Uber – A Test of the Free Market

uber photo
Photo by bfishadow
You’ve probably heard about Uber, I’ve written about it before, and they are all over the news. Uber has a service called UberX that allows normal people to take their cars and get paid for giving rides to people. Basically it’s a taxi service minus all the government regulation.

Uber, not surprisingly, makes wildly optimistic claims about what people make. One journalist decided to go undercover as an Uber driver and tell about her experience. Based on her activities we learn that you can net about $10/hour as a driver for Uber, and some people claim to make a little more.

There are several very interesting things about Uber and it’s competitors.

They Have Successfully Bypassed Government Taxi Regulation

UberX is available in most major cities. Even eastern stalwarts of unions and labor movements like Philadelphia, Pittsburgh and others have allowed Uber to come in to their communities. Medallion systems in these communities require taxi services to operate under strict guidelines and limit the number of taxis in the city. Uber doesn’t require commercial insurance. UberX has an insurance policy which (in theory) works with the driver’s personal insurance. Uber leaves the maintenance of the cars up to the individual that owns them unlike a traditional taxi company that would purchase and maintain their fleet. Many cities with this medallion system are still allowing Uber to operate and not follow all their rules.

Uber is Paying it’s Drivers Less than Taxi Companies

Salary.com lists the average taxi driver salary at $32k per year. That’s $16/hour. While it seems like Uber driver’s hourly income may be below that, the real issue is the cost to the company. These aren’t full time employee’s so Uber isn’t paying unemployment tax, payroll taxes, related insurance costs, benefits, etc… Uber has, so far, succeeded in eliminating all these extra labor costs that regular companies have to deal with.

Uber Has Variable Fees

Uber has adjusted it’s fee schedule in many cities and has something referred to as “Surge Pricing” to increase costs at busy times of the day. The effectiveness of this dynamic pricing algorithm may be under scrutiny, but ultimately it’s the right direction to go.

What does this mean?

Uber has knocked down one of the most highly regulated industries in the country. Will their model be successful? Eventually the transportation sector, if it’s not interfered with by government regulators, should reach an equilibrium. Competitors in the market will limit the amount of profit Uber can take off the top and prices should adjust to the point where there are an optimum number of drivers available to satisfy the market. Hopefully, with the power of the Internet, we will see a perfect free market form.

Right now Uber is taking a 20% charge, plus $1 in insurance from every trip, a fee that seems quite successful. Can Lyft or other competitors apply enough pressure to minimize that profit taking? It will be interesting to see how this whole system evolves and changes our transportation infrastructure.

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Edwin Armstrong and the FCC

Edwin Armstrong inventor of FM radioJulie Borowski asked about underrated men on her Facebook page this week, and Edwin Armstrong came to mind.

Edwin was the inventor of FM radio, but RCA with some help from the FCC strongarmed him out of the business. This is an important story today with the FCC working on regulating the Internet in the name of Net Neutrality.

Here is a great article on Edwin Armstrong and his tragic story. The basics are that Armstrong was a genius inventor that revolutionized electronics. RCA on the other hand was an established electronics company that had invested heavily in AM radio. FM radio would have cost RCA a lot of money. So instead of playing ball RCA turned first to a corrupt FCC official in an attempt to destroy FM.

The future looked bright for FM. Other radio set manufacturers, including Zenith and Western Electric (but not RCA, as we shall see), arranged royalty deals. Despite the United States’ entry into World War II, the number of commercial FM stations doubled from 18 in 1941 to 36 in 1942, and grew to 46 in 1945. According to Time magazine, more than a half-million FM radio receivers were then in use.

Then came a shocker: In January 1945 the FCC proposed to kick FM up into the range of frequencies around 100 megahertz, and to give television additional space in the vacated area. This precipitated a third spectrum battle between FM and television.

The stated reason for the proposed move was the concern that, at FM’s current frequencies, radio transmissions would be particularly vulnerable to interference caused by sunspots. It was necessary to make the move immediately, since the height of the next sunspot cycle was expected in 1948–49.

Unfortunately for RCA, it’s difficult to destroy superior technology. Since FM didn’t go away RCA had to try a different tactic. They attempted to license the technology from Armstrong, but didn’t like his terms, so they stole it. RCA developed their own FM system,

RCA, which first ignored FM and then asked the FCC to rule it out of the airwaves, eventually accepted the new medium as a fact of life and started to manufacture FM receivers, as well as televisions with the required FM sound. Sarnoff had offered Armstrong a flat fee of $1,000,000 for a license to use his FM system when it was first approved for commercial use in 1940, but Armstrong preferred a royalty arrangement.

