals, motors, sensors, road construction, etc. They may not be visibly tied to the ride hailing economy.
The free market is the best way to get everyone into the most productive work they can do. Regulators should attempt to impose free market conditions as their guiding principle. They failed to do that with the old taxi system, and the market revolted. They may yet fail again with the self-driving revolution. But if they don't, and if some jobs go away, it will be because people could be doing more productive work.
I did write extensively on regulatory issues (during my career I worked first hand on both railroad and airline deregulation) and specifically on the medallion issue. There is no way Edward could have mentioned every Uber issue I analyzed over the past decade.
Uber’s early PR narrative claims that eliminating taxi regulations would produce the same cornucopia of consumer benefits that airline deregulation produced, and that it was creating huge value by transferring the huge profits medallion holders had seized to consumers were both entirely dishonest.
The transportation deregulation movement wanted to replace a clumsy system of administrative review of price and capacity decisions with a significant (but not total) reliance on letting robust market competition guide those decisions. Robust market competition depended on consumers being able to choose between multiple providers based on prices and service quality. Workers would go to the companies with the best pay and conditions. Investors would then get to choose where to invest based on which companies made the most money, based on those consumer choices and the efficiency of operations.
Uber was a frontal attack on all of the factors capitalism needs to allocate resources to their most efficient use. The tens of billions in predatory subsidies completely distorted consumer and worker choices and were always designed to eliminate any possibility of serious competition so that Uber could exploit artificial market power.
You are not arguing for the type of “free market” that enhances overall welfare. That type of “free market” depends on robust competition and governmentally administered protections for competition. You are arguing for a totally corrupted laissez-faire structure where competition can be easily subverted by forces with more money and political power.
The only test of whether a business enhances welfare is whether is increases the consumer surplus. Uber obviously increases consumer surplus. End of argument.
On the contrary, you can't just say "enshittification" as an argument that tech companies are always ultimately extractive without putting some wood behind the arrowhead. You can argue with some merit that Amazon no longer really provides much consumer surplus, thanks to having strategically subsidized first consumers and then sellers to wipe out their competitors.
But Uber hasn't done anything equivalent on the consumer side, and I'd argue that they cannot because they don't have any path to wiping out their competition.
I imagine it ends up being like Amazon - the competitors get sick of losing money and bow out. No one is going to start a new ride sharing service expecting to make money on it. I’d have their head examined.
No, but Uber's competitors still exist and while they're smaller they're not financially do any worse than Uber itself, plus most major metros still have taxis and a growing few have Waymo.
Uber did execute the enshittification playbook back when they were still private - they launched with very cheap end user prices, raised those prices to attract more drivers, and then cut driver compensation to pay themselves. But they landed up both with most big cities still having licensed cabs and with ride share competitors in most markets where they operate. This has left them unable to jack prices up, hence the clear consumer surplus. Now they are public, they no longer have the option to run at a loss in order to drive out competitors, so its not clear how they get a second chance.
But how would that happen with Uber? They have close competition in all markets I know of. To some extent they can screw the drivers, but how could they take back the consumer surplus? I don't see it.
To bowdlerize the great housing researcher Nolan Gray, "How much welfare did the taxi cartels have?"
We can look at companies like Uber and Lyft and see a lot of things that could be improved to maximize welfare, especially on a regulatory level. But we're not exactly comparing it to God's own perfect transportation service here. And compared to a system that would leave you on the curb for being Black or lock the doors and try to shake you down if you were going too far into the outer boroughs, ride sharing apps are unquestionably a massive improvement.
Yeah this is mostly bullshit. First part of article is a bunch of non-sequiturs and red herrings strung together with a bunch of buzzwords that lefties find scary.
Once it gets around to actually discussing Uber itself, it... just makes shit up. The "three enhancements necessary for welfare" are actually not necessary for welfare, its just something someone made up. And even then, contrary to the "argument by assertion" (with no evidence) Uber actually passes these! It does make a profit, it does provide services at lower cost and it is competitive. Hubert Horan is not an "economist" but, let's see, "independent aviation consultant" (he does have an MBA) who writes on a blog. Then we get an assertion that Uber doesnt comply with GAAP, which is just nonsense.
