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Uber vs Black Cab Drivers of London

August 1, 2018

 

 

The latest in the plight of the average worker: taxi drivers trying to force other taxi drivers out of their jobs. Those cheap Uber drivers, putting black cabs out of business... Or is it those nasty black cab drivers, trying to force Uber out of business? Let’s discuss.

 

 

 

 

Firstly, we should set the scene with some context for those who have not visited a built-up area for the past nine years. Uber is a transportation network company, the taxiing side of which is our topic for today. Drivers operate as independent contractors to Uber, providing their taxiing services via the Uber app which allows a customer to call a taxi remotely from their phone and decide whether they want to pay the fare displayed. For anyone who has never visited London, the black cab, otherwise known as the hackney carriage, is the traditional London taxi.

 

The Guardian reported on 24th June that "London’s black-cab drivers are considering legal action against Uber with potential plans to sue the US ride-hailing service for more than £1bn over their loss of earnings.” Now, let’s take that figure at face value and say that it is true: black-cab drivers have lost £1bn to Uber drivers. Black-cab drivers view this as “unfair”, and they receive some significant support from members of the public, politicians, and of course their trade union. But what is it exactly that black-cab drivers are claiming is “unfair”, warranting their enormous target legal settlement?

 

To claim that it is “unfair” for Uber to successfully taxi for a cheaper fare than the black-cab driver can, the black-cab driver must also necessarily claim that his or her potential customers (and former customers, lost to Uber) are acting “unfairly” by choosing to ride Uber as opposed to black-cab. This is a point at the crux of the argument which is so often overlooked or wilfully ignored: Uber do not force people to get in their taxis. If Uber were going around kidnapping prospective black-cab customers, then they would certainly be acting unfairly, to both the customer and the black-cab driver. The reality is that Uber are successful because people prefer that service. The two services are possibly more different than many realise. Black cab drivers must jump through some difficult hoops, regarding encyclopaedia-level knowledge of the city of London and its road network, and the regulatory compliance of their carriage; on the other hand, Uber drivers face none of those black-cab specific tests, and may say absolutely nothing to their passenger as they follow the directions on their satellite navigation device. How far the Uber driver’s service is deemed acceptable or preferable is determined not only by the star-rating awarded to them by the customer, but also by the vote made by the customer in continuing to pay for Uber. Evidently, judging by the surge in London Uber taxis so exponential that they have overtaken black-cabs in number, people in London on the whole prefer the cheap fares and convenience afforded to them by Uber.

 

There will always be demand for the historic and charming black-cab, but that does not mean they should retain a majority share of taxi fare income in spite of contrary consumer preferences. The authorities, with or without public support in the form of activism and polling data, may enforce a monopoly in favour of black-cabs by further extending licensing, increased regulation, minimum price fixing (to illegalise cheaper services), or an outright ban of competitors. If the city of London authorities, or the government, are to enforce a monopoly, then the greatest net loss is exacted. The more thriving business is closed down to protect the underachieving business; the range of market choices available is forcibly declined; and, most importantly, the consumer is robbed of their overall preference. In the free market, free from coercion, individuals buy only what they want and individuals can only sell what others want. It is this free and mutually voluntary nature of a transaction, in which the fullest range of choices possible is available, which fosters the production of goods and services that others want. Without coercion, you cannot make someone buy something they do not want. Introducing coercive factors as “realignment” to “fairness” is in truth only realigning the market toward what people necessarily do not want to the level is it forced to be. These changes are always made without the public support, evidenced by the public’s consumer habits. The losses incurred by black-cab drivers in the form of their reduced earnings, due to the change in the market driven by consumers, is a significantly smaller loss than those to Uber drivers and consumers already mentioned.

The only reasons it is ever attractive or persuasive to incur this huge net loss in the first place are, I believe, twofold:

 

  1. Concentrated losses such as lost jobs have an emotional appeal, while losses dispersed among a large number of people are harder to identify and do not have the same emotional appeal. Even if the dispersed losses are significantly greater and more damaging than the concentrated losses, they will likely be accepted or knowingly or not.

  2. It is politically fashionable to do away with the “gig economy” regardless of how many people would be made poorer. Leftists are so invested in railing against capitalism that the actual results of diminishing or manipulating the market are secondary to them. (“Gig economy” is a term coined long ago in the music industry, now used by leftists to negatively characterise casual work often taken on a self-employed basis. While many individuals voluntarily take such jobs and prefer to lead lifestyles of flexible working, leftists insist they are “exploited”).

 

Black cab drivers should, of course, be free to pursue a legal case as they wish - but I do not think they are justified in doing so, in this case. Let Uber be!

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