Mexican Cartels and Uber XLs: Congress Ponders and Panders, Sharing Economy Edition

What do an Uber driver, an insurance expert, the chief economist for a startup, and a thinktank director have in common?

Not a whole lot, but Congress decided to call them in to testify on the sharing economy anyways.

A congressional hearing was recently held on the benefits of the sharing economy, with a scarcely detectable slant in its GOP-influenced title: The Disrupter Series: How the Sharing Economy Creates Jobs, Benefits Consumers, and Raises Policy Questions.  Statements given by Members of Congress from both parties highlighted their still-ambiguous attitudes towards the sharing economy, as well as a great deal of confusion about what it does.

Republicans, led by Chairman Michael Burgess (R-TX), lauded the benefits of the sharing economy by citing platforms such as Uber and AirBnB as laissez-faire capitalism in action – organic responses to supply and demand. 

In his opening statement, Burgess emphasized the importance of understanding the sharing economy, stating that the sharing economy’s global performance will balloon from $50 billion in 2013 to more than $330 billion by 2020. 

Chief among Burgess’ concerns was the privacy of customers who participate in the sharing economy, particularly Uber’s alleged tracking of customers’ locations when they were not using the application.  Reflecting the larger Republican position on the matter, Burgess also emphasized that firms in the sharing economy were “inherently good at creating positive economic feedback loops.”  This was not lost on the Internet Association, which is currently holding its aptly-named Virtuous Circle conference attended by elected officials, policy experts, senior executives, and regulators in Menlo Park, California.

Burgess proceeded to give tech firms a rather juvenile warning, advising firms to continue exhibiting the good behavior that allowed them to skirt regulations in the first place, otherwise the government would have to intervene.  Although the specific extent and nature of this intervention was unclear, we can only assume it means being grounded from global market disruption for at least one week.

At the other end, Democrats led by Ranking Member Jan Schakowsky (D-IL) questioned the wisdom of allowing businesses in the sharing economy to skirt industry regulations and worker protections for the sole purpose of innovation.  Among Schakowsky’s concerns was the inability of workers to organize and engage in collective bargaining—she argued that workers on platforms such as Uber are “atomized” and disconnected from one another, preventing the use of traditional methods for demanding worker protections.

The reluctance of normally tech-friendly Democrats to fully embrace the sharing economy was demonstrated by Rep. Frank Pallone (D-NJ).  At the beginning of this year, Pallone was selected to be the top Democrat in the House Energy and Commerce Committee – which has jurisdiction over numerous tech issues – over Congresswoman Ana Eshoo (D-CA), a Silicon Valley Democrat who was widely expected to fill the position due to her Silicon Valley constituency and tech-centric policy focus.

Pallone, a New Jersey Democrat, cautiously questioned the benefits of the sharing economy.  He voiced concerns about customer privacy, the lack of transparency in Uber’s customer/driver rating system, and the potentially exploitative practice of classifying drivers as contractors rather than employees.  In an act of political self-defense that we will certainly see more of, Pallone also mentioned the thousands of taxi drivers in his district whose livelihoods were challenged by Uber’s business model.  In closing, Pallone argued that innovations must be paired with protections for all parties.

The panel of witnesses was an exercise in political heat diffusion, including: an Uber driver-partner, the Center for Economic and Policy Research (the only organization that truly urged caution in the sharing economy), the Internet Association, Intuit, San Francisco-based Thumbtack, and the Property Casualty Insurers Association of America

 

Uber’s choice to send a “driver-partner” – a contracted worker who does not hold employee status or the benefits thereof – was characteristic of the company’s larger approach to government relations.  Operating on the premise that it is better to ask for forgiveness than permission, Uber has largely dodged direct confrontations with the government by relying on surrogate government relations groups like the Internet Association to represent them at Congressional hearings, de-escalating tough questions about their practices by promising responses at a later date.  

Uber is also known for launching sometimes hostile campaigns against local governments that seek to regulate its activities or observe its impact on local transit—something that it did not have to address thanks to its choice of a pseudo-representative.

Uber’s driver-partner witness, Luceele Smith, was well-chosen for their purposes: she started driving for Uber in June 2014 and had previously worked in law and served in the Air Force for 8 years.   She is an example of how the sharing economy provides opportunity to its participants, which was reflected at the end of her testimony:

“With other jobs, the only way to earn more money is to take another job or get a promotion - which can take years. That freedom removes a lot of stress from your life. And that freedom is priceless. Knowing you can log in anytime and make money - that’s incredible. It’s unmatched.”

Unsurprisingly, any hard-hitting questions that the committee asked Smith were outside of her purview as a driver-partner.  She did not have authority nor control of privacy issues, price points, the driver-passenger rating system, or the number of drivers Uber puts on the road.

 

Yet in the most perplexing moment of the hearing, Congressman Pete Olson (R-TX) asked the entire panel of witnesses how the sharing economy aids human traffickers along the Mexican border, particularly in his hometown of Houston, Texas. 

The question, which carried a strange mixture of genuine concern and bordering on the absurd, triggered a brief silence in the hearing room as the audience attempted to visualize Mexican cartels calling Uber XLs to shuttle people across the border.

The question glanced off most of the witness, except for Michael Beckerman of the Internet Association and Dean Baker of the Center for Economic and Policy Research.  Beckerman argued that the sharing economy is unique because it creates communities that could potentially identify these issues and allow for fast intervention.  Baker, meanwhile, noted that regulations prevent taxis from aiding and abetting human traffickers and that any such rules should apply to Uber as well.

From a practical standpoint, the GPS tracking and precise identification methods required to participate in the sharing economy would likely discourage human traffickers from using services such as Uber or AirBnB.  Furthermore, if human traffickers were to use sharing economy services, the information collected on them in the process would be a great assistance to law enforcement agencies in locating traffickers and their victims. 

Meanwhile, Michelle Bachmann showed up in the middle of the hearing, presumably to have an audience for the humblebrag once she found her name in Politico.

After failing to find her name - or perhaps realizing that she was sitting at a hearing she had no intention of listening to - Blackburn slid out.

All told, the hearing ended as it began. Republicans lauded the sharing economy as the victory of capitalism over regulation, a Representative tied the topic back to the Mexican border, and Democrats made a half-hearted attempt to advocate for worker protections in the sharing economy and shared the concerns of taxi drivers in their respective districts. 

The hearing was the first in House Energy and Commerce Committee’s Disrupter Series, which we will continue to cover throughout this session of Congress.  Send us questions or comments by emailing us at contact@theautonomer.com or tweet us @TheAutonomer.  We regularly cover Congressional hearings, media events, and tech fairs in New York and the Washington, DC area and would love to hear from you.