And so on and so forth.
"Hubert Horan is not an "economist" but, let's see, "independent aviation consultant" (he does have an MBA) who writes on a blog."
That you dismiss Horan's extensive work on the basis of a one sentence ad hominem attack, reveals the level of seriousness of your criticisms.
I dismiss him on the basis of the fact that Uber is fully GAAP compliant and always has been despite what this guy claims
I mean all public companies have to publish GAAP compliant numbers. Some also publish non-GAAP numbers because the market sometimes wants to see them. Its just a weird claim that implies he has no idea what he's talking about and is just trying to throw shade.
That is a ludicrously simplistic, and false accusation. If you took the time to read his work, perhaps you would have more serious – and accurate – criticisms.
For example, below is an excerpt from an article by Horan published in February on the Naked Capitalism website. He makes it clear that GAAP reporting is done by UBER, but that there are related problems.
"The graph above illustrates the gap between Uber’s reported net profit margin, and a net margin corrected to only include items related to its ongoing business operations during the reported time period. Uber overstated current P&L performance by 18 points in 2024 and 5 points in 2023, and overtime Uber rendered GAAP net profitability meaningless for any investor that was trying to track profit improvement over time. Even when Uber was producing massive losses its P&L did not have the huge volatility that its reported numbers suggested.
"Uber produced meaningless GAAP net profit numbers because they wanted investors and other outsiders to focus on its even more bogus “Adjusted EBITDA Profitability” metric, which measures neither EBITDA nor profitability.[3] Since 2019 Uber has excluded over $21 billion of expenses from this “EBITDA Profitability” metric other than interest, taxes, depreciation and amortization.
"This practice allows Uber PR to claim a “profit margin” 10-12 points higher than its corrected GAAP net margin in the last three years. Prior to the pandemic when Uber was desperate to mask how far the company was from GAAP breakeven it was claiming a profit margin 24-32 points higher.
"This PR strategy has been successful. Media and financial analyst reports almost exclusively evaluate Uber profitability based on the bogus “Adjusted EBITDA Profitability” and only mention reported GAAP net profits in passing."
source:
https://www.nakedcapitalism.com/2025/02/hubert-horan-can-uber-ever-deliver-part-thirty-five-what-drove-ubers-recent-8-billion-pl-improvement.html
Ive reas it. It's nonsense.
Sorry to come late to this discussion. I obviously appreciate Edward basing his article on a a clearly written explanation of Uber economics. And anything that helps expose Yglesias’s hackery is very welcome. I’ll respond to other commenters below but this first comment focuses on Radek’s crude dishonesty
At no point in hundreds of thousands of words I’ve published about Uber did I ever claim, as Radek insists, that Uber’s SEC filings didn’t follow GAAP. The $32 billion in Uber losses I documented were GAAP losses. Radek obviously has no understanding of GAAP or corporate financial reporting and does not understand that companies have huge latitude within GAAP’s general guidelines, and my articles have pointed out a number of questionable Uber practices within those general guidelines. Are Uber’s incentive payments to drivers or promotional customer discounts an expense or an offset to revenue? GAAP doesn’t say and Uber has done both depending on the emphasis it wanted to place on top-line revenue.
In theory, GAAP and SEC reporting requirements are designed to help investors develop reasonable judgements about a company’s financial performance but don’t require any specific levels of reporting detail. Contra Radek’s dishonest claim that I said Uber was disobeying basic GAAP requirements, I argued that Uber never gave its investors any ability to figure out what drove reported P&L changes. Are they explained by price changes or demand changes? Did operating efficiency (unit costs) improve or get worse, and why? What was the relative impact of car services versus food delivery, or North American versus overseas operations? Is Uber taking a bigger share of customer payments? Was this because Uber forced drivers to accept a smaller share, or did driver compensation increase but not as fast as Uber’s? How did Uber’s “investments” in potential future businesses (Avs, scooters, flying cars, etc) affect the overall P&L? Uber has been publishing SEC reports that nominally comply with GAAP rules but don’t allow investors to answer any of these questions.
