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Startup 101: Decency
July 10, 2013 1:28 PM   Subscribe

On Monday, Toronto received over 100mm of rainfall, leading to severe flooding, power outages, and hundreds of thousands of stranded drivers and transit users. Uber, a startup that matches taxis with passengers, instituted "surge pricing" - did they break the cardinal "don't be an asshole" rule?
posted by modernnomad (153 comments total) 7 users marked this as a favorite

 
(In their defence, Uber claims they only institute surge pricing on their black cars, not their taxis).
posted by modernnomad at 1:29 PM on July 10, 2013


I'm assuming Uber is a taxi/car service?
posted by Keith Talent at 1:31 PM on July 10, 2013


I believe it's called profiteering, and it's sad that we've gotten to the point where we need to debate whether it's morally wrong.
posted by Kevin Street at 1:32 PM on July 10, 2013 [46 favorites]


did they break the cardinal "don't be an asshole" rule?

Synopsis: Yes.
posted by mhoye at 1:32 PM on July 10, 2013 [4 favorites]


When Uber was newer some folks I know took it home on New Years Eve (!) in San Francisco (!!) and with multiple stops (!!!). They paid well over $200 for something close to a 3 mile trip. That's demand pricing for you.
posted by 2bucksplus at 1:32 PM on July 10, 2013


Possibly, but I think it has been overshadowed slightly by Toronto Hydro, who seem to think that "rolling blackouts" actually mean "orbiting one part of the city blackouts"; or by Environment Canada, who appear to have given up completely and are now just shouting out the names of random weather events.
posted by TheWhiteSkull at 1:33 PM on July 10, 2013 [4 favorites]


An economic defence of Uber's surge pricing...
posted by modernnomad at 1:34 PM on July 10, 2013 [9 favorites]


Once upon a time, usury was a sin. Now it's called financial innovation. Pretty soon monopolization and profiteering will be acceptable as well.
posted by Kevin Street at 1:35 PM on July 10, 2013 [10 favorites]


It sounds to me like the answer to the question is "yes."
posted by Mister_A at 1:35 PM on July 10, 2013


Uber's pricing is automatic based on demand. It gets more expensive every friday night in SF. Computers are good at this sort of thing, and computers are bad at knowing if they're being assholes. The app does tell you what the rates are going to be before you call for a car.
posted by jeffamaphone at 1:36 PM on July 10, 2013


Insurgents!
posted by Kabanos at 1:37 PM on July 10, 2013


(In their defence, Uber claims they only institute surge pricing on their black cars, not their taxis).

So not only are they assholes, but they're racist too.
posted by Faint of Butt at 1:38 PM on July 10, 2013 [20 favorites]


That's true as far as it goes, jeffamaphone. However, Uber must have some mechanism to cap or manually set fares at times like these. I think it's a crap policy to let the computer decide to charge someone a 500% premium during a disaster.
posted by Mister_A at 1:39 PM on July 10, 2013 [1 favorite]


Ironic headline from last year.
posted by Kabanos at 1:40 PM on July 10, 2013 [2 favorites]


I'm not yet an Uber user, but in an event like this one, I'd much rather have my phone app tell me "not enough cars, you're SOL" than leave me holding out hope that a car will come.

And demand pricing accomplishes exactly that.
posted by ocschwar at 1:42 PM on July 10, 2013 [3 favorites]


"Never let a good crisis go to waste." - some asshole.

Though, realistically, Uber could have said "hey, uncommon circumstances, freeze pricing, and allow for service to suffer, because, well, floods and stuff", but I have a funny feeling their application engineers never put in override controls. They probably couldn't have frozen the prices, even if they wanted to, since their main purpose is a sliding scale price/demand ratio management system, rather than having humans involved. This is an example of technology being written to spec, but not accounting for knock-on effects of changes in environment.

If this continues, it will destroy their market. They're too small to have enough leverage to create legislative lock in for their market sector (at least not yet), and the inertia of enough bad PR will likely force them to change their current methodology (one would hope they're smart enough to see that).

The economic argument is a little too cut and dry, frankly. What are they going to do in a major catastrophic emergency situation (you know, like flooding)? Pretend that they're hands are tied and they have to let the "invisible hand" take care of everything? That's worse than fatalism. That's walking off a cliff because you're too ideologically blinded by wishful thinking.
posted by daq at 1:45 PM on July 10, 2013 [7 favorites]


One of the DJs on the Victoria, BC station I listen to misspoke and said "over 100kilometers of rain" and for a moment I was stunned, and then went "Oh, oh... right, he must have meant millimeters." But for a moment, my morning commute was pretty surreal.
posted by xedrik at 1:45 PM on July 10, 2013 [5 favorites]


The CEO of Uber uses the cover image from Ayn Rand's The Fountainhead as his Twitter icon. I'm pretty sure that being an asshole is something that he aspires to.
posted by octothorpe at 1:46 PM on July 10, 2013 [60 favorites]


Just imagine if they were building the big utility networks now. "Power line downed by ice? Just give us a $2000 connect fee, and it'll be back in a jiffy!" "Did a gas explosion tear up your street? As soon as you pay the disconnect and repair fees, we'll shut it off and get to work."
posted by Kevin Street at 1:46 PM on July 10, 2013 [4 favorites]


I don't know about lumping New Year's Eve pricing with natural disaster pricing as Asshole behavior.
posted by wester at 1:46 PM on July 10, 2013


Environment Canada, who appear to have given up completely and are now just shouting out the names of random weather events

That might have something to do with how the Harper Government fired all their scientists.
posted by junco at 1:47 PM on July 10, 2013 [21 favorites]


Possibly, but I think it has been overshadowed slightly by Toronto Hydro, who seem to think that "rolling blackouts" actually mean "orbiting one part of the city blackouts";

From what I understand from a friend who is in the blackout areas and also a big energy nerd who understands the power grid:

There's really only two stations that were heavily affected, Richview and Manby. Those substations are near each other, and they can only really have their load carried by other nearby facilities. So, there aren't blackouts in Scarborough, because it wouldn't do them any good to black out Scarborough when the part of the grid that's missing is in Etobicoke.
posted by jacquilynne at 1:47 PM on July 10, 2013 [4 favorites]


Before Uber existed, how many people got towncars during floods?
posted by jeffamaphone at 1:47 PM on July 10, 2013 [10 favorites]


HOw many got them during the flood? Only the wealthy!
posted by Mister_A at 1:49 PM on July 10, 2013


They can charge whatever they want, jeffamaphone, but people are going to look at stuff like this as profiteering, which it is.
posted by Mister_A at 1:49 PM on July 10, 2013


because it wouldn't do them any good to black out Scarborough when the part of the grid that's missing is in Etobicoke.

Probably, but if they would maybe black out Rosedale for a little while it might make me feel better.
posted by TheWhiteSkull at 1:51 PM on July 10, 2013 [2 favorites]


Are people similarly upset with hotels when room prices rise in peak seasons and dip in the off season?
posted by xedrik at 1:52 PM on July 10, 2013 [3 favorites]


People may not gripe about seasonal hotels, but they sure would gripe if hotels started charging 500% more during a blizzard.
posted by ldthomps at 1:54 PM on July 10, 2013 [7 favorites]


Are people similarly upset with hotels when room prices rise in peak seasons and dip in the off season?

Yes?
posted by 2bucksplus at 1:55 PM on July 10, 2013 [4 favorites]


I can't seem to get myself outraged about this, upon discovering that their pricing is determined algorithmically. If they'd had a backroom meeting with cigars and the whole works, and decided to shaft the poor flooded Canadians, sure. But their pricing algorithm is devised to ensure that supplies (drivers) are incentivized to roll in and get to work when demand is high, which in my opinion is simply rational decision-making on their part.
posted by mullingitover at 1:55 PM on July 10, 2013 [9 favorites]


I was working downtown one afternoon in 2000 or 2001 when the phone lines went down for most of the core...which at the time meant no internet or fax. Word was the bike couriers immediately quadrupled their rates, and that the Bay Street crowd had a shit fit about it. SUPPLY AND DEMAND, MOTHERFUCKERS.
posted by The Card Cheat at 1:56 PM on July 10, 2013 [7 favorites]


...because it wouldn't do them any good to black out Scarborough when the part of the grid that's missing is in Etobicoke.

True enough. A friend of mine is getting hit by the blackouts over and over, and has a leaking basement to deal with as well. Good friend that I am, I keep posting on facebook how I need to go out and water the garden, because Hamilton got no rain to speak of, and my, that beer from my fully-powered fridge sure is cold.

