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Uber Takes Manhattan

Uber, the six-year old American ride-sharing firm, has stirred controversy in literally every market it has entered the world over. Perhaps the most poignant example of this would be the blockage of major roads throughout Paris last month by cab drivers so infuriated with Uber that they overturned cars and burned tires. With the exception of France, Uber has largely won most of the battles it has started, and now boasts drivers in 300 cities spread over 58 countries, as well as an estimated valuation of $50 billion. Just last week, Uber reached an agreement with Mayor Bill de Blasio’s administration in New York: the city council dropped the proposal to legally cap Uber’s growth in the city. Yet the debate about Uber is far from over, and the case of New York provides an excellent look into the merits and faults of the popular app as the conversation develops. 

Mayor de Blasio, in an op-ed for the Daily News, centered his opposition to Uber on their contribution to the city’s growing congestion problem. As the number of for-hire vehicles has swelled in New York so to has the city’s traffic problems. David Plouffe, chief advisor for Uber, argues instead that his firm will help the congestion problem as it reduces the need for personal vehicles, particularly in lower Manhattan where the congestion problem is worst. Furthermore, Uber vehicles tend not to drive around for fares as do the traditional yellow cabs. Yet over the last few years as Uber’s presence has grown, so too has population, and driving behavior has arguably changed, as noted by transportation economist Charles Komanoff. Thus the agreement’s establishment of a four-month study to be carried out by the city with data contribution from Uber is welcomed, as it will likely shed light on the relationship between ride-sharing services and causes of congestion.

Uber’s next argument attempts to appeal to New Yorkers’ empathy, as a recent ad aired in the city by the company suggests that Uber serves the poorer and ethnic minority neighborhoods of the city, particularly in the outer boroughs, better than the traditional yellow cabs that tend to stick to mid- and downtown Manhattan. Conversely, the city asserts that Uber does not properly vet drivers or provide them with the benefits of more certain employment, as well as pointing to the lack of wheelchair accessibility in Uber cars. Both sides make good points here, and a degree of common cooperation will help commuters across the Big Apple. Uber raises fair critiques of the yellow cab industry, which for years was a near-monopoly, and this new competition will likely push them to innovate and adapt to twenty-first century New York. On the other hand, if the city’s study finds ride-sharing services like Uber responsible for rising congestion, then there exists a strong argument to slow its unrestrained growth.

Where the debate between Uber and de Blasio becomes particularly vicious is with regard to money. The mayor, who campaigned on a platform of progressive populism, says Uber is simply a big corporation who “thinks they can get their way through using a lot of money”. He has a point, as Uber spent roughly $3.2 million in their media blitz against the mayor. Yet Uber has fired back at the mayor’s administration saying that he is exhibiting patronage as reciprocation for the taxi industry’s campaign contributions. Third party experts have also proposed ways to curb congestion and invest in infrastructure without arbitrarily capping for-hire cars, the most popular plan being to reduces incentives to drive in the central business district through the implementation of tolls and other vehicle surcharges. The fact that mayor de Blasio has not properly addressed these alternatives gives weight to Uber’s claims of favoritism.

Personally, I find that the mayor’s position is less an act of patronage and more a representation of many people’s weariness towards “disruptive” business models like Uber. Firms such as Uber often inject direly needed competition into stagnant industries while providing cheaper, and often better, services to consumers. The role of city governments the world over should be to represent public interest, as de Blasio himself has voiced, and it seems there is an important role to be played in evaluating Uber’s impact and ensuring that its growth is fair to its drivers and its impact on the city a positive one. Through cooperation, such as the study to be carried out by New York over the next several months, disruptive firms like Uber can revolutionize industries for the better. The alternative, prohibition of services, can hinder innovation and ultimately hurt consumers.

Image License: Some rights reserved by Stefano Corso

About Michael Swistara

Michael graduated from McGill University in 2015 with a double major in political science and economics, and currently attends Columbia University where he is pursuing a master's degree. As former Editor-in-Chief of the Political Bouillon, Michael continues to occasionally contribute articles on his favorite topics, including American politics, economic policy, and foreign affairs.

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