The Welcome Disruption of Uber and Airbnb

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by Jeff Boone

Two new Bay Area companies, Uber and Airbnb, are shaking up their industries, causing a political war, and laying bare the conflict between a truly free economy, and those that prefer monopolization in a “permission-only” public-private cartel relationship.  Together these two shared-economy, multiple-use-of-assets, companies are illuminating the great divide between the union-political machine and everyone else.  They are also helping bring awareness to the tremendous social and economic benefits of capitalism and free enterprise – where the constant strive to build a better mouse trap propels entire industries to much greater efficiency, value and growth.

Uber

For those that have not heard of Uber, it is a ride sharing business built on a social networking platform.  If you have a newer car, insurance and a good driving record you can be an Uber driver.

Uber uses a smart phone application and cellular phone location services to connect drivers with those needing a ride.  As a driver, you can pick your hours and territory.  As a rider, you simply put in your destination and request a ride.  Uber alerts the phone of the nearest driver, and that driver accepts or declines.  If the driver declines, the request goes to the next nearest driver.  When the driver accepts, the rider gets a picture of the driver and a description of the driver’s car.  The rider can even check past reviews of the driver.  The rider also gets an estimated cost.  At this point the rider can accept or reject the driver.  If the driver is accepted, the rider sees a map and an icon of the driver’s car making its way to the pickup location along with a countdown estimated minutes until arrival.  The ride cost is fixed with no tipping required.  There is no cash exchanged… Uber bills the rider’s credit card from their Uber account.  A receipt is emailed along with an Uber request to rate the driver. Uber takes a cut and then pays the driver based on a fee-rate schedule.  Drivers that gain experience and get good reviews are paid a higher rate.  Larger cars and luxury cars also get a higher rate.  Rates automatically adjust upward for busy times and late night or early morning hours.

Not in a big hurry and favor discount fares? Chose the “ride share” option and the Uber app will attempt to find other ride-sharing riders to load up a driver’s car.

Uber drivers are required to keep their cars clean.  Uber drivers are friendly and courteous.  Drivers that collect bad reviews don’t last.

In Silicon Valley, lonely but well-employed, “techno-geeks” become Uber drivers just to make some human contact.  They frequently “gift” rides.

So what’s not to like about Uber?

Taxi drivers don’t like Uber because it is cutting into their business.  Tax and spend politicians and government bureaucrats don’t like Uber, because they collect a lot of tax money from the taxi business.

There is no question that Uber is transforming the taxi business.  In fact, in many areas of the country, taxi drivers are defecting to Uber.  Although their rates are lower as Uber drivers, their taxes are also lower.  They can set their own hours and choose their own territory.   They like the simple to use Uber phone app… generally much better than the taxi dispatch service.

But riders absolutely love Uber!  It is easier, safer, cleaner, more efficient and cheaper than taxis.  Uber helps reduce the number of cars on the road as people with cars share their excess passenger capacity.  Uber is great for seniors and students that cannot afford high taxi costs.  Uber is more efficient… much easier than calling for a cab.  Uber is helping to reduce occurrences of drunk driving as it is easier and less expensive for people to order a ride that to risk driving.   Since the fare is pre-determined and fixed, unlike a Taxi driver, Uber drivers don’t take longer routes just to increase charges.   There is no uncomfortable tipping.  Uber drivers tend to be more reliably courteous and friendly because they are rated.  The Uber app is convenient and informative: riders get an accurate estimate of driver arrival.  Riders get a receipt emailed to them, and get to rate their driver.

Airbnb

Airbnb is a website for visitors to rent out lodging from homeowners and other renters. It has over 1,000,000 listings in 34,000 cities and 190 countries.  Airbnb’s tagline is “Belong Anywhere – Rent unique places to stay from local hosts in 190+ countries”.  The San Francisco company books more nights than does Hyatt Hotels worldwide at relatively low prices.

Airbnb allows the property owner / renter to list the property and set a visit rate.  Airbnb handles the credit card billing between the property owner / renter and the visitor… taking a cut and forwarding the rest to the property owner or renter.

Visitors search through a list of available options with pictures and reviews. Rentals with poor reviews can get removed by Airbnd.  After booking, visitors generally contact the property owner directly via email through the Airbnd site.  Arrangements are made for property use instructions and keys.

Airbnb provides a way for homeowners and apartment dwellers to make some money by renting out their homes.  Homeowners and renters love it because they can help pay their exorbitant real estate costs. But mostly visitors love it.  Why rent an expensive hotel room where everything is marked up, when you can stay at a cozy home with a kitchen within walking distance of a market?

Hotel owners don’t like Airbnb cutting into their business.  Tax and spend politicians and government bureaucrats don’t like Airbnb, because they collect a lot of tax money from the hotel business.  But some hotels are actually putting some of their rooms on Airbnd.

The Political Conflict

Democratic free market capitalism relies on an economic process called creative destruction.  Austrian American economist Joseph Schumpeter is generally identified as creating the modern definition of the term.