An especially problematic practice is Uber’s conflation of hypothetical value changes in untradeable securities from countries it doesn’t serve with operating revenue from current operations in the countries it did serve. Under historic GAAP practices these changes should have been shown on the balance sheet, not the operating P&L, but (as with hundreds of other accounting issues) there isn’t a black-and-white GAAP rule saying that an accountant who blesses SEC filings that don’t strictly comply will be disciplined. Uber first did this in its S-1 filing reporting the unverifiable increases in the untradeable foreign equities in the hopes of deceiving investors into thinking it was making major progress towards profitability. I’ve documented how this practice produced wild, incoherent P&L swings, so investors had no way of understanding how the actual financial performance of the core business was changing over time.
My articles and website are totally transparent about my background. Note that Radek attacks them (40 years of experience in transportation economics) without telling anyone why he is qualified to say anything about the economics of Uber or any other company. One of Uber’s major PR narrative claims is that it was going to enhance overall efficiency by replacing the old taxi regulatory structure with pure laissez faire. My long, direct experience with the deregulation of other transportation industries was extremely relevant to refuting Uber’s baseless claims.
Nothing Radek posted represented an honest attempt to engage with issues Edward or I had raised. Since he has no facts or analysis that challenge what I’ve written about Uber’s economics, he resorts to dishonest slurs in the hope this will prevent others from even considering any of the criticisms of Uber that many have raised.
Edward did not base his article on "a clearly written explanation of Uber economics". Mostly he made scare noises about "fintech" and "venture capital" and something something "threats to democracy".
If youre upset that someone said that you said Uber didn't follow GAAP, then rather resorting to insults and calling me dishonest (crudely!) perhaps you should be mad at the person who wrote the following. Quote:
"Uber has a long history of publishing incomplete, opaque, and adjusted financial reports that do not adhere to generally accepted accounting principles (GAAP)"
Oh. That'd be Edward. The guy you just praised for a "clear explanation of Uber economics". Looks like its him being dishonest. Or maybe, its you, since your writing while perhaps never explicitly and unequivocally accusing Uber of not adhering to GAAP does all it can to insinuate it, imply it, suggest it and all but say it, perhaps with full knowledge that most people will walk away exactly with that impression.
Your enhanced welfare test seems pretty flawed because it doesn't engage with or account for the main reason uber and lyft are widely used and have largely displaced taxis: they're really convenient in a way that taxis never were or could be. That seems like meaningful innovation to me, and sidestepping it makes it hard to balance the rest of your objections
I just don’t think convenience matters more than everything else I listed (effects on political system, worker welfare, consumer predation, anti-competition, academic PR, etc.) but I hear you and in a future Uber’s Bastards piece I plan on talking a bit more about “consumer surplus” and related concepts
The convenience is an illusion though because unlike good public transit it's entirely at the whim of a private company and dependant on the availability of drivers who are willing to accept poor pay. If I can misquote Franklin: those who exchange long term reliability for short term convenience deserve neither.
Lol, did you just claim that public transit is more convenient then Uber? You people are delusional.
The long term/short term thing is key because the (implicit in your post) claim of the regulatory arbitrage/investor subsidy/low profitability argument is that once they achieve market dominance, Uber will shift to extracting rents, leading to retrenchment of whatever consumer benefits they are currently delivering.
Ironically, that will most likely cause the restoration of the prior monopoly scenario. It's easy to envision ride sharing services being the chain letters of the early 2000s.
As a consumer, I do think that convenience matters more than everything else you listed, even if those things were factually true. I both disagree on the substance and resent having someone else try to tell me how to weigh these values.
Then we have little to talk about!
