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Monday, June 13, 2016

Uber Is Progress, So Why Aren’t Progressives On Board?

Some progressives really are conservatives underneath

I have sung Uber’s praises before. For me, if the choice to take Uber is available, I will almost always choose it over a regular cab. Patronizing Uber supports entrepreneurial individuals rather than cab companies that are often monopoly franchises or benefactors of other forms of crony capitalism.

So it always surprises me when left-liberal/progressive friends of mine look askance at Uber and other similar innovations. My priors are that people on the left would side with the apparent “little guy” against the corporate employers and local monopolies of cab companies (or large hotel chains in the case of AirBnB). And some do. But others don’t, and it’s worth thinking about how we might make the progressive case for Uber to them.

Let’s be clear what Uber, Lyft, AirBnB and the rest of the so-called “sharing economy” are really about. Thinking in terms of “sharing” really isn’t the best way to see the nature of their innovation. What it’s really about is using technology to dramatically reduce the transaction costs of making more efficient use of idle resources.

The Bad Old Days

Perhaps this really is about the fear of uncontrolled change. You have a spare bedroom in your home. Before smartphones, GPS, and the Internet, it would have been very difficult to find people who would have a demand for that space at the time it was available. You also needed some way to vet for trustworthiness. You could have still rented out that room for days or weeks at a time, but the costs of making it work would have been enormous.

The same is true of Uber and Lyft. After all, jitneys have been around for decades, and Uber and Lyft are just a new take on that old idea. But rather than either having fixed pick up points and waiting for an available jitney to come by, and knowing little about the driver, Uber and Lyft reduce all of those transaction costs dramatically. They use a software platform to coordinate suppliers and demanders. The “sharing” economy is really just the next major step in what is the real story of economic progress: the ongoing reduction of transaction costs economy wide.

What’s Not to Love?

But what should make these innovations particularly attractive to the left? One of the most interesting features of Uber, for example, is that the drivers own their own capital and set their own hours of work and, in most ways, the conditions of that work. Uber simply allows people with their own capital to put it to work by more effectively connecting them with demanders of that service.

For more than a century, the left has argued that workers’ lack of control over capital and their working conditions enabled them to be exploited by owners and bosses. The typical left-liberal rationale for unions is tied to this complaint. But Uber provides a solution to this situation. Uber drivers own their own capital (the car) and can determine how often they work and which rides they choose to provide.

Some on the left argue that this very flexibility is a bug not a feature, as it is not full-time work and doesn’t come with health insurance and the like. Most Uber drivers, however, will tell you that the flexibility is exactly what they like about it.

Who Works for Uber?

For example, two of my drivers in Portland recently were doing it part-time to supplement their incomes for various reasons. In one case, the guy was about to take the bar exam and was driving to generate some income to get an office to start up his legal practice.

For some of those immigrant Uber drivers, driving is probably their main source of income. The other driver was a manager at a fast food restaurant and drove part time to save up for a house.  When I asked him about the flexibility, he said “take this morning: my wife is still sleeping, so why not get out in the car for a few hours and pick up a few extra bucks?” His flexibility is also to the benefit of people like me, needing a ride across Portland to meet a friend for brunch.

In my experience, almost none of the Uber drivers I met were doing it full-time. They all had other jobs and this was a secondary source of income to make their lives better. Why isn’t it noble for us to patronize Uber and support the newly minted lawyer or young married couple trying to buy a first house?

In other cities, the bulk of Uber drivers are recent immigrants. Whereas my drivers in Portland and Indianapolis have almost all been younger white men and women, my Uber drivers in Washington, DC have almost all been immigrants of color.

Doesn’t it make using Uber even more consistent with progressive goals if we are supporting the livelihood of entrepreneurial immigrants who have come to the US to make a better life, and perhaps remit some of those funds back home?

For some of those immigrant Uber drivers, driving is probably their main source of income. Are we to deny them that income because Uber driving is seen as a less than perfect compared to the jobs of the old economy? Should we not use Uber and make it less likely that immigrants will come in the first place, consigning them to the greater poverty of their home countries?

If the improvement of the lives of the global poor is a progressive goal, then using Uber (not to mention buying “sweatshop” clothing) is among the more moral things we can do.

What about Safety?

Some progressives might worry that Uber is more dangerous than cabs. The data do not seem to bear this out, and a recent study shows that the entry of Uber into a city reduces the number of drunk driving arrests and fatalities. Not only are Uber drivers no more likely to commit crimes than cab drivers, the availability of a cheap ride that shows up quickly with minimal effort by the customer saves lives and keeps dangerous drivers off the road. Again, this seems to be a goal that progressives should support.

It just seems strange that the progressives who bemoan the rise of the One Dimensional Man or the “McDonaldization” of America would object to innovations that provide more people with more flexible work arrangements that give them more control over their capital and the conditions of their work.

It seems strange that they would object to a service that lowers the cost of transportation for people of limited means and enables young people to survive in large cities without having to own a car of their own.

Progressives = Conservatives

Perhaps this really is about the fear of uncontrolled change that Hayek saw at the heart of what he called conservatism. It certainly seems as though “progressive” objections to Uber reflect a nostalgia for the 1950s economy that parallels conservative nostalgia for the family life of the same era.

And in the end, the fear of Uber suggests that some progressives really are conservatives underneath. The case for Uber is the case for liberal progress, which is based on a willingness to welcome uncontrolled change in the face of supposed progressives standing athwart economic history yelling “stop.”

  • Steven Horwitz was the Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University, where he was also Director of the Institute for the Study of Political Economy. He is the author of Austrian Economics: An Introduction.