His years of Hamilton-bashing is yielding some pretty sweet comeuppance fruit right now.
posted by Capt. Renault at 1:58 PM on July 10, 2013 [2 favorites]


HOw many got them during the flood? Only the wealthy!

I doubt that "the poor" are heavy Uber users in any case. But it's worth bearing in mind that having the price float up in response to demand also helps to make casual users drop out of the market--which helps prioritize availability to those who really, really need the service. Now, obviously, that only works on people who are in some way sensitive to price, so "the wealthy" still get their Uber service even if it's just to hop from one bar to another. But the positive effect is that cars are available to people who genuinely need rides if they're willing/able to pay the increased price.

There's a reason economics is called the dismal science and it's largely because it forces you--or should force you--to be honest about all the costs and benefits of a given action; which means that in practice it usually has the bumming-out effect of making you aware that lots of things you think sound great ("hey, there's a disaster happening--let's suspend our normal system of pricing!") have really bad downsides ("there are no cars available at all for the people who really need them").
posted by yoink at 2:01 PM on July 10, 2013 [12 favorites]


"Why are you overcharging for this! The price is half as high across the street!"
"So why don't you buy from across the street?"
"They're out of stock!"
"Well, then when I run out of stock I promise to make *my* prices a *third* as high!"
posted by roystgnr at 2:03 PM on July 10, 2013 [6 favorites]


Yeah, "environment canada" isn't really... yeah.
posted by windykites at 2:04 PM on July 10, 2013


"An economic defence of Uber's surge pricing..."

I'm having a hard time parsing this. I think their argument is that higher prices will encourage more people to put their cars into service, thus minimizing shortages. But it doesn't work, because there are only so many town cars and taxis that have a contract with Uber. That puts an upper limit on how many rides people can get, and any money that passengers are paying above the amount it takes to put every vehicle out on the road is, from the passenger's perspective, wasted.
posted by Kevin Street at 2:05 PM on July 10, 2013


An economic defence of Uber's surge pricing..

Son, if you think that the supply of taxis is going to flex to any meaningful degree over the course of a single day in response to demand, you are the heir to the throne of the Kingdom of Idiots.
posted by ROU_Xenophobe at 2:05 PM on July 10, 2013 [15 favorites]


If it's mean and nasty and hateful to allocate these suddenly scarce resources by price, what's the superior method? Dice? Fisticuffs? Bureaucrats listening to impassioned pleas and making judgement calls?
posted by jon1270 at 2:08 PM on July 10, 2013 [10 favorites]


First come, first served, I guess.
posted by Kevin Street at 2:11 PM on July 10, 2013 [4 favorites]


Cabbies in Mumbai do this when there's serious flooding. People complain but I have sympathy for the cabbies too, plowing their Matchbox cars through feet of filthy water.
posted by seemoreglass at 2:13 PM on July 10, 2013


"...But the positive effect is that cars are available to people who genuinely need rides if they're willing/able to pay the increased price."

But a crisis situation is when the number of people who are wasting the service (by using it when they don't need it) is going to be at it's lowest. Very few people will be bar hopping in a flood.
posted by Kevin Street at 2:13 PM on July 10, 2013 [2 favorites]


Should I point out the obvious?
You know you're a limousine liberal when you complain about the rising price of a ride in a black car during a big storm.

The Uber drivers that day were providing this service during the storm, putting their cars at risk and foregoing the chance to take care of their personal friends and their homes. You don't think they ought to have a premium paid to them?
posted by ocschwar at 2:18 PM on July 10, 2013 [35 favorites]


Before Uber existed, how many people got towncars during floods?
Word. In 14 years of living in my neighborhood, Uber is the only company that I can count on to show up when I call. I remember exactly one other cab that has ever come to my house, and that took an hour or more. Uber is at my door in 5 minutes or less--I've heard it said "Put your shoes on before you call Uber," and it's damned good advice.
posted by MrMoonPie at 2:20 PM on July 10, 2013 [6 favorites]


But a crisis situation is when the number of people who are wasting the service (by using it when they don't need it) is going to be at it's lowest. Very few people will be bar hopping in a flood.

Then the price wouldn't rise due to increased demand. The price rose algorithmically and automatically because of the increased number of people making calls on the service. The fact that none of those people think they're "wasting" the service doesn't mean that there isn't, in fact, a hierarchy of needs among those users. Price seems to me the most practical way of allocating scarce resources in a crisis situation to those whose need is, in fact, greatest. If you have some other way to propose, though, I'd be interested to hear it.

There is, by the way, a great deal of economic literature about price effects during disaster situations and their aftermath and some of the damaging consequences to well-meaning attempts to keep prices down so as to be seen not to be "profiteering" off people (we see this in every natural disaster or epidemic-scare situation when local stores get emptied by people hoarding or local pharmacies run out of relevant medications etc.). As I say, this is all "dismal science" stuff and I understand the desire to say "I don't care about perverse consequences, we should just do the Right Thing (tm)!" But on the whole I think it best to be honest about all the foreseeable consequences of any policy decision.
posted by yoink at 2:23 PM on July 10, 2013 [6 favorites]


You can almost always pay more for service even in scarce times. I bet if you called up a car service during the flood and said you would pay $5000 for a ride you would have little problem getting a prompt pick-up. Having an algorithm that attempts to smoothly increase the price seems a little more reasonable than having a price that is affordable for everyone that is largely unavailable and a super-premium service that's only for the rich.
posted by demiurge at 2:24 PM on July 10, 2013 [1 favorite]


But the positive effect is that cars are available to people who genuinely need rides if they're willing/able to pay the increased price.

That's a pretty big if and -- though this particular service isn't really a good example of it -- it seems odd to me that we think "need for service x" correlates well with "has disposable income for this service". There was this weird CBC podcast that argued that increasing prices on gas in the aftermath of some disaster was good because otherwise how could you prioritize between the person with a sick kid and the person who just wants to go to the store to buy cookies other than based on who will wait in line longer/got there first?
posted by jeather at 2:26 PM on July 10, 2013 [5 favorites]


Price seems to me the most practical way of allocating scarce resources in a crisis situation to those whose need is, in fact, greatest.

Price is a practical way of allocating scarce resources in a crisis situation to those whose resources are, in fact, already greatest.
posted by jacquilynne at 2:28 PM on July 10, 2013 [28 favorites]


Price seems to me the most practical way of allocating scarce resources in a crisis situation to those whose need is, in fact, greatest.

It's certainly the most practical way to guarantee that people with the most money will be inconvenienced the least while those with the least money will be inconvenienced the most.
posted by cjelli at 2:32 PM on July 10, 2013 [26 favorites]


Price is a practical way of allocating scarce resources in a crisis situation to those whose resources are, in fact, already greatest.

Those scarce resources are human beings and their time and labor.
posted by ocschwar at 2:32 PM on July 10, 2013 [2 favorites]


So pre-flood your ride would have cost $20. Demand increases this to say... $28. (These numbers are a guess, based on my experience with Uber surge pricing in San Francisco).

I guess I'm not seeing the great social injustice being done by limiting rides to people whose situation is grave enough that they're willing to pay 8 whole canadian dollars more than normal, if it means cars are available when they need it.
posted by danny the boy at 2:33 PM on July 10, 2013 [4 favorites]


Are people similarly upset with hotels when room prices rise in peak seasons and dip in the off season?

People can adjust their travel to take advantage of this fact, which helps level out the demand for rooms when the supply is effectively fixed. Same with traveling on different days of the week, both for airline tickets and hotel rooms. Even the movie theater matinee is the same thing.

There is very little analogous flexibility in the event of a natural disaster, which are generally difficult to predict, and thus people have very little alternative options short of camping in their office all night rather than going home.
posted by kiltedtaco at 2:34 PM on July 10, 2013


Like, yeah I get that it looks bad, but I think this is a case of people are upset because they don't understand counterintuitive sciences like economics, not because it's fundamentally immoral.
posted by danny the boy at 2:35 PM on July 10, 2013 [3 favorites]


Toronto Hydro, who seem to think that "rolling blackouts" actually mean "orbiting one part of the city blackouts"

On the one hand, being just north of St. Clair paid off big time this week, as my unfashionable address meant that I lost power only from 6 PM to 3 AM Tuesday.

On the other hand, I get Nunziata as my councillor every day of the year.
posted by maudlin at 2:35 PM on July 10, 2013 [3 favorites]


The non asshole thing to do would be to keep the surge pricing intact, but to offer everyone who used the cars that day a substantial discount on their next ride as a way to say that the company understands the extraordinary circumstances of the event and is willing to at least partially pay their share as a member of the community.

