Uber is destined to win the battle with Luddite drivers

Here’s an example where I side with “Big Business” against independent local operators: Uber against cabbies. It’s playing out in multiple major cities across the world. Uber provides smartphone-dispatched taxi service. Traditional taxi operators oppose that – they want to remain monopoly providers of taxi transportation. For example, in London cabbies went on strike to protest Uber. Their trade union representative even dismissed Uber’s offer to open its app to traditional black cabs. This is pure monopoly protection, nothing else. Nowadays, more than 50% of public owns smartphones and uses them for more and more everyday tasks. What is a good reason riders shouldn’t be able to hail a cab from a phone?
In some cases, government regulatory agencies are siding with the cabbies. This is an illustration of a phenomena known as “regulatory capture” – a government agency created to regulate an industry becoming a tool of that industry against the public.
In this case, it’s clear on whose side the public interest is: the public wants more value from smartphones and more convenience in arranging transportation. I think cabbies are fighting a losing rearguard battle here. It might take decades, but their profession will disappear entirely, replaces by self-driving cars. Technology will prevail.


Stand with Tesla against outdated car dealership business

Tesla is fighting to introduce a new way to sell cars in US – not through a dealer network, but directly by manufacturer. Yet existing state laws across US require that cars are sold by dealers. One recent example (May 2014) is their battle in Missouri. Another one, more than a year old, is in North Carolina.

Why should state governments impose a particular business model for new car sales and stand in the way of innovation? Ask yourself: who are these laws protecting: consumers or the dealers? Is there a danger that direct sales by manufacturers will be so harmful to the buying public that they must be not just regulated, but outright banned?
Of course not. Tesla is forced to fight these laws one state at a time because car dealers are a politically powerful group with serious lobbying power. Are they a force for good? Do they deserve protection from new and disruptive competitors?
My recent experience suggests that dealers don’t need a protection, they need a stiff challenge. Due to some unfortunate circumstances (curse you, Sandy), I bought 3 cars within a short period. My experience was, simply put, dreadful. Obtaining price quotes for new cars was an impossible challenge. Some dealers simply refuse to provide quotes by email or even by phone. Others quote abstract “generic” vehicles. Once I get into the dealership, it turns out that the quoted car is not available. What is available is equipped with a different set of options, so their quote doesn’t apply. One car that matched my request was offered with $995 “appearance package” comprised of door edge guards and pinstripes. Even after price is negotiated and agreed upon, they are still not done playing tricks. I was offered an extended warranty package for $2000. When I refused, finance manager removed it but immediately added $2200 “just because” fee to the total. I saw that and challenged him, so he promptly removed it, but this just goes to show how deceptive dealers’ practices are. It’s not an accident that car salesmen are notoriously unpopular.
All in all, dealers prey on the less informed and mercilessly overcharge those people even on the new car sales, which are supposed to be more transparent. Used car sales and service are even worse. Dealers use their ill-gotten profits to buy influence with lawmakers, who in turn protect them. A change to this model can’t come soon enough and would be most welcome. Public interest in this fight is on the side of Tesla, not the dealers.

Voluntary disclosure: I don’t own Tesla shares.