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Rep. David McKinley (R-WV) tries unsuccessfully to hail a taxi as cabbies with the D.C. Taxi Operators Association stage a rolling protest against app-based ride-hailing services such as Uber and Lyft, June 25, 2014, near the U.S. Capitol in Washington.
Disrupting D.C.: The Rise of Uber and the Fall of the City
By Katie J. Wells, Kafui Attoh & Declan Cullen
Princeton University Press
In the telling of authors Katie J. Wells, Kafui Attoh, and Declan Cullen, the late Ron Linton is an almost tragic figure. As chair of the D.C. Taxicab Commission, he resisted the illegal incursion of Uber onto the city’s streets. On January 13, 2012, he ordered an Uber ride at a local hotel to catch the firm in an act of lawbreaking: providing taxi service without complying with municipal rules on licensing, insurance coverage, and fares. Linton, who was white and at the time 82 years old, was seemingly out of place in a plurality-Black city, which had a government that was desperate to draw a young professional class and big business into the District. He represented an old model of municipal market governance, with locally owned private enterprises regulated by public officials. And he lost the fight to preserve it.
Uber’s rise represented America’s diminished public expectations in the 2010s. Governments at the national and local levels would not build a more just economy, and in turn the public began expecting less from government. Instead, the state turned to private corporations to deliver a facsimile of justice. The global financial crisis of 2008 and the Great Recession offered an opportunity for an ideological break with what had been the defining neoliberal worldview of the previous 30 years. Instead it yielded continuity. Disrupting D.C.: The Rise of Uber and the Fall of the City, by Wells, Attoh, and Cullen, narrates that story, in careful and powerful detail.
Disrupting D.C. shows that Uber, for all its knavery, was a logical outgrowth of the political economy of the 2010s. The authors are not apologists for Uber at all, but they are clear-eyed about the pre-Uber cab system in Washington, D.C. Many cabs on city streets were old and dirty, not to mention uniformly primitive until 2012: Drivers accepted payment only in cash, even as cabs elsewhere were equipped for credit and debit card payments. Further, they avoided majority-Black sections of the city and routinely drove past Black people attempting to hail a cab.
The desire for an alternative to municipally regulated cabs was undeniable. People in all parts of the city wanted reliable cab service. Uber met that demand.
Uber is also a supply-side story, specifically supplying jobs. For many, driving for Uber was a comparatively attractive employment option in the early 2010s. The recovery from the Great Recession was tepid. Unemployment remained high, and wage growth stagnated through the 2010s.
Uber stepped into this environment and provided jobs, with at least the pretense of flexibility and decent pay. The company ultimately failed on both grounds: Many drivers feel pressure to “be on the app” as much as possible, due to Uber’s compensation structure, and make less than the legal minimum wage once their costs are considered. Nonetheless, Uber provided jobs when the alternative for many in D.C. and across the country was unemployment. Given these choices, many drivers interviewed by Wells, Attoh, and Cullen defended Uber from its critics.
The conditions that bred Uber were not preordained, as the authors explain. The D.C. government, along with neighboring state governments in Maryland and Virginia and fiscal support from the federal government, could have addressed regional transportation woes by improving public transportation. A federal-state-local partnership would have been a return to the Washington Metro’s roots. As Zachary Schrag writes in The Great Society Subway, the federal government of the 1960s was committed to public investment and aimed to build not just a practical but a beautiful rail system for the nation’s capital. D.C.’s public transit was not to be a replica of New York’s functional but grimy subway.
Better public transit would have been an alternative to Uber. Metro’s board could have reduced rail and bus fares by obtaining more financial support from the District of Columbia, Maryland, Virginia, and the federal government. In this alternate universe, residents of all classes and races in the region could travel to and from work and places of leisure riding buses and trains, in lieu of hailing a Yellow Cab or an Uber.
For many workers, the options didn’t have to be Uber or unemployment. Congress could have appropriated more than the $800 billion it did in the American Recovery and Reinvestment Act of 2009, to stimulate a strong recovery from the Great Recession. National Economic Council chairman Larry Summers infamously counseled against doing more and argued that a larger program would spook the public and trigger a right-wing backlash. But if President Barack Obama had ignored Summers’s advice and pushed for a bigger package as Council of Economic Advisers chair Christina Romer had advised, he might have gotten more from Congress, especially during his honeymoon phase in office with large Democratic majorities in both the House and the Senate.
Sustained federal relief and investment—imagine jobs programs like the New Deal’s Civilian Conservation Corps and Works Progress Administration in 2009 and 2010—could have achieved full employment for everyone. The possibilities were not limited to building public works and manufacturing concrete and steel. Defining cultural products of the post–Great Recession era could have been the output of public programs: The federal government in the 1930s gave actors, artists, and writers work through initiatives such as the Federal Theatre Project. With full employment, workers could have ignored Uber and found better-paying and more stable jobs. Under these very different economic conditions, Uber would have likely been stillborn.
Uber, for all its knavery, was a logical outgrowth of the political economy of the 2010s.