Yes there is a healthy dose of “don’t believe your lying eyes” for those of us who were taxi consumers before Uber and can plainly see how much better Uber is for the consumer.
The primary pro Uber argument is that it made life much better for consumers—some by innovation and some by transferring value from taxi owners and drivers to passengers.
Ignoring that in the enhanced welfare section with a bunch of theory makes it a little hard to credit the rest of the analysis.
If anyone in a mid market city recalls trying to get a taxi in 2010, Uber was a game changer.
But the demands of growth and capital constrained the actual ingenuity of Uber, to the point that now, yes public transit is more or as convenient in a lot of places. In many cases, public transit just straight up offer an Uber-like on demand service that guarantees consistent service at consistent transparent prices.
If anything Uber is a case study in why many public services are becoming superior to private ones. Uber suffers from a lack of regulatory structure, which unfortunately has allowed it to slip into a bizarre level of unpredictable service at unpredictable prices. Locally, there are usually better alternatives.
Uber was great when they subsidized the rides to break the taxi industry. Now, the fares are the same as cab fares and often higher since Uber charges what it can get away with while taxis have regulated rates or a taximeter.
Uber also introduced taxi hailing using an app rather than calling a dispatcher which was nice since the app gives continuous updates about arrival times. Now that taxi companies use apps as well, they're often better priced and just as convenient.
Uber was also great when it was heavily subsidized since it paid drivers by the mile, so drivers could figure out what they were earning. I had a lot of interesting drivers including an MBA waiting for her real job to start and driving to figure out the business. Another was a veteran who gamed Uber to fund his incipient real estate empire.
As Uber has tightened the screws, I've noticed fewer and fewer drivers can speak much English. Some speak none at all. Driving for Uber is a low end immigrant job like field work. The better immigrant drivers formed their own car companies. I used to use one founded by Congolese immigrants. With the upcoming engineered recession, I expect English skills to rise.
I still use Uber from time to time, but I usually use a taxi or a car service.
I addressed your biggest error earlier. You can’t argue that the artificially low fares and higher service levels enhanced welfare by making things better for consumers. As $32 billion in losses demonstrated they were always unsustainable.
Your claim that “Ignoring that in the enhanced welfare section with a bunch of theory makes it a little hard to credit the rest of the analysis” is false. You’ve attacked my analysis without reading it. My argument was overwhelming financial and operating data. If you want to dismiss my argument that companies need to demonstrate they can sustainably produce enough revenue to cover costs as excessive abstract theory that should be ignored by all means lay out that case.
Uber’s PR argument that it was transferring wealth from the “evil taxi cartel” to consumers was always completely unsubstantiated and complete nonsense. Taxi medallions were somewhat dubious but these only existed in a handful of cities, and the things that made traditional taxis unpopular existed everywhere. There were no taxi companies making supra-competitive profits so consumers gained nothing from new competition from Uber unless they could sustainably produce taxi service at lower cost and pass some of those efficiency gains to consumers. Uber’s PR argument that its meteor growth was due to its “innovative technology” was also completely unsubstantiated and complete nonsense. My published articles explain why these arguments were nonsense at great length. No independent party has ever produced a shred of credible evidence showing any material efficiency gains from Uber’s “innovative technology” or demonstrated how other companies profitably exploited it. And it is totally irrelevant if some secondary innovation saved a few dollars in one area when the company as a whole was losing billions.
Your comments grossly distort Uber’s actual economics and history.
Uber was not popular because of technological innovations that made it more convenient. It was popular because of tens of billions in unsustainable predatory subsidies designed to drive all existing competitors out of business. It set fares fare below what was needed to cover its costs. It flooded markets with services that traditional taxis hadn’t provided because they were staggeringly unprofitable. This is a major reason they produced GAAP losses of $32 billion. It is not surprising that a company that sells dollar bills for 80 cents would become popular. It doesn’t mean that it is improving overall economic welfare.