“The process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one; incessantly creating a new one“.

For a business to remain competitive and successful it must constantly innovate and improve. However, old business designs and structures don’t easily get reformed.  And over time bureaucracy sets in where power tilts to those with a vested interest to maintain the status quo.  Creative destruction is the renewing force.  It pulls the weeds from the business and from the larger economy.  It plants new gardens of greater value that lead to economic growth.

Innovation business thinker Peter Drucker advocated that big business add a Chief Destruction Officer to their executive suite and report to the CEO.  The thinking is that strategy and plans for disruption and reform are as important as are ensuring profitability from current operations.

The computer industry is a fabulous example of the great social and economic benefits of creative destruction.  In the 1970s and 1980s, IBM dominated the computer industry.  Computers at that time were room-filling machines that cost millions and required specially-trained technicians to program and operate them.  IBM was creatively destructed in the 1990s when PCs came of age.  Lou Gerstner took over for IBM in 1993 at a time when IBM’s sales, profit and market share were in decline.  The destructive forces were Microsoft and Intel.  And then the Internet became a destructive force disrupting the PC market.  And next came the creative destruction force of Apple and the age of the handheld computer with processing power thousands of times what the old room-sized million dollar IBM computer could provide.

The music industry was also creatively destructed.  The old guard music industry executives tried desperately to maintain their control by preventing access to electronic music content; but ultimately the transformations took hold and the music industry expanded in a new business model.

Of course some industries are not so dynamic and are not as easily changed.  The taxi and hotel industries are good examples… they have remained pretty much the same for decades if not centuries.

But eventually all industries face the challenge of creative destruction and in every case, consumers benefit and the industry as a whole expands.

The taxi and hotel industries complain that it isn’t fair because they pay so many taxes, and because Uber and Airbnb are different business models, they escape the taxes.  But then there was nothing preventing the taxi industry or the hotel industry from changing their business model to be like Uber and Airbnb.  These two industries failed to innovate and hence they are being creatively destructed for the benefit of consumers and the private economy.

So if the public likes Uber and Airbnb and they will help grow the industry, why would politicians not celebrate them as a positive creatively destructive force in our economy?  The answer is simply money.  More specifically, is the money going to high-priced union labor and government from high taxation.

Innovation that leads to creative destruction, by its nature, challenges politicians that traditionally benefit from, and give policy rewards to, organized labor.   And there is a populist movement with Democrats running for President – namely: Hillary Clinton, Elizabeth Warren and Bernie Sanders – to vilify business for not paying workers more.

Hillary Clinton has come out characterizing the on-demand economy as committing wage theft. Elizabeth Warren has come out demanding that Uber classify their drivers as employees rather than independent contractors… even though Uber drivers meet all the requirements for as independent contractors.  Obviously this requirement would mean an end to Uber… something Ms. Warren knows.  San Francisco Democrats are demanding that Airbnb pays hotel taxes… including back taxes.  New York Democrats would do the same if not for the overwhelming support for Airbnb from the voters. These Democrats know that hotel taxes would kill Airbnb.

However Democrats may be open their own creative destruction for social cause including new definitions of marriage, the thought that there might be some for-profit contracts between consenting adults gives them fits.  New business like Uber and Airbnb don’t quite fit the established regulatory categories.  And the political response is to kill them with new taxes and new regulatory pressure… attempting to stuff them back into the “permission economy” where they can be controlled by the politicians and the legalized cartel can get their cut.

It is clear that Uber and Airbnb better represent our core principles of democratic free market capitalism.  These two revolutionary businesses represent the best of what this country is about.  Democrats should tread lightly on this topic, and Republicans should be ready to pounce on any attempt to damage Uber and Airbnb only to keep filling those union and politicians pockets.

This is all a good topic to discuss with your friendly Uber driver next time you hitch a ride to stay in that beautiful and affordable Airbnb rental.

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41 thoughts on “The Welcome Disruption of Uber and Airbnb”

  1. PhilColeman

    Fascinating article. The writer appeared to me to have a more biased view supporting the smart-phone economy than not. He wrote of this change in free enterprise and described the political fall-out, along partisan political lines and the impact on labor unions. There was some bias there as well. That is an observation, not a criticism.

    Jeff Boone has another app that  is free, and not on his smart phone. He has Free Speech and used it. No matter how any reader translates this topic, it surely caused readers to think and ponder. That is the greatest app of all in a Free Society.

    While never have been a consumer (yet), this “Uber controversy” has intrigued me. You must have noted this public service and its many imitators seems to be on front pages of more and more newspaper articles, and a frequent lead item on local and national TV. A political columnist recent wrote that the smart-phone economy is going to be a major political plank for both parties in the upcoming Presidential election.