I'm on the side that says that the higher prices (which can also be called higher drivers' wages, especially since all Uber drivers are independent owner-operators) are what allowed the cars to be available in the first place.
posted by cell divide at 2:38 PM on July 10, 2013 [2 favorites]


Will it bum you out, Maudlin, to know that I live 2 blocks South of you in Gord Perks territory, and we lost power for only about an hour and a half during the storm and have otherwise been blackout free?
posted by jacquilynne at 2:43 PM on July 10, 2013


modernnomad: "An economic defence of Uber's surge pricing..."

Weird, this is the only article on this site.
posted by boo_radley at 2:44 PM on July 10, 2013


mullingitover: "I can't seem to get myself outraged about this, upon discovering that their pricing is determined algorithmically. If they'd had a backroom meeting with cigars and the whole works, and decided to shaft the poor flooded Canadians, sure. But their pricing algorithm is devised to ensure that supplies (drivers) are incentivized to roll in and get to work when demand is high, which in my opinion is simply rational decision-making on their part."

Why is it less outrageous when it is done by computers? What if the backroom cigar smokers, instead of cackling and rolling their corpulent waistcoat-clad bulks over large piles of cash, had instead said "let's make rational decisions"?

When prices are set sanely and by humans, it is obvious that you don't suddenly start gouging in emergencies. When you've got a price-gouge-atron up and running to squeeze a nickel out of people every day, it is both unsurprising and out-frigging-rageous that it starts to gouge 100x that amount as soon as it sees the chance.
posted by dendrochronologizer at 2:45 PM on July 10, 2013


/sizzles in jacquilynne's general direction
posted by maudlin at 2:45 PM on July 10, 2013


I really don't understand this moral outrage. Traffic was at a standstill throughout most of the city, bridge underpasses looked like bathtubs, the transit system was paralyzed or shut down... it was terrible driving weather.

Why should limo drivers be the ones to absorb the cost and risk of transport during such a storm?
posted by anthill at 2:47 PM on July 10, 2013 [7 favorites]


it is obvious that you don't suddenly start gouging in emergencies

This is different than selling goods in a store, this is getting people to show up to work in a disaster when they don't have to. Public workers get disaster pay, and Uber drivers are independent and don't have to work if they don't want to. Perhaps under these conditions, the only way to get them to work is to pay them more. What then?
posted by cell divide at 2:47 PM on July 10, 2013 [8 favorites]


> ... Environment Canada, who appear to have given up completely and are now just shouting out the names of random weather events.

Hey, now that's a no-fair. I know some of the Downsview EC crowd, and they do a damn fine job. Forecasting is a balance between having all of the relevant inputs, then using considerable skill and human judgment, reporting what's likely to happen. If there's a chance of a weather hazard, they always have to raise an alert. When there's a huge energetic storm out there, all they can do is raise that warning (which they did), hope people heed it, and report on what they measured after the fact.

Storms don't come conveniently labelled with the amount of rain they'll deliver. Weather's a probabilities game; a big return on the radar might deliver a (metric) fuck-tonne of rain, or sod off elsewhere and fizzle out. Given the amount of randomness involved, you'd know if EC started with the markov chains. No matter what a forecaster does, they get shit if they get it wrong (and no-one applauds if they get it right). Given the squeeze they're having on resources from the fuck-budgets in The Harper Government™, they are forced to jam econo.
posted by scruss at 2:48 PM on July 10, 2013 [3 favorites]


Uber's pricing is automatic based on demand. It gets more expensive every friday night in SF. Computers are good at this sort of thing, and computers are bad at knowing if they're being assholes. The app does tell you what the rates are going to be before you call for a car.

Come with me if you want to drive.

*shoots Toronto

You said you weren't going to kill anybody!

They'll live.
posted by It's Raining Florence Henderson at 2:49 PM on July 10, 2013


it doesn't sound good to me, but we're missing one very basic fact - how much did they increase their price for? - where are the actual numbers?
posted by pyramid termite at 2:49 PM on July 10, 2013 [2 favorites]


(oh, and can I say, re taxis at that time, you couldn't get one no matter what. The line for taxis at Yonge and King was over a block long. I saw someone try to jump into an already-hired taxi at a stop light, and have to be beaten off. It was nuts. I got home fine by streetcar and subway; eastside represent!)
posted by scruss at 2:51 PM on July 10, 2013


Like, even if we assume 6x pricing (the linked page doesn't say what the pricing actually was), then all we're really arguing about is how much is too much to raise the prices. And this isn't based on any actual harm--because the result is the same: at 6x pricing you don't get a car because you decide you can't afford it, and at 1x pricing you don't get a car because there aren't any available. The only real difference at 6x pricing is that someone, somewhere, will decide that they need a ride badly enough that they will pay. Under 1x pricing, they would've not gotten a car, despite the severity of their need.

So all the resistance to this is because of appearances, rather than effects. It seems contingent on the idea that people to whom 6x pricing is inconsequential, will benefit in a disaster. Which I suppose is possible, but at that point your real issue isn't about how things are priced, but that wealth is distributed unequally in western society. Which I am sympathetic to, but is an altogether different issue.

The other thing to note is that increasing prices does increase supply, to a point. Uber drivers decide how long they want to work, or if they want to work at all. Giving them an incentive to be out there definitely increases supply. It's not totally elastic since you can't magically come up with more cars and drivers than exist, but it's not a silly idea. A lot of the drivers here didn't bother to work on memorial day weekend when Uber lowered their rates to .75x in response to demand.
posted by danny the boy at 2:51 PM on July 10, 2013 [11 favorites]


There is very little analogous flexibility in the event of a natural disaster, which are generally difficult to predict, and thus people have very little alternative options short of camping in their office all night rather than going home.

I am healthy enough that I could camp out in the office. My family is healthy enough to bear my absence.

That is not true for all my coworkers. A price signal telling me to man up and stay in place to free up cars for the others seems fine to me.
posted by ocschwar at 2:56 PM on July 10, 2013 [1 favorite]


In better "expensive cars during the flood" news: Ferrari!
posted by Lemurrhea at 2:57 PM on July 10, 2013 [4 favorites]


If this was something like increasing the price while the rider is in the car, it would be pretty bad. But if you know the price before you accept the deal, and that's what they charge you, what's the problem?

It is only profiteering if the supply isn't limited. If I have 10 days of product and I know I'm getting a delivery in 5 days, then I shouldn't raise my prices. But if I have more customers than I have product, then I have to raise my prices or go out of business.
posted by gjc at 2:57 PM on July 10, 2013 [1 favorite]


I've heard the theoretical whole "its ok to gouge the price on insulin in an emergency so only the people who really need insulin will but it" argument. The thing I don't understand is how does Mrs. Granny who is poor scrounge up enough insulin money to not die (while Mr. Moneybags who is rich can just buy it all up)? Is the theory that if her need were *truly* great, she'd find the money somehow? Perhaps by going door to door and selling craft projects as she slowly dies?

"Really need it" seems to suggest, in this scenario, that "really need it" is at least in part defined by one's wealth. Poor people *obviously* don't need it as much or they would have more money on hand to begin with. Rich people *obviously* need it more because they took the time and effort to be born rich.

Theoretical Mrs. Granny's death from lack of insulin presumably demonstrates that she didn't value her life enough to become wealthy. If she'd really needed her life, she would have acquired the capital to afford her insulin in a time of disaster.

So, basically, the "defense of price gouging" arguments all come across to me as implying that all people who need things logically and obviously have the capital on hand to get those things they need - and if they don't have the capital on hand, they must not need that thing all that much anyways.
posted by Joey Michaels at 2:59 PM on July 10, 2013 [13 favorites]


I've heard the theoretical whole "its ok to gouge the price on insulin in an emergency so only the people who really need insulin will but it" argument.

Oddly enough, different moral principles may apply to a product without which you might die, and a car service which did not exist until 2009.
posted by dsfan at 3:01 PM on July 10, 2013 [21 favorites]


answered my own question - 1.75 times regular rates

now why couldn't aron solomon just tell us that instead of talking about 219 buck NYC rides? - why was he posting about 6x rates on new year's eve when it was 1.75x?

he has a point, but he's making it in a deliberately misleading and distorting way, and yeah, that kind of makes him an asshole, too

decency rule 2 - STATE THE FACTS
posted by pyramid termite at 3:03 PM on July 10, 2013 [18 favorites]


1. The laws of economics doesn't care whether demand is brought on by a disaster, or by new years eve in manhattan. The inputs, the variables, and the results look indentical.

