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The Uber Factor


I  flew into Houston Hobby Airport a few days ago, touched the Uber App (i had set up some time ago).  I put in the destination and It said there was a ride two minutes away.  I learned that even if the driver is standing right next to you it will say they are two minutes away. This was my first Uber booking.

A nice face shot of Lateefah and her license plate showed up also noting she had a Honda Pilot. (you can spec SUVs and Black Cars if you want a more limo style ride.)  She had just dropped off a fare at Hobby and responded literally in seconds (they have 15 seconds to respond).  She quickly called me to establish a rendezvous,  I noticed the phone number was a Cleveland number.  She explained that was because it was provided from Uber.  The App also quoted the fare as between $20 and $28 depending on traffic and delays.  It ended up being $22.12

After I was dropped off the fare is charged to my credit card.  No cash changes hands, no tips.

I was able to see a rating of Lateefah before I accepted .  She had a 4.8 out of 5.0.  I gave her a 5.0. The drivers also rate the passengers.  If you are a rowdy trouble maker who has thrown up in a cab, you may have a tough time getting a ride.  Lateefah will not pick up a low rated passenger.

Drivers with a lot of customer complaints get yanked.  Lateefah said some cabbies who have driven for years bring bad attitudes with them when they drive for Uber and do not last long.

In Houston a low end ride – the Uber X charges $1 base, $.15/ minute, $1.10 per mile, a minimum of $5 and a cancellation fee of $6

The Uber XL (bigger car)- $2.85 base, $.30/ minute, $2.20 a mile, $7 minimum and $6 cancellation

The Black car (Luxury – Cadillac/ Lincoln/ Mercedes)- $7 base, $.35 a minute, $3.45/ mile, $15 minimum and $10 cancellation.

The SUV- $14 base, $.45/minute, $4 per mile, $25 minimum, $10 cancellation.

The final charge is computed by Uber and a invoice is on your phone within a minute of reaching your destination. Your then rate your driver from one to five stars.

The big losers are clearly the cab companies which are slow to respond and generally a poor quality ride.  The rental car companies will also take a hit.  I would rather Uber than rent, if it is an Uber friendly city.  Less stress, no hassle or time wasted at the rental car kiosk(even thought this has been streamlined quite well) and no parking fees  Short Hertz and Avis.  No more worrying about getting ripped off with their gas reimbursement or insurance charges, or worrying about how to find the drop off when you return to the airport.

The winners are consumers who get a whole new level of quality and service that was not there before for a wide market.  Downtown bars and restaurants benefit from customers who no longer choose between driving and drinking or staying at home.  Safety improves. You can afford a bit of luxury by getting a Black car on very short notice (literally minutes)  without having to book a limo for an entire evening. Uber offers more than a replacement for a cab ride.  It is a whole new experience.

Uber has unleashed  idle asset and thus created an opportunity for thousands of car owners who would like to supplement their income.  Most of the drivers were part time, or were able to work whenever they wished.  They were given an opportunity to run their own business.  They had to meet certain standards but their real boss was the passenger and their very simple and very timely rating system.  Bad customer service and you are quickly out of job. Imagine that level of accountability with your cab experiences.

I had two more Uber experiences before I left Houston and both were great. The App allows you you to see how many vehicles are in the area and the approximate wait times.  You can check on the various quality rides: X, XL, Black Car r SUV, and see which one will get to you faster.

Uber has fostered a community.  If you had presented to me a business model that consisted of an App to allow me to quickly contact a perfect stranger in an unmarked car to transport me in a strange city, I would never have given it a chance.  I would have been very wrong.  The highly regulated taxi business is understandably outraged at this new unregulated competition.  The biggest loser may not be the cabs, but government regulations of the industry and the income this regulation generated.   The rapid growth of Uber has caught regulators off guard.  The conflict is more than between Uber and the cab companies; it lies more predominantly between the Uber Community (independent drivers and very satisfied customers) and government regulators.

Uber now has a market cap of $18 billion.  AirBNB is the Uber of the hotel business and this story is largely repeated there.  I imagine the users are largely younger and will have a new more involved look at the impact of regulations on their lives.

