Kemal Derviş analyses: “Is Uber a Threat to Democracy?”
Vice President of the Brookings Institute, and distinguished Turkish economist, Kemal Derviş discusses Uber, and other disruptive companies in our technologically advanced society.
The Rencontres Économiques forum recently convened for their annual meeting, the timing of which coincided with a debate in France about the ride-sharing service, Uber. The forums theme was selected in response to concerns that technological advances will lead to widespread unemployment. He cites Andrew McAfee of MIT who suggests, “We may need to re-build our societies so that, as intelligent machines increase productivity, the declining demand for human work has welfare-enhancing outcomes like higher (and more equitably distributed) incomes and more leisure time”
Uber is one of the disruptive companies driving the shift. Their no-frills service, UberPOP or UberX (outside of Europe), are causing taxi drivers a lot of frustration.
Derviş outlines the problems that must be addressed. First, there are the traditional taxi drivers who have had to pay hefty license fees, and they simply cannot compete with the less expensive Uber pricing. “Taxi drivers are being asked to adjust in a matter of days, rather than years, leaving democratic systems little time to determine how much compensation they should receive, and how it should be distributed.”
The second issue is regulation. Taxis are a source of income tax and sales tax, however the UberPOP software doesn’t make it possible to collect these value-added taxes. Finally, financial returns are going toward the companies leadership, rather than to the service providers, which Derviş believes is contributing to rising income inequality.
Uber is just one example of a disruptive innovation company that is bringing an increase in efficiency, as well as social and regulatory challenges. Derviş concludes, “what is needed now are new social and regulatory policies, often global in nature, that embody a new social contract for the twenty-first century.”
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