2. Humans DO care. Enough to ignore (1).

3. There's a big difference between insulin and a car service that you have to install on your smartphone to even access.

4. That difference is why almost all developed nations have separated the profit motive from things like healthcare.
posted by danny the boy at 3:06 PM on July 10, 2013 [4 favorites]


decency rule 2 - STATE THE FACTS

He went to the David Lowery school of blogging about numbers.
posted by jeffamaphone at 3:07 PM on July 10, 2013


its ok to gouge the price on insulin

But in this case we're not talking about the price of a good, but the price of a service delivered by another human being. So, it would be the cost of a messenger to deliver the insulin. Granny could presumably walk, call a friend or family member, a neighbor, hire a cheaper messenger and wait longer, but her insulin price is not at risk, only her speed of getting it from someone else's labor that she would also be paying for.
posted by cell divide at 3:08 PM on July 10, 2013 [1 favorite]


Like, yeah I get that it looks bad, but I think this is a case of people are upset because they don't understand counterintuitive sciences like economics, not because it's fundamentally immoral.

I think everything about Uber is pure assholishness.

They shirk overhead costs by not having employees or maintaining a fleet. They arrogantly expect labor (and equipment!) to just come and go as the market bears. It seems there's already been a strike of Uber drivers demanding to become employees with defined benefits and salaries.
posted by RonButNotStupid at 3:09 PM on July 10, 2013 [4 favorites]


I have to admit, I am unoutraged (well, to be honest, I was only mildly sort of piqued to begin with) if the price didn't even double. It sounded like some expert system ramped a taxi ride up to hundreds of dollars but a factor of 1.75 doesn't really seem like price gouging to me.

The legislation in effect in Ontario does allow for increases if there are increased costs involved, and given that half the routes out of downtown weren't even drivable, I'd say it's a fairly safe bet that it took more than 1.75 times the usual amount of time, fuel and wear and tear on the cabs to get out of downtown last night.
posted by jacquilynne at 3:09 PM on July 10, 2013 [2 favorites]


We kind of did this thread already, but about gas rationing post-Sandy. (Though that was less of a luxury good.)

Anyway, the article specifically contrasts Uber with another similar car service, Hailo. The author implies Hailo didn't use surge pricing (can't find a source for this) and that they went out of their way to help people get home. Did Hailo experience a shortage? If not, that would suggest that raising prices wasn't particularly necessary. Even if it did, it would probably be worth examining which people were more annoyed by in this situation - long wait times/possible shortage, or needing to pay more.
posted by en forme de poire at 3:10 PM on July 10, 2013 [1 favorite]


If you really needed Uber, you should have been prepared and stockpiled some Uber in your basement. After all, you live in a city where disasters are known to occur.
posted by jeffamaphone at 3:12 PM on July 10, 2013 [1 favorite]


Options:
1 No taxis are available. Well, that sucks. What if you need a taxi?
2 Taxis are available, cost more money than usual. That sounds better, no?

I'm really not seeing the outrage here. The taxi drivers should work for nothing? They don't deserve to make more money when there is a big demand? That's tough. Taxi drivers aren't very rich in my experience.
posted by alasdair at 3:12 PM on July 10, 2013 [1 favorite]


SF Chronicle reference on Uber's surge pricing during last week's BART fiasco. Also the rabbinical take.
posted by Ogre Lawless at 3:12 PM on July 10, 2013


If you can provide a service profitably at x dollars, there is no real reason to demand 2x during a brief difficulty. You can try and justify your price increase any number of ways; they all boil down to inflated self-interest. Uber's competitors didn't seem to have any issues.
posted by Benny Andajetz at 3:13 PM on July 10, 2013


Hailo, as I understand it, is an app that lets you "flag" a city taxi from your smartphone. I don't know if they have control over pricing as they use (at least in the US and UK) regular licensed cabs, as opposed to "black cars" (towncars and SUVs).
posted by cell divide at 3:13 PM on July 10, 2013 [1 favorite]


Fast-moving thread...

So a $10 taxi ride is now... $17.50?

OH THE RAPACIOUS SWINE GROWING FAT FROM OUR SUFFERING! COMRADES, OUR PITCHFORKS! MY BABIES ARE STARVING WHILE THEY GROW FAT WITH THEIR PROFITS!

Really. It keeps the service being provided. Good plan. Better than not having the service.
posted by alasdair at 3:16 PM on July 10, 2013 [8 favorites]


Really. It keeps the service being provided. Good plan. Better than not having the service.


Please don't tell the banks.

(Maybe later we discuss the fine differences between "accounting for debt risk" and usury.)
posted by Benny Andajetz at 3:23 PM on July 10, 2013


But, see, in the case of a disaster where there may well be people who actually do need transportation for reasons more than "its a bummer to be stuck at the office over night," there is still the suggestion that people with more capital have greater need than than people without. Should a poor single parent whose kids are waiting at home be forced to sleep in an office while some rich dude goes home so he doesn't have to sleep on the floor?

Yes, proving "need" is not an easy thing, but if part of your definition of "need" includes "and can afford," there are people who will never meet your definition of "need," be it for insulin, transportation home during time of disaster or what have you.

Now, as far as raising prices on Friday nights and New Year's Eve, have at it.
posted by Joey Michaels at 3:25 PM on July 10, 2013 [3 favorites]


"An economic defence of Uber's surge pricing..."

Why do so many people use economics as a carte blanche to be dicks.
posted by Jernau at 3:25 PM on July 10, 2013


They shirk overhead costs by not having employees or maintaining a fleet. They arrogantly expect labor (and equipment!) to just come and go as the market bears. It seems there's already been a strike of Uber drivers demanding to become employees with defined benefits and salaries.
I've taken Uber a handful of times when I'm in a new city and need to get picked up or dropped off at a location off the beaten path where taxis are notoriously bad. I always try some light chat with the driver if possible. What drivers have told me is that Uber is a far better partner than typical service companies. All the drivers I've talked to are completely independent, and seem to like it that way, as it allows them to come and go as they please, take long vacations, and have nearly complete control of their lives. I was genuinely jealous of one French driver who took off a couple months each summer to visit his family, assuming he was honest with the numbers that he gave me. Unlike the typical limo service company, Uber is reliable and honest when it comes to paying drivers, and pays on time in the correct amount. It's not that Uber is shirking overhead, it's the entire industry. And the taxi companies are far far worse and more abusive than the limo service companies. None of these drivers were even just "Oh yeah, it's good," they were all gushing and visibly perked up when I asked.

Surge pricing of 1.75 lets drivers make the decision to not take the day off, if the extra fares are worth it to them. Keeping the fares at 1.00 means fewer drivers will take the risk. Surge pricing of 6x? Well, there had better be some evidence that it would actually bring out more drivers. But if it gets more people to where they need to go, and it's emergency situations, perhaps not a bad thing.

Dynamic pricing signals are not the best thing in the world, but it's far better than nothing.
posted by Llama-Lime at 3:29 PM on July 10, 2013 [4 favorites]


jesus christ all the hand wringing about this is tiresome. I knew i'd scroll down and find exactly what i did.

That this is a very small price increase.

Similarly, what's everyones defense of the fact that the drivers are putting both themselves and the vehicles at a higher risk of damage/injury during these conditions? Should the company(whose insurance may or may not even cover that type of damage!) and the drivers just have to eat that in the sake of "fairness"?

Everyone in here seems to be imagining the $20 cab rides being $80 or $120 or something. That isn't happening. STOP PRETENDING THAT IS WHAT IS HAPPENING. It's an absolute straw man.

There's some assholery going on in by people trying to prove some weird point, who are making shit up to drum up outrage. And it's tiresome. Pyramid termite pretty much nailed it above.
posted by emptythought at 3:30 PM on July 10, 2013 [10 favorites]


WHAT ABOUT THE INSULIN?
posted by It's Raining Florence Henderson at 3:32 PM on July 10, 2013 [2 favorites]


I also feel like a lot of people in here are dismissing how incredibly goddamn awful regular "respectable" yellow cabs can be in lots of major cities. Yellow cab in seattle is this interesting venn diagram between unreliable/useless and occasionally criminal.