Uber seems a near perfect name from a marketing perspective.  They now own the word and it has become synonymous with the industry.  You do not call a”private contractor transportation service”, you “Uber” a ride.  A marketing dream name.





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The Bigger Benghazi Question


From The American Interest, The Case for More Congress In American Foreign Policy, by Walter Russell Mead:


At the same time, with our Libyan policy, like the country itself, in ruins, one has the sense that the Benghazi investigation missed the larger point. The United States participated in the overthrow of the Qaddafi government, largely on humanitarian grounds, but we were utterly unprepared for the aftermath. Libya is in chaos today, radical jihadi groups have proliferated in the ruins, Qaddafi’s arms and fighters have fanned out across North Africa and the Middle East, and arguably more Libyans have died as the result of the intervention than would have perished had we stayed home. On top of this, there are credible allegations that the U.S. had guaranteed Qaddafi’s safety when he gave up his WMD program. Did our intervention in Libya break a pledge, or did it reduce our ability to persuade other countries to abstain from WMD programs? Did the decision to intervene in Libya also mean that the U.S. was less ready and able to respond appropriately to the much greater humanitarian and strategic crisis that holds Syria in its grip?

Benghazi was one consequence of a much larger and more serious policy failure, and the costs of that failure are still mounting up. By focusing narrowly on Benghazi, Congress missed the bigger question and the more consequential failure. Again, the question is less one of partisan politics than of the national interest: what can we learn from policies that go awry so that in future we can make better choices?

A review of our policy failure in Libya (or earlier ones in Iraq and elsewhere) isn’t just about second guessing and assigning blame. It is about making sure that the nation’s foreign policy infrastructure is up to the tasks that our turbulent century has set for us.

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A Harsh Political Lesson


Chuck Schumer lays a harsh and accurate assessment on his fellow Democrats.

From The Wall Street Journal,  Schumer’s ObamaCare Mea Culpa (link may require a subscription)


The Senator called the law a distraction from the “middle-class-oriented programs” his party should have pursued after 2008: “Unfortunately, Democrats blew the opportunity the American people gave them. We took their mandate and put all of our focus on the wrong problem: health-care reform.”

Mr. Schumer said he still supported the entitlement’s goals, but “it wasn’t the change we were hired to make. Americans were crying out for the end to the recession, for better wages and more jobs.” We’re glad he’s finally taking our advice from 2009-2010.

Ever the politico, Mr. Schumer put the problem to Democrats in terms crass enough for them to understand—“only a third of the uninsured are even registered to vote,” he said, and only “about 5% of the electorate” benefits from the entitlement. “To aim a huge change in mandate at such a small percentage of the electorate made no political sense.”

Mr. Schumer is still missing the crucial point. ObamaCare is not merely a disaster for big government but a disaster of big government. The law is unpopular because its mandates, taxes and central planning are harming the economy and the insurance and medical care of average Americans.


He is spot on in my opinion.  There are many improvements in the economy from the bottom when he was first inaugurated, but the critical flaw that cost them dearly was the stagnation and decline in middle class VOTERS’ incomes. This is why so many feel we are still in a recession even though all of the technical data indicates otherwise.

The political lesson the GOP should study as well is that a broad victory is not a mandate to do whatever you want.  The winners need to remain humble (if they ever were) and listen.  It is important to have a broad representation in the cabinet, not just of the ethnic and special interests, but of the intellectual ideas we hold.  Obama’s administration represented a far too narrow cross section of the electorate, and much the media (except Fox)  never held his administration accountable until the failures mounted and became impossible to ignore.

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Insulated Decisions


From John Cochrane, The Grumpy Economist, Behavioral Political Economy


People do dumb things, in somewhat predictable ways. It follows that super-rational aliens or divine guidance could make better choices for people than they often make for themselves. But how does it follow that the bureaucracy of the United States Federal Government can coerce better choices for people than they can make for themselves?

For if psychology teaches us anything, it is that people in groups do even dumber things than people do as individuals — groupthink, social pressure, politics, and so on — and that people do even dumber things when they are insulated from competition than when their decisions are subject to ruthless competition.

