In the midst of the earthquakes last night, it was striking to compare the performance of two key public and private institutions, Radio New Zealand and Uber, and the things that motivate them.
As dozens of people noted, RNZ put in a stellar performance: Susie Ferguson rushed to the studio, and she and others provided a steady stream of calm, clear, important information, delivered both quickly and accurately. The driver for them was – I think we can assume – not financial but altruistic: wanting to help a frightened and confused public understand what was going on and how to react.
In contrast, according to reports on Twitter, Uber’s surge pricing – a process that increases the price of a ride when demand is high – pushed the cost of hiring one of its drivers to 2.8 times the usual amount.
This was immediately defended by economist Eric Crampton and others, arguing that the pricing increase was good either because it would bring more drivers onto the roads or because it would weed out the truly needy from those taking frivolous rides.
Neither argument holds up, of course. Drivers would already be making a profit with standard Uber charges, and if you need extra money to get on the road to help frightened people evacuate their homes, there’s something wrong with your levels of empathy.
As to the second point, apart from the ludicrous presumption that tonnes of people would be frivolously using Uber in the middle of the night during a massive earthquake, price is a terrible way to allocate resources because it discriminates against the poor, and because ability to pay is no guaranteed reflection of need.
What would have sorted things out very clearly is a classic public sector process: finding out people’s circumstances, assessing their need based on their overall situation not the size of their wallet, and allocating resources (rides) accordingly. Of course Uber doesn’t do that because it’s not a public service. But that brings us round again to what performs well, especially during tough times – and that, unsurprisingly, is both the public sector’s spirit and its processes.