New Mexico and Old Germany

One of the joys of driving a cab is the opportunity it provides for interesting conversation.  One of the most memorable I have had was with a fellow who got into my taxi at the airport.  He is a lawyer in Germany who had come here to teach at Stanford.  We had a wonderfully wide-ranging discussion (indeed, one might almost call it global) about everything from the American judicial system to the astonishing dossiers that Google and others are compiling on all of us, from Shakespeare’s sonnets to Manning and Snowden.  By the time we arrived at Stanford, we were exchanging email addresses and I was giving him the title and URL of this blog.

We saw each other once again, a few weeks later, again at the airport.  He had asked me to pick him up there with his wife and daughters who were flying in from Germany to join him touring
San Francisco and other parts of the American west.  In that conversation he mentioned that the city of Hamburg in Germany had banned Uber from operating there.  He thought that other cities would follow suit because it is the right thing to do.  Uber and its imitators, Lyft and Sidecar, have been the bane of my existence since I started driving a cab six months ago.  I was pleased to hear his observations.  Later I heard that the State of New Mexico had ordered Lyft to cease operations too.  In both cases the municipal governments had decided that despite their claims to the contrary, Uber et al. are taxi companies operating without proper licensing, driver training, and insurance.

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While I was looking for work over the last few years, a number of my friends suggested that I answer “help wanted” ads which they had seen on Craig's List.  They were specifically recommending that I drive for Uber or Lyft. When I replied by asking what these businesses were, they would describe something that I knew to be obviously criminal.  My friends would assure me that it was alright because it was here for all to see on the Internet.

I held my tongue, but I knew perfectly well that over the years any number of criminal enterprises had flourished on the Internet – e.g. Napster and Silk Road – and that criminals have used Craig’s List to entice children into sexual encounters and lure adults on dates that turned into rape.  I knew also that it would be just my luck to go to work for one these businesses and be the one arrested and prosecuted for doing so.

The red flag for me was the fact that these businesses require no training for the drivers and no licensing (i.e., no medallions) for the vehicles.  I had lived in Manhattan during the 1980s and remembered the campaign against "Gypsy Cabs" (an utterly undeserved slur at the Roma, by the way.)  In those days beat-up old sedans wandered the streets of Harlem, the Bronx, and Brooklyn driven by otherwise out-of-work men who were primarily either recent immigrants or black. They pulled over to the curb where a person was standing waiting for a taxi to come by and named a price for a ride to that person's destination.

The free-enterprise, laissez-faire capitalists among you may ask, “So what was wrong with that?”  There was a mutually agreed upon price, full disclosure (the passenger could see the condition of both the driver and the vehicle), and evidently no untoward coercion or deception to sully the mechanism of the free market. God knows both the would-be passenger and the driver needed the transaction. So why were Mayor Koch and the other bureaucrats getting their panties in such a twist?

The answer is both complex and simple:  economic theories and ideological principles are not a prioi guides to good public policy.  The problems lay not in the innocuous transactions described above but in the potential for abuse provided by such unregulated, anonymous encounters.  It was not uncommon for the drivers of these “cabs” to drive recklessly at high speed through the city streets.  You might get into such a vehicle and never be seen again.  Or you as a driver might pick up a passenger and be robbed or murdered.  And while taxi drivers were also at great risk for robbery and murder in those days (the job was listed by OSHA as the most hazardous in the country), the general public was not:  drivers had undergone background checks, were identified by name on licenses clearly visible to passengers, and their whereabouts were easily traced by their dispatchers and by the police.  Unlicensed cabs had to be controlled because they presented a potential threat to public safety.

Uber and Lyft, which are dispatchers for private cars operating for hire without proper licenses, do know the whereabouts of all their drivers through GPS systems, and because they collect all fares through the rider’s phones, the drivers are not obvious targets for robbery.  But the potential for abuse of the public is still there.  Already an Uber driver has taken an inebriated woman who got in his car to a motel, instead of her home, and tried to have sex with her.  Another driver took his passengers on a wild high-speed ride so frightening that one of the passengers tweeted from the back seat in terror, begging for help.  And what does it say that Uber feels it necessary to make all drivers sign a waiver when hired that absolves Uber of any responsibility for what happens in the car?  When an Uber driver killed a six year old girl in a crosswalk in San Francisco, Uber denied any liability.

So there are reasons that taxis and taxi drivers both have been specially licensed and have been required to carry large commercial insurance policies.  Uber, Lyft, and Sidecar have skirted these requirements by claiming that they are not taxis but “ride share” organizations.  Their claim amounts to this:  if you use your mobile phone to call a dispatcher who sends a car to pick you up, that car is a taxi, but if you use your mobile phone to ask for a car by contacting the dispatcher through the Internet, the car that arrives is not a taxi.  (By the way, in both cases the dispatcher is a computer.)  This disingenuous bit of legal legerdemain has been matched in its arrogance by the response Lyft recently gave to the State of New Mexico when New Mexico ordered Lyft to cease operations in the state because they were operating an unlicensed taxi business.  Lyft replied that they would not obey the order and would continue their operations because “We don’t think we are doing anything wrong.”

