Imagine you are standing on the street and waiting for a taxi to take you home. While you are having second thoughts as to whether the convenience of a taxi ride is really worth the cost, a private car stops in front of you and the person at the steering wheel offers to drive you home for a price significantly below the taxi rate. Once you have convinced yourself of the driver’s competence and reliability, what could possibly speak against accepting the offer? Not much, it may seem.
Granted, the scene just described may appear too unrealistic to merit serious ethical reflection. In cities around the world, however, smartphone technology has recently led to a surge of structurally similar situations. Ride-hailing platforms that act as brokers between private drivers and potential clients have been experiencing rapid growth and offer rates that are often below those of established taxi industries. Uber, the most prominent example, has extended its operation to 54 countries and has created headlines by attracting more than $2bn of investment during the last two years. In many places, however, this expansion has been accompanied by fervent political controversy, and in a number of jurisdictions regulatory opposition has brought Uber’s operation to a halt.
Some of the criticisms voiced in opposition to Uber reflect concerns that seem relatively uncontroversial. For example, the enforcement of adequate safety standards in cars (including mandatory liability insurance for drivers) and appropriate forms of taxation appear to represent valid objectives, both from the point of view of public interest and in terms of ensuring a level playing field in Uber’s competition with traditional taxi providers. At the same time, these objectives do not necessarily conflict with Uber’s business model. Assuming that drivers are subject to the same safety and tax requirements as traditional taxi providers, Uber may still be able to offer lower fares. In the following, I would like to consider two additional concerns that are more fundamentally connected to the way Uber operates and that also seem more difficult to evaluate.
The first concern relates to the interest of drivers that rely on their job as a primary source of income. One of the prominent complaints of taxi associations has been that Uber’s competition threatens the ability of professional drivers to make a living from their occupation. While Uber argues that its drivers are able to achieve incomes far above the average income of taxi drivers, protests by Uber drivers cast doubt on the generalisability of this claim. Moreover, recent data shows that the majority of drivers do not treat Uber as their main source of income, which in turn may contribute to the preparedness of Uber drivers to work for lower rates. If it is indeed the case that Uber’s business model poses a threat to the interest of drivers in being able to make a living from their occupation (be it in the traditional taxi sector or after a switch to Uber), does this interest provide a legitimate basis for banning Uber?
On the one hand, Uber would appear to exemplify the general potential of freelance working arrangements to erode income levels. Given that earnings in the established taxi industry are already at the low end of the income spectrum, we may think that, if anything, policy should aim at improving wages in the taxi industry, e.g. through appropriate minimum wage legislation, rather than allowing income levels to be threatened by Uber’s business model which, in virtue of treating drivers as individual contractors, is not bound by wage regulations. On the other hand, the interest to make a living from taxi driving would have to be defended against the interest of those who are willing to offer their service at a lower price, if only as a partial source of income, and would be prevented from doing so through an ban of platforms such as Uber. Such a defence, it seems to me, cannot necessarily be taken for granted. A judgment on the issue would have to take into account the level of material well-being and the occupational alternatives of both groups.
Setting aside the interest of drivers, the second concern may be cast in terms of public or general interest. While taxi rates are legally regulated, ride-hailing platforms are free to set their prices according to demand and supply. Uber, for example, relies on rate increases in times of high demand in order to incentivize additional drivers to offer their services. As a result, on holidays or in situations of emergency, fares can increase up to fourfold, to levels far above standard taxi rates. Regulated taxi fares, in contrast, may be thought to serve an important public interest in the availability, in general, of rides at rates that are affordable for a relatively wide section of the population. To the extent to which the success of Uber and other ride-hailing platforms leads to an erosion of the supply of fix-rate taxis, people with urgent transportation needs may find themselves in situations without affordable options.
Is the interest in affordable rides compelling enough to justify a ban on unregulated services such as Uber in order to protect the supply of fix-rate taxis? The answer to this question does not seem obvious either. Among the countervailing interests to consider are the interests of customers who would take advantage of Uber’s service during times at which fares are below the taxi rate. Among them are equally going to be people with urgent needs, some of whom may in fact not be able to afford the regulated taxi fare. And to the extent to which the taxi fare is affordable for them, can they be expected to effectively subsidise the rides of others? One consideration that seems clearly relevant here is the existence of alternative modes of transportation that may serve to protect the interest in generally available affordable transportation. An answer thus appears even more context-dependent than in the case of the first concern. What do you think?