Uber and its capitalisation of social coordination

Personal observations:

  1. Yes, I know in some countries using Uber is a hot potato. I do have this application for two reasons: I don’t always carry enough cash so it’s convenient for me to link my bank account to pay the bill. And, using Uber I can assume how much the fare will be, before even hopping in. On the other hand, I only can guess by experience how much the taximeter will call.
  2. There was a major regulation on using Uber in Argentina. Going to Ezeiza airport with Uber now is as much expensive as using a taxi. The fare can be a bit lower, but it became much more expensive what one used to pay before.
  3. Still inside the city, I believe Uber is a bit cheaper. For example, on a Friday night with Uber I paid 96 pesos (7 dollars) from San Telmo to Palermo. The very before weekend the same place to place I paid 250 pesos (17 dollars) to a taxi driver. Being in an economic level that enables to use such cost-cutting technology can be unfair for the others who don’t have access to have Uber or to have a bank account when to think of the unignorable portion of economic population in Argentina is in black.
  4. These days when I hop in a Uber car, I notice that those cars are so clean, having almost zero article that relates to the driver. Then I saw the car key. The key was from a rental service company. I assumed that then the car wasn’t belong to the driver. He was subcontracted to drive, for the profit of a rental company.

Uber came out to use the resource that is already ready on the traffic but not in use because of drivers’ condition. Or to say, if I have a sleeping car and I have a free time, I can use these two resources (transportation and time, or in economic term, capital and labour) to make a profit. The application is a coordination centre that communicates between the users; those who need resource and those who can provide it). It’s called efficiency, since there would be no more production but only reallocation of currently existing resources for a better management.

But this has changed when such car-rental-service companies interfered between the users’ chain and started to exploit subcontracted people’s resource (drivers’ time). So the more people who rent the car from the corporation and drive, the more corporate return they generate for the capital investment the corporation has put, which is the car.

This has fundamentally changed the relation between the technology and its users. The relation map was;

Uber application – Users who have car and time to drive

considering that those cars existed already sleeping, there is no further cost. What does the application is to coordinate between the users to maximise the current resources to put in use without further cost. Now, putting a new party in the relation, it became

Uber application – Corporation that rents cars to drivers – Contracted drivers

Surely, there would be still those who have time and car to put, but since the corporation interfered in the relation the market became more competitive. The coordination cost also lost its advantage, because the corporation generated another communication channel between herself and contracted drivers. The game became lost-lost for the former parties(application and users). In the new game only corporation wins. Think of a service worth of 10 dollars. I used to pay 10 dollars from San Telmo to Palermo. In this transaction, let’s say that Uber application takes 10% of commission. So Uber takes 1 dollar and the driver takes 9 dollars. Now, the regulation happened by the State to protect the current taxi driver’s right and to regulate emerging digital market. So the fare from San Telmo to Palermo became 13 dollars (and let’s say that normal taxi fare is 15 so using Uber still has an advantage). Now I need to pay 3 dollars more for the same distance and service. Uber takes 1 dollar as usual for the commission, and there remains 12 dollars to divide between the rental corporation and the driver. Giving more weight on labour (which hardly happens in real world where capital is more valuable than labour), the corporation takes 5 dollars and the driver 7.

The conclusion here is that the consumer, which is I in this case, pays 3 dollars more and the supplier, which is the driver, earns 2 dollars less. If there were no regulation that raised the cost from 10 to 13, the driver would end with even lesser earning.

Of course, this scenario is arbitrary and simplified one. There are more variables to count: the regulation cost and the State’s earning. The quality of service and capital with the fact that the contracted one has better control of quality. And, etc.

Technology innovates the market and empowers the citizens, giving them a better platform for coordination and communication. But it doesn’t result such, as if of textbook’s conclusion. In this sense, maybe it’s not about platforming technology but a social consciousness and willingness that permits the better social coordination. Considering what is needed to allocate the current resources between the users to maximise and satisfy one’s desire, this talk gives us a hint of wisdom: (anyone can put any other on the moon!)

We all need to be mounted on the same platform to make the social coordination available. It’s obvious now that we have enough resource available. The remaining question is how to coordinate and redistribute those existing resources between the entities. Uber has failed, for the communicative turbulence it allowed to interfere into the communication channel. But still, I admit that Uber created a legitimate platform that many citizen enrol and put their desire (of moving to one place to another). It’s a platform that we can utilise to reach a maximum coordination for the allocation of economic and social resources.

Isolation is a dream-killer. Technology allows us to not be isolated, but connected, just as the application Uber allows us to connect between the users. And technology should stay in that way as being communicative channel between the one who has the question and the other one who has the solution. Technology is a platform that makes those two communicate each other to gain their maximum gain.

Technology is to realise the social coordination.

The case is repetitive in Airbnb and any other social technology of allocation. And there should be an allocation from the State to guarantee the earning of both users, not by a corporation, simply because their interference of communication channel generates in general unnecessary social cost for their own private gain.



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