Yes, Uber was one of the first to introduce an easy to use ordering app. But this was easily copiable technology, not something that could produce a power competitive advantage or could possibly explain meteoric demand growth or huge valuations. A local taxi company here in Phoenix introduced an app with all of Uber’s functionality. They failed because they had to charge fares that covered their actual operating costs while Uber attracted passengers with fares that fares fell billions below their actual costs. If Uber’s app was really a powerful welfare enhancing efficiency, where are all the other companies that generated over $100 billion in corporate value after adopting this technology?
The convenience of ordering a taxi through an app does nothing to challenge my economic welfare arguments. Uber was popular but was staggering unprofitable until 2023-24 so it fails every possible efficiency/welfare test. Uber’s recent profit recovery was entirely due to the fact that its predatory practices established an impregnable quasi-monopoly power and full immunity from competition. That power allowed them to raise all the prices and eliminate most of the service that had made them popular pre-pandemic. It was also due to massive political expenditures eliminating any possibility that drivers could receive even rudimentary labor law protections. A company that used predatory subsidies to massively distort markets, regularly disobeyed laws that competitors had to follow, and spent hundreds of millions to thwart regulations designed to limit driver exploitation is not enhancing overall economic welfare. Even if you happen to like its ordering app.
As an UberLyft driver of some 8 years, I found some of this eye-opening; some of it was shoulder-shrugging.
The thing that got most of my attention was what I have always called The Jump Ball; a rider not sent directly to me. Now I know what makes a Jump Ball. What you hinted at is there's some jiggery-pokery at who wins a Jump Ball. I only Jump on a Jump Ball if the $ looks good for the distance to service it. But, I have enough 'points' where I see the $ I'll make, the pick up address and the drop off. Some people may not be keeping their points up.
I have always believed, from Day 1, I was being treated fairly and happy with my wages overall. If you ever want to hear things from driver's POV [there was very little of that in the article. I say that as a former-investigative journalist and TV News writer.] , try to find me on social media (Bluesky) and we can exchange particulars.
As an aside: The late-morning passenger fall off has been like falling off a cliff the last 3 weeks.
Headly Westerfield
Would love to talk more with you about this, always down to talk with drivers. I’ll find you there!
The old saw of whether fish know they're swimming in water applies to networked computing power decades on. It has bent our perceptions to the point that we seem largely unaware of how it has "driven" these business models.
To whit: rent-seeking is a feature of the Internet, not a bug. You can operate from anywhere and place yourself firmly in the middle of any and all market transactions between a buyer and a seller for, say, transportation services. But that's just one example.
What's developed around these models is financial support for running in the red till you secure a specific market by undercutting the existing providers. With monopoly power eventually in hand, it's all over but the proverbial shouting.
With that comes the loss of jobs and income that were the purview of organized labor, replaced by batteries of independent contractors. Given the inexorable rise in the cost of housing, health care, insurance, food and so on, I'm very interested in seeing a comparison for the before and after of these hostile takeovers.
Good. Unions are cartels.
Of course they are. They're cartels for workers.
You probably need a little more education regarding the inextricable link between the trade union movement and the extension of the franchise in the UK.
Democracy is the tyranny of the majority. Before extension of the franchise, there was liberty in Britain (at least for English men), which produced the Industrial Revolution, also known as the only historical event that really mattered to ordinary people. What came after extension of the franchise was >90% income tax and state takeovers of major industries that imposed dreary uniformity, petty jobsworths' tyranny, destruction of high culture, and economic stagnation.
Never a better sentence written about Uber imo: "it is about the consequences of letting predatory firms rewrite our laws to maximize their profits and to maximize their ability to convert those profits into political power that can further boost said profits."
I could never understand why so many governments around that world, who had spent years policing taxi rules, suddenly seemed to throw their policies out when it came to Uber just because it had an app and an air of the new. And this mentality to bypass regulations and civic duty through the trojan horse of technology, is indeed spreading to all facets of life.
