This week Mayor Bill de Blasio tried to make an example of Uber, to demonstrate that billion-dollar corporations can't dictate terms of business to New York. Instead, Uber just made an example out of him
, one his fellow Democrats nationwide couldn't have missed.
The model for these big new disruptors, like Uber (for rides) and Airbnb (for rooms), in the so-called sharing economy is simple: 1) Make markets, while treating workers as independent contractors or eliminating them altogether, 2) Build scale quickly and then negotiate from strength with would-be regulators, 3) Use the money they're raking in to sway if possible and crush if not any politician who tries to interfere with (1) or (2).
It's a fundamentally libertarian approach, with the market making the rules. Airbnb, for instance, has fought fiercely with New York officials to keep its "hosts" hidden, even when it has appeared
that some of its biggest ones were major landlords turning stockpiled apartments into illegal hotels.
And Lyft, an Uber competitor, last year threatened to simply start operating in New York without complying with existing insurance rules. As always in these fights between market-making disruptors and government regulators, Lyft's implicit argument was that it was just an app and wasn't responsible for how people used it, which New York's attorney general called
"a disingenuous attempt to disguise old-fashioned lawbreaking."
So it's no wonder that progressives across the country are trying to push back. So far, though, they're struggling
Last Sunday, de Blasio wrote an op-ed in the New York Daily News drawing his line in the sand. He declared that Uber, a company with a staggering $40 billion market cap and basically no formal workforce (it claims its "driver-partners" are independent contractors that it just matches with fares in exchange for as much as a 30% cut of each ride) had to be frozen in size for a year while the city worked out rules for it.
The company's explosive growth has effectively busted the city-administered yellow cab system
that, for all its flaws, lets the city track cab rides, ensure vehicles are wheelchair accessible and collect 50 cents from each fare for mass transportation. Uber does none of those things.
Uber says drivers love being able to work when they want to. But that scenario also lets the company avoid the costly requirements of labor laws -- like overtime, minimum wage, breaks, sick days as well as workers compensation, unemployment insurance and Social Security payments -- even as it controls drivers' every interaction with customers and can fire them at will. At some point, it plans to eliminate drivers entirely,
go to self-driving cars, and pass the savings on to riders. Letting people make a decent living isn't efficient, it seems.
Comparing the car company to Walmart and ExxonMobil, de Blasio said it was time to show these new businesses who makes the rules here.
Uber responded to the threat to their single biggest market with an all-out campaig
n coordinated by former Obama election guru David Plouffe: A multi-million dollar ad campaign accusing de Blasio of betraying his progressive promises by favoring wealthy taxi medallion owners at the expense of ordinary New Yorkers who work for and count on the company.
It won prominent black elected officials and voices, long frustrated by the difficulties of "hailing while black," to their cause. It enlisted celebrities, including Kate Upton,
to tweet at the mayor.
"I don't debate with private corporations," the mayor said Monday,
holding his ground and explaining that new technologies meant that "the rights of consumers are now in doubt, the rights of workers are in doubt. There's all sorts of unintended consequences here. And government regulation hasn't caught up with the reality. So I think it's important that we do so."
But Wednesday, de Blasio surrendered, hours after Gov. Andrew Cuomo sided squarely with Uber and just a day before the City Council was to vote on that freeze. Instead, he agreed to a four-month "study" of transportation issues in New York. The company still won't give much of its data on rides to the city, citing "client privacy." To see some of what is shared, city officials may have to go into a secure, Uber-controlled room
Somehow, the mayor is insisting this a "victory,"
but no one is buying that.
Clinton, in her first major economic address as a candidate earlier this month, sounded almost agonized about the on-demand economy, saying
it "is creating exciting economies and unleashing innovation (while) also raising hard questions about workplace protections and what a good job will look like in the future."
De Blasio wanted to be the national progressive model for how government can stand up to these companies on behalf of workers. Instead, his political scalp is being waved as a warning to other mayors, and to Clinton, to tread softly.