So on logical grounds, I would have thought that behavioral economists would be libertarians. Where are the behavioral Stigler, Buchanan, Tullock, etc.? The case for free markets never was that markets are perfect. It has always been that government meddling is worse. And behavioral economics — the application of psychology to economics — seems like a great tool for understanding why governments do so badly. It might also inform us how they might work better; why some branches of government and some governments work better than others.


Bureaucracies are also insulated from accountability. Political factors make it much harder to admit mistakes or failures.  Business organizations are also resistant to change but market forces are far less political and often blind and brutal.  Bureaucracies will make better decisions when they face the same accountability faced in a bankruptcy court.

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Predicting Nothing


From American Thinker, Anthropogenic Global Warming and the Scientific Method by Betsy Gorisch


Science is about ruling things out. Any good scientific hypothesis will make predictions about the natural world — ideally, it will predict at least one natural effect whose existence cannot be caused by anything other than the hypothesis being tested. Observations are then made to acquire evidence, and the evidence is evaluated against the hypothesis’s predictions. Evidence can either rule the hypothesis out or not; if the evidence differs from the hypothesis’s predicted effects, then the hypothesis is wrong and is considered to be ruled out, or falsified. That which has not been ruled out by evidence remains possible. If enough confirmatory evidence is accumulated, the hypothesis is elevated to the status of a theory. Scientific Method is, conceptually, no more complicated than that.

Karl Popper, the great philosopher of science, used a simple observational experiment to illustrate the scientific method’s requirement of falsifiability — the requirement that a hypothesis be stated in such a way as to allow its testing against evidence with a view towards ruling it out. He noted that most people had once assumed that all swans are white. This assumption was based on the observation, over time, of uncounted numbers of white swans — and each such observation was taken as evidence supporting the assumption. However, there came a time when a black swan was found in Australia, and its discovery served to disprove the assumption that all swans are white. In generalizing from this discovery, Popper understood that you would not test the hypothesis that all swans are white by undertaking a search for white swans — because no matter how many white swans you found, you would neither have proven, nor even properly tested, the hypothesis. Instead, you must mount an intensive search for a single non-white swan.  If you found even one of those, you would have ruled the hypothesis out. Alternatively, and without finding a non-white swan, it remained viable — but because there remained the possibility of a single undetected non-white swan, it could not be regarded as proven.

The AGW hypothesis that so many people claim accounts for what is essentially pretend global warming has never been treated this way. Initially, its proponents engaged in a search for supporting evidence: Elevated average annual temperatures, local glacial retreats, elevated-temperature indicators in proxy systems such as tree-ring records, measurable coincident increases in atmospheric CO2 concentration, and so on — a search for white swans. But these efforts ignored, and failed even to seek, either any alternative explanations or evidence that would have ruled the hypothesis out. AGW has failed the predictions test again and again; any true scientific hypothesis with so poor an evidence-based evaluation record would have been scrapped by now. Instead, its proponents elevated it to the status of a theory and, ignoring the fact that climate changes continually, renamed it “climate change.”

Models are essentially used as predictive tools, so they are only as good as the information upon which they are constructed. If there are any unknown components in the modeled system, then the model’s predictions will, almost by definition, be unreliable.  In the case of a system both as complex and incompletely understood as Earth’s atmosphere, the model’s construction will essentially be required to include untested, incomplete, and/or unproven function assumptions and data. In such a case, the problems and pitfalls of using these models to construct governing policies quickly become self-evident: People trying to rely on the models essentially cannot know what they are doing.  When, for example, their model does not predict their real-world observations, they tweak it until it does — which introduces errors-by-expectation into both output and the policies based upon it. These errors increase in magnitude, and therefore in effect, in a non-linear fashion directly proportional both to the size of the system and to the modeled outputs.

AGW’s predictions are not being reliably confirmed by observations. When stasis and/or cooling occur rather than warming — as has been the case over the last decade-and-a-half — atmospheric scientists fudge interpretations by saying that if it is cool, well, that is just weather; if it is warm, though, that is climate.  Alternatively, they claim AGW predicts the cooling — as, for example, with the recent polar-vortex outbreaks.  However, a theory that predicts everything predicts nothing — because a theory that predicts everything cannot be falsified through testing; nothing will serve to rule it out.

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