Yet these options were never seriously considered at the national level. The burst of fiscal spending in 2008 and 2009 prevented the financial crisis from producing a full-blown depression. But this Keynesian fiscal policy was short-lived. President Obama was not interested in sustained federal spending to promote full employment, let alone to create a more equitable economy. In his 2010 State of the Union address, he declared, “[F]amilies across the country are tightening their belts and making tough decisions. The federal government should do the same.” Obama ignored the fundamental difference between households and the federal government: The latter supplies its own currency and is not monetarily constrained by how much it can raise through taxation and borrowing.
Wells, Attoh, and Cullen show that as the public sector delivered less, the public came to expect less. Uber thrived in this environment. But Uber’s success was not solely a function of fiscal austerity. It also reflected a distrust of democracy and confidence in big business and competition.
The problems of the pre-Uber D.C. cab system were fixable without Uber. Under the regulated system, which Uber has not entirely destroyed, the D.C. government sets rules on who can drive cabs and what qualifications they need to possess and establishes standard fares. In contrast to Uber’s dynamic pricing, whereby two passengers hailing a ride from the same origin to the same destination at the same time can pay wildly different fares, licensed cabs are required by law to post the regulated fares and comply with them. This system means that a rider can estimate approximately how much a ride from Foggy Bottom to Tenleytown will cost.
As described above, this system was far from perfect. Yet the basic principle was sound: balancing decent wages and safe working conditions for drivers with affordable, transparent, nondiscriminatory fares for riders, while also preventing traffic congestion.
The District, and cities across the nation, could have improved the public governance of cab markets. In Washington, D.C., the municipal cab commission could have required taxis to be fitted with card readers years before the arrival of Uber. Somewhat more ambitiously, regulators could have aided the development and adoption of ride-hailing apps, which on their own did not represent a major technological advance. Further, the commission could have penalized drivers and operators for discriminating against riders. To enforce nondiscrimination rules, it could have used secret testers to identify taxi drivers who refused to pick up Black passengers, and reviewed pickup and drop-off data to determine whether companies avoided certain neighborhoods.
But improving municipal cab regulation was not seriously contemplated. The Ron Lintons would not be ordered, let alone empowered, to do better. This was a function of the dominant manner of thinking since 1970: Liberals and conservatives alike have viewed public regulators with skepticism, if not outright disdain.
Contrary to the claims of big business and allied scholars, laissez-faire policy in which the state grants broad discretionary power to corporations was not the historical baseline in the United States. Legal historian William Novak has shown that public market regulation, particularly at the local level, can be traced to the founding of the nation. Nationally, the beginning of public regulation is commonly associated with the Interstate Commerce Act of 1887, which regulated the railroads. The federal government replicated this model across the economy during the New Deal. In the 1930s, Congress created, or expanded the authority of, agencies such as the Civil Aeronautics Board, Federal Power Commission, and Securities and Exchange Commission. Public regulators managed markets; private firms provided universal service on nondiscriminatory terms approved by the federal government.
Graeme Sloan/Sipa USA via AP Images
A Metrobus navigates its route near the U.S. Capitol, October 13, 2021, in Washington. The Washington Metropolitan Area Transit Authority relies on funding from the District of Columbia, other local jurisdictions, and the federal government to provide bus and rail service.
But according to the conservative public choice theory and the more progressive story of regulatory capture that took hold in the ’70s, regulators were inevitably in thrall to the firms they regulated. In the case of cabs, commissions became beholden to drivers and operators and abandoned their duty to protect passengers as well. How could it be any other way, asked the critics? Drivers and cab companies with a lot at stake would win regulatory favor over the diffuse public, per theories developed by economists like Mancur Olson.
Although this simple story of regulatory hopelessness was at best incomplete and contradicted by historical experience, a deep skepticism of public market governance was used to restructure many sectors, including airlines, electricity, finance, natural gas, and railroads. When he signed a major railroad restructuring bill into law in 1980, President Jimmy Carter declared, “This act is the capstone of my efforts over the past 4 years to get the Federal Government off the backs of private industry by removing needless, burdensome regulation which benefits no one and harms us all.”
This abdication of public responsibility culminated most spectacularly in the financial crisis of 2008. Yet, the United States’ worst economic crisis in 80 years did not undermine, or even seriously unsettle, the philosophical commitment to this so-called deregulatory project among political elites in the 2010s.
While public market governance was condemned as a fool’s errand, local governments wooing corporations to open offices and invest was not. Since the federal government was unwilling to help state and local governments on a long-term basis, corporations would have to be their savior. As Disrupting D.C. describes in rich detail, Mayor Muriel Bowser, elected in 2014, tirelessly courted tech companies and served as a reliable booster for those that established a presence in the city. Facebook or Google setting up shop, she believed, would show the city’s vibrancy and attract more investment and new residents. It was the way to keep the District relevant.
Critically, corporations promised one thing that stodgy government did not: competition, which could serve as the alternative to public market governance. Uber and its competition with the incumbent taxi industry were the solution for dysfunctional regulation.
