by Summary:
Did you know that most cars do nothing for 23 hours a day? Yes, they are totally idle. Sleeping safely in their owner's garage, or on his drive, or at her place of work, or in the station car park. Shocking, isn't it? What a terrible waste of assets. We should ensure that all these cars are DRIVEN. All the time. But there is a reason why all these cars are idle. Their owners are busy doing something else. Many people who drive to work, or to the station, do jobs that they love, that they have the skills to do, and that earn them a good living. Should these people give up their jobs and embark on new careers ferrying people around for money, just so their cars don't stay idle for large parts of the day? Really? No-one in their right mind would give up a job that was sufficiently well-paid for a quality car to be affordable, in order to drive for Uber (or any other "car sharing" business, for that matter). The remuneration just isn't that good. So presumably we are talking about people car sharing for money in addition to their day jobs. But this is not a free lunch. If the car owner's productivity in his day job falls because he is tired from moonlighting as an Uber driver, then making more productive use of his car comes at a cost - a cost that may lead to him losing his better-paid job. This is not clever.
Topics:
Frances Coppola considers the following as important: cars, production, productivity, sharing
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Did you know that most cars do nothing for 23 hours a day? Yes, they are totally idle. Sleeping safely in their owner's garage, or on his drive, or at her place of work, or in the station car park. Shocking, isn't it? What a terrible waste of assets. We should ensure that all these cars are DRIVEN. All the time. But there is a reason why all these cars are idle. Their owners are busy doing something else. Many people who drive to work, or to the station, do jobs that they love, that they have the skills to do, and that earn them a good living. Should these people give up their jobs and embark on new careers ferrying people around for money, just so their cars don't stay idle for large parts of the day? Really? No-one in their right mind would give up a job that was sufficiently well-paid for a quality car to be affordable, in order to drive for Uber (or any other "car sharing" business, for that matter). The remuneration just isn't that good. So presumably we are talking about people car sharing for money in addition to their day jobs. But this is not a free lunch. If the car owner's productivity in his day job falls because he is tired from moonlighting as an Uber driver, then making more productive use of his car comes at a cost - a cost that may lead to him losing his better-paid job. This is not clever.
Topics:
Frances Coppola considers the following as important: cars, production, productivity, sharing
This could be interesting, too:
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Did you know that most cars do nothing for 23 hours a day? Yes, they are totally idle. Sleeping safely in their owner's garage, or on his drive, or at her place of work, or in the station car park. Shocking, isn't it? What a terrible waste of assets. We should ensure that all these cars are DRIVEN. All the time.
But there is a reason why all these cars are idle. Their owners are busy doing something else. Many people who drive to work, or to the station, do jobs that they love, that they have the skills to do, and that earn them a good living. Should these people give up their jobs and embark on new careers ferrying people around for money, just so their cars don't stay idle for large parts of the day? Really?
No-one in their right mind would give up a job that was sufficiently well-paid for a quality car to be affordable, in order to drive for Uber (or any other "car sharing" business, for that matter). The remuneration just isn't that good. So presumably we are talking about people car sharing for money in addition to their day jobs. But this is not a free lunch. If the car owner's productivity in his day job falls because he is tired from moonlighting as an Uber driver, then making more productive use of his car comes at a cost - a cost that may lead to him losing his better-paid job. This is not clever. Better that the car remains idle for 23 hours a day, surely?
Even if all these car owners took up new careers driving for Uber, or did a few hours in addition to their day jobs, their cars still would not be used 24/7. They would still be parked up the majority of the time. After all, people work maybe 8 or so hours in every 24, less at weekends. The rest of the time is spent sleeping, eating, helping the kids with their homework, visiting relatives, entertaining friends, fending off nuisance phone calls, setting the world to rights in the pub and doing a range of voluntary activities. And of course most people expect to have holidays (though some people actually drive their cars more when they go on holiday than they do the rest of the time). Do we really regard all these activities as unproductive? Must we replace them with driving, simply to ensure that cars are "used"? What is the cost to society of doing so?
For example, suppose our car owner gives up running the local scout troop in order to drive for Uber in the evenings. Is he adding value to the economy? Economically, perhaps yes, though as I've already pointed out that there are limits to the amount of work that people can do before productivity suffers. Socially, I'd suggest, the answer is clear. No way is driving for Uber of equal social value to running the local scout troop. We have replaced a socially useful activity with an economic activity of at best marginal benefit.
The underlying assumption is that economic value is the only "value" that matters. This is poisonous. Our society is founded on the things that people do in their spare time. When people are forced to work longer hours because their incomes aren't high enough, social and philanthropic activities decline. The argument that "idle" cars should be brought into use therefore ignores both economic and social opportunity costs.
Of course, there are always the retirees who buy expensive cars with their pension lump sums. They aren't working, so there is no economic opportunity cost involved. And they probably spend their time playing golf, which is not a particularly socially useful activity. So clearly they should drive for Uber. And some do.
But there is a cost, actually. They are retired for a reason, namely that they are getting old and may have medical problems. If they drive for Uber, they risk running down their own physical resources.
