On Saturday night, Uber riders got the sense that something was up with the company. #DeleteUber started trending. Riders have been posting screenshots of themselves deleting the app. As is often the case in the quickly-changing world of social media, it took some time to track down what happened.
It’s a strange confluence of events. In the end, I fault Uber very little for their actions. Even so, if you’d like to support anti-Trump protesters arguing for the human rights of immigrants — or any of the other horrific policies to come out of Trump’s administration — you should delete Uber.
First, here’s why #DeleteUber started:
As thousands of protesters flooded to John F. Kennedy International Airport, the New York Taxi Workers Alliance tweeted that it would support the protest by boycotting pickups from the airport at between 6pm and 7pm.
— NY Taxi Workers (@NYTWA) January 28, 2017
A little over two hours later, Uber tweeted that it would suspend its surge-pricing at JFK. This, in effect, makes it less expensive for passengers to get rides, helping people find a way home from JFK.
Surge pricing has been turned off at #JFK Airport. This may result in longer wait times. Please be patient.
— Uber NYC (@Uber_NYC) January 29, 2017
Clearly, these two actions worked in opposite directions. Protesters have complained that Uber’s removal of surge pricing was an attempt to steal business from taxi drivers and profit from the protests.
The economics of Uber’s surge pricing have raised howls of profiteering. They don’t deserve them.
There are many legitimate questions about whether or not Uber’s gig-economy and part-time work will turn out to be a social good or an exploitation of labor.
But when it comes to surge pricing, it works. Price can be effectively used to determine who gets a ride and you don’t have to be a Randian Libertarian to see it.
Years ago, my wife and I spent Halloween night in Fell’s Point — a Baltimore neighborhood that’s become the unofficial destination for the holiday. When the bars closed at 2 a.m., hundreds of people poured onto the street. Getting a cab was simply an impossibility. A few drove past, all full, and we were left walking for miles before we found a cab to get home.
It wasn’t just that so many people wanted a cab, it’s that there were no cabs. No driver in his right mind would venture into the snarled traffic and tight cobblestone streets to pick up a crowd of drunks for one more $15 fare. A rational driver would stay far away.
With surge pricing you can use demand for rides to increase the supply. Price helps determine who gets a ride but it also brings out the drivers. As a driver, a Halloween pickup in Fells Point still doesn’t have much appeal. But being that you get paid extra for your troubles more drivers come out to collect passengers.
Rather than 50 people getting a ride that night, the number could be 100 or 200.
On the passenger side you can get a ride when you need it. If you’re unfortunate enough to need to get to an interview during a storm or leave for the hospital right when a concert lets out, you can get the ride. You just need to pay for it. And if that ride is valuable enough to you have to option to pay for it, rather than desperately search for a cab that may never come.
You do pay more but you need to frame your choices fairly. Your option isn’t between getting a ride and paying more and getting a ride and paying less. Your option is between getting a ride and being stranded.
It’s unfortunate that price is relative. Those with a higher income can still take a trivial ride over a lower-income person with greater need. Even so, price is the only tool we have for now.
That means surge pricing isn’t perfect. But it works. Most economists believe that we should see surge pricing on more goods and services to more fairly allocate resources.
Even so, seeing that Uber’s charging you three times the normal price for a ride when you really need it strikes many people as unfair and the company’s tried to combat that image. Uber’s adopted the policy of suspending surge pricing during disasters or other times when raising prices may seem unsavory.
Now we can get back to the Saturday night protests.
When Uber saw that lots of people needed rides from JFK they decided to suspend surge pricing.
Uber did not do this to steal business from cabs. No logical reason for that exists. Cabs are not Uber’s competition. Uber has beaten cabs. Uber competes with regulators, other ride-sharing services like Lyft, and with the concept of owning your own car.
As Uber told Fortune magazine, “the decision to turn off surge pricing was made specifically to avoid profiting from increased demand during the protest.”
I believe you can take them at their word. They were trying to improve their image by not taking advantage of folks in need. You can give them credit as altruists or just as a business attempting to improve their public image. How much credit you give them is up to you, but you shouldn’t consider them craven capitalists trying to undercut the protests.
Here’s another way to look at it. The New York Taxi Works Alliance made a bold and commendable move by doing something to help the protest. However, it did not need to come in the form of a work stoppage to prevent rides from the airport. The taxi workers could have just have sensibly decided to provide free rides to help protesters get to the airport and help stranded travelers get home.