Thank you! And honestly, we still only have a few pieces of that story. The Uber Files were quite illuminating in how backdoor deals were negotiated, but Uber also has been quite adept at wooing unions, buying academic researchers, borrowing older lobbying techniques, and also grafting onto existing techno-optimism. There’s also the fact some people genuinely believe in this and don’t actually value the impact on drivers or consumers or society at large beyond producing more of a good/service.
The ability to call a ride via app is the only legitimate innovation Uber can claim imo
One tangential note about Uber’s business model is that, if memory serves, a hugely disproportionate part of its overall revenue comes from three major cities (NYC, LA, SF), a large portion of which is composed of rides to and from the airport. They’ve actually run into a sort of strange challenge of monopolization of utilities, where they can’t exit certain markets even if they’re losing money because the service needs to be everywhere for the sake of the brand.
Yeah it’s NYC, LA, SF, London, and Rio. In their s-1 I believe they accounted for 24 percent of all rides and those are the cities where they have more than half of the market share consistently. Another thing I didn’t have the chance to get in is their subscription program, Uber One, has actually seen massive growth and is likely another site of fare squeezing/algorithmic discrimination that we see. Hoping we get some external research of that soon!
They are a godsend in small cities. I live in Fayetteville, AR, and no taxi service ever existed here before ride sharing apps. I own a car but still use Lyft from time to time, especially if going to an event in downtown that will suck up all the parking spaces.
This is like the Platonic ideal of a leftist screed: A long list of complaints about the system being critiqued--many legitimate, some less so--ending with a brief, hand-wavy claim that any problems with the author's preferred alternative (taxis) aren't worth considering. Plus some gratuitous ad homs for good measure.
Yglesias said Uber was better than the old world of taxi monopoly dominance. This article does not even engage with that argument. By refusing to acknowledge the reality of trade-offs, you ensure that you come off as the moron here.
that’s right!
You said that this article failed to engage with what Yglesias had argued. “Yglesias said Uber was better than the old world of taxi monopoly dominance. This article does not even engage with that argument. By refusing to acknowledge the reality of trade-offs, you ensure that you come off as the moron here”
Yglesias didn’t present a shred of evidence that “Uber was better than the old world of taxi monopoly dominance” None. Zilch. I am more than happy to respond to anyone who tries to counter my arguments with objective evidence and analysis. I have published tens of thousands of words on “the old world of taxi monopoly dominance” that explain, using financial and operating evidence why Uber’s PR claims that its “disruption” of the old taxi regulatory regime would produce massive consumer gains was complete nonsense.
How do taxi prices and service levels and driver compensation levels today compare to pre-Uber days? Yglesias doesn’t have an iota of hard data. My claims were based on extensive analysis about car service economics. The source of Yglesias’ claim was his rectal cavity. You’ve decided that I am a moron because I didn’t find fabricated, evidence-free assertions as convincing as you do.
Yglesias's whole thing is that he cares more about appearing to be a serious thinker than actually thinking seriously about any issue he covers. Hence why he calls his own work "economic analysis" and LPE's work something else.
This is an excellent article, well written, easy to read, and full of information. Kudos!
How are these accounting practices legal? Aren’t there laws against publicly traded companies zhuzhing the books in a way that could mislead investors?
Short answer is that he's lying to you. Uber follows standard accounting practices and files all the paper work required by GAAP.
They also put out *other* financial metrics which financial analysts can use *if they want to*. This has led some, like this "Independent Aviation Consultant" guy he quotes to spin it all into some wacko conspiracy-theory-but-for-the-left about how Uber is not following good accounting practices. They are.
"Not actually breaking a law" = "that's how its legal"
Thanks for the very deep coverage of the Uber scam. There's nothing wrong with Yglesias: neoliberalism, now rebranded as Abundance, is his religion. Sola fides.
