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by tomcorrigan
3429 days ago
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That ignores common sense. If Uber is more profitable by circumventing W2 regulations it will do so. There is no morality in capitalism, only worship of the bottom line. Businesses don't care about "reasonable" regulations, they care about profit. I don't think there is anything wrong with that. A corporation is not a person, it can't be expected to think like one. Instead people must elect representatives that impose laws that force business to operate in a way that is compatible with our collective morality. |
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Without defining the time horizon you are referring to for profitability, you are making a non-statement, one that is easily demonstrated to be both trivially true and trivially false.
Firms forego profit all the time when they invest in uncertain R&D rather than returning profits to shareholders in the form of a dividend.
Similarly, firms often invest in building their brand even though it is very difficult to quantify brand marketing ROI.
My argument is that Uber is making a foolish choice by trying to get away with 1099 status for employees... or in other words, Uber is betting on the wrong horse, or investing poorly in its future. The same folly would apply to any short-sighted business decision.
This is where time enters. Uber's strategy makes its financials look better in the short term at the expense of a sustainable long-term strategy.
Market forces don't get much chance to help discipline this decision, since the only actors are Uber's investors and board and those of Uber's competitors. Regulators haven't done anything to force the issue yet. So like any other decision that might be made in a shortsighted way or a more appropriate long-term-value-based way, Uber is simply making a suboptimal business decision.
It is not a foregone conclusion that regulators must be the ones to nudge Uber into the "right" decision. Firms make mistakes all the time, and other firms are ready to step in to correct the mistake and generate profit in the process.
So only if you view Uber as a permanent fixture does regulatory involvement seem necessary. Uber is far from a permanent fixture. In my view, Uber underestimates the importance of winning over high quality drivers vs paying drivers fractionally less simply to make its books look better in the short term.