When Regulators Attack: Cambridge and Uber

by Andrew McAfee on June 19, 2014

I’m on the brink of making a big real estate commitment in Cambridge, the idiosyncratic New England city I’ve called home since 1994. But a set of proposed regulations discussed at a License Commission meeting last night are so bad and so dumb they’re causing me to rethink whether or not I really want to live here.

The draft rules cover how people get rides in the city. And I’ll at least give the Commission credit for honesty; they’re not even really trying any more to cover up their assault on Uber, Lyft, and other on demand, smartphone-summoned ride services. The rules they came up with are quite clearly designed to drive these companies out of town; there’s really no other way to read them. As Uber summarized on its blog:

these regulations would:

    • Set a $50 minimum price for any non-taxi car ride, regardless of time or distance
    • Prohibit you from requesting a ride on-demand from anyone other than a taxi
    • Forbid any technological device from being part of fare calculation during a ride

Who else but a Cambridge taxi driver or regulator could possibly think this was a good idea?

I’ve been taking cabs here since I showed up as an undergraduate in 1984 (I wasn’t taking many back then because I was so poor). I’ve never had better than an OK experience, and I’ve had plenty of truly lousy ones: dirty, broken down cabs, unqualified drivers, and so on. I’ve also been unable to get a cab so many times I’ve lost count. When there are only 257 medallions for a city of more than 100,000 people this isn’t too surprising, but it’s always frustrating.

And then Uber came along, and life got better for me and all other ride seekers (I’ve never used Lyft, so can’t comment on it). I’ve always been able to find a car, it’s always showed up, and I’ve had an OK-to-great experience all but a handful of times. And each of those times Uber noticed my dissatisfaction (since users rate every ride), reached out to me, apologized, and tried to make it right via a refund. The Uber experience is so superior that I’ve basically taken ‘taxi’ off my mental list of ways to get around Cambridge.

The License Commission wants to put it back on not by improving taxis, but by taking away my preferred alternative. Can they be serious? This honestly seems like an elaborate piece of civic performance art in which I’m an unwilling participant, or an episode of “Nathan For You” where he somehow convinces bureaucrats to use their powers to maximum detrimental effect.

Uber supporters came out in force last night and the Commission backed off, saying that the public hearing “was the start of the conversation and committed to a transparent process going forward, involving both Uber and the people of Cambridge.” according to Uber’s blog.

My fellow Cantabrigians, let’s make sure we stay involved. There’s a lot riding on this issue.

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aa-unemployed-college-grads-300x198Recent research continues to shed light on the big trends in the US labor market. Unfortunately, many if not most of them are bad news.

As Thomas Edsall describes well in his latest New York Times column, it looks like demand has slowed down for even the most cognitively demanding jobs (in other words, the highest skilled ones) since the turn of the century. During the 1980s and 90s demand for jobs had a U-shaped pattern: there were plenty of opportunities at the high end and the low end (thanks to the rise of low-skilled service jobs) and shrinking opportunities in the middle. My MIT colleague David Autor, who did the most work to document this phenomenon, calls this the ‘polarization‘ or ‘hollowing out’ of the US job market.

A new study by Paul Beaudry, David A. Green, and Ben Sand looking at the same phenomenon finds that a very different pattern holds since 2000, with demand for even the highest skilled jobs declining slightly. After looking at this research, Autor observed that the pattern has gone from a U-shape to “a bit more like a downward ramp” since the turn of the century.

This is bad news for several reasons. One of the most important is that the downward ramp appears to be leading to a “skills cascade” in which highly skilled / educated workers take jobs lower down the skill / wage ladder (since there’s not much demand at high levels), which in turn pushes less skilled workers even lower down the ladder, and so on. Larry Katz has found that “lots of new college graduates are moving into the service sector, that is, into traditionally non-college jobs, displacing young non-college workers.”

Where this all ends is anyone’s guess. Edsall quotes Larry Summers at the end of the article as saying that “The single most important step the U.S. government can take to reverse these discouraging trends is to mount a concerted, large-scale program directed at renewing our national infrastructure.” Erik Brynjolfsson and I certainly agree; infrastructure investment is one of main things in the ‘Econ 101 playbook’ for restoring growth and opportunity that we put forward in our book The Second Machine Age (along with other economic no-brainers like fostering entrepreneurship, reforming immigration, and investing more in basic research).

