Uber is Driving Us to Thunderdome

Originally published at Futures Exchange. There are few things more satisfying than watching new technology and creative people conquer entrenched industries. Whether it’s Etsy, Zipcar, Airbnb, Napster, you name it. There is something deeply appealing about seeing an underdog make a clever website and knock down a power structure. It can be such a beautiful thing.

Which is why it gives me, and should give other bleeding hearts like me, great dread to see a suite of such disruptive business models, commonly referred to as the Sharing Economy, leading us toward a cyber-libertarian dystopia.

The Sharing Economy is supposed to be about delivering power back to the little guy, bringing capitalism back to personal transactions, rejecting consumer culture. But unless regulators get caught up, businesses like car-sharing service Uber are driving us toward something resembling the Bartertown economy in the world of Mad Max.

Stay with me.

You remember Mad Max Beyond Thunderdome, where Tina Turner and her genius/thug hybrid Master Blaster jockey for control of a post-apocalyptic town and its pig-shit-based fuel source. Master Blaster exerts his power by periodically shutting off the fuel refinery he’s created. It’s a state of controlled chaos, and conflicts are resolved in Thunderdome, the battle arena in which two men enter, one man leaves. It’s what I envision as the end state of libertarianism, and it comes to mind when I think of the regulatory vacuum surrounding some of these sharing companies—warlords hoarding control of services, wielding power over a struggling populace left to fend for themselves.

This is most definitely, absurdly hyperbolic. I apologize. But not that hyperbolic if you’ve been reading the Mad Max of tech journalism, Gawker Media’s Sam Biddle, and his one man war against Uber.

Uber is probably the worst of these successful services, and an easy target due to its irritating leadership. And yet, people love it. Good-hearted people. They love the convenience, the sense of control, the idea of subverting undependable cab companies that have screwed us all at some point or another. And no tips! We all know people who swear by it, and not just the well off.

But Biddle has run a relentless string of posts at Valleywag ripping into the service for its bad behaviors, and what-are-you-going-to-do-about-it attitude. For starters, there’s the “surge pricing” by which rates multiply when demand is high (like, say, during a snowstorm or a holiday), so the supply of drivers will meet the increased need. Enter the $357 fare. Then there’s the recent lawsuit filed that accuses the service of being partially responsible for a child’s death, for encouraging distracted driving. One of the more warlord-ish stories is the time several Uber staff, including senior management, sabotaged New York competitor Gett (which doesn’t scale up price beyond a flat fee for high demand), by faking orders for drivers and then canceling last minute.

Two cab companies enter! One cab company leaves!

If Uber is the most colorful and thematically appropriate example of sharing services going Master Blaster, it’s not the only one.

I should include a disclaimer here: I love Airbnb. Love it. Using Airbnb, I had one of the best vacations in recent memory involving white cheddar, a yurt, a Tibetan singing bowl, and affordable financial transactions conducted entirely between me and a beautiful and gracious hippie couple in Vermont. Roll your eyes all you want jerks, it was beautiful. Namaste.

Not only that, I know people who make or augment their livings using Airbnb, while struggling to stay in cities that are basically pricing their tax bracket out of town. One is a music composition PhD, who while hunting for scarce university jobs rented his Chicago apartment out using Airbnb, crashing with his girlfriend in the meantime. Another in New York lets out a room to supplement photography and filmmaking gigs. The idea that artists or otherwise poor-ish people are leveraging the cachet of their cities to make it financially practical to keep living there is awesome. And I have very little sympathy for the hotel conglomerates suffering as a result.

But as Airbnb is growing into a goliath of its own, it’s subverting public structures that are there for very good reason. Airbnb waged a high-profile battle against paying occupancy tax in New York City. Cities like San Francisco and New York fear users are turning much-needed rental housing into off-the-books hotel properties. And the biggest red flag we’ve seen yet was a recent study from Harvard Business School that found non-black hosts can charge 12% more than black hosts, and that black hosts face a larger penalty for having a poor location than non-black hosts. These are similar housing battles that civil rights activists have fought tooth-and-nail for decades, and they are rearing up in the new economy with little recourse beyond a bad online review.

The issues extend to the workplace. As more people find themselves working for contract or temporary jobs, sites like Elance, TaskRabbit or Freelancer that connect clients to contractors are invaluable. They even emphasize protection of workers, facilitating quick and dependable payment, rejecting substandard job postings. And yet, with millions of transactions happening, it’s common to see jobs offering $1 an hour, a small fraction of a cent a word, unpaid tryout work, often with promise of building your portfolio on the sites.

This feudal underbelly that sharing services are creating, intentionally or otherwise, is gaining attention. News reports are regularly popping them, and a European tech conference Lift last week featured an entire session on the Sharing Economy backlash. Oversight may very well catch up.

It’s important for pro-regulation progressives to remember that the Sharing Economy is thriving, in part, because the middle class is flat broke.

The Sharing Economy represents a lot of great things. For one, it represents everything we love about innovation and capitalism, clever people rewriting the rules of the game. It uses new tools to deliver commerce back into the hands of individuals, giving us the chance to face an independent vendor and shake hands, a joy robbed from most of us by corporate conglomerates. It also allows the middle class and younger generation to shrug off the glut of possessions, opting out of the mid-century values of ownership as a path to happiness.

But I think it’s also important for pro-regulation progressives to remember that the Sharing Economy is thriving, in part, because the middle class is flat broke. Wages are stagnant, good jobs are harder to find, and people still need these services. And where that need for alternatives grows, savvy and ambitious businessmen are happy to swoop in and offer something new and different. Some of those guys are Tina Turner. Or Master Blaster.

Who run Bartertown? Not you.