April 18, 2015
That’s the question millions are asking after reading Matthew Yglesias’ piece arguing that former Obama political adviser David Plouffe is cashing in the right way by working as a lobbyist for Uber. Matt argues that Plouffe is getting rich by openly arguing for a cause that he believes in. I’m not convinced.
First, Matt argues that if Plouffe thought the incumbent taxi industry was mostly right in its battles with Uber, then he could have gone to work lobbying for them. While this is true, my guess is that the incumbent cab industry would have a hard time coming up with the same sort of paycheck as Uber, a company with a $40 billion market capitalization. I doubt the industry collectively can come close to matching a $40 billion market capitalization. Furthermore, given the difficulties of coordination, it is extremely unlikely that their association would be able to toss around the same sort of cash for lobbyists as Uber even if the incumbents collectively had the same resources.
The other more important reason why I’m not convinced that Plouffe believes that he is on the side of the angels, is that the angels don’t have to cheat to make their case. Here I’m referring to the study that Alan Krueger, the former head of Obama’s Council of Economic Advisers, did on the pay of Uber drivers. Uber gave Kreuger data on drivers’ gross earnings per trip, as well as the number of trips they did per hour. This allowed Krueger to calculate that they grossed on average $6.00 an hour more than the net earnings of drivers for the incumbent cab industry.
What Krueger could not do was make a comparison of net earnings. While there is no way for Uber to know exactly how much it costs its drivers for each mile driven, we do have data on this issue. (The IRS puts the cost at 57 cents per mile.) This means that if we know the length of an average trip, then we could get a pretty good estimate of the net earnings of Uber drivers. (Actually, we would still need to factor in miles driven to and from pick-ups and dropoffs.)
Unfortunately, Krueger tells us that he didn’t have data on average miles per trip. Of course Uber would have very good data on miles per trip. If Kreuger didn’t have the data it’s because Uber chose not to give it to him. Presumably Uber opted not to share the data on miles per trip because it knew the data would make them look bad. Therefore, it opted to withhold these data from Kreuger so he could not do a full analysis.
Getting back to Plouffe’s motives, if he really believed in the virtues of Uber, then he should not have a problem with Uber giving all the data to Kreuger and letting him tell the whole story. The fact that Uber withheld the data indicates that Plouffe and the folks at Uber feel they have something to hide and therefore don’t entirely believe in the merits of their case. (I’m assuming that Plouffe was involved in arranging this study.)
So I’m afraid I can’t agree with Matt here. My guess is that Plouffe went with the highest bidder.
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