Archives for July 2015

I admit it, I join the majority of the human race in being pretty crap at thinking with a long term mindset, even if doing so would be the right selfish thing to do (let alone being the right thing for a larger community).

Being around the world of high tech, especially in Silicon Valley, it is easy to be awashed in simplistic flawed logic that declares all regulation as bad, and all innovation and disruption as good. A better experience with convenience for users is all that matters.

So, I was very happy to read the Kim-Mai Cutler’s piece on The Conflict Between Policy’s Ratchet Effect And Tech’s Accelerating Speed.

If you hang out in SOMA or Palo Alto, the majority point of view at the coffee shop is a very black and white:

“Our crappy government, and the mafia’s that control the taxi medallions, are trying to hang on to a world that has already been disrupted. Move on and give me my Uber everywhere!”

You certainly can’t beat the experience:

• Call for a ride without having to talk to a human
• See where the cars are
• Simple payment (no need to pull out a credit card, let alone cash)
• See who is coming to get you, with a rating
• Have the ability to rate the driver and for them to rate you.

The last one is a huge game changer. Before this, what were the incentives for both sides to be the best people they can be? The odds of driver and passenger ever seeing each other again are very low.

The rating system makes the micro transaction something that can effect the transactions that are to come.

The taxi cab companies didn’t innovate (in general, there are exceptions… the world is large) and instead often you jump in a cab that has a TV in your face selling ads at your captive eye balls, and a disgruntled smelly driver who is mad at you for asking about using your credit card as they want cash to not count towards taxes.

The mobile revolution came with a disruptive look at transportation, and it continues to happen as computing helps build out efficiencies (e.g. Uber Pool and Lyft Line).

This doesn’t mean that we need to let companies come in and have their way with transportation with zero regulation. Regulation isn’t evil. The free market has no soul, and we should look at the incentives to make sure that long term protections are in place.

Kim does a great job at spelling this out:

“It’s about what those pressures imply for public infrastructure like roads and the city housing stock, which are inherently much harder to scale than software.”

“There’s a real difference of ideology here,” said a source close to De Blasio’s impact study. “You have a company that believes that the free market will essentially correct any negative externalities. What if there are so many drivers that nobody can make a living or that there are so many drivers and vehicles that we have unbearable congestion? There is a world in which Uber is still making money while our traffic moves at five miles per hour.”

It also looks at the nuance and both sides:

“They added that the city instituted medallions during the Great Depression eighty years ago when 30,000 drivers trawled through the streets to earn money. “There were so many people driving cars for nickel fares that nobody could make any money. The congestion became unworkable, so Mayor [Fiorello] LaGuardia installed medallions because we had a tragedy of the commons.”

But on the converse side, policy and laws have an unintended, and sometimes nasty, effect of sticking around for years or decades even as circumstances clearly change. It’s called the ratchet effect, and it’s much easier to ratchet in favor of limits than it is to push for growth.

For instance, New York City’s cap on medallions remained unchanged at 11,787 from the end of the Great Depression on through 1996, an imposed level of scarcity that has made medallion values skyrocket to north of $1 million each until Uber arrived. Those values enabled the taxi industry to be one of De Blasio’s sources of political donations, with hundreds of thousands of dollars in contributions.”

And comes up with the question that will come back to time and time again as we witness an increase in disruptions:

“How can companies really believe that purportedly temporary measures don’t become set in stone forever?

And on the other side, how can city governments work with companies that only selectively share data on their impact when it’s politically convenient, and which resist for months and years to pay basic taxes which sustain the public infrastructure that makes their businesses possible?

As John Markoff, who has covered Silicon Valley since the 1970s, put it last week, “You have this crumbling public infrastructure, and now the Internet has made it possible to essentially skim the cream.”

There are other ways though. Nick Grossman over at Union Square Ventures favors a more modernized regulatory approach, which is permissive upfront in exchange for transparency and access to data. He has written an entire white paper about it here.

Unfortunately, these companies don’t do this. In San Francisco, both Lyft and Uber don’t share data with the city that would help it understand whether trips are merely substituting for MUNI or BART rides instead of replacing additional car traffic. Airbnb also doesn’t share data with the city, so the planning department has to resort to scraping the company’s website and using forms that are self-reported by hosts once a year.

Because of this, the regulatory process devolves into a game of brinksmanship around rigid caps and controls, which is what we all saw this week.”

Grey and Good

There is a lot of grey here. It seems obvious that with self-driving cars eventually coming, drivers have some years of making a wage, but how long will it all last, and then what?

Having people do work at the end of an API is one thing. It is very point to point. It isn’t all good and it isn’t all bad.

Uber uses technology to enable people to run their own business, or work for Uber depending on your point of view. Can we do the equivalent but enable professions not just task workers? Enable apprenticeships and collections?

We are seeing some success stories (and many perceived failures) with self organization, such as this example of nurses providing much better care with a lower overhead, and more that Frederic Laloux is cataloging:

Much is changing, and more experiments need to happen. While it is unclear what effects we will see from true automation and computers continuing on the path to super intelligence, something is going to give.

Now is the time to discuss the trade offs before we are in the heat of the moment. Eventually we may need some heat to allow meaningful change to occur at the governing level. Will it be time for something drastic such as a basic income guarantee, and a chance to take on the mission to get basic human rights to all of us?

I will try to think in this way and not resort to my usual “man, I wish <insert city> had Uber for my convenience!”