Uber Clueless About the Market

This is the most troubling aspect of media ignorance regarding basic economics.

Politicians should expect this. It’s what I would expect from them. The New York Times. However, it is sad to observe in the New York Posta rare alternative to Democrat Media in my Town.

Recent tabloid Be scaredIgnore ride-sharing companies’ higher pricing. “New Yorkers are fed up with forking over excessive amounts for Uber and Lyft rides.”

Excessive? Just what is “excessive?” Who decides?

Already, prices were rising because of higher gasoline costs, NYC’s new regulations and taxes. The federal government also pays too many people to not work so there is a shortage in drivers.

That day, unusually high “surge” prices were in effect because there had been a horrible shooting on the subway. Fearful of another shooting in the subway, commuters turned towards ride-share.

What can Uber do to deal with this? Uber is suddenly faced with a greater demand than ever before for ride services. Customers should not wait to get in the line. The majority of people won’t ride for more than a few days.

Ride-share providers do what is sensible: temporarily increase prices. When there is no car available, they lower the prices again. This solution is best for most people.

People who are in dire need of rides may be able to pay an extra fee. If you have the time, take a bus or walk. You can call your friend, talk to someone, or wait for prices drop.

Drivers who earn more are also paid higher prices. This encourages drivers working part-time to give rides and quit what they do.

This congestion pricing would also be a good way to reduce traffic jams, if elected officials had the guts to enforce it.

However, this solution may not be enough to satisfy economically ignorant reporters. The Post said, “Critics say the sticker shock is unsustainable.”

“Critics say” is a clue that you are reading the product of lazy reporting. When reporters don’t take the time to search out reliable sources or gather actual data, they simply write, “critics say.” The critics could be their friends, family or a couple Uber users at the airport.

How do these critics know the prices are “unsustainable?” They don’t. Rider share investors with their own capital know more about sustainable pricing. The company could go bankrupt if the prices are truly unsustainable.

The reporter went further: “critics say (the fares are) … sometimes downright unethical.”

Unethical? They don’t push people to their cars. Uber drivers don’t trick people with ads.

Actually, it’s the reverse. Before I can book a ride, I get a message warning me that the cost will be “higher due to increased demand.”

Don Boudreaux was an economist who wrote The Post. Post for publishing his letter): “Prices reflect underlying realities of demand and supply. New York City’s rising crime is thanks to Bill de Blasio! Uber’s demand is rising at the same time as the Uber supply. These realities cannot help but push fares upward.”

Right.

Uber and Lyft represent great innovation. Uber and Lyft were able to force taxi monopolies into giving customers better service. They also allowed ordinary drivers to use their cars for free.

However, businesses are regularly criticized by the media for any aberration. On that day, social media exploded with comments like, “Fare surge after a mass shooting … Shame on you @Uber.”

The businesses quickly went into damage control mode. “Our hearts go out to the victims,” tweeted Uber Support. “We disabled surge pricing in the area.”

While it may seem like a good PR move, disabling surge pricing is a bad one. At the beginning of the pandemic, when toilet paper and hand sanitizer were scarce, politicians told people, “Report merchants who raise prices!” They called that “illegal price gouging.”

But “gouging” was a good thing even then. It discouraged hoarding and made suppliers produce more products that we really needed.

Yes, today “gouging” is often illegal.

This is because politicians and journalists are clueless about how markets work.