    Credit to the foresight of the published economist who coined the term, “Creative Destruction.” In its use here at least, I’d respectfully suggest a change in wording: “Creative Evolution,” as the services and products identified were not destroyed or made to disappear, they changed. Fisher Body has a longstanding presence in the American economy–because the saw the incoming tide called “horseless carriages” and went from manufacturing quality horse carriages to automobile bodies.

    Smart-phone application for other consumer needs are coming in waves. Are you aware there is an app where you can have a full-course meal in the home of a Michelin-stared chef for a much reduced cost? The chef is currently unemployed, or moonlighting on his days off, and all this is available at the push of a button. No longer does anyone actually have to call a Call-girl. The arrangement is made without saying a word. “Revolutionary” is not too strong a word to describe this economic phenomenon.

    Existing public policy and untold numbers of government employees charged with taxation, regulation, and inspection of these services cannot enforce what they cannot see, and nobody is sure how this is going to turn out. Never before in our history have we had the ability to connect consumer and provider at the speed of light, at no cost, and no government monitoring.

     

     

    1. Jeff Boone

      That is the greatest app [free speech] of all in a Free Society.

      Hear hear!

      I’d respectfully suggest a change in wording: “Creative Evolution,”

      Interesting.  I think the reason that “creative destruction” has stuck, is that there is a two step process to reform with the ultimate goal of evolution or progress… and without the first step, the second step is largely unattainable.

      Also, if you use the term “creative evolution”, that infers retaining the existing structures and possibly just layering on new process and veneer.   This is often what is done to appease the old guard; but in the end it can just add complexity and bureaucracy… creating a less efficient and less valuable business.

      As an over-simplified example, if you want to start the home renovation project the first step is to start demoing the room.  Now I certainly would not recommend doing that before having a plan for the new room design; however, even the most progressive of designs will require that you first take down what already exists.  If you are only to “creatively evolve” the room, it will be paint and wall paper and new furniture.   And this might be fine… but it also might mean that you are just holding on to what you are comfortable with and afraid to be truly innovative and creative.

      Existing power structures do not go down without a fight.  Sometimes you can sell the idea, sometimes the vision of change is so profound that you have to destroy the existing structure by developing a parallel alternative that eventually dominates.

      In the early 20th century, just before the Great Depression, the age of air travel was just getting off the ground (pun intended).  At the time there wasn’t any passenger aircraft that could reliably fly non-stop from New York to Europe.  There was an ambitious developer that created a plan to put man-made landing strip “islands” in the ocean anchored to the ocean floor as intermediate stops for the aircraft to refuel.  These Island would have a hotel and shopping and entertainment venues included.  This developer wanted to creatively destruct the business of passenger ship travel to and from America and Europe.  This developer was successful in getting the financial backing for his project, but the Great Depression hit and put a delay on his plans.  As he waited and worked to get started, aircraft design evolved and it led to him needing fewer and fewer islands.  And then no islands were needed as aircraft design reached a point with non-stop transatlantic flight and it  creatively destructed his business concept.

      This developer’s designs went on to be the basis for modern ocean oil drilling platforms.

      Just think if we had only “creatively evolved” ship travel.

      1. Tia Will

        “If you use the term “creative evolution”, that infers retaining the existing structures and possibly just layering on new process and veneer”

        You have inferred that this means retaining the existing structures. I made no such inference from Phil’s comment.

        So let’s take your example of the ship travel vs air travel with islands model and really imagine what might have been. Let’s suppose that instead of just preservation of the shipping industry, the ideas for these islands had led in any entirely different direction than new ways to extract oil. Let’s imagine for the moment that we had had the foresight to realize that an oil based means of powering automobiles and other means of transportation and manufacturing also had serious deleterious consequences for the environment, various species including our own in terms of individual and public health. Let’s further suppose that members of the passenger ship, nascent air travel companies, oil barons, and people who recognized and made early warning of the potential adverse consequences of these means of transportation had sat down together as collaborators with the goal of finding the most economic, safest, and least environmentally and individually toxic means of travel while still achieving a profit. With so much inventive power in one room, and with a more expansive view of optimal outcome than simply”how can we make the most profit” what kind of technology might have been born of such a collaboration ? For example,what if his island designs had been directed to a means of harnessing the power of ocean waves in some way to power ships or even planes ?  We of course don’t know, because the technologies that were developed were the outcome of a competitive rather than a collaborative process with broader goals than just individual wealth generation.

  2. Barack Palin

    I love Uber, have always received fast courteous service at a decent price.  I’ve used AirBnB several times while traveling through Europe with great success.  Democrats who are fighting theses two companies will find themselves at the losing end of the battle because the public loves these new resources.

  3. Tia Will

    Jeff

    Thanks for the timely and informative article.

    I am a regular user of AirBnb services and have been for the most part delighted with my lodgings. Uber I have tried and not had the kind of glowing experiences that many have had. In San Francisco, we recently found it difficult to use and ultimately unsuccessful as mid attempted transaction of at least 15 minutes we were eventually able to flag a cab  from our location on a street off the usual cab routes.

