# Max Chafkin is an Idiot



## Chauncey Bivitz (Sep 28, 2015)

In a recent interview Max Chafkin (not sure what his credentials are, but they are certainly not in economics) commented "When you take an Uber in a big city you wonder why it's so cheap the reason it's so cheap is that on the other side of it Uber is spending a lot of money to the driver to incentivize him to take that fare."

I'm struggling with his logic. Fares are cheap because they give SO much money to drivers. Uber (and apparently Chafkin) math. The woman interviewing him is not the sharpest tool in the shed either.

http://www.bloomberg.com/news/artic...es-at-least-1-2-billion-in-first-half-of-2016


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## tohunt4me (Nov 23, 2015)

Uber is so cheap because DRVERS SUBSIDISE UBER AGAINST THEIR WILL !


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## Xylphan (Aug 26, 2016)

It's not just Uber. A growing number of delivery companies are going the so-called "independent contractor" route. Uber, Lyft, Flex, etc. are taking advantage of the fact that people simply don't know what they're getting into. People equate the $X per hour amount with a regular wage and think they're making bank, when in fact it's less than minimum wage (with no benefits). There is no regulatory floor here, and in fact some people working for these companies are probably winding up net negative.

Uber is cheap because people can't do math and don't understand what being an "independent contractor" entails. By the time they figure it out the hard way, Uber has already made their profit and has whole bunch of other ignorant suckers lined up to replace them.

Or put simply, if these jobs were really so easy and lucrative to make a profit, why the hell would they outsource them to the general public? The answer of course is that by outsourcing to the general public they are no longer are required to pay minimum wages, benefits, or expenses related to transportation. It's the old capitalist ideal: privatize the gains, socialize the losses.


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## agtg (Jun 8, 2016)

Uber propaganda machine is on overdrive with this crap.


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## Hippy Matt (May 29, 2016)

They sold it to us, we drove, they won.. that simple, move on to the next job to complain about. I did it to get out of the shittiest of shitty jobs, then took my time to find something I enjoy. I win


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## Driving and Driven (Jul 4, 2016)

They would do better to stop paying out to get new drivers to sign up and start incentivizing the existing, experienced drivers.

Of course, that won't happen. 

They WILL become profitable once they replace us all with OTTO-driven vehicles such as the Volvos in Pittsburgh.


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## Hippy Matt (May 29, 2016)

They're building a fleet for free.. they will get rid of the drivers and take 100%. My guess is they will drop rates more, but they will still double or triple profits


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## Chauncey Bivitz (Sep 28, 2015)

Xylphan said:


> It's not just Uber. A growing number of delivery companies are going the so-called "independent contractor" route. Uber, Lyft, Flex, etc. are taking advantage of the fact that people simply don't know what they're getting into. People equate the $X per hour amount with a regular wage and think they're making bank, when in fact it's less than minimum wage (with no benefits). There is no regulatory floor here, and in fact some people working for these companies are probably winding up net negative.
> 
> Uber is cheap because people can't do math and don't understand what being an "independent contractor" entails. By the time they figure it out the hard way, Uber has already made their profit and has whole bunch of other ignorant suckers lined up to replace them.
> 
> Or put simply, if these jobs were really so easy and lucrative to make a profit, why the hell would they outsource them to the general public? The answer of course is that by outsourcing to the general public they are no longer are required to pay minimum wages, benefits, or expenses related to transportation. It's the old capitalist ideal: privatize the gains, socialize the losses.


Well put.


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## Euius (May 19, 2016)

Chauncey Bivitz said:


> I'm struggling with his logic. Fares are cheap because they give SO much money to drivers. Uber (and apparently Chafkin) math. The woman interviewing him is not the sharpest tool in the shed either.


Uh. This is seriously Economics 101 stuff here.

Uber pays bonuses to the drivers to entice them to take rides at rates they otherwise wouldn't. In other words, the _rider_ is being _subsidized_. Just like the WIC coupon user can get milk for cheap, Uber riders get rides for cheap.

That's the problem with all of you only looking at the per mile rate. It's not the entire compensation.


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## Euius (May 19, 2016)

Driving and Driven said:


> They would do better to stop paying out to get new drivers to sign up and start incentivizing the existing, experienced drivers.
> 
> Of course, that won't happen.
> 
> They WILL become profitable once they replace us all with OTTO-driven vehicles such as the Volvos in Pittsburgh.


Uber was profitable in the US, and then they ramped up driver bonuses and now are very slightly losing money. $100 million in the US, total, for the year. Really not very much, big picture.


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## Chauncey Bivitz (Sep 28, 2015)

Euius said:


> Uh. This is seriously Economics 101 stuff here.
> 
> Uber pays bonuses to the drivers to entice them to take rides at rates they otherwise wouldn't. In other words, the _rider_ is being _subsidized_. Just like the WIC coupon user can get milk for cheap, Uber riders get rides for cheap.
> 
> That's the problem with all of you only looking at the per mile rate. It's not the entire compensation.