I'm just struggling to understand how anyone wanting this type of service in these circumstances for a lower price isn't horribly entitled. I'd love to see a blog post that was an account of trying to get a normal taxi to pick them up during this mess.
posted by emptythought at 3:34 PM on July 10, 2013 [2 favorites]


Honestly, the more I read about this the less I care. Uber appears to be primarily a luxury cab service - one of the main advertised perks is that the cars look cool. If the price of that service floats a (relatively small) amount, I'm not sure I particularly care, because it seems like there should almost certainly be cheaper options to begin with. I'd be more interested in why these services are so popular, and whether that points to solvable issues with transit in Toronto/SF/etc. in general.
posted by en forme de poire at 3:35 PM on July 10, 2013 [1 favorite]


Yeah, I wish we had a better example for discussing price gouging in emergencies — which is a miserable practice and must be stamped out immediately by whatever means possible — because even as an advocate of queueing over market allocation, I can't get all that worked up by this relatively small increase in cost for a luxury limo service.
posted by You Can't Tip a Buick at 3:39 PM on July 10, 2013 [1 favorite]


I'd be more interested in why these services are so popular, and whether that points to solvable issues with transit in Toronto/SF/etc. in general.

Its because, and i think this is the basis of some of the outrage in here, it's almost the only for hire car/cab companies that's actually reliable. Somehow they've got supply/demand and routing worked out so well that you can flag one down with the app and it's there. Yellow cabs can show up after a half hour, super late on their estimate, or never. And then when you call they just go "oh yea sorry he couldn't make it good luck bye"

I think people were losing site of the fact that it's a luxury cab service because OMG DISASTER CAPITALISM and BUT IT'S ONE OF THE ONLY RELIABLE OPTIONS.

The first one is very thin in this context and instance, the second one is what needs to be addressed, as you said.
posted by emptythought at 3:53 PM on July 10, 2013


I lived in New York during the 9/11 attacks. One of the very first directives on that day from the governor's mansion on down was, "suspend all MTA fees." It's almost as if public services remain in control of the public they can provide for, well, the public in moments of crisis.

It's not that I agree with Uber- I don't, and yes this was clearly a callous act that can bite them in the ass PR wise- but I am always fascinated with stories like this about people being shocked, SHOCKED that a private company providing premium access to a basic public service, in this case, transportation, tried to, you know, make more money.
posted by XQUZYPHYR at 4:06 PM on July 10, 2013 [1 favorite]


This sounds OK, in theory, from the consumers' standpoint, but I kind of don't get how the whole thing works (despite taking a little time looking around.)

Uber apparently works w/ existing car services, and also with ordinary drivers in their own cars. The towncar thing I kind of get- they're already licensed and regulated and the cars are doing nothing if they're not booked.

But of course all cars cost money, and commercial insurance - which afaict Uber requires the non-black-car drivers to have - ain't cheap, not at all.

So Uber are a centralized dispatch system for towncar companies - which sounds like a fine idea- which also enlists regular peoples' cars (though it certainly doesn't sound to me like those drivers would be hobbyists, given the costs involved),

What I don't get is, how can they be BUT IT'S ONE OF THE ONLY RELIABLE OPTIONS?

The reason you can't get a cab during a flood is not, likely, because drivers don't want to drive in the rain, (although given that as a driver you're way more likely to get in an accident in the rain which might cost you the damages to the car/dings on your license which could cost you the job/ your car being out of service for who knows how long even if the first 2 don't happen) but this- there are only so many cars out there.

If there were always a peak-service amount of cars on the road - or even just maintained/insured - then most of the time most of them would be sitting idle, which doesn't make sense for anybody. So how does this work, at all?

Price-gouging or not, the whole business model sounds off to me, and if somebody's paying the price for that it's probably not mainly the customers, is what I'm guessing.
posted by hap_hazard at 4:12 PM on July 10, 2013


> suspend all MTA fees

Public transit is not like private cars. An empty or full bus/train takes the same labor, road space, and (more or less) time.

If transit systems dynamically priced off-peak fares to keep buses running full, I'd be all for that.
posted by anthill at 4:16 PM on July 10, 2013 [4 favorites]


Aren't Uber run by objectivists? If so, wouldn't they be in a state of sin if they didn't squeeze the punters for what the market can bear?
posted by acb at 4:19 PM on July 10, 2013


I guess now we know why municipalities regulate the Taxi service.
posted by notyou at 4:23 PM on July 10, 2013 [2 favorites]


The same theory that says that Uber acted correctly in price gouging during the storm emergency, also says that Uber's gain in getting an afternoon of fares in Toronto at 75% higher rates than normal must be more valuable to the company than the storm flood large amount of negative publicity it's getting globally from this action.

So I'm not sure why people are defending them; surely this private company has made the decision that it was worth the cost of being classified as money-hungry asshole vultures profiting off human misery, and in defending them, you are offsetting their costs, insulating them from being exposed to the true cost of their actions and thus distorting the market.
posted by Homeboy Trouble at 4:27 PM on July 10, 2013


So there can be insufficient regulated cabs when there's an emergency?
posted by Joe in Australia at 4:27 PM on July 10, 2013 [1 favorite]


Price is a practical way of allocating scarce resources in a crisis situation to those whose resources are, in fact, already greatest.

Fictional storm example with made-up numbers:

Scenario 1: Storm coming to town with no-price gauging laws
Water pumps are priced $200 at normal times and times of high-demand. Big storm is announced. Rich person goes to hardware store and buys a pump just in case (cost $200). Poor person doesn't go and buy one since he is poor and doesn't by things just in case. Pumps sell out before any real damage occurs.

If rich man's basements floods or not his costs are set at cost $200.

Poor man's basement floods, but there are no pumps available and water causes permanent damage worth $5000. Total cost for rich and poor man are $5200.

I.e. total cost of the storm for the rich and poor person is between $200 - $5200.

Scenario 2: Storm coming to town with no-price gauge laws.
Both rich and poor person wait for the storm.

Poor man's basement flood and he goes to buy a pump, but the price is $1000 due to high demand. If poor man is too poor to spend the $1000, he is stuck with the damage of $5000 to his basement. Rich man pays the same if his basement floods at cost of $1000.

Neither poor or rich person spends any money unless necessary.

I.e. total cost of the storm for the rich and poor person is between $0 - $2000. Note: Only rich man can be worse off in the price gauging town, for poor man living is price gauging town neutral or net-positive.
posted by zeikka at 4:37 PM on July 10, 2013 [1 favorite]


I know some of the Downsview EC crowd, and they do a damn fine job.

I started out in the storm taking the the 105 Dufferin North with three people from the EC office. I found this out when I made a crack about the 1-2mm forecast on Sunday that was 40 at the airport. Turns out precipitation estimates are pointless when your forecast area is all of the GTA and the rain is coming in thunderstorms. Makes sense. They helpfully warned of the massive size of the coming storm, one showing me the radar on his phone.

By the time we got to Downsview, the power was already out, and the shuttle bus only took us to Lawrence West, which took the better part of two hours. Walked to St. Clair West, then walked from Osgood to home, just east of King & Dufferin.

Got home around 10:30, five hours later. In hindsight, I should have just walked the whole way, it would have been much faster, and the walking was the best part anyway. I had a nice big golf umbrella, and the real hard rain had basically ended by 7:00.

Whole day yesterday without power. Invited the neighbours over and drank wine and played music and lit tons of candles. Power came back on before the freezer melted.

Last two days haven't even attempted to get to work on time. I know it's been a huge pain for many people, but for me, it's been a conversation starter more than anything. Lac Megantic really puts this in perspective, for me at least.
posted by [expletive deleted] at 4:38 PM on July 10, 2013


So I'm not sure why people are defending them; surely this private company has made the decision that it was worth the cost of being classified as money-hungry asshole vultures profiting off human misery, and in defending them, you are offsetting their costs, insulating them from being exposed to the true cost of their actions and thus distorting the market.

I suspect they have decided that having a reputation for availability is what they are aiming for with surge pricing.

As a related aside, I'm not sure I've ever seen a product which had a greater divergence of opinion between the company's actual customers (who, the author of this piece notwithstanding, are in my experience very happy with the product) and people who object to it for their own ideological reasons.
posted by dsfan at 4:38 PM on July 10, 2013 [1 favorite]


So there can be insufficient regulated cabs when there's an emergency?

I was thinking it had more to do with regulating prices, among other things (safety, insurance, etc), in particular preventing gouging during emergencies or in high demand places like, say, the airport.

Maybe you can demonstrate that more supply found its way into Toronto in response to the surge in demand and price.

Or maybe one of the factors that allows for the surge is inelasticity of supply? And Uber recognized it had folks by the short ones for a few hours or days and negotiated accordingly?
posted by notyou at 4:45 PM on July 10, 2013


I.e. total cost of the storm for the rich and poor person is between $0 - $2000. Note: Only rich man can be worse off in the price gauging town, for poor man living is price gauging town neutral or net-positive.

