Uber-corruption? New taxi service threatens good-paying US jobs while enriching a few insiders
Last week I was in Moscow, invited there by the Anti-Globalization Movement of Russia (AGM), an organization founded by young patriotic Russians. They have made an effort to reach out to progressive communities around the world, even protesting in front of the US Embassy in Moscow against police impunity in murders of unarmed Blacks. We had been negotiating dates for my trip there for about a year. I finally made the trip last week: my visit coinciding with that of US Secretary of State John Kerry. This unusual alignment of US officialdom and a former Member of Congress made for enhanced media interest in my visit.
In the process, I learned a lot about young Russians. But, for now, I want to explore the focus of this article: what I learned about a controversial business that has deep financial ties to Wall Street insiders and Chicago Mayor Rahm Emanuel.
On my return from Moscow, I landed at JFK airport, but had to make my way quickly over to LaGuardia airport for the next leg of my journey. That is when I chanced upon a conversation with my taxi driver who was fighting mad about what he believed was an acute injustice that violated the compact between taxi companies that pay more than one million dollars for permission to operate, called a “medallion,” in exchange for protection and regulation by the City. The political tale he spun to me reeked of what seemed to be a type of illegal Wall Street insider trading. Here’s what he told me:
Immediately after collecting the medallion money from taxi operators in New York City, then-Mayor and billionaire Michael Bloomberg publicly quarreled with a political connected businessman known as “The Taxi King,” Evgeny “Gene” Friedman. According to news reports, Bloomberg reportedly told Friedman that he was going to “destroy your f_cking industry.”
According to information provided to Business Insider by a witness to the exchange, Bloomberg appeared to be upset by the ‘Taxi King’s’ successful legal attack on Bloomberg’s plans to introduce reforms in the New York taxi industry. Those reforms were to include the mandate that all taxis would be a special yellow design made especially by Nissan for the New York Mayor’s initiative, the Nissan NV 200. The deal with Nissan was reportedly worth one billion dollars. Dubbed by Mayor Bloomberg as the “Taxi of Tomorrow,” it just so happened that my dash from JFK to LaGuardia was in that very Nissan model that is neither electric nor hybrid.
My driver was angry because he had worked hard and paid the fee for the medallion and then the Mayor undercut the value of the medallion by allowing Uber drivers to operate in the city in any vehicle. He railed that overnight, the value of his medallion had dropped precipitously and due to the Uber competition, he was facing eviction from his home due to decreased business and increased price competition. He claimed that his situation was mirrored by thousands of other New York City taxi drivers and that overnight a middle class job had become one out of which barely a modest living could be eked.
Indeed, Uber has made international headlines recently. Available in 68 countries according to its website, Uber faces a frontal challenge from competitors in India and China. Uber’s website claims that its drivers make good money, work on their own schedule, outside of an office and without a boss. Indians and Chinese investors have joined forces to back Ola, Uber’s competition in India. The stakes are big with Ola having raised approximately $670 million between 2012 and mid-2015 before the Chinese investment. In mid-November 2015, Ola announced another fundraising success of an additional $500 million that included investment from the Chinese Uber competitor, Didi Kuaidi.
Then, my driver dropped what was a bombshell to me: Chicago Mayor Rahm Emanuel’s brother, Ari Emanuel, head of William Morris Endeavor talent agency, was an Uber investor. So, I decided to investigate. And sure enough, it turns out that the William Morris Endeavor talent agency owns an investment in Uber. According to the Chicago Sun Times, the company spokesperson confirmed that the Uber investment was made about three months after Uber began operating in Chicago. Moreover, the Sun Times reports that Uber investors also include Amazon’s billionaire Jeff Bezos and Goldman Sachs.
Chicago taxi drivers contend that the relationship between Uber and the Mayor’s brother is an outrage because of the city taxi regulations. The paper concludes that the relationship makes it hard for the mayor to appear to be acting solely in the city’s interest. Even worse, in 2012, a city employee was reassigned after she informed the public in a tweet that the Uber drivers were not licensed. By 2014, Mayor Emanuel’s ordinance was adopted allowing Uber to legally operate in the city where taxi medallions cost over $350,000.
An investigation by the City of Portland and reported by Bloomberg news shows how taxis become displaced by Uber. Meanwhile, in New York City, my driver reported to me that current New York City Mayor Bill de Blasio is trying to sort out the mess left behind by his predecessor. But in July 2015, the Washington Post reported, “Uber mows down Bill de Blasio.” The Post article also says that driver-less cars could soon replace Uber drivers. It ends by acknowledging that while Uber was smashing Bill de Blasio’s efforts to slow down its penetration of the New York City market, it also was crushing the dreams of “a lot of hardworking cab drivers.”
So, what does this mean to me?
Somehow, it seems unseemly that billionaire and millionaire mayors can use their money and political power to cost the jobs of hard working middle class taxi drivers without some kind of alternative training opportunities or something to ease the losses of the losers while the winners seem to be playing insider profit games.
Last week, I wrote about how those powerful enough to make US policy on Haiti are turning it into a vassal state; what I stumbled on two days ago, upon my return to the US, is how a similar situation is brewing in cities all across the United States while millions of dollars in profits are on the table and hundreds of thousands of jobs are at stake.
In the current US neoliberal system, the winners are the few on the inside and the losers are all of the rest of us. This is especially true while the taxi industry undergoes a game-changing transformation.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.