On that Uber ruling

The Adam Smith Institute said that the ruling could mean a small increase in Uber fares for passengers, but most of the increased costs would probably be passed on to drivers.

Well, quite.

Things like holiday and sick pay are incident upon the wages of the workers, just like employers’ national insurance and so on.

16 thoughts on “On that Uber ruling”

  1. Ah yes the Adam Smith Institute that trades off the great man’s name without mentioning that his whole system is based on Land Value Tax.

  2. For Christ’s sake, DBC, what does the value of the land have to do with employment law?

    There are blog posts where land value is relevant. This definitely isn’t one.

  3. Depends how much they’re earning.

    Yes, for most workers, being reclassified as employees means having part of your pay compulsorily converted into non-cash benefits (holiday, sick pay, working hours limits, etc.), regardless of whether you’d have preferred cash or not. Annoying but not generally catastrophic.

    But the real killer is when employment rights coincide with the minimum wage, so the incidence should be passed on to the workers but there isn’t enough pay to take it without breaching the minimum wage rules.

    That’s when jobs really start disappearing.

  4. Richard,

    It’s not just that. It’s also about things like investment and commitment.

    I’m getting to a point where I’m going past 6 days a week. Somehow, I’ve got clients that like me and keep telling their friends. I might hire a few guys to do some extra work for me. But that’s maybe a few days a week. It might suddenly disappear. I don’t want the bureaucracy of all the crap required when you have employees. And if forced to take it, I’d rather just turn down the work or pass it onto someone else.

    What’s changed in the world, and why I would get shot of most employment law, is how much work is now freelanced, because it now can be. 25 years ago, a company couldn’t call up a developer and ask them to do something. The developer didn’t have a mainframe at home or even a capable computer to dial in. Hell, that company even managed its own car fleet management.

    Companies don’t like employees any more than people do. The lefties don’t get this, even though none of them ever employ anyone. Employment is about necessity, security and continuity. Companies employ call centre staff to make sure they’ve got enough trained and experienced people. Not because they’re nice. Cineworld have zero-hours staff because training someone to sell popcorn isn’t a large investment.

    This decision is nuts because taxis are a thing that doesn’t need employment. The market can manage it. If someone wants a personal chauffeur who will sit and wait for them all day, that’s a job.

  5. @AM
    Au contraire, the question of rent (see Smith, Ricardo …) is very relevant to UBER as the taxi intermediary takes a rent on the use of its service and doesn’t do any work like all rentiers.
    If you read the latest work by Guy Standing ,of Precariat fame , you will see that the workers are less menaced by capital investment than rent clipping from all quarters, the banks having given up making “loans” to industrialists and instead retired into mortgage farming the masses.

  6. Do stop being a twat DBC there’s a good chap. It has always been true of the “Anglo Saxon” system that industry gets it’s capital an financing from markets, bonds and equity, rather than loans from banks. Just as it has always been true that the continental system relies more on bank loans than market capital, whether bond or equity.

    Perfectly willing to have the argument about which is the better system but it’s twattery to deny the difference.

  7. – “UBER as the taxi intermediary takes a rent on the use of its service and doesn’t do any work like all rentiers.”

    They provide a service, yet in the very same sentence are denounced as rentiers.

    Which is it?

  8. DBC,

    I agree that Uber takes a cut of the work done by its drivers, as does eBay, Amazon (third-party sellers), etc. You call it economic rent (agreed), and you claim that’s a bad thing. But there are four main counter-arguments:

    First, and most important, the consumer still wins. Even handing over 20% to Uber, their ride is still cheaper than elsewhere. That’s thanks to Uber’s technology. Their app means drivers spend more time carrying passengers and less time waiting around. It means passengers can decide whether to take a cab or wait for the bus, depending on price and availability.

    Look closer to home: if I had to fork out £5 to U-Clean each time I switched on my washing machine, it would still be cheaper than paying someone to wash my clothes by hand. That’s simple economic efficiency through technology.