    As usual, we see the potential for constructive change in the economy differently. You stress “constructive destruction” but in your glowing description of how this benefits the customer and the “winning company” you neglect to mention any ill effects of the “destructive” forces. Not a word about the fates of the employees and families of those whose jobs happen to be destroyed. Not a word about the loss to the local and  overall economy as these folks are able to purchase less, or lose their homes, or end up on complete or partial public assistance. My feeling is that these negative effects could be avoided by helping the “losing company” or service to transition to the more successful strategy rather than just “running them out of business” or “stealing their business”.

    Now my emphasis would be, much as Phil has suggested, a Creative Evolution, or in my case, a Creative Collaboration officer. Would we not be better off overall if instead of promoting competitive destruction, we were to promote creative collaboration? My view is of course heavily based in the Kaiser model of provision of health care. This model is based on the idea that our service provides the best patient care by working in close collaboration with our partners rather than in competition with them. It is this collaborative, constructive approach that has allowed Kaiser to expand from a small virtual pariah in the medical community to a well respected, nationally recognized model for the provision of health care. In my field, collaboration is what allowed us to reduce the time frame for detection of a breast lump to treatment of the cancer from our previous approximately 6 weeks to our current approximately six days.

    It is my strong belief that although competition has been a major driver in production and accumulation of wealth in this country, it is certainly not the only, or even the best model for our future and that we need to be open to non competition based means of the creation of value, both economic and non economic.

    1. PhilColeman

      Another example of “creative collaboration,” a concept that sounds wonderful conceptually, but could it really happen here?

      4am, and chatting with the chief aircraft mechanic at one of the Oakland Airport commercial aircraft maintenance hangers. An adjacent hanger with the same purpose is owned by the mechanic’s biggest competitor. The chief mechanic’s counterpart and competitor walks up and says he needs a particular part to return a plane to service. He was “on a critical deadline” and needs to borrow the part.

      The other mechanic immediately gave him the part, and the exchange was not even acknowledged with a handshake, just a nod. Routine transaction. The mechanic giving the part then said to a perplexed witness, “We help each other whenever we can. It’s in all our interest to keep planes safe, nothing else matters.”

      Of course, customer/patient safety, adding Tia’s example, is a relatively easy means on which to build collaborative effort towards a common solution. Unfortunately, can we attain a similar bond of commonality where economic self-interest is the only driving factor?

       

      1. Tia Will

        can we attain a similar bond of commonality where economic self-interest is the only driving factor?”

        My answer to this question is “no”. But fortunately, we are human beings and as such we have the ability to change our beliefs and practices based on new information. There is nothing set in stone that says that we must adhere to a model in which economic self interest is the only driving factor. This is a matter of personal and societal choice which we can make freely.

        We can choose only to act in our own material self interest ( as Ayn Rand would suggest is the only moral imperative) or we can choose to act nearly exclusively altruistically. Most of us will choose some hybrid of these two models. My experience of our culture is that we have gone overboard on the self interest, materialistic model to the benefit of a few and the detriment of many. More importantly, I think that our current levels of self absorption holds us back as a society from achieving our potential. Certainly we are held back medically if individuals do not share their techniques and processes publicly to benefit all. I believe that this has implications across all sectors and that a purely competitive model should be seen as a part of our past which can be honored for the material wealth it has created but not seen as the sole, or even a major path for our future which can  benefit greatly  from more collaboration.

         

    2. Jeff Boone

      Successful collaboration requires an inventory of shared goals.  Without shared goals you move into mediation, arbitration, competition and conflict.

      And you need to be honest about the existence of tangible and measurable shared goals: “for the good of humanity” generally will not get it done, and those that espouse it generally are either hiding, or are unaware of, a hidden agenda.  Because everyone always pursues their own self-interest as a primary motivating catalyst.

      You simply cannot use the Kaiser collaborative model juxtaposed onto other industries unless those industries possess similar inventories of shared goals.

      And I would also caution that healthcare in general is so shielded from competitive pressures as to make it very unique in its lack of competitive pressure and resistance to the typical market forces of creative destruction and reform.  And that is a big reason why the cost of healthcare in this country is breaking the bank.   Consumers of healthcare would likely benefit a great deal if that industry would become more competitive and value-focused.   I believe that will eventually happen as smart and creative minds figure out a way to creatively destruct it.

  4. WesC

    Airbnb type services have been around long before Airbnb arrived on the scene.  We used Waytostay years ago to rent a Paris apartment for 10 days and had a beautiful place in a great location for a very reasonable price, with a very helpful host to take care of everything and give us great advice.  This was in contrast with our Airbnb experience in Taipei where after arrival in Taipei we tried to contact the host for 8 hours via emails and phone calls to get access to our apartment. We ended up scrambling for a hotel that night after it was obvious we would be sleeping on the street.  The host acknowledged it was his fault because he did not bring his cell phone with him.  Despite this he refused to refund our payment, and even refused to refund our cleaning fee.  Several complaints to Airbnb were no help.  They would not respond to any of our complaints or requests for assistance.  We also used an Airbnb apartment in Tokyo and quite honestly could have got a better price with much better accommodations by using Agoda or hotels.com. to get a budget hotel room.

