October 01, 2014
Justin Wolfers tells us that economists are unanimous in supporting Uber and Lyft in a NYT piece this morning. He notes a survey of prominent economists which found that 100 percent either agreed or strongly agreed with the proposition:
“Letting car services such as Uber or Lyft compete with taxi firms on equal footing regarding genuine safety and insurance requirements, but without restrictions on prices or routes, raises consumer welfare.”
This seems like a proposition that it would be difficult to disagree with, albeit with a few caveats. First, I suspect that many economists would want to see some guarantees about handicap access including in the “equal footing” standard. Most cities require that taxi companies have some number of cabs that are handicap accessible. Uber and Lyft make no commitment to serve the handicapped.
Some economists might also like to see some rules on labor conditions applied to Uber and Lyft. For example, should their drivers be able to organize unions like employees? Also, should there be a guarantee that drivers earn at least the minimum wage after covering expenses? It seems rather foolish to have minimum wage laws if companies can just evade them by setting up their employees as independent contractors. (Some folks may claim that Uber and Lyft can’t control what their drivers actually earn, but with modern technology this is not really a difficult calculation. If these companies have problems, then perhaps they can be replaced with more computer literate competitors.)
Finally, it is important to realize that at this point Uber and Lyft are largely not subject to the same safety and insurance restrictions as traditional taxis. The latter may be too stringent, but I really doubt that any of these economists would oppose uniform standards.
One last point on the wisdom of economists: how many of these people saw the economic crash coming in 2008?
Note: Typos corrected, thanks Robert Salzberg.
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