In part I of this morality tale I looked at some of the effects of Uber’s surge pricing. Uber raises prices when demand is high — Friday and Saturday nights, say, when a lot of people want to drink without worrying about driving or in the particular case I looked at, after the explosion in the Chelsea neighborhood of New York City (which did turn out to be a bomb, evidently) when a bunch of people in that neighborhood suddenly decided they very much wanted to be somewhere else.
When the price of a ride increases during a time of unusually high demand, there are two effects. Some drivers who might otherwise not drive will find it worthwhile to drive. And some riders who might otherwise have requested an Uber will choose not to. They will either postpone their trips or skip them altogether.
The recent financial crisis exposed some serious flaws in our economic thinking. It has highlighted the need to look at economic policy with more critical, fresh approaches. It has also revealed the limitations of existing tools for structural analysis in factoring in key linkages, feedbacks and trade-offs — for example between growth, inequality and the environment.
When Uber puts surge pricing in place on a Saturday night, say, two things happen. The first is that some drivers who otherwise might sit at home enjoying life now find it worthwhile to spend time picking up people and taking them where they want to go. The second is that some people who want a ride decide to either delay their trip for a bit or find an alternative way (taxi, bus, walk, friend) to get to their planned destination. Some will decide to cancel their trip when they see the cost of getting an Uber.
These effects are particularly important when there is danger that people wish to flee. Last night in New York City there was an explosion in the Chelsea neighborhood. No one at the time knew for sure what the cause was or whether it was part of more general danger in the area. A lot of people wanted to get out of the area and get out quickly. Surge pricing encouraged drivers to face potential danger. It also signaled to potential passengers whose desire for a ride was not urgent to step aside and make room for those whose need was very urgent indeed. The beauty of prices is that these people do not have to know what is going on. The higher price sends them a message.
This past week brought blockbuster news on the M&A front — Unilever, fresh from relieving Dollar Shave Club of its investors, is in preliminary talks to buy The Honest Co., for all intents and purposes turning Paul Polman into the new patron saint of the LA startup scene.
My wife, Adrienne, and I are long-time supporters of unconditional cash giving. From handing $5 to a homeless person on the street in Manhattan to raising $450 to give to a working father of one in rural South Africa — we believe in the virtues of sharing abundance in an empowering fashion that enables people to decide how best to allocate their resources themselves. When we found GiveDirectly in November 2015, an org that gives $1,000, unconditionally, to people who are in extreme poverty, as a solution to get them out of extreme poverty, we fell in love. Unconditional — they can do anything they want with it — which is incredibly empowering to recipients, but many people in ‘the west’ think it’s risky…or even foolish.
We’ve told countless friends and family about GiveDirectly, and the concept of transferring cash is met with much skepticism; soliciting responses such as “eh, I only give people food,” and others such as;
Lately I’ve been writing about the relative virtues of basic income and child allowance proposals to counteract poverty and inequality. These seem like novel ideas on the American scene today. But in fact, there was a time when both of these ideas were seriously proposed on Capitol Hill. After forty-five years of lost faith in government, we are simply rediscovering the ambitions we once held.
In August 1969, President Richard Nixon unveiled a basic income scheme for needy families with children called the “Family Assistance Plan.” (FAP) Under Nixon’s FAP, a family of four would receive $1,600 annually from the federal government, or about $10,500 in 2016 dollars. For families deriving income from work, the FAP would gradually phase out above a certain level. Indeed, FAP included a work requirement for most “employable” individuals.
This is the second in a series to show why it’s so essential for all of us to understand the implications of exponential technologies, and why we’re hosting the SingularityU New Zealand Summit in November. The first was an introduction to exponential technology in comic form. This one’s a bit more intense. Enjoy!
I give a lot of presentations about exponential technology. Here’s a brief summary (feel free to skip ahead…):
The presentation is designed to be a shock-and-awe wake-up call about the nature of exponentially accelerating technology and its implications. In it, I quote a now-infamous figure from Frey and Osborne: 47 to 81% of jobs as we understand them could be under threat from technology within 20 years (acknowledging there are differences of opinion on this).
And then I show the crowd a recent headline: Apple’s Foxconn factory in China just fired 60,000 people and replaced them with robots.
We set the rules of business’s game. We can change them. As new tech and new ideas restructure our economic world, Tim O’Reilly writes, we shouldn’t just sit back and assume that the “laws of economics” will assure an optimal outcome for all. For example: Uber has designed an amazing new transportation system around the needs of consumers, business, and investors — but by failing to take into account the needs of its drivers, it’s not only making their lives harder, it’s assuring backlash down the road. The Uber world needs, among other things, drivers who can deliver good rides, and it’s not going to get them unless it treats them fairly, as stakeholders. Systems that assume humans are expendable can’t succeed in the long run: that’s a “failed rule.”
Court to FCC: If states block public internet access, you can’t stop them. A federal appeals court has just made it a lot harder for cities trying to promote municipal broadband alternatives to the cable monopolies (Washington Post). The Federal Communications Commission has tried to give these public-sector options a chance, but many states have passed laws to hold them in check, and now the courts say the states, and not the FCC, should call the shots. The ruling is more about arcane principles of federalism than the practical needs of internet users. But that won’t help people still waiting for faster speeds and better service. The FCC can still appeal the decision (Ars Technica).
Fourth in our Shift Dialogs Series — Full Transcript and Video
I first posted about Rana Foroohar back in May, when her timely and well-received book Makers and Takers: The Rise of Finance and the Fall of American Business came out. That interview was one of our most-read pieces back then, but in the last few months, tens of thousands of new readers have come to NewCo Shift, and Rana was kind enough to come into the Nasdaq studios and shoot a fresh interview with us.
This twenty-minute conversation lays out not only the core argument of Rana’s book, but also ties today’s extraordinary social shifts to a long term trend of financialization in our economy. Along the way she has some choice words for Apple and Uber, and some deep insights on today’s political circus (she notes that Trump voters have not had an increase in real income since the 1970s, for example).
The recent Republican National Convention (RNC) portrayed a very negative version of the current state of the Republic. There are certainly many issues facing the United States — structural underemployment, income inequality, divisive violence — but the truth is, on many counts the country is doing extremely well.
I wanted to collect some of those indicators and present them here to remind us that we’re not failing. In fact, we’re continuing to reach new heights. I’m sure there are many ways to claim that “America is in decline,” but let’s not fall into the politics of fear and despair. Of course, Americans know there are many ways to improve and so we can and should do better. But here are some proof points that might help you feel a bit more optimistic than the news out of Cleveland would have you believe.
The US GDP continues to grow to unprecedented heights (Federal Reserve).