And there is a second issue. They have spent their savings on a depreciating asset. Driving that car for money means that the asset depreciates even faster, not just because a car that is driven a lot wears out more quickly but also because a high-mileage car simply is not as valuable as a low-mileage one, however good its condition. "One careful lady owner" is a thing, in second-hand car markets. So it may not be in the financial interests of our retiree who has blown part of his pension on a top-of-the-range Mercedes to drive for Uber. The remuneration he will receive is unlikely to compensate him for both his time spent driving (and therefore not on the golf course) and the depreciation of his asset. When he replaces the Mercedes in five years' time, he may find that he ends up materially poorer than he would have been had he spent the time on the golf course instead of driving for Uber.
Faster depreciation of assets is dis-saving. Unless it is compensated by high enough remuneration to support regular replacement of those assets while still generating a profit, it is NOT PRODUCTIVE. It does not create wealth.
Commercial businesses take opportunity costs, profit margins and depreciation into account when making buying decisions. But ordinary people generally do not. How many people driving for Uber have taken into account not only the value of their time (including the loss of alternative activities) but the faster depreciation of their cars? I would venture to suggest that the number is vanishingly small.
The fact is that commercial car sharing schemes are able to undercut existing taxi services because their drivers bear the cost of asset maintenance and depreciation. They exploit the fact that people do not value either their time or their assets properly. They are therefore founded on an information and power asymmetry. When banks do this, we call it mis-selling. But when it is hyped up as "sharing" and supported by "new technology", it will spread peace, love and happiness everywhere while building better communities and saving the planet, apparently. Eh??
But there is a second issue here. If people use their cars so little, why do they have them? Why don't they just use taxis or public transport? Well, there are good reasons for this. And they aren't, by and large, financial ones.
The vast majority of people who drive, do so only as a means to an end. They want to get from A to B at a time of their choosing, without having to stop off at G, wait half an hour in the rain for a connection to X then change again at X to get to B. They like to travel in an environment where they can play loud rock music and smoke like chimneys if they want to. Using their own car means they can carry with them all the things they need (and probably quite a lot of things that they don't need, but that's human nature for you). They can ferry their own kids to school, removing the worry that parents feel when kids use public transport, supposedly "safe" taxis, bikes or their own feet. They can take Grandma to the day centre, the cat to the vet and the dog somewhere interesting for a walk.
And for many (I am one), even when they aren't using the car they leave stuff in it. The boot of a parked car is an extra storage space. So although my car may be parked, it is not idle. It is being used.
People drive because it is easy, convenient and gives them control, not because it is cheap. Only when the deadweight cost of owning a car exceeds the cumulative costs of taxis AND taxis can adequately substitute for the convenience of a car, are they are likely to ditch their cars in favour of taxis. Similarly, when public transport is comprehensive and parking charges high, car ownership tends to decline.
So if disruption and technological change in public transport and taxi services mean they improve, that is all to the good. Bring on driverless cars controlled by smartphones as a replacement for inefficient, crowded and dirty buses and expensive taxis. I, for one, would happily relinquish my car if there were a public transport service, or a private taxi service, that was equally convenient (including the extra storage space, please). It doesn't have to be cheap - after all, driving a car is dead time. If I can use that time more productively, I might be prepared to pay more, rather than less.
But disruptive technology bringing real convenience improvement is not fundamentally what Uber and its relatives offer. They are offering me cheap rides in other people's cars. I don't have a problem with Uber disrupting taxi services and public transport, if that forces them to up their game, but I do have a problem with the idea that bringing idle cars into use is "productive". At Uber rates, I can't see how it is.
But there is something else underlying this idea that "idle assets" should be brought into use. At the "Battle of Ideas" event that I attended last weekend, someone in the audience complained about yachts that he had seen moored at St. Katherine's Dock in London. "It was a fine sunny evening, and yet they weren't being used", he said. "Why don't the rich people let us use them?"
Indeed, why DON'T car owners, yacht owners and the owners of large houses rent out their assets to total strangers?
I'm sure you can work out why. If they are rich enough to afford them, they probably don't need the money. And if they don't need the money, why would they expose their assets to theft, vandalism, faster depreciation and general wear and tear? They leave their assets idle because they can.
Leaving assets idle is the privilege of those rich enough to own them. It is the principle underlying property rights, that I can use my assets when I choose and lay them aside when I choose. I don't have to share them with others if I don't want to. You may regard it as wasteful for my car to be left parked while I am at work. but frankly that's none of your business. It is my car, and you have no right to tell me what to do with it. I've paid for exclusive use of that car.
So, those too poor to afford those assets look enviously at them and say, "You aren't using that, so I should be allowed to". And those with green principles (and exploitative business models) latch on to this in the name of "sharing". In the latest version of Brave New World, everyone must "share" their assets for money. It's wasteful of them not to.
I'm astounded that people of libertarian persuasion can't see that this is creeping communism. All your cars are belong us. And your yachts, and your houses. In fact anything that you have and we want. It's immoral not to share them. Innit.
Related reading:
How free exchange and the "sharing economy" is the best route to peace love and understanding - The View From Cullingworth
Do the economics of self-driving cars actually make sense? - FT Alphaville