It’s just about as logical. Had they done that, Uber’s waiver of surge pricing would have appeared to be in solidarity with the protests.
This situation developed quickly. There was no way to know, in the moment, that the movement would settle on a boycott of travel as the chosen approach.
You could make the case that Uber got railroaded here. You don’t have to give them credit for helping, but they were trying to do no harm in a fluid situation and ended up making a misstep.
That said, you should delete Uber.
Business interests have long avoided taking sides in political arguments.
It’s not disinterest, or greed, or a weak will that keeps CEOs and other corporate leaders from voicing controversial opinions. Again, we’re talking about rational actors. Rather, their responsibilities to employees and shareholders obligate CEOs to take sensible low-risk strategies.
We’ve all got our opinions. Trumps rhetoric and policies are, without exaggeration, the most frightening and upsetting things I’ve seen happen in my lifetime. No doubt, many CEOs agree and you may believe that, were you CEO of a large company, you’d have the fortitude to use your platform for good.
However, you may hesitate. First, you could have hundreds or thousands of employees that need their jobs to feed their families and provide health care. Second, you’ve got investors who have put their trust in you. You may not have sympathy for Wall Street, but in reality the shareholders are people saving for retirement in their 401k’s or pension plans that need to pay benefits to school teachers or firefighters.
Now consider, Trump does have a dedicated following of millions of people. Even more troubling, Trump has no qualms about using his office to directly target businesses that cross him. We’ve enjoyed a long succession of Presidents who understood that tactics like this were beneath the office and morally repugnant. We don’t have that anymore.
In your role as CEO, would you be willing to risk a boycott or targeted attack by Trump? If the outcome could be a reduction in sales that leads to layoffs of people who trusted you or lost savings for mom-and-pop investors, does their sacrifice in pursuit of your personal stand still sound fair or brave?
That’s a lot of responsibility.
If you think leaders like Tim Cook of Apple, who’s openly gay and has spoken out on immigration reform and human rights, or Sheryl Sandberg of Facebook, who’s done irreplaceable work to advance women in the workplace, sat in their December meeting with Trump and hoped to find ways to profit and support their personal fortunes, you’re mistaken.
I’d bet — though I have no personal knowledge of their views — that they feel as strongly as the most vehement anti-Trumper but their sense of responsibility prevents them from making bold moves.
If you want corporate leaders to do anything en masse it cannot take high levels of personal courage or require great risks. The only way they’ll support anti-Trump activities as a whole is if it makes rational sense.
That turns #DeleteUber into a rare lever of power for the anti-Trump movement.
Uber didn’t really do anything wrong. They didn’t intend to support Trump policies. They may even have, in a passive way, intended to help protesters.
You can tell them that’s not enough.
If you delete Uber today, you can send the message that you companies can’t stake out neutral ground. You can show them that unless companies directly and openly support anti-Trump actions, they are in danger of imperiling their business.
Remember, large institutions will only act on a mass scale when it makes rational sense. You have to change the cost-benefit calculation for them for that to happen. If silence or noncommittal statements can lead to lost sales then being silent becomes the risky strategy.
Fortunately, you can delete Uber with little worry about ill effects. After all, I’ve pointed out that punishing companies can unfairly harm employees and investors who have no role to play in the process.
That doesn’t apply here. Uber drivers aren’t employees. The vast majority of them can switch to Lyft in an afternoon. Most of them likely drive for both services already. Also, Uber’s a private company whose investors are mainly venture capital funds and other investment vehicles that only represent high-net-worth, accredited investors. Uber gives you an opportunity to send this message with the least amount of damage possible.
On top of all that, Uber is a highly-watched company with lots of media attention. People know its name and what it does. If ridership or monthly users declines, people will take notice.
I suspect that those who wish to send a message to American businesses won’t get a chance like this again. The situation is too strange, with too many moving parts falling perfectly into place.
We’ve seen many official statements that companies “do not support” Trump’s immigration policy. We’ve seen them from elected officials as well. These are carefully calculated statements to take as little risk as possible and appease both sides.
If you’d like to change those statements to active opposition, you need to make that the most sensible action for companies and congressmen to take. Deleting Uber will show them that the calculation has changed.
by Matt Weinschenk
Matt Weinschenk has Masters Degree in Applied Economics and works as an investment analyst in Baltimore.