Edsall quotes our book in his article:  “the transformations brought about by digital technology will be profoundly beneficial ones. We’re heading into an era that won’t be just different; it will be better.” We do in fact say this (and still believe it), but it’s inaccurate to portray us as tech pollyannas or utopians.

The quote above refers to the uncontroversial fact that tech progress grows the overall economic pie (to use the economist’s favorite metaphor). However, we spend more than a third of The Second Machine Age highlighting that the distribution of this pie is becoming more uneven (and hence problematic) in large part because of this same progress, and discussing ways to mitigate or reverse this trend.

All the evidence I see these days solidifies the conviction that our labor market is shifting both deeply and quickly these days. How long before we take action in response? As Edsall writes, maybe policy changes will come more quickly once large numbers of college-educated parents see their college-educated kids unable to find the jobs that used to be regarded as essentially the birthright of their class.

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If There Was Already an Ocean of Data in 2007, How Much is there Now?

June 2, 2014

  I’ve been trying to figure out how to convey the scale of the ‘Big Data‘ phenomenon — the recent worldwide explosion of the volume of data encoded in digital form. Inspiration came from Randall Munroe’s fantastic “What if?” comics, which provide “Serious Scientific Answers to Absurd Hypothetical Questions.” (check out his 2o14 TED talk and pre-order […]

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Even Sweatshops are Getting Automated. So What’s Left?

May 22, 2014

Comparison of Nike’s successive sustainability reports reveals that the company used 106,000 fewer contract employees around the world in 2013 than 2012 (a greater than 9% drop), even as both profits and revenues increased by 16% and 5%, respectively. A story in the International Business Times states that this is because the company is “shift[ing] […]

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Why Is Customer Service Still So Lousy? Monopolist (i.e. Comcast) Edition

April 24, 2014

Every so often I have an experience as a consumer so bad that I have to write about it. The latest were the interactions I had with Comcast to get a new TiVo box working properly at my Mom’s house in Chicago and then (having, I thought, learned from that one) ordering a Comcast DVR […]

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On Monday, April 21: Talking with Walter Isaacson About The Second Machine Age

April 16, 2014

Next Monday morning at Noon I’m talking with king of all media Walter Isaacson about The Second Machine Age at the Aspen Institute in Washington DC. I give Walter that title because in addition to editing Time and being CEO of CNN, he’s also written runaway bestsellers (about Steve Jobs) and Pulitzer Prize nominees (about Henry Kissinger). In […]

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The Second Machine Age Comes to DC This Week

April 10, 2014

Just a quick note to let Washingtonians know about two happenings in their city this week. I find them interesting not because I’m speaking at them, but rather because of the people I’m speaking with. Tonight from 5:30 to 7 I’m sitting down to talk with Prof. Amitai Etzioni at George Washington University about “the […]

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The Second Machine Age Comes to New York this Friday

March 31, 2014

Just a quick note to let New Yorkers know that the MIT Initiative on the Digital Economy is coming to your city this Friday, April 4. MIT Sloan faculty, alums, and other digital movers and shakers will come together from Noon to 7 pm on Friday at the TimesCenter (I haven’t been inside the facility […]

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Event: FWD.us in New York on Wednesday, March 26

March 25, 2014

Just a quick note to let New Yorkers know that I’ll be in Manhattan tomorrow (Wednesday, March 26) participating in a very worthwhile event: a discussion and reception sponsored by tech industry advocacy group FWD.us on technology, the middle class, and the American dream. It takes place at AOL headquarters at 770 Broadway. I’m not sure […]

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Non-Technologists Agree: It’s the Technology

March 12, 2014

Two papers came out last year that examined important issues around jobs and wages. Both are in top journals. Both were written by first-rate researchers, none of whom specialize in studying the impact of technology. And both came to the same conclusion: that digital technologies were largely responsible for the phenomena they examined. The first […]

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