“Spoils of the privileged.” A phrase thrown around not uncommonly about services like Uber and Airbnb. I find this phrase an incomplete assessment, one driven mostly be emotion. There are two problems with this criticism I want to address:
- It doesn’t account for economic pressures to optimize process efficiency
- It implies these things need to justify their cost vs. more “worthwhile” efforts
New things start out expensive because they’re new and get cheaper as they optimize
Uber and Airbnb aren’t spoils for the privileged. They’re infant services experiencing a perfectly normal economic process: new things start out expensive and get cheaper as their components and processes become cheaper. It happened with electricity, cars, computers, and it will continue to happen with new industries and products.
It’s of course no coincidence these specific services are picked on. After all, just look at the people who get into an Uber cab: on an iPhone, paying a premium rate, and getting into a black towncar. Talk about deluxe.
Or at least that’s how it worked for a while.
Let’s look at Uber as it exists now in 2013. Uber offers not just towncar service but also regular cab service and even “uberX”-certified independent drivers driving their own Prius or Corolla.
And even the price argument is no longer valid: uberX prices are now 10% lower than taxi prices. The transition from infant service to grown-up, cheaper-than-the-incumbent service has occurred. This same transition will occur with all “spoils of the privileged” services in time.
The cost justification argument
Let’s extract this argument out of being ad hominem: really what people are upset with is big money spent on (relatively) lavish things when there’s also so much economic disparity in the world.
Again, would the same people who make this complaint be upset with the advent of electricity and how it began as an expensive utility for a few wealthy people and gradually grew? How about cars? Or computers? Each experienced the exact same growth from infantile project used by a few people for a high cost to a permanent utility produced as cheaply as possible.
Ever heard the question “When there are so many problems on Earth, why should we spend money on going into space?” NASA hears this every day. Peter Marquez points out a great answer from the NSC’s space policy during Eisenhower’s presidency:
“More than by any other imaginative concept, the mind of man is aroused by the thought of exploring the mysteries of outer space. Through such exploration, man hopes to broaden his horizons, add to his knowledge, improve his way of living on earth.”
In other words it’s not a trade-off. In fact it’s the opposite: only by being bold and innovating across the board do we discover better solutions that can cross-polinate. Building Uber doesn’t preclude us from solving other problems at the same time; building Uber gives us new insights into solving large-scale problems in new, more efficient ways.
One final thought: everything is on a spectrum. So if, for example, you have a problem with Dave Morin saying San Francisco is a city of the future because we spend more money on things that make our lives better, keep in mind at least one thing you use is nicer than something somebody else uses. Was that nicer, more expensive product worth producing? Of course. Why? Because progress.
I originally wrote this in 2013 on my blog, Noble Pioneer. Don’t miss the conversation there too.