    1. Jeff Boone

      WesC – It sounds like maybe you did not read or have access to any reviews for the places that you rented.  My wife and I have used Airbnb a dozen times in the last several years, and never had a bad experience.  We look at the pictures and check the maps to see where the place is located. But we also have paid close attention to the reviews.  In one case we were reading bad reviews and we emailed the owner and asked if we could have a phone conversation to ask some questions.  Turns out that his wife had cancer and they had moved to another state where she could get the best treatment, and then rented their condo.  And she went downhill and eventual did not survive.  And it was during that time that he understandably was not paying good enough attention.  He was a very nice man and our stay was fantastic.  But I assume that there is always a percentage of renters that don’t have their act together.  But in terms of selecting a place that meets expectations, I think the photos, descriptions and reviews should help ensure there are no major problems.

      1. WesC

        Jeff – In each case I reviewed all of the photos read all reviews and corresponded at least a dozen times with each host.  Everything looked fantastic on paper. When a host is not available on your day of arrival and states that it is his fault because he forgot to bring his cellphone with him, then goes on to state that he will not refund your 4 days payment or even the cleaning fee because he doesn’t have to, and Airbnb refuses to even respond to multiple requests for assistance, it does not make for a good customer experience.  The Tokyo apartment was just as the photos showed with the exception that it was not very clean.  The host was very helpful. The bottom line is that we could have had a nicer room at a lower price at a budget hotel in the same area.

        Airbnb is evolving, and many an entrepreneur has figured out that you can lease a house/apt, convert it to a amateur hotel  and rent out the rooms via Airbnb for a nice little profit without having to comply with all of the local fire and safety codes or pay any of the occupancy or other taxes that the local hostel/hotels operators have to. Our Tokyo host who lives in San Francisco told me he actually has several properties in Asia and the US.  In New York approx 13% of Airbnb listing are from hosts with multiple properties.  Airbnb bookings in New York were about $1 billion/yr in 2013.  If the Airbnb hosts should be exempt from having to pay local hotel occupancy and other taxes, why shouldn’t other local small businesses be exempt from paying their fees & taxes.  I think Airbnb will eventually be a great service if they ever figure out that good customer service is essential.  They are forcing the smaller hotels to reduce their prices and improve their service among other things.  That being said I also do not think I would be very happy if my neighbor’s 5 bedroom house was converted to a mini-hotel.

  5. Tia Will

    Also pertinent to Phil’s question. Yesterday while awaiting a specific interview on The Takeaway, I caught part of the preceding interview. The gentleman being interviewed was an African who was discussing the differing concepts of “wealth”. He stated that in his native language, there were thirteen different terms for “wealth” and only one of them had anything to do with money.

    This led me to a central point of my belief system. There are many different kinds of “wealth” or “value” in life. From my perspective, our current predominant American culture has over emphasized the “value” of material goods over other kinds of “wealth”. We place a higher value on achieving material wealth as measured by our measuring almost every endeavor in terms of whether it will help us to obtain more or less money in the future. We see education in this light.  Prior to Obamacare which has started to reinterpret medical care as a “right” not a material good to be purchased if you can or done without if you cannot, we treated medical care this way. We treat legal representation in this way. If you can pay for the best legal representation, you are likely to walk free. If you cannot, you may find yourself in jail, or facing other serious and potentially lifelong consequences because you could not purchase the best counsel. You name the good or service, and I believe that you will find that our culture has found a way to  maximize not the individual or general good, but rather how much an individual can make money on it.

     

    1. Jeff Boone

      Tia – I think you might not understand human nature well enough related to the subject of wealth.  The vast majority of the wealthy in this country got wealthy not pursuing wealth, but pursuing a mastery of certain professional disciplines that led to them earning a lot of money.   A lot of it is incidental maybe helped with strategy and luck.  Someone starting and growing a business generally does so because they want to be in business and want the validation that they are good and successful at owning a business.   Around this area, rural land prices are going through the roof as there are generally adequate water rights, and nut farming is exploding.  I know some of those land owners and they are becoming fabulously wealthy.  I wish I had mastered rural land acquisition earlier and could have shared in that wealth… but I chose another field and it allows me to live comfortably.  I am a bit envious of those people I know, but I also know that they don’t value this wealth any more or less than I do.  They still put their pants on one leg at a time.

      But the value-set for most people is very similar.  It is represented in our hierarchy of needs.   Ultimately, I think, everyone would like similar outcomes for humanity in general.  Our policy differences are more about “how” we get it done.