Ante-Uber Chicago had a terrific cab system. I never had to wait more than a minute for a cab. Post-Uber, I haven't been able to hail a cab for years. Uber also continues to benefit from regulatory preferences. I serve as an election judge. After the polls close we have to take the ballots, etc., to a collection station. We're prohibited from taking a bus or a cab. But not from using Uber.
As a black person who lived in the south side of Chicago and have family who live there, taxis would literally never come. It was widely known that they would openly discriminate against black people and whole area codes. Uber has been significantly better in that regard. Of course if you live north of the loop you never had a problem getting a taxi. But you probably never had a problem getting anything else.
You make a very good point. The long-standing discrimination of the cab companies needed to be addressed.
I fully accept that people of color suffered discrimination from traditional taxi drivers. But the problem of lousy taxi service in large portions of every major city was only partially a function of race. The larger problem is the “empty backhaul” problem that every mode of transportation faces in some form. There are parts of every city that are somewhat compact, have a lot of wealthier people and/or entertainment venues (restaurants, hotels, airports, etc.) Taxi drivers that focus on those areas will make more money because it is much easier to find a new fare after you drop someone off. If you take a fare to a more distant, lower density neighborhood, the driver will inevitably return downtown empty.
New York’s Taxi and Limousine Commission did a number of studies in response to racial profiling concerns. They explicitly acknowledged there was no way to eliminate cases where a driver ignore a black passenger to pick up a white one, but refuted claims that race drove most cases where a driver drove away after a black passenger asked to go to a black neighborhood. It found that drivers were driving away whenever passengers asked to go to distant neighborhoods where there’d be no return fare. It also found that perceptions of crime rates were irrelevant. Driver refused trips to distant very low crime neighborhoods at the same rate as distant neighborhoods with higher crime.
Uber’s business model did nothing to solve the empty backhaul problem. In its early days Uber aggressively promoted the idea that they were providing much better service to neighborhoods (and ethnic groups) that traditional taxis had not served well because its strategy was to grow ridership volumes as fast as possible. But it was losing huge amounts of money serving these neighborhoods, and when Uber was desperate to cuts its losses, all of this highly publicized service was largely eliminated. Uber originally hid passenger destinations from drivers so they couldn’t reject fares based on the socio-economic nature of the destination. But all of that has been eliminated as well.
There’s absolutely no evidence that in 2025 Uber is providing better service to less wealthy, lower density, more distant neighborhoods than traditional taxis offered in 2012. And today’s fares are much much higher.
Pretty absurd that you’re not given an exception for Uber! I wonder who came up with the idea to do Election Day partnerships at the company, it has proved to be a brilliant PR move for them—helps cement the image of them as something better than public goods.
Well, it is Chicago. Where Mayor Richie Daley auctioned off the city parking meters to a "hastily formed investment group — the creatively named Chicago Parking Meters LLC" for $1.1 billion in exchange for a 75-year lease. Except, of course, there was no auction. And the estimated value of the contract was in excess of $2 billion. So I assume a certain number of skids were greased.
Did you know that Daley now works for the law firm that negotiated the 08 parking meter deal (Katten Muchin Rosenman) lol (well I say now like it was recently but i only learned about this a year or two ago and it’s so incredibly cartoonishly corrupt)
The problem that muddles the discussion around Uber is that if we frame it as Uber vs Taxi, it is basically the story of the fight of Evil against Evil, but Uber being a more modern, agile and convenient evil for its users.
Most people don't really care about higher order effects, can't relate them to Uber, or think the trade-offs are acceptable.
Very few people, including politicians, are interested in analyzing Uber systemically.
I understand that Uber broke a lot of regulatory structure. But that structure had been captured by special interests and deserved to be broken.
Who got paid millions of dollars for medallions, and what value did they provide? You can't write a serious article on this topic with addressing the distortions, abuses, and outright dysfunctions of the old system.
In the short term, Uber is obviously great for consumers. It is also obviously good for the drivers, or else they wouldn't do it. Nobody is forcing them. Many of them have other jobs. Many others are recent immigrants who don't speak English and can't do much else.
