An Uber political problem

Anyone following social media last week would have seen it. The smug smiles, the tubs held aloft, the awkwardly worn promotional hats. Uber, the world's largest 'ride-sharing' company, offered new users a literal free lunch – complimentary ice-cream if they signed up to its service, delivered to their door at the push of a button.

It wasn't the most subtle campaign, but it seemed to work. If my friends were any indication, Australians reacted with the dizzy and undignified excitement of children being given a puppy.

The ice-cream deal was Uber's latest move in an ongoing public relations war with the taxi industry. Since coming to Australia in late 2012, the company's ambitious expansion has existed largely outside the law. Uber drivers don't buy expensive taxi licences that cost up to $400,000 in states like NSW – they simply drive their own cars. By avoiding these costs, as well as other charges like commercial insurance, Uber drivers generally provide a cheaper service than traditional taxis.

Uber's business model is the most prominent example of what some analysts call the 'sharing economy'. While probably a misnomer (sharing, as taught to five-year-olds, generally doesn't involve credit cards) the term refers to businesses that allow individuals to sell surplus capacity, rather than engaging in formal employment. Uber drivers sell spare seats in their car, Airbnb​ users sell spare rooms in their house, while TaskRabbit​ subscribers just sell their spare time.

One thing that both supporters and critics of the sharing economy agree on is that, if the model gains critical mass, it will represent a serious challenge to current modes of economic organisation. Where workplaces traditionally protect their employees against some of life's risks (by providing security in times of sickness, injury and old age) these new companies don't assume the same obligations. For all the opportunities Uber offers, its drivers are contractors with no weekends, no annual leave and no guaranteed minimum income.

For politicians trying to manage the fallout, these new industries pose problems. Disruption can be great, a necessary precursor to evolution. But it also has an undeniable dark side.


The problems are particularly difficult for parties that exist to blunt the rough edges of a market economy, like Labor and the Greens in Australia. The conflict between incumbent taxi drivers and their new competitors is one thing. A deeper challenge is managing a society where workers enjoy few of the protections traditionally associated with employment.

In presidential primary contests currently occurring in the United States, the rise of Uber has served as a symbol of the economic divide. Republicans like Jeb Bush and Rand Paul proudly embrace the company as a capitalist success story, hiring Uber cars to ferry them around campaign events.

Democrats generally find the debate more difficult. The contradiction between workplace rights and disruptive innovation is pronounced. Hillary Clinton's response, for instance, was notably conflicted.

"This 'on demand' or so called 'gig economy' is creating exciting opportunities and unleashing innovation, but it's also raising hard questions about workplace protections and what a good job will look like in the future".

Concise enough as a Wikipedia summary, but less convincing as a policy position.

Here in the ACT, Labor Chief Minister Andrew Barr showed none of this hesitation when dealing with the local branch. In April, he announced his support for Uber's presence in Canberra, promising taxi reform that would "specifically address allowing Uber to operate in the territory".

While the sharing economy remains on the edge of Australia's labour market, the questions for politicians like Barr aren't as pointed as they may become. But Uber's ambitions are larger than just profit (Travis Kalanick, its CEO, aspires to a level of efficiency that would eliminate private cars altogether) and policymakers must consider what a world with widespread 'Uberfication' might look like.

It's not all doom and gloom. Karl Marx dreamt of a world where humans could "hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner … without ever becoming a hunter, fisherman, herdsman or critic". The point being that life in a single occupation can be alienating, a compression of humanity's real potential.

Allowing people to follow different paths without being defined by them might even make us happy. But there's no getting around its insecurity. Few of these new companies want to foot the tab for sick pay, let alone deal with unions.

In the event that this business model does become normal, demands will inevitably rise for governments to cover more of life's risks. As the Nobel Prize-winning economist Paul Krugman puts it, "the only way we could have anything resembling a middle class society … would be by having a strong social safety net, one that guarantees not just healthcare but a minimum income".

Such a world is admittedly some time off, though it would still feature familiar battles.

Funding expanded social security requires the type of taxation that tech companies avoid like small pox. Even if some political parties demand it, they won't cough up much without a serious fight.

The participants might shift, the terrain might look different, but the battle will be recognisable. The more things change, the more they stay the same.

Shaun Crowe​ is a research manager and doctoral candidate at the ANU's Centre for the Study of Australian Politics, where he also tutors.