      1. Tia Will

        Jeff

        I think you might not understand human nature well enough related to the subject of wealth”

        And I think that you may be misinterpreting my point about wealth. I do not believe that the problem lies in the motivation of any one individual. I believe that the essential problem lies in the medium with which we have chosen as a society to reward success. We have chosen money as our reward medium. We could have chosen high social regard. We could have chosen public accolades. We could have chosen acknowledgement of wisdom and a higher place in decision making. Instead, we have chosen money. I do not see this as optimal. And I do not see it as an immutable part of human nature.

        1. Jeff Boone

          I have read these points from you before.  First, you write as if there are absolutes in this.  Those things you feel are more worthy of praise are already praised.  In fact, they tend to receive more praise these days than does the accumulation of wealth.  If you want to be in the most highly-praised level in current American society, you would be a wealthy liberal.   That way you have have your wealth and be somewhat sheltered from criticism for that wealth because you are seen as valuing those other things you opine for.

          Al Gore and Bill and Hillary Clinton are examples.

          And since you are a well-compensated doctor, I am guessing you too fit this mold.

          So, I think you have it backwards.  Monetary success is demonized today.  If you are successful, unless you also wrap yourself in a shroud of liberal political and social views, you will be vilified.  But people still pursue their passions and some of them become wealthy because of it.  And many of them produce things of tremendous value to society that the rest take for granted while they complain about life being so unfair.

          The problem I think is that you are somewhat disconnected with the concept of trade.  We trade the value of our labor in work for the value of money.  We trade the value of our capital for opportunity of returns.  It is a market-based economy.  It is the only type of system proven to work.  Any other system demands tyrannical control from government to prevent any rise of those driven to produce value that others would pay for.   So although I get your attraction to a system like what you opine for, it is an unattainable utopia… one that would trade a lot more terrible problems in return for eliminating those things you don’t like about a market-based system.

          Our system isn’t perfect; but at its foundation it is by far the best.  But you can still go run a charity and be rewarded with accolades.

  6. Michelle Millet

    This is all a good topic to discuss with your friendly Uber driver next time you hitch a ride to stay in that beautiful and affordable Airbnb rental.

    Ha, I did both of these things for the first time this week. In fact I read this article in the very comfortable Airbnb bed I slept in for the past week.  My sisters and I used Uber to go to and from the movies. The drivers arrived quickly and were indeed VERY friendly.

    Uber and Airbnb have been a hot topic this week at my family reunion.  My siblings (all 5 of them)  travel a lot more then I do, and frequently use both of these services in various cities around the world.  They have nothing but good things to say about both of them.

    My inner environmentalist likes the idea of maximizing use of already existing infrastructure/automobiles. 😉

    1. Barack Palin

      My inner environmentalist likes the idea of maximizing use of already existing infrastructure/automobiles. 

      As opposed to building new 6 story  infrastructure?

  7. SODA

    Read article but not all comments and running late so apologize if it has been brought up already….

    airbnb landlords sometimes do not register and pay taxes (see yesterday’s letter to the editor in DE).  We have a vacation rental on the coast and got a business license and charge renters on both airbnb and VRBO (much better for the renter in my opinion) the 11% hotel tax we are expected to pay the county.  Wonder how many landlords aren’t.  Think that is one of the criticisms of these sites also.  But they are wonderful from an advertising perspective, have opened up the world to our little rental!

    I echo the article saying one of the pro’s of Uber is the fixed tip. Our daughter uses them in cities all the time and her main reason is that the driver seems to engage more in conversation (which she likes) FOR the conversation and not the expected tip.

    PS:  Airbnb charges renter a fee, about 13% in our case and collects the money up front (even if a year out). As a landlord I cannot talk to the prospective renter because airbnb does not want us to deal outside their model (understandable). VRBO does not charge the renter any fee. The model is the landlord pays an annual subscripton fee to VRBO depending on how visible they want the ad to be on the site. They have not problem sharing phone number with landlord and I like to talk to prospective renters to see if our place will be a good fit, and they are a good fit.  As a renter, knowing this, I would always check VRBO first and many properties are listed on both sites as ours is.

  8. jayk

    The YouTube video link below is a talk on the impact of the digital economy on labor and society by Ursula Huws.  She, the speaker, does not explicitly say that if service companies like Uber is good or bad, she just tells people the kind of changes that happens due to these companies.  As a teaser, just ask yourselves these questions:  Who are most likely become the service providers of Uber or AirBnB or $(YOUR_NEXT_SERVICE_COMPANY) in the long run?  Or who are the owners of these companies?  What are the long term effect of organizing  the economy this way?  Is this true progress/innovation?  Also, if people have time, I recommend “Digital Disconnect: How Capitalism is Turing the Internet Against Democracy” by Robert McChesney.  I liken it to Fast Food Nation (by Eric Schlosser) for the internet companies, with less gore.

    https://www.youtube.com/watch?v=dG-xj42eZW8&index=9&list=PLXQ_thv0B91RbJfhFPIHgGHeaBe2-dkc4

  9. PhilColeman

    This discussion thread has split into two distinct, yet related, threads: Future ripple effect economically compared to current business models, and personal experience and evaluation using smart phone app technology. Being grossly ignorant in both areas, I follow both with much interest.