Surely it's between 0 and 6000, because the poor person may not be able to afford the 1000 fix?
posted by jacalata at 5:04 PM on July 10, 2013 [1 favorite]


So the market method of allocation absolutely sucks. It's miserable. It comforts the comfortable and afflicts the afflicted. As an atheist who lives in and grew up in a majority Christian society, I've soaked up enough Christian ethics to consider comforting the comfortable and afflicting the afflicted as more or less the definition of evil.

Well and so but anyway, one of the ways that we justify the presence of the market — that beastly institution at the center of our society — is by assuming (or at least hoping) that in an emergency, when it's really important, we'll all drop the market game and treat each other humanely instead. Yes, the market tells us to gouge, but because our ethical system finds that abhorrent, we ignore what the market tells us to do and hope that others likewise ignore its voice. When someone fails to ignore the voice of the market in an emergency situation, we, well, have reason to shun them. At the very least, we know that they're people whose ethical systems are alien from ours, and we know that we should act accordingly around them.

But then again, we already knew that about those Uber creeps.

I guess the reason why I don't get particularly worked up over this particular type of gouging is because, on the whole, in most non-emergency situations, riding in taxis and limos is an activity for the comfortable. Taking a taxi or limo (and I take taxis sometimes) is, most of the time, a form of anti-social queue jumping, for those who think they're too good or in too much of a hurry to take a bus like normal people... and who have the money to do so.
posted by You Can't Tip a Buick at 5:15 PM on July 10, 2013 [1 favorite]


You know what regulated taxis in this town has gotten me? Cabs that don't come when I call. Cabs that refuse to take me to, or pick me up from, my ex girlfriend's house, because she lived in a shitty part of town. Taxis that won't pick me up based on how I'm dressed. Trying to hail a cab for an hour on weekends, only to have them slow down and ask if I'm going to "take care of them" as a prerequisite for stopping. Cabs that refuse to take me if I only have a credit card, even though they all have credit card machines.

There are so few cabs (by design/regulation) that the drivers are completely justified in feeling like they're doing you a favor when they pick you up, and boy does it show.

Meanwhile every Uber/Lyft driver I've had has been nothing less than awesome, and they're happy to be doing it even though they get huge amounts of abuse from cabbies, and even though the city continues trying to regulate them out of existence. Oh and the no tipping. Jesus. I don't get how the same metafilter that's all "we should totally abolish tipping and pay everyone a living wage like they do in europe" sees no benefit in a system that DOESN'T hold someone's livelihood hostage in the form of tips.

So if the price of all that is I'm going to pay $35 instead of $20 in the middle of a goddamned natural disaster? I GUESS I'M OK WITH THAT.
posted by danny the boy at 5:25 PM on July 10, 2013 [10 favorites]


Seems to me that the obvious solution for Uber would be to simply announce that all the company's excess revenues (or even just all revenues) collected during the course of the disaster would be donated to disaster relief efforts. It preserves all the upsides to the functionality of the system, while basically eliminating the "greed" accusation.
posted by alexei at 5:32 PM on July 10, 2013 [1 favorite]


From the "economic defence of Uber's surge pricing..."
What these detractors don’t seem to understand is that the alternative to higher prices is not simply lower prices. It is lower prices and a shortage. (In the graph below, the shortage would be equivalent to the distance between Q1 and Q3.)
Just so this is clear: that claim, and the reasoning behind it, is 100% specious bullshit.

If this were a case of Toronto experiencing a sudden demand shock for transportation, that would be one thing - raising prices to take avantage of demand shock is perfectly normal, and has the expected effect of incenting other market actors to participate, thus driving prices back down as the market stabilizes - that would be one thing entirely.

This was not demand shock, not even a little. This was an urban-transportation supply shock, and no amount of raising prices would have been able to bring more participants to the market place. That's why it's called "price gouging".

The reason you hear so many Randroids talk in terms of "Econ 101", incidentally, is that's the entirety of the understanding they bring to the table, this belief that the first class in the first year of undergrad is the entirety of the subject. "Wealth equals worth, you see? Here's an a graph with unlabelled axes and some curves that intersect! It's all just Econ 101!"

The "shortage" he's talking about isn't a lack of cabs per se. The exact same number of cabs would be available to the overall market in this situation regardless of the price, and they'd be exactly as inaccessible to the overwhelming majority of everyone as they were on the day of. What he's talking about is a shortage of access to a scarce resource by people who believe their wealth entitles them to accessing those scarce resources.

Which is all to say: fuck that guy in particular, and objectivists in general. Because when the chips are down, that's what their philosophy dictates is the moral and right thing to do to you.
posted by mhoye at 5:37 PM on July 10, 2013 [13 favorites]


The "shortage" he's talking about isn't a lack of cabs per se. The exact same number of cabs would be available to the overall market in this situation regardless of the price, and they'd be exactly as inaccessible to the overwhelming majority of everyone as they were on the day of. What he's talking about is a shortage of access to a scarce resource by people who believe their wealth entitles them to accessing those scarce resources.

No. Uber drivers are largely independent operators, and therefore can absolutely increase the supply of cars available by working longer hours, or by reallocating the hours worked to times when demand is higher.
posted by dsfan at 5:42 PM on July 10, 2013 [5 favorites]


TAXI DRIVERS PLAN TO DISRUPT UBER BUSINESS MODEL BY OFFERING REGULATED AND STANDARDIZED RATES

WHAT ABOUT THE INSULIN?

Martins: Have you ever seen any of your victims?

Harry Lime: You know, I never feel comfortable on these sort of things. Victims? Don't be melodramatic. Look down there. Tell me. Would you really feel any pity if one of those dots stopped moving forever? If I offered you twenty thousand pounds for every dot that stopped, would you really, old man, tell me to keep my money, or would you calculate how many dots you could afford to spare? Free of income tax, old man. Free of income tax - the only way you can save money nowadays.

Yes, I know that what Harry Lime trafficked in was penicillin.
posted by dhartung at 5:49 PM on July 10, 2013 [1 favorite]


Yes, it's the reliability. I've always lived in neighborhoods that cabbies didn't like. I'm about a mile from Union Station in DC, but no cabs cruise my area, and they really, truly almost never come. That means trips to the airport, out to dinner, whatever, have to start with a long walk or a wait for a bus.

Then boom, Uber. Always, always under 10 minutes, and sometimes 5 or even less. It's crazy. One difference, possibly, is that regular cabs dispatched to me get intercepted by someone else, but more likely it's old-fashioned redlining. But Uber already knows who I am, I guess, that they have my credit card and all that. Since lots of people take cars to Union Station, there's always someone nearby, I think.

I swear I'm not a shill. I do find the ethics discussion, even in the abstract, interesting. But, man, I can now plan on that car coming right away. I can make that movie without sweating at a bus stop, and I'm willing to pay a bit extra.
posted by MrMoonPie at 5:49 PM on July 10, 2013 [4 favorites]


Spare me the PhD economics baloney about the supposed virtue of "surge pricing" for allocating demand. And read what the bible has to say about usury.

Few issues in life are simple. But this is one. It's black and white. Or good vs. evil.

At a minimum: there is a huge difference between New Year's Eve partygoers and victims of a natural disaster who get ripped off by an evil comany swimming in venture capital cash that chooses to exploit human misery to reap windfall profits.

Folks like these give capitalism a bad name. And they risk unleashing a regulatory over-reaction that could harm capitalism.

The supreme irony? Uber could have stuck to its basic business model -- and reaped huge PR benefits by just doing the right thing for a few hours. But, no....they probably believe too much in their model. Fundamentalism is never a good idea.
posted by DanielFreedman at 5:54 PM on July 10, 2013


Hailo is a hailing app, and its business model depends on where it is deployed, since it works with the existing power structure and regulators in the city. Unsurprisingly, they encounter less resistance than Uber.

I'd love to see actual data about how Uber performed during the storm and if the surge pricing actually resulted in increased supply -- of course, we don't know how many drivers would have stayed home if the surge pricing wasn't in effect.

If transit systems dynamically priced off-peak fares to keep buses running full, I'd be all for that.

