By Steve Kelman

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Uber, government, the market and the new generation

steve kelman

We had a group of mostly 20-something Mexicans at the Harvard Kennedy School last week, visiting from the Monterrey Technological Institute, where they are studying public administration or international law. I sat in on a class on public policy towards Uber, and was fascinated by what I heard.

(I want, in deference to one of my daughters, who is about to start working for Uber's competitor Lyft, to note that I am using the term "Uber" generically to discuss startup alternative taxi services. These new transportation options started in the United States but have now spread to many other countries, including Mexico.)

What I heard surprised me, because Mexico has a strong tradition of statism -- a view that if there is a problem in society, people should look to government to legislate or regulate a response. And, though some of these students are working for companies, most are themselves in the public sector.

Yet the overwhelming sentiment in the discussion was pro-Uber, favoring no regulation at all or light-touch regulation (of the kind Uber itself advocates) to make sure drivers have background checks and so forth. When the argument was made for keeping the existing regulated system in the interest of better consumer protection, it became clear that most of these students felt marketplace competition provided not only lower prices, but also better consumer protection than the existing regulated system, at least in Mexico.

A number pointed to the availability of the driver's picture on the Internet and to the ability to rate the driver. Virtually all agreed they felt safer driving in an Uber vehicle than in a regulated taxi – there are occasional problems in Mexico with taxi drivers kidnapping passengers. A number expressed dislike of the Mexican taxi drivers' union, which they saw as corrupt and as protecting special privileges and high prices.

As I listened to these young people (and my colleague teaching the class told me that the Mexican students sounded much like their American counterparts when she teaches this case in our own master's program), I started thinking about a recent conversation with a number of older professors participating in an academic conference in Shanghai. Somehow, one professor from Europe got the table talking about Uber, which he absolutely despised. Uber, he said, represented American capitalism at its worst, disrupting European systems of social protection and care, creating a race to the bottom where fares might be lower, but at the expense of impoverishing drivers and compromising customer safety. The more the discussion went on, the more heated my European colleague got.

This contrast may be a Europe versus U.S. story, but I am inclined to think it is a generational story. I am guessing these Mexican students' parents might well have attitudes similar to the older European at the dinner table. Among young people, there is less tolerance for old regulated systems that favor established insiders at the expense of upstart outsiders.

Posted by Steve Kelman on Jun 16, 2015 at 12:39 PM


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