    But a thought came to mind on the second thread. The Internet has given consumers who want to know an incredible information base to evaluate–and therefore reward and punish–good and bad service and products received. Before touch-phone technology, we had this capability, Uber and mimics have developed to another level, where service providers rate the personality of those receiving service!  Some Uber drivers avoid fares because they are documented jerks.

    Now to my thought, which might be considered heresy by some: With today’s growing ability to self-police service and product quality– given and received–are the myriad of regulators at every level of government about to experiences the first stages of their own “creative destruction?”

    1. Jeff Boone

      Government is the ultimate monopoly.  That is why many demand that government stay and small as possible.

      A system of democratic free market capitalism is a bit of dynamic and organic chaos.  It is self regulating in may respects if allowed to be… with the democratic part being the laws and rules and controls to ensure optimum competition.  We lament change because someone wins and someone loses.   But we reform our views and get along well until the next change.  And when we look back after having our nerves constantly disrupted by all the change and chaos we feel, we note progress.  We note that we have a better life.

      Or we remain unable or unwilling to see and acknowledge the goodness, and only focus on the negative.  And those that focus on the negative will demand government control to bring order to the chaos.  And with large government control we tend to trade one set of problem for another.  And ultimately this leads to less progress.

      I don’t see government as a business that can be creatively destructed and innovated until and unless we accept and demand that government needs to be as small as possible.

    1. Jeff Boone

      The main point of this article is an argument for support of this type of innovation and creative destruction that helps the economy grow… in the face of direct opposition from leading Democrat politicians.  I am not trying to partisanize anything that isn’t already partisanized by these politicians.

      Sure we can make the case that smart people on the left and right of politics may agree that Uber and Airbnb are good changes.  But there is a definite ideological view/agenda difference here.  And  there political forces calling the shots and threatening to call the shots also have opposing views.  So it is important to identify those differences especially leading up to an election.

      It is really interesting to me that the young creative class doing all this innovating destruction and reformation of entire industries are more apt to vote for the very politicians in opposition to what they do.  Are they really thinking deeply enough about their true political beliefs?

       

      1. Michelle Millet

        It is really interesting to me that the young creative class doing all this innovating destruction and reformation of entire industries are more apt to vote for the very politicians in opposition to what they do.  Are they really thinking deeply enough about their true political beliefs?

        My two cents, if politicians want to win the support of the young creative class they need to adopt a more progressive platform when it comes to social issues. (i.e. gay marriage, immigration reform, reproductive freedom etc). You are not going to win over this group of people by calling immigrants rapist, or denying children born in the U.S. birth certificates. Just saying.

        1. Jeff Boone

          I think it is unfortunate that the media sensationalizes and over-amplifies this stuff to the point that everyone stops listening and starts throwing darts.

          There is a great one-sided political advantage today as the media has turned from representing journalistic integrity, to a combo of entertainment for money, and politics for money… and the politics are mostly one-sided.

          True that young people are much more tolerant and accepting of the things that ruffle the feathers of those holding onto more conservative (old person) values.  And true that young people are easy to inflame on these social issues.  But there is also great room for honest debate and discussion that the media (and you too apparently) want to just make into personal demonetization of those you do not agree with.

          Do you actually think that Donald Trump thinks immigrants are rapists and that we should deny birth certificates to children born in the US?’

          What he said…

          Thank you. It’s true, and these are the best and the finest. When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.

          But I speak to border guards and they tell us what we’re getting. And it only makes common sense. It only makes common sense. They’re sending us not the right people.

          It’s coming from more than Mexico. It’s coming from all over South and Latin America, and it’s coming probably — probably — from the Middle East. But we don’t know. Because we have no protection and we have no competence, we don’t know what’s happening. And it’s got to stop and it’s got to stop fast.

          Then…

          Stumping for her dad in Manchester, New Hampshire, on Wednesday, Ivanka Trump said the media “twisted” his words.
          “He was talking about illegal immigration, and a porous border between the U.S. and Mexico; he wasn’t talking about the Mexican people,” she said when asked about the topic. “He was talking about people coming across the border illegally and so it was very sad for me to see that that message was totally taken out of context and the mainstream media really ran with it.”

          So with all due respect Michelle, you demonstrate the problem here.  You have accepted the sound bite narrative without putting much brainpower into really reading what he said and reflecting on it.

          And so if we want to understand why there is so much partisanship, it is because the conversation gets distorted immediately (by both sides) from the politicos and their media friends and the attacks start flying.