RCA used it’s wealth and the power of the US government to suppress Armstrong’s new technology. Did this effect the world? It’s hard to say. What would it have been like if Elvis and Buddy Holly had been broadcast in hi-fidelity FM?

Is history repeating itself? Are Internet giants like Google bending the FCC to their will in the name of Net Neutrality instead of sunspots? Is the market being abused by corporate profits and government corruption? If the FCC wasn’t above this kind of behavior in 1945, why do we think they are above it now?

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Did Flash Steal The Walking Dead Theme Song

Seems everyone is copying their music from someone else these days. Robin Thicke is in court defending his song Blurred Lines against allegations that it’s just a rip off of Marvin Gaye. Madonna is concerned that Lady Gaga’s Born This Way was a little too close to Express Yourself. Post Modern Jukebox gets copied by artists on the Voice UK. Where is the line between artistic expression and plagiarism.

This week I noticed another similarity between two theme songs.

New spinoff from Arrow for the 2014-2015 show The Flash has a remarkably similar theme song to The Walking Dead. The biggest difference is the tempo, but the signature string melody is very similar.

Here, listen for yourself:

What’s going on here? Was the composer for The Flash inspired by The Walking Dead?

Both series are based on comic books, but from different studios, so it seems unlikely that this would be some kind of backroom deal. If not, DC Comics, The Flash and the CW may be in trouble with AMC and Robert Kirkman…

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Penn State Professor Reviews American Sniper Without Watching It

The New Republic published an article yesterday that is a movie review of the new Bradly Cooper film American Sniper that dramatizes the actions of Navy SEAL sniper Chris Kyle. The writer, Dennis Jett, is a career diplomat and university professor. What makes this review so interesting is that Jett didn’t bother to see the movie and mentions that in the review.

Now, to be fair, he has read Chris Kyle’s autobiography, American Sniper: The Autobiography of the Most Lethal Sniper in U.S. Military History, or at least he mentions it like he read it and doesn’t let us know if he didn’t read that either. Most movie reviewers likely haven’t read the book, but seriously, would it have been worth 2 hours of Jett’s live to watch the movie before critiquing it?

Jett makes an interesting analysis, that would be worthy of discussion if he had only bothered to see the movie he was writing about.

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AK-47 – The Gun that Changed the World

The Colt Single Action Army holds a place in history as “The Gun That Won the West”. The combination of reliability and power enabled the American settlers in the West to bring law an order to a wild, dangerous place.

Since then the only other gun with that kind of distinction is the AK-47. Ranking #26 on Businessweek’s The 85 Most Disruptive Ideas in Our History, the AK-47 brought tremendous firepower and reliability at a low cost to both freedom fighter and government thug.

The Low-Tech Gun That Changed Everything

AK-47 photo
Photo by Russland und Ukraine
…the strangest irony of all, given that it was produced by the Soviet Union, which could barely design a toaster: It almost never breaks. AKs made in the early 1950s are still in use in Afghanistan in the 21st century.

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Why Occupy Supporters Should Hate Uber

I have a cousin who is a emphatic Occupy supporter. He is constantly discussing why companies that want to profit are bad and minimum wage and other government regulations are good.

Today he shared a post about Uber. His Brother-in-law (who I suspect also slants liberal) is driving for them.

Uber is a wonderful service. If you aren’t familiar, Uber is a ridesharing company that uses the Internet and mobile apps to let people use their personal cars and drive others around. It’s a great opportunity for individuals who want to make a little extra cash and a great service that’s probably cheaper and more accessible than a taxi. Brilliant idea.

The thing is, Uber is completely capitalist and flies in the face of years of government regulation of the transportation industry. Taxi drivers have unionized and helped passed laws to protect their artificially inflated wages. The government has adopted these laws and transportation is one of the most highly regulated sectors of American industry.

This makes Uber the EXACT OPPOSITE of what every democrat, liberal, socialist or Occupy supporter wants! It is a total libertarian/conservative/tea party idea. Power to the people, no government regulation, freedom to do what you want with your car and your time.

Anyone who is liberal and loves Uber must either reconsider their position on Uber classic car insurance UK or reconsider their politics because they don’t mix.

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Rock and Roll Cartoon From the 80s

Anyone else remember this animated musical adventure from 1984? I was 12 years old and remember watching Kidd Video. Pop music, cute girls, workout gear on a fairy, pretty awesome.

Amazingly, not only is Kidd Video not forgotten, but there’s a pretty good website dedicated to the show.
www.kvflipside.org

A couple years ago Whiz (Robbie Rist) and Carla (Gabriele Rozzi) got together for a song

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