Bang! It hasn’t even been two weeks since Uber and Lyft left the Austin market and already the Austin City Council is beginning to backpedal on their demand that ride-sharing companies do fingerprint background checks on their drivers.

The Austin-American Statesman is reporting that Austin City Council member Ellen Troxclair has suggested that Austin should make fingerprint background checks optional just as San Antonio and other cities have done. Shocking. Why didn’t the Austin City Council simply look at how other cities have dealt with this problem in the first place? Why waste hundreds of thousands of dollars of taxpayer money which resulted in nothing but loss? What do I mean by loss?

  1. The City of Austin spent who knows how much in City Council members time debating this issue as well as the cost of having an election on Proposition 1.
  2. Thousands of Uber drivers found themselves out of work.
  3. Thousands of Uber passengers had to find alternative and usually more expensive or less convenient forms of transportation.

Was there a winner here? No. Austin will almost certainly adopt optional fingerprint background checks just as other cities have.

The sad thing is that even those optional fingerprint background checks don’t solve any problems. They are purely security theater. A few people who care might feel safer but that doesn’t mean they are. Additionally, all 7 of last year’s reports of sexual assault by Uber drivers came from drunk, young women none of whom will be in a state of mind to request only an Uber driver who has passed a more rigorous background check when they stumble out of a Sixth Street bar at 2AM on a Saturday night. So even they won’t be any safer.

My original post on this caused several people to tweet at me about how Uber is some big, bad corporation with greedy investors who care nothing about passenger safety and want to squeeze their drivers while they sit in high towers twirling the ends of their mustaches. It saddens me that anyone lacks the critical thinking skills to the degree that they would believe such nonsense.

Of course Uber cares about passenger safety. If Uber had a widespread reputation for being unsafe, they would be out of business. Caring about passenger safety is good for Uber’s profit. Having said that, like many investments, there’s the law of diminishing returns.There’s a point at which riding with Uber is safe enough. As I stated in my last post on this topic, Uber is already extremely safe. You are more likely to be hit by lightning than assaulted by an Uber driver. There’s a point at which Uber won’t benefit by trying to make their service even safer and in fact will instead cost them which ultimately costs the consumer. How does that work?

Like any business, Uber is in this to make a profit. If you think that’s a bad idea, you don’t like free markets and should probably stop reading now. The more expense they have, the harder it is to make a profit. That leads either to charging customers more per minute or making less profit. They won’t do either unless they have no choice. You may think that regulations can be put in place so they won’t have a choice. That’s faulty logic. People always have a choice. If regulations make providing ride-sharing unprofitable or simply less profitable than deploying their money elsewhere, Uber and its shareholders will move on. That’s exactly what they did do when this ridiculous regulation could not be over-turned. They exited the Austin market. Would you leave your money in a savings account that paid far less interest than at another bank? Would you leave your money in a poorly-performing stock when you knew of a better one? Would you keep paying for your child’s college education when they were spending so much time partying that their grades were suffering? Of course not.

Why would Uber leave over such a silly little thing as requiring fingerprint background checks? Because it’s not a silly little thing. Uber knows better than anyone that fingerprint background checks don’t solve any significant problems but they do make the process of hiring drivers more onerous. If they don’t make sure there are enough drivers, enough supply for the demand, passengers will no longer feel that Uber is a reliable service and they will stop using it. This isn’t Uber’s first rodeo. They have been down this path before in other cities. In most every case, the city eventually receives enough complaints about Uber leaving the market that they backpedal (as Austin is doing now) and make the fingerprint background checks optional. The fact that Uber was willing to leave the market over this should tell you something.

Most people work for someone else. Unfortunately, that leads to a very one-sided view of how businesses work. It’s been tweeted at me that Uber pays less than minimum wage (they don’t) and that as a result, Uber drivers must rely on government welfare. Let’s examine that for a moment. First, we don’t know that this is even true but let’s assume that it is. Bob is an Uber driver. In our fictional scenario, Bob can’t make enough driving for Uber so he qualifies for government benefits. Why doesn’t Bob stop driving for Uber and take that high-paying corporate job he keeps getting offered? Because no such job offer exists. Bob drivers for Uber because Bob thinks thats his best option. If there was a better one, Bob would likely take it. In other words, if Bob stops driving for Uber and goes to work elsewhere, he’s likely to earn a similar amount of money which means he is just as qualified for government assistance as before. Nothing has changed. If Bob could earn more elsewhere he wouldn’t be driving for Uber. This is the same argument that has been used with Wal-Mart. I quite rarely shop at Wal-Mart nor do I own stock in the company. I’m no fan. However, if people who work at Wal-Mart could make better money elsewhere, they would do so. Since they can’t, they are no more reliant upon government welfare than they would be any where else. If they instead increase their skills to the point where they make enough to no longer need welfare, great. However, that is up to them, not their employer.

It has been tweeted at me that Uber is under-cutting taxi services. That’s a charge that is absolutely true. That’s the free market folks! That’s competition. That’s how the world becomes more efficient. Someone finds a better way and people pay for it. If the taxi services had been smarter, they would have seen Uber coming. They would have become Uber before Uber ever arrived. They didn’t because people tend to get stuck in their old habits. Companies are as guilty of this as anyone else because companies are made up of…wait for it….people! Do you want to know why Apple is the biggest publicly-trade company in the world with profit margins that other companies only dream of? Because Apple admits to something that the overwhelming majority of other companies do not: there’s someone else out there right now working on creating the product that will obsolete what we sell so we better do it first. Apple doesn’t care that the iPad might result in fewer Mac sales because they are still making money. If Apple doesn’t create it, someone else will.

I have been self-employed most of my adult life. It’s not easy. I remember hiring my first employee (Jason, who still works for me 20 years later btw) and thinking, “What if I can’t generate enough revenue to pay his salary? That would mean he can’t pay is rent or buy food!” Being an employer is a huge responsibility. That feeling never goes away. I’ve been running my current business, Xojo, Inc., for 20 years now. While I have gotten used to the feeling of responsibility for my employees and while it’s easier to manage that responsibility than it was when I first started, I still feel it. Being self-employed changes you. It changes how you look at the world. It makes you realize that there are two-sides to everything. The best thing is being able to see any situation from all sides so you can most efficiently resolve it. We would be better off if everyone, at some point in their lives, ran their own business.

That’s not likely to happen but what can happen is for more people to apply critical thinking to situations they encounter. When faced with a problem, try to avoid immediately getting caught up in the emotions of it and instead apply some rational thinking. Try and see it from all sides. Do some research (which with the Internet is so easy now) and see if the problem really does exist and is big enough that we should spend time and resources to resolve it. Not every problem is actually worth solving. We don’t have unlimited resources. We must prioritize our activities. You can do a few things really well or a lot of things really badly. Critical thinking helps us realize this and it’s something we could use a lot more of in today’s society.

I’m confident that Uber will be back in operation here in Austin within the next 30 days or so. I’m glad for that because it’s a valuable service that I have only just begun to utilize. I’m also glad that the Austin City Council has at least one reasonable member in Ellen Troxclair.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s