          By the way.  I think you and others might be stuck in an old political template about the young people.  They are leaving the Democrat Party in droves.

          http://townhall.com/tipsheet/danieldoherty/2014/04/29/poll-millennials-leaving-democratic-party-less-likely-to-vote-in-midterms-n1831022

          You can only be unemployed for so long before those social issues start to matter much less.

          However, the Democrat party is doing well with minorities.  Which then begs the question… is this why people on the left of politics defend illegal immigration so strongly?

          1. Don Shor

            Jeff 7/24:

            Do you actually think that Donald Trump thinks immigrants are rapists and that we should deny birth certificates to children born in the US?’

            Frankly 7/23:

            We need to change the Constitution to stop with the practice of granting US citizenship to kids born in the US.

            Hard to say what Donald Trump believes, as he will clearly say anything to get attention. But it’s pretty clear what Frankly believes.
            Michelle is absolutely right, as every reputable public opinion survey will show you. The Republican Party is increasingly out of touch with millennials on social issues.

            personal demonetization

            Great spellcheck error!

        2. Jeff Boone

          Well I think Frankly was talking about changing the law, not denying existing children born in this country.  Proving they were born before the law was changed should be easy.  Change the law now and there would be a lot less illegal immigration and a lot fewer wealthy foreigners coming here pregnant just so their kids have dual citizenship.   Which, by the way, will also help prevent future terrorists from living here as citizens when they really hate the US.

          That WAS a great spellcheck error!

        3. Michelle Millet

          I think it is unfortunate that the media sensationalizes and over-amplifies this stuff to the point that everyone stops listening and starts throwing darts.

          I may have picked a sensationalized example, but there are plenty of others that make my point.

          Honestly if I had to choose between a politician that was defending Uber, which I do think has a good business model,  or defending people’s basic civil liberties, I’m going with the civil liberties, my guess is that the majority of the young creative class feel the same way.

          I think this is a problem with the two party system. In order to get elected into higher offices you need the backing of one of these two groups (yes, there are exceptions but they are rare).  Thus you need to tow the party line. My guess is that there are republicans who have progressive social values, and democrats who would agree with your approach to the market place, unfortunately unless these people suck it up and go along with their party on issues they disagree with, they are sunk politically, and we as voters are stuck voting for the candidate we feel is the lesser of two evils.

          Maybe it’s time for this young creative class to start their own political party, if they keep coming up with great ideas like Uber and Airbnb they should have plenty of money to fund their candidates, (and maybe figure out a way to silence Donald Trump once and for all, honestly there should be an app for that).

        4. Michelle Millet

          So with all due respect Michelle, you demonstrate the problem here.  You have accepted the sound bite narrative without putting much brainpower into really reading what he said and reflecting on it.

          Nope. Sorry Jeff,  while I completely agree with you that media over sensationalization is a problem in this case the problem is Donald Trump.  Fear mongering of this kind is destructive and divisive and does not lead to productive dialogue or solutions. I have zero tolerance for it, especially when it is so vitriol, and especially when it is aimed at a group of people. Its disheartening that every republican in the country is not trying to distance themselves from this man, and the hatred he is spewing.

           

           

        5. Jeff Boone

          Fear mongering of this kind is destructive and divisive and does not lead to productive dialogue or solutions.

          So, Ms. Michelle Millet – how would you suggest anyone approach this position in a productive and non-divisive manner that would allow you to have a productive dialougue?

          Or does just the fact that they oppose illegal immigration make them un-productive and divisive and mongers of fear?

      2. Tia Will

        Jeff

        Our system isn’t perfect; but at its foundation it is by far the best”

        And this was exactly what was said to Sydney Garfield by they then leaders of private, for profit medicine when he founded the group that would eventually evolve into Kaiser and the Permanente Medical Group. In the early days no one could imagine the existence of pre-paid medical care with salaried collaborative physicians. It was unproven. It could’t succeed. It was communist. It was unethical. It would take away their business. All but the last have proven to be false. Just because something is hard to imagine, and believed to be unattainable does not mean that it cannot be achieved. I think it is time to start thinking outside of our current values and rewards box and look to what we could achieve if we could leave behind the concept that our current paradigm is the only, or even the best that can be achieved. For me, this is the central problem holding us back.

      3. Michelle Millet

        Donald Trump opposing illegal immigration is not what I have a problem with. I have a problem with him pandering to people’s fears by making the broad generalization, based on some conversations with border police, that most illegal immigrants are drug dealing, criminal, rapist.

  10. Alan Miller

    Uber is the greatest, and represents the true cost of the service.

    Should I miss the train from Sacramento to Davis, the choice is wait, usually an hour or more, or take a taxi for $45 if you can’t wait.  Recently I had to make a meeting and took Uber and it was totally clean and cost $19.  That I can afford.  So the other $26 that I didn’t pay is the cost of doing business, if you are a cab.  In other words, more than half of your cost for a taxi goes to the mob, government or private.

    Taxis will cease to exist as people who won’t try something new die off.

    The real question is, will the people rise up when the government tries to extract money from Uber?

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