25 June 2018

Consumers – not the state – should decide Uber’s fate


There is a widening divide in the United Kingdom between those who embrace economic freedom and the so-called “gig economy”, and those who are deeply cynical about it. The Labour Party is led by Marxists, and the Conservative Party has refused to make the positive case for capitalism and freedom – instead they seem intent on surpassing Labour’s economic illiteracy.

A prime example of the creeping war on business was Transport for London’s announcement last September that Uber was to lose its private hire license. TfL cited concerns over public safety and security in claiming Uber was not “fit and proper” to operate in the capital.

Putting to one side the irony of TfL lecturing other organisations about being “fit and proper”, the real reason why the Californian firm could lose its license – if the appeal that’s begun today fails – is because it has been a successful disruptor of established interests.

Before Uber came along, black cabs operated within a de facto monopoly. This inevitably led to examples of bad service, high prices and an arrogant attitude when faced with competition. While it is perfectly natural to feel uneasy about having your industry come under threat from a competitor, the answer is to innovate, not stage protests or lobby to get the competition outlawed.

Of course, black cabs are fighting a losing battle with the likes of Uber. Twenty years ago, the expertise of black cabs was their main selling point – and cabbies’ knowledge of London’s streets is still extremely impressive. But in an age when you can easily navigate the city with an app, black cabs feel like an analogue antique in a digital age. Taking sentimental values out of the market, not many people – other than perhaps tourists – would choose to pay a substantial premium just to sit in a black cab.

One of the main criticisms the likes of Uber and Deliveroo face is that they create insecure jobs. This is true as far at it goes, but we live in an age where the idea of a “job for life” looks increasingly like a relic from a bygone age. Indeed, its pitfalls don’t come close to outweighing the incredible flexibility for those who choose to work for the company – those who can perhaps only work during nights, or people just looking for a bit of extra cash.

While Labour mayor Sadiq Khan — who supported TfL’s decision — may not like Uber, Londoners do. And many are rightly sceptical about TfL’s claims against Uber. One of the revolutionary benefits of Uber is that you can track your current location and send that to a friend to monitor. That is surely safer than traditional cabs.

None of the strawman arguments put forward by Uber’s critics should surprise us, however. It is par for the course for socialists – and for some traditional conservatives too – to prize vested interests over individual choice. The Uber case is just another example of them trying to protect the past at the expense of the future – and in so doing increase the cost of living for those on modest incomes.

The epitome of this situation is that while you as a consumer may regard Uber as a cost-effective and dynamic invention, statists regard it as dangerous and offensive to established monopolies. You, a jobseeker, may regard Uber as a flexible, self-empowering option in the labour market; they regard it as “insecure” work and – listening to figures like John McDonnell – tantamount to modern slavery. But in September 2017 an independent poll revealed that 80 per cent of Uber drivers in the UK would prefer to remain as contractors rather than employees.

The overarching liberal argument against this kind of intervention is that decisions, both social and economic, should be left to the individual. If consumers find a company immoral, they are entitled to vote with their feet. If workers find a company’s terms and conditions substandard, then the company won’t attract the workforce it needs. These basic market mechanisms are a far more sensible way to decide the future than the government simply deciding that it’s going to ban something, regardless of its popularity among consumers.

Thankfully, it looks like Uber will reach a deal with the regulator and be allowed to continue their operations. But the fact TfL, with the full backing of City Hall, even considered pushing them off the road has revealed an important truth that Milton Friedman picked up on decades ago: “Underlying most arguments against the free market is a lack of belief in freedom itself.”

Jack Powell is Editor of 1828 and a student at King's College London.