Drive by: how companies like Uber work around regulations, avoid paying taxes, and shaft their workers.

AuthorConnolly, Matt
PositionBook review

Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers

by Steven Hill

St. Martin's Press, 336 pp.

For a certain class of urbanite, using Uber is a guilty convenience. You know you shouldn't even if you don't quite know why you shouldn't--something about labor and privacy issues--but sometimes it's late and it's raining and you know it'll be more expensive if you take a more traditional cab. Plus, it's just one ride. It can't be that bad, right?

If you already feel guilt pangs when using Uber, reading a few chapters of the journalist Steven Hill's Raw Deal: How the "Uber Economy" and Runaway Capitalism Are Screwing American Workers may have you deleting the app entirely. Hill sets his sights even higher, hitting Silicon Valley darlings like Uber and Airbnb alongside the former online black market Silk Road, right-to-work laws, and factory robots all under the umbrella of "naked capitalism." "You may not have health care from your job anymore, or unemployment, retirement or sick days, but hey, you are your own boss now," Hill writes. "Congratulations."

What makes a service like Uber so successful that it's valued at more than $50 billion? The easy answer is that the company saw a broken, inefficient system--the taxi industry--and streamlined the process by designing a cutting-edge app. It's a classic Silicon Valley origin myth. But it's missing a key component.

A good idea and some tech savvy alone aren't enough to raise millions (or billions) of dollars. Companies like Uber and Airbnb don't just identify an industry in need of disrupting; they identify regulatory blind spots that allow them to operate with little government oversight. For all intents and purposes, Uber is a taxi company and Airbnb is a hotel company. But both maintain they're just services connecting users with independent contractors (in these cases, drivers and homeowners). This shell game lets the companies avoid costly licensing, training requirements, and sometimes even taxes. By the time local governments move to regulate after a year or three of operation, there are already teams of lawyers and a customer base used to low prices ready to fight. The message is clear: face a lengthy legal and public relations battle or give up and let companies operate outside the rules.

The regulatory piece of the equation does not get by Hill. "In every location where the company has bumped up against regulations--which is pretty much everywhere--Uber...

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