Ron Linton’s sting operation against Uber did not attract support from the D.C. political establishment. Instead, they changed the law to accommodate Uber. In 2012, Councilmember Mary Cheh channeled the philosophy expressed by President Carter 32 years earlier when she wrote to her colleagues that legalizing Uber in the District would “support innovation in the public vehicle-for-hire industry by decreasing regulation and encouraging competition.”
The Obama administration echoed this theme. The Federal Trade Commission, a consistent champion of Uber in the 2010s, touted the company’s benefits and encouraged municipal governments to permit Uber to grow freely. In one telling letter, FTC staff wrote to a Chicago alderman: “Unregulated markets can be adept at accommodating new and innovative forms of competition, whereas traditional regulatory frameworks may lack the flexibility to do so precisely because they tend to mirror, and even entrench, the business models that have developed in the past.” (This contrast between regulation and competition is fiction. A first-year law student learns that no market is unregulated: Every market is a product of rules on property, contract, and sales practices.)
The type of competition in vogue in the 2010s was not the fair competition progressive lawyer and future Supreme Court justice Louis Brandeis espoused in the early 20th century. He favored business rivalry in which firms succeeded through good treatment of trading partners, operational efficiency, and research and development. Informed by Brandeis and his way of thinking, Congress prohibited “unfair methods of competition” in the Federal Trade Commission Act of 1914 and sought to promote morality in business rivalry.
But elected officials, antitrust enforcers, and judges during Uber’s first decade almost uniformly believed in business rivalry in which “might makes right” and the deployment of financial power was welcome. Amazon shirked sales taxes, priced certain goods below cost, and squeezed its suppliers to obtain and maintain market dominance, but that was just competition in action per the prevailing wisdom. Amazon was not a dominant firm that merited public concern, let alone federal antitrust action; it was the rightful winner of the competitive struggle.
The political economy of the 2010s failed on its own terms. In the long run, Uber did not deliver affordable transportation, nor well-paying jobs.
Uber arguably was an even more extreme version of such competition and exemplified the idea of “move fast and break things.” Despite the hype around being able to hail a cab on your smartphone, that was not the principal source of Uber’s competitive advantage. Moreover, Uber is not more operationally efficient than traditional cab companies, according to transportation expert Hubert Horan. He studied Uber’s business and concluded that, by outsourcing so many responsibilities to individual drivers, the company is likely less efficient than a licensed cab operator.
The company’s competitive edge was really its willingness to break municipal cab rules—hence Ron Linton’s sting operation—and to misclassify its drivers as independent contractors, despite setting their fares and dictating who they picked up and the routes they took through contracts and its app. Further, it had abundant patient capital backing it. The Saudi sovereign wealth fund invested $3.5 billion in venture capital funds that bankrolled Uber and accepted near-term losses in the anticipation of a lucrative monopoly in the future. And the backers were patient. Between 2016 and 2023, Uber lost a staggering $30 billion.
As Wells, Attoh, and Cullen explain, licensed cab drivers “were required to undergo regular inspections, pay registration fees, pass a sixty-hour training course that cost several hundred dollars, and maintain certain coverages, [yet] UberX drivers faced no comparable hurdles.” The combination of large-scale lawbreaking, lower labor costs, and financial privilege easily became unstoppable competitive weapons. A licensed cab company with an app could not compensate for the substantial cost advantages Uber, and its smaller rival Lyft, enjoyed.
Cab driving was once a path to the middle class, especially for immigrants. As legal scholar Veena Dubal laid bare in her ethnographic work on the San Francisco taxi industry, cab driving had become precarious well before Uber accelerated the trend. Having borrowed money to buy their vehicles as well as taxi medallions, many drivers were left with substantial debt but no passengers in the face of this new ruthless rival. Even as Uber and its boosters were pledging to remedy racism in cab-hailing, the company was destroying the livelihoods of many Black and other minority workers. In New York, eight drivers and operators committed suicide between 2017 and 2018. Wells, Attoh, and Cullen write that the narrow consumerist case for Uber ignored the injuries the company inflicted on people of color in their capacity as workers.
The political economy of the 2010s failed on its own terms. In the long run, Uber did not deliver affordable transportation, nor well-paying jobs. A decade of ostensibly cheap cab rides has come to an end: Uber’s financial backers have run out of patience and want their outsized returns. Uber is raising fares and further reducing pay for drivers. And Uber’s universality is a fiction: Disrupting D.C. makes clear that Uber is not as race-blind in serving passengers as it asserts and has resisted legal obligations and public demands to serve disabled riders.
For all the hype, Uber is a simulacrum of what came before it. Uber has become the cab dispatcher and regulator for thousands of cities around the world. But it has no formal obligations to serve passengers or drivers. Notwithstanding the deficiencies of the regulated cab system, especially before Uber’s arrival, it is local and public. Residents of the District of Columbia can demand the taxi commission do better, and members of the D.C. Council can increase its funding and ensure affordable transportation for all. Regardless of whether these rights are exercised, this latent democracy exists.
Uber has no such public character or even public trappings. It is global and private. Residents of cities, even big cities, are at its mercy. We can hope the corporate guardian acts responsibly, but we should not expect that. Doing better requires recommitting to democracy and public action.