I've had a lovely, quiet, expensive ride on an empty train car between DC and NYC thinking exactly the same thing.
posted by RobotVoodooPower at 6:02 PM on July 10, 2013


Also: Uber, The Toronto Storm, Price Gouging, and a Lesson from Coca-Cola -- or, the thesis that people don't act as rationally with respect to pricing as the market models would like.
posted by RobotVoodooPower at 6:10 PM on July 10, 2013 [1 favorite]


cell divide: "This is different than selling goods in a store, this is getting people to show up to work in a disaster when they don't have to. Public workers get disaster pay, and Uber drivers are independent and don't have to work if they don't want to. Perhaps under these conditions, the only way to get them to work is to pay them more. What then?"

This is an admirable concern. But we know (eg) that people are bad at making rational decisions. In the case of municipal workers, collective action has put into place structures (hazard-duty pay, but also workplace safety rules, centralized decision making etc.) that protects them.

Paying limo drivers 1.5x more, or 6x more, or whatever it actually takes to get them to drive people around, is not going to fairly compensate them for their risk. It's crazy to think that any algorithm using (exclusively) up-to-the-moment price data will. What's needed is a plan. I guess Uber isn't going to learn this lesson (except perhaps from the public backlash), though, because their position in the market seems to be that of a broker: the cab drivers bear the risk, and consumers bear the price fluctuations, and a cut is taken from the middle. That's our M.O. these days (see also: financial institutions), though, so I guess it sucks to be us.
posted by dendrochronologizer at 6:14 PM on July 10, 2013


I was coming in to say what emptythought said. I've had calls for taxis in Seattle where they don't show, or they get lost on the way here (they claim) and at one point I got stuck at the store when a bus just didn't show at all, and none of the cab companies would come there - and I don't live in a really bad part of town (okay, Ranier Beach doesn't have a great rep but I lived in north Newark NJ for a bit and there's no comparison).

Finally, frustrated, I got on my phone and got Uber. Fifteen minutes later I was home, and the guy helped me carry the groceries to the door and wouldn't let me give him more money towards the tip.

One of my housemates had a root canal and I had to get her home. I contacted Uber. He showed up fast, helped her in, asked if we wanted some water, and waited until we got in before leaving. I have never had a bad experience with them, at all.

I did try to use them once on a Friday when there was both a Mariners game AND a concert at Key Arena, and the app popped up a note about availability issues and higher prices. So they can do that - warn you in advance. Plus project your trip cost. So... Yeah, maybe some might call it predatory, but they do inform you.
posted by mephron at 6:20 PM on July 10, 2013 [3 favorites]


Is economics an entire discipline devoted to apologizing for wealthy assholes? Or is it just that wealthy assholes (or assholes who aspire to be wealthy) trot out that supply-and-demand graph every time someone calls them on their shit?
posted by treepour at 6:21 PM on July 10, 2013


Judging by the comments here, MetaFilter will surely be outraged once distance-based pricing is (re)instituted on the TTC and commuting downtown costs twice as much for the food-service worker from Rexdale as for the investment banker from Rosedale.
posted by one more dead town's last parade at 6:27 PM on July 10, 2013


No. Uber drivers are largely independent operators, and therefore can absolutely increase the supply of cars available by working longer hours, or by reallocating the hours worked to times when demand is higher.

The storm occurred during the evening rush hour, which is normally the start of the peak for taxi demand. Probably pretty close to every driver was already planning to be in the system.
posted by Homeboy Trouble at 6:27 PM on July 10, 2013


And read what the bible has to say about usury.

Boy, and then read what it has to say about slavery! Hint: may make you rethink your use of the Bible as a relevant moral authority.
posted by jacalata at 6:32 PM on July 10, 2013 [8 favorites]


Well, hey, if even people who think Slavery is fine and dandy think Usury is terrible, it must be pretty damned terrible.
posted by jacquilynne at 7:04 PM on July 10, 2013 [7 favorites]


Uber's lesson here is simple: Set a maximum surge price (with exceptions for big holidays like NYE) at 200% and advertise non-surge prices as "off-peak discount". I highly doubt you could get this much outrage from the "discount rate" being 10% instead of 50%.
posted by 0xFCAF at 7:16 PM on July 10, 2013 [1 favorite]


Meanwhile, WTF climate? 100MM of rainfall in a single evening?

I'm moving all my shares into disaster response.
posted by notyou at 7:19 PM on July 10, 2013


Huh, isn't the solution to write to local representative for better public services? Why would Uber have to change their business model when the market seem to be rewarding their own?
posted by asra at 7:27 PM on July 10, 2013


I have a little sympathy for Uber drivers in Toronto: during the storm, Yonge Street looked like the last exit out of the apocalypse.
posted by Bora Horza Gobuchul at 7:49 PM on July 10, 2013


This is not bad publicity for Uber. It tells drivers: "Uber gets you paid." It tells passengers "when you're wiling to pay for a ride, Uber can get it for you come Hell or (literally) high water." The beauty of it is that you get this message even if you find free markets discomfiting; you aren't going to not use Uber when you really need it.
posted by MattD at 7:49 PM on July 10, 2013 [2 favorites]


I don't understand all the Uber-hate in this thread. It's the taxi-drivers that are making more money. Wouldn't you rather be paid more to do your job during a situation where your personal property and, quite possibly, your own health was at risk?

This is hardly price gouging. Unless you consider things like overtime and hazard pay to be price gouging.
posted by enamon at 7:53 PM on July 10, 2013


I don't think this is anything new. The poor never got towncars and those with cash to spend can get whatever they want.

Uber just made this visible.

Sure taxis have price regulations in place but good fucking luck if it is 5am and there is even a light drizzle.

I can call the corner car service and say "get someone out of bed and i'll pay $500" and they will, not that I would.
posted by Ad hominem at 7:57 PM on July 10, 2013 [1 favorite]


Let's just be clear here: Uber takes 20% off the total. So they are also making more money in this situation (bigger fare -> bigger Uber cut).
posted by 2bucksplus at 9:20 PM on July 10, 2013


>This is hardly price gouging. Unless you consider things like overtime and hazard pay to be price gouging.

Here's the definition that was proposed for an Ontario law, Anti Price-Gouging Act, 2001

Prohibition 1.  (1)  In a situation of crisis, no person whose business includes the retail sale of products or services shall, in the area affected by the situation, sell a necessary product or service to another person at a price higher than the price charged immediately before the crisis began.

Unless transportation is not considered a necessary service (it is in some but not all cases), this could not more exactly describe what Uber did.

I love demand pricing of transportation. Like, I bring it up randomly in conversation I like it so much. But it only works as long as the market is functioning normally. In a short term crisis like the flood, it does not work. And it is not moral. Sadly, the law didn't pass, so it was likely legal.
posted by Homeboy Trouble at 11:37 PM on July 10, 2013


Of course, a perfectly legal and highly moral thing Uber could have done is keep their prices to consumers exactly the same as before the crisis, but sent out a message to the drivers offering to pay twice the usual rate.

This would have had the same effect on supply, would have only cost Uber about four evenings worth of revenue, and gained them as much positive notice as they received negative.

Maybe I'm biased, since I'm from Calgary, where after the floods, we had businesses of all types - especially small ones - doing whatever it takes to help out. Food trucks spent the week after the flood driving around the damaged areas, handing out free meals for workers and volunteers. The free pizza I got was pretty good, but those idiots missed the chance to change us 1.75x surge pricing. Lord knows cleaning flooded basements builds an appetite, and all the restaurants were shut down.
posted by Homeboy Trouble at 12:03 AM on July 11, 2013 [2 favorites]


>> Fairness vs Availability: A defense of Uber’s surge pricing (note, this is my take on the discussion).

Basically, I argue that Uber is in the business of allocating a scarce resource. It could choose to do it "fairly" -- meaning, at the same price regardless of circumstance. Some random subset of the population would get access to the service, and some people -- even if they really really want/need/value this service -- would find it unavailable. Uber could also choose to value availability over this fairness: basically, declare that they'll keep increasing prices until there's at least one cab always available (to simplify things). This effectively guarantees that their service is always available. Except that now consumers that really really do want/need/value this service have a way to acquire it.

Uber is not a government-sponsored monopoly. It is not a critical service. It's a luxury. It's not just fine for it to impose this surge pricing, but almost absolutely the right thing for them to do given their stated service.
posted by haykinson at 12:17 AM on July 11, 2013


Okay look, I could dig the 6x cost for the average user IFF (as in if and only if) the pricing was such that a portion of the cars were directly allocated to disaster relief at zero cost to those who most need it.