    Secondly, this is what every company does. Tesco’s takes a cut off the farmer’s labour and sells it to you with a hefty mark-up. It’s cheaper than me having to drive round to every high-street butcher, baker, and candle-stick maker to get my shopping. British Airways charges more than their costs to fly to Barbados, but it’s a lot cheaper than going by boat.

    Thirdly, competition exists. There are other cab-hailing apps. Other supermarkets and airlines also exist. We have competition authorities to ensure that the market remains competitive, and no doubt they’ll step in if Uber takes too big a share of the minicab market. (This is my most speculative claim, but I don’t see why the UK government would be reluctant to shake down US-based Uber.)

    Fourthly, it still has nothing to do with land values. Economic rent, yes, through User’s sheer scale and brand name; but it has nothing to do with land.

  9. – “Economic rent, yes”

    Not really.

    Payment for services provided is not synonymous with rent.

    Rent, for example, would be a cartel – businesses or labour unions – seeking to artificially raise rewards above market rates for the benefit of their members at the expense of non-members. London’s tube drivers for example. And teachers. And doctors, who have a legal monopoly on the prescription pad.

  10. @wat dabney: thats an interesting point, perhaps DBC Reed can tell us if LVT will prevent doctors rent seeking via their medical closed shop? And lawyers too?

  11. Somewhat disconcerted by Mr Worstall’s entirely losing it: the question of how much British banks “lend” to business relative to housing seem to depend on his carefully considered view that they never lent much to business to begin with, so that’s alright then, there you go!
    A realistic view is that immediately before Mrs Thatcher 42% of the population lived in council houses and paid moderate rents to a welfare state; after the Thatcher coup, the working population was forced to take on commercial bank accounts and submit to their mortgage farming which now sees enterprising young people paying 70%+ of their wages in rent or mortgages as house price inflation has got out of control / or rather has got entirely into the control of the banks.
    (Mr Worstall is perfectly familiar with the fact that people charged extortionate rent also cannot buy this country’s own products, being a sound land taxer) .
    I was trying to advance the idea that rather than capitalism red in tooth and claw, we are getting the takeover of public sector enterprises (like housing, the railways , university education ) by private sector rent clippers who take over (with political connivance) existing revenue streams and increase profit share, not supply (look at British housing: evidence of a failed state).
    Several people set about dismantling the above thesis as it applies to Uber in ways which showed a grasp of the relevant issues. Not so with TW who charged in with the arrogant irrelevance I have experienced many times from people of his privileged background.
    (On the bank lending question I would quote TW himself “No banks don’t create money” 14.vii.12 : “The short explanation is that banks do indeed just create money out of thin air”19.iii.14.
    Or as Martin Wolf of the FT , a proper economist, straightforwardly states “Strip private banks of their power to create money” FT 24.iv.14

  12. OK, DBC, so, twat up or twat off.

    “Somewhat disconcerted by Mr Worstall’s entirely losing it: the question of how much British banks “lend” to business relative to housing seem to depend on his carefully considered view that they never lent much to business to begin with, so that’s alright then, there you go!
    A realistic view is that immediately before Mrs Thatcher 42% of the population lived in council houses and paid moderate rents to a welfare state;”

    No, don’t connect mortgages with business lending. Tell us, tell me, tell other readers here. So what was the portion of bank lending to business before Fatcher. And the portion after?

    You are the person insisting that there was a change. So, you prove it. What percentage of bank loans were to business before, what after?

  13. Worstall
    There is no rational argument here: you argue (if that is the right word) that British banks issue too much money to housing by customarily lending too little to industry ; I was suggesting that they issue too little to industry by lending too much to housing .
    You respond to these shades of opinion like a lout.

    I am being treated for pneumonia at the moment . If you would like to reply, perhaps you might use my short spell of convalescence to collect yourself.

  14. Tha Anglo Saxon system does not and never has depended upon bank finance for industry. It has always depended (much more, at least) upon market finance, both bonds and equity, than the continental system.

  15. This report suggests that bank lending to businesses in the UK was about the same size as syndicated lending and bond issuance , at least in 2014 in gross terms. I doubt that much more new equity came onto the market.

Leave a Reply

Your email address will not be published. Required fields are marked *