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I must admit that I am inspired by this entrepreneurial zeal. I am so inspired that I am going to start a company of my own give called SuperHiWay. We all know that the pharmaceutical companies have a stranglehold on medicines for the general public.  So SuperHiWay will be a community-based pharmaceutical sharing network. All those extra pills left in the bottle after you are feeling better, pills which now sit in your medicine chest until they expire and you toss them out, can now be redistributed to other members of the network, for which you will be rewarded by a “convenience fee” paid by the receiving member.  Members will also be allowed to share holistic and traditional medical supplies.  The more adventurous will undoubtedly include heroin, methamphetamine, barbiturates, Oxycodone, and other more exotic Pharmaceuticals. We needn't worry about breaking the law because we will not be drug dealers:  we will just be a community-based pharmaceutical sharing network.

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A few days ago while driving I did not reach the knob fast enough and was subjected to a few minutes of “Marketplace” on NPR. This program, I should explain for those of your who have not listened to it, is the People magazine of financial news. Overly enthusiastic announcers report superficially on business activities sounding like adolescents gushing over the objects of their youthful lusts.  In this case, they were chattering away about what they termed “disruptive technologies”, citing Uber among them. When they uttered the word “disruptive” you could hear the aural equivalent of a wide grin.  And for them these enterprises, taking Uber as an example, proved their viability and their importance for the future by the size of their estimated valuation, which in Uber’s case is $18 billion.  I suppose that they are happy that "disruptive" businesses have robbed us of independent bookstores and travel agencies, two places where you could get information and advice from thoughtful people whose experience and knowledge was thorough and consisted not only of facts but of understanding and genuine caring for both their areas of expertise and for their clientele, which of course meant you.

Again I quote T.S. Eliot:  "The wisdom lost in knowledge/The knowledge lost in information."

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I can argue legally and morally against the new app-based systems, but it does not make sense to defend the taxi industry itself.  I know how the taxi industry in San Francisco failed to serve the public, including me, under the old system. I gave up using cabs because when I called to have one pick me up, they almost never showed up.  The dispatcher would say that one was on the way; I would wait twenty minutes and call again and receive the same assurance’ but more often than not no cab would ever arrive.  I finally learned to rent a Zip Car, to impose on a friend, or to use the bus to get where I needed to go.

I know too that the old system was in many ways as guilty as the new is of exploiting workers.  I have mentioned that Uber requires drives to sign a waiver.  They also require drivers to buy the car, to pay for the insurance, to pay for all maintenance, and to pay for the gas.  It is also true that the old-style cab companies, such as the one I work for, have managed to shift the risks and costs of operations to the drivers:  I have to pay over $100 per shift (in Gate fees and gas) for the privilege of going to work.  I have no benefits, no unemployment protection, no sick leave, and if I am sick and cannot make my shift I still have to pay the Gate fee for that day.  The companies can exploit us in these ways because we are classed not as employees but as “Independent Contractors.”  At least they pay for the maintenance of the cars I lease each night and for the generous commercial insurance policy which covers me and my passengers.  In those ways they are better than the app-based “ride-share” companies.

Here then is the real story being played out on this city’s streets.  Businesses are relentlessly beating down the working man and woman, finding ways to cut pay, increase duties, and even pass risk on to the average employee.  Something like 40% of the American work force is classed – or is on its way to being classed -- as “independent contractors,” freeing their employers from the responsibilities of paying minimum wage or providing health care and other benefits.  Work rules and worker protections, even something as basic as the 40 hour work week, are null and void in the case of “independent contractors.”  And it is all nonsense:  I work for Luxor Cab.  I could not even get my license to operate a car for hire without submitting a letter from Luxor saying that they would hire me.  Yet I make less than minimum wage, have no benefits of any kind, have to pay $100 each shift to go to work, and must pay that $100 even if I am sick and cannot come to work.

The great irony here is that it is precisely this squeezing of the working person that caused the financial markets to collapse in 2008.  It is often said (especially by the chattering class of commentators like those on “Marketplace”) that the American consumer drives 2/3s of the economy and that the American economy is the engine that drives the global economy.  But for over thirty years American businesses have enriched their managements and their shareholders by impoverishing their employees.  They have failed to realize that the American worker is the American consumer.  They have been able to ignore this fact because the American worker has been enticed to carrying greater and greater burdens of debt to fund his or her everyday life.

In 2008, when gas hit $5.00 a gallon, those consumers had to choose between filling the car with gas to go to work or paying the mortgage and staying home.  If they stayed home, they would never earn the next month’s mortgage payment, or the one after that and the one after that.  They chose to buy the gas and go to work, hoping something would happen to save them from defaulting on their mortgages.  But what happened was that their failure to make payments brought the entire global financial system down.

Since that time, nothing has changed.  The financial system has been propped up, or rather has been kept afloat, by the flood of money pouring out of the Federal Reserve and other Central Banks.  The house of cards is still a house of cards, but for the time being it is that little house perched on the deck of Noah’s Arc, managing to stay above water because it is being buoyed up by all that monetary water.  But the flood will subside, and next time, the collapse will be final.