Toronto suffered a disaster. Uber raised their costs. Unlike Starbucks during the Boston Bombings who ... gave away product... which was a big improvement from their 2001 WTC publicity effort when they charged rescue workers $130 for three cases of water.
posted by Nanukthedog at 3:52 AM on July 11, 2013


Some people in this thread appear to be mistaken about the meaning of the word 'usury'. Usury is the practice of making immoral loans, not charging a high price for a service.
posted by pharm at 3:55 AM on July 11, 2013 [4 favorites]


Hey you guys, I think I found a counter example to Betteridge's law of headlines! (Or wait, does that just make it a leading question? Maybe I need to mull this over some more...)
posted by wenestvedt at 5:32 AM on July 11, 2013


mhoye: If this were a case of Toronto experiencing a sudden demand shock for transportation, that would be one thing - raising prices to take avantage of demand shock is perfectly normal, and has the expected effect of incenting other market actors to participate, thus driving prices back down as the market stabilizes - that would be one thing entirely.

This was not demand shock, not even a little. This was an urban-transportation supply shock, and no amount of raising prices would have been able to bring more participants to the market place. That's why it's called "price gouging".

-------------------------------------------------------------------------------------
From the links, right up at the tops of the pages:

Demand shock: In economics, a demand shock is a sudden event that increases or decreases demand for goods or services temporarily.

Supply shock: A supply shock is an event that suddenly changes the price of a commodity or service. It may be caused by a sudden increase or decrease in the supply of a particular good. This sudden change affects the equilibrium price.
-------------------------------------------------------------------------------------
Can somebody explain mhoye's reasoning to me? Because it seems totally inside-out. I can't see this situation with Uber as anything but an extremely clear-cut case of demand shock, and yet he's got 12 favorites for an assertion that it's not. I must be missing something.
posted by jon1270 at 5:34 AM on July 11, 2013 [2 favorites]


On further thought I suppose mhoye must mean that there was a shock to the supply of transportation, whereas I'm seeing it as a shock to the demand for taxis. Of course, both happened here simultaneously. Which suggests that it's not a useful way of distinguishing good from bad in this case.
posted by jon1270 at 5:44 AM on July 11, 2013


Is economics an entire discipline devoted to apologizing for wealthy assholes? Or is it just that wealthy assholes (or assholes who aspire to be wealthy) trot out that supply-and-demand graph every time someone calls them on their shit?

The latter. That, and a lot of objectivists take a semester of microeconomics, and think they know everything.
posted by MisantropicPainforest at 6:47 AM on July 11, 2013


Maybe, MAYBE, prices could be doubled to compensate drivers for the extra risk to cars, encourage car-sharing, and whatever. You send that message out to your customers with valid reasons, and also acting as a clearinghouse for information and help, and maybe you're not a complete, utter, flaming, suppurating, monstrous, cynical, greedy, money-grubbing fucking asshole. Yeah, probably not.

The outrage is inspiring. People seem to suck it up when assholes are greedy way too often.
posted by theora55 at 7:40 AM on July 11, 2013


Can somebody explain mhoye's reasoning to me? Because it seems totally inside-out.

I'll give it a try, but that guy can be kind of a headcase sometimes, so best-effort.

An analogous situation is this: the power goes out, and it's not clear when it will be back, so in the face of a sudden surge in demand for generators, the local gasoline-generator salesman adds an extra zero to the price of his generators.

Now: in isolation - without the context of "the power goes out" - this would appear to be demand shock. In the absence of that context, you'd be right, and mhoye's reasoning would be precisely backwards.

Including that context, however, it's clear that the sudden spike in generator demand has nothing to do with the generators per se, and everything to do with the fact that the electricity supply has suddenly and unexpectedly dropped to zero. So, what seems in isolation like a demand shock to the generator market is actually a side effect of the real problem: the supply shock to electrical production.

Further: In this context - a crisis with profound systemic effects - it is clear that this sudden 10x increase in pricing will not, on the time scales involved, result in more generator salesmen appearing, and competing to drive the price down. Nobody will bring more generators to that market - Coming from where? And what happens when the power's turned back on, and you've got ten or a hundred ISO containers full of generators on a boat going to a market that will never want them? - so the arguments in favor of jacking up the price boil down to an elaborate, hollow justification for greed. It's profit-taking in difficult times, nothing more, and again: that's why it's called price gouging.

(And make no mistake, generator salesman: karma is a wheel, this is not the only crisis that will affect us all and people have very long memories for how they're treated when things are going bad.)
posted by mhoye at 10:34 AM on July 11, 2013 [2 favorites]


Okay look, I could dig the 6x cost for the average user IFF

it actually happened? What would it take to get you to dig the actual really happened 1.75x cost for the average user?
posted by jacalata at 10:58 AM on July 11, 2013


So, what seems in isolation like a demand shock to the generator market is actually a side effect of the real problem: the supply shock to electrical production.


But, it actually is a demand shock to generators, caused by a supply shock to electricity production. Like if an earthquake causes a tidal wave, you don't say 'it appeared to be a tidal wave, but in the larger context there is no tidal wave, only an earthquake'. You say it's a tidal wave, caused by an earthquake.
posted by jacalata at 11:01 AM on July 11, 2013 [2 favorites]


This would have had the same effect on supply, would have only cost Uber about four evenings worth of revenue, and gained them as much positive notice as they received negative.

Except no, no one would have noticed unless they advertised it online. And then we'd probably all be on here going "aww, look at them wanting a pat on the pack for being decent human beings" if it even got much of a mention at all.

Some people in this thread appear to be mistaken about the meaning of the word 'usury'. Usury is the practice of making immoral loans, not charging a high price for a service.

Seriously, i feel like i'm hanging out with a bunch of the "activists" i knew in high school. It sure sounds bad doesn't it guys! even though that's not what it means at all, it's a big scary word for people being awful!
posted by emptythought at 1:02 PM on July 11, 2013


Actually, I saw a lot of tweets about the hotels that were advertising special rates for people stranded by the storm, both to pass along the information and to praise the businesses that made those offers. There wasn't a cynical backlash against them that I noticed.
posted by jacquilynne at 1:05 PM on July 11, 2013


Yea, but that's for a discount. Just keeping normal prices wouldn't do much of anything, they'd actually have to cut prices for people to be going "yay, look at how cool they are!"

I realize that may be a bit hair split-y, but what was being discussed above was just not raising the prices, not discounting them.
posted by emptythought at 1:13 PM on July 11, 2013


How many people could afford uber at 1.00x rates but not at 1.75x rates? I'm genuinely curious, assuming a ride costs $65/$113 how many people are ok at $65 but cannot afford to pay $113?
posted by Skorgu at 3:31 PM on July 11, 2013 [1 favorite]


"Boy, and then read what it has to say about slavery! Hint: may make you rethink your use of the Bible as a relevant moral authority."

It says that a vulnerable and powerless community of likeminded people living in a violently reactionary society so genocide happy it turned ethnic cleaning into its most popular sport should probably not either ferment necessarily doomed rebellion that had precisely zero chance of doing anything good beyond satisfying internet quality philosophers or economically shut themselves of from the world they were trying to change. It recommends instead doing the profoundly radical thing of seeing enslaved people as human beings with dignity inherent to them that is equal to that of anyone else, as well as including and treating enslaved people as such.

But no, you're right, we have nothing to learn from the document that has guided Western morality for nearly two mellenia now and can safely ignore it.
posted by Blasdelb at 3:39 AM on July 12, 2013


I think you mean "millenia". And if you can see no middle ground between being a moral authority and something worth reading, you might not be a deep thinker.
posted by jacalata at 11:32 AM on July 12, 2013


[Continuing the bible discussion will completely derail this thread from its original topic. The choice is yours but I'd suggest not doing that.]
posted by jessamyn at 11:36 AM on July 12, 2013


How many people could afford uber at 1.00x rates but not at 1.75x rates? I'm genuinely curious, assuming a ride costs $65/$113 how many people are ok at $65 but cannot afford to pay $113?

FWIW I know people on overdrafts, people whose bank account is barely in the black and people who need to ask for an advance payment now and then. The extra money could make a difference for them if they had to use a car during an emergency.

The problem with "demand" is that it concerns the people who want and can afford a service or a product.
posted by ersatz at 11:38 AM on July 12, 2013


If you honestly have little more to criticize about the deepness of my thought than my spellchecker would were it set to English, I'll take that as maybe not so self aware flattery.
posted by Blasdelb at 6:26 PM on July 12, 2013


That was not the criticism, that was just a stpuid insult (sorry). The criticism was that you appear not to differentiate between 'a moral authority' and 'a document we can learn from'. By that standard, Shakespeare and Disney films are moral authorities.

I can't see a problem with 'derailing' a thread nobody is talking in
posted by jacalata at 12:31 PM on July 13, 2013


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