Clearly you never made it to Econ 201. What bonuses are you talking about? Clearly there are some that are profitable (cape islands for example), but those 'bonuses' are outliers. Referrals? That is a whole separate matter.


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## Euius (May 19, 2016)

Chauncey Bivitz said:


> What bonuses are you talking about?


The ones in my pay every week.


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## Xylphan (Aug 26, 2016)

Euius said:


> Uh. This is seriously Economics 101 stuff here.
> 
> Uber pays bonuses to the drivers to entice them to take rides at rates they otherwise wouldn't. In other words, the _rider_ is being _subsidized_. Just like the WIC coupon user can get milk for cheap, Uber riders get rides for cheap.


They don't pay you a bonus. They offer incentives that effectively reduce the percentage you pay them for their services. It just puts more of the fares you collected back into your pocket. Unless the amount of money they're giving you exceeds the percentage they originally took, then you're not making more money. You're just keeping more of what you already earned.

It's a clever way to gamify fee reductions that allows marketing to to promote/disguise them as "bonuses". It's a psychological ploy that allows them to keep fees higher because only a small percentage of drivers will actually be able to meet the goals for the fee reduction, but a large number of drivers will try and fail. Too bad, better luck next time.

A real bonus is like what they do with sign-up bonus the do for new drivers. That is money coming out of Uber's own pocket.



Euius said:


> That's the problem with all of you only looking at the per mile rate. It's not the entire compensation.


Your compensation is coming from the rider. Uber isn't compensating you. They're just refunding part of their cut if you manage to hit certain milestones. If you receive MORE than the fares you colleccted, then that's a different story.

You're problem is that you don't understand how Uber actually works. For some reason you think independent contracting works just the same as a normal wage job. It doesn't. Again, this is spelled out pretty clearly in the documentation if you'd ever bother to read it.


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## Euius (May 19, 2016)

Xylphan said:


> They don't pay you a bonus. They offer incentives that effectively reduce the percentage you pay them for their services.


You can fantasize all you want, but it's a non contractually required incentive. I.e., a bonus



> Unless the amount of money they're giving you exceeds the percentage they originally took


Which it does.



> Your compensation is coming from the rider.


Absolutely, inarguably, factually false.

I suggest you look into how pool and flat fare uberx is billed.

Uber actually loses money on many Pool rides. I would not even accept just what the rider pays. Good thing my agreement with Uber has Uber paying me at a rate with no connection to what the rider pays.



> You're problem is that you don't understand how Uber actually works. For some reason you think independent contracting works just the same as a normal wage job


I've been working as an independent contractor since there was an SGI to be an independent contractor with. Don't try to argue with me how things work, particularly as you're wrong.


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## Xylphan (Aug 26, 2016)

Euius said:


> You can fantasize all you want, but it's a non contractually required incentive. I.e., a bonus


Provide an example. All the examples of their so-called bonuses I've seen are them just refunding a portion of the fees you've paid them.



Euius said:


> Absolutely, inarguably, factually false.


Sure it's false. That's why it's in the language of your contract.



Euius said:


> I suggest you look into how pool and flat fare uberx is billed.
> 
> Uber actually loses money on many Pool rides. I would not even accept just what the rider pays. Good thing my agreement with Uber has Uber paying me at a rate with no connection to what the rider pays.


Uber isn't losing money on pools. The RideShareGuy even did a blog post on how profitable they are. You're still paying Uber out of the fares you collect.



Euius said:


> I've been working as an independent contractor since there was an SGI to be an independent contractor with. Don't try to argue with me how things work, particularly as you're wrong.


Well perhaps that's why SGI went out of business then. 

Uber's revenue stream is based on the percentage they collect from driver fares. Drivers aren't on their payroll. You don't have an employee record. You are a contract number. The contract stipulates you pay Uber (the contracting service) a percentage of your fares for their services. It really is quite clearly stated in the agreement.


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## Euius (May 19, 2016)

Xylphan said:


> Provide an example. All the examples of their so-called bonuses I've seen are them just refunding a portion of the fees you've paid them.


Then you're far too ill informed to be engaging in this conversation.

Hourly guarantees, for one. Guaranteed surge for two. Per ride bonuses for three.



> Sure it's false. That's why it's in the language of your contract.


Again, you're too ill informed to be engaging in this conversation. Not all markets have the same contract.



> Uber isn't losing money on pools.


So ill informed. Riders are paying as low as $2 for trips paying the driver $12.



> The contract stipulates you pay Uber (the contracting service) a percentage of your fares for their services. It really is quite clearly stated in the agreement.


So ill informed. Your agreement is not my agreement. Which is good, since pool and flat fare uberx doesn't work that way


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