There is no long term. Self-driving will take over, and all these gig workers will be out. There will still be jobs, but they will be with companies that sell cars, batteries, AI chips, software, cyber tools, electricity, minerals, motors, sensors, road construction, etc. They may not be visibly tied to the ride hailing economy.
The free market is the best way to get everyone into the most productive work they can do. Regulators should attempt to impose free market conditions as their guiding principle. They failed to do that with the old taxi system, and the market revolted. They may yet fail again with the self-driving revolution. But if they don't, and if some jobs go away, it will be because people could be doing more productive work.
I did write extensively on regulatory issues (during my career I worked first hand on both railroad and airline deregulation) and specifically on the medallion issue. There is no way Edward could have mentioned every Uber issue I analyzed over the past decade.
Uber’s early PR narrative claims that eliminating taxi regulations would produce the same cornucopia of consumer benefits that airline deregulation produced, and that it was creating huge value by transferring the huge profits medallion holders had seized to consumers were both entirely dishonest.
The transportation deregulation movement wanted to replace a clumsy system of administrative review of price and capacity decisions with a significant (but not total) reliance on letting robust market competition guide those decisions. Robust market competition depended on consumers being able to choose between multiple providers based on prices and service quality. Workers would go to the companies with the best pay and conditions. Investors would then get to choose where to invest based on which companies made the most money, based on those consumer choices and the efficiency of operations.
Uber was a frontal attack on all of the factors capitalism needs to allocate resources to their most efficient use. The tens of billions in predatory subsidies completely distorted consumer and worker choices and were always designed to eliminate any possibility of serious competition so that Uber could exploit artificial market power.
You are not arguing for the type of “free market” that enhances overall welfare. That type of “free market” depends on robust competition and governmentally administered protections for competition. You are arguing for a totally corrupted laissez-faire structure where competition can be easily subverted by forces with more money and political power.
The only test of whether a business enhances welfare is whether is increases the consumer surplus. Uber obviously increases consumer surplus. End of argument.
Right up until it doesn’t …
It's almost like people don't understand enshittification in the interest of profit extraction.
On the contrary, you can't just say "enshittification" as an argument that tech companies are always ultimately extractive without putting some wood behind the arrowhead. You can argue with some merit that Amazon no longer really provides much consumer surplus, thanks to having strategically subsidized first consumers and then sellers to wipe out their competitors.
But Uber hasn't done anything equivalent on the consumer side, and I'd argue that they cannot because they don't have any path to wiping out their competition.
I imagine it ends up being like Amazon - the competitors get sick of losing money and bow out. No one is going to start a new ride sharing service expecting to make money on it. I’d have their head examined.
No, but Uber's competitors still exist and while they're smaller they're not financially do any worse than Uber itself, plus most major metros still have taxis and a growing few have Waymo.
Uber did execute the enshittification playbook back when they were still private - they launched with very cheap end user prices, raised those prices to attract more drivers, and then cut driver compensation to pay themselves. But they landed up both with most big cities still having licensed cabs and with ride share competitors in most markets where they operate. This has left them unable to jack prices up, hence the clear consumer surplus. Now they are public, they no longer have the option to run at a loss in order to drive out competitors, so its not clear how they get a second chance.
But how would that happen with Uber? They have close competition in all markets I know of. To some extent they can screw the drivers, but how could they take back the consumer surplus? I don't see it.
To bowdlerize the great housing researcher Nolan Gray, "How much welfare did the taxi cartels have?"
We can look at companies like Uber and Lyft and see a lot of things that could be improved to maximize welfare, especially on a regulatory level. But we're not exactly comparing it to God's own perfect transportation service here. And compared to a system that would leave you on the curb for being Black or lock the doors and try to shake you down if you were going too far into the outer boroughs, ride sharing apps are unquestionably a massive improvement.
That Yglesias is a hack hardly needs further evidence. As for Uber, it may be Exhibit A where Cory Doctorow’s “enshittification” is concerned … 🤨