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The Glee over the Uber Ban Reveals How Corbyn’s Economic Policy Would Work

Ryan Bourne

On Uber, reactions speak louder than words. Set aside for a
moment the issue of Uber’s compliance with the Transport for London (TfL) rules, and whether revoking
their licence was justified or proportionate.

The celebratory tone of the supposed “labour
movement” to news that 40,000 contractors will see their main
source of income effectively banned (a higher number than employed
in the much-discussed steel industry) was far more eye-opening, and
should lead many to question the hard left’s true concern for
“workers”.

In fact, this whole episode has offered a revealing insight into
how a Corbyn-governed Britain might operate when it comes to
business and the labour market.

The willingness to revoke
licenses and stop businesses operating at short notice creates
substantial uncertainty, deterring investment and
innovation.

First, there’s the obvious: the unions running riot.
Delirious from this “victory”, the general secretary of
the Trade Union Congress, Frances O’Grady, tweeted
chillingly: “Firms have a choice. Sit down with us and work
out a fair deal for workers. Or end up in court and all over the
front pages. #Uber”.

Never mind that Britain has a labour market with low levels of
unemployment and a high number of vacancies — suggesting
workers have market power and choices available. Under a Corbyn
government, emboldened unions would use their bullying tactics to
narrow that choice to firms where they consider strong
“rights” available, no doubt shaped by existing models
of employment.

In other words, in truly Orwellian double-speak, we’ll see
unions who purport to care about workers’ rights —
apart from the right to work for the company you want to.

Second, there’s the complete disregard for consumers.

Perhaps I’ve missed it, but I’ve yet to hear one
Labour supporter of the TfL decision acknowledge that it could have
a downside for the public who actually regularly need to get around
London.

While most economists would weigh up the impact of any
intervention using a cost and benefit analysis, including the
impact on prices and availability for customers, the Corbynistas
only seem to see things through the lens of the incumbent
producers. Hence the obsession with “stopping undercutting of
workers”.

This would no doubt permeate other aspects of their economic
programme, with more in the way of protectionism for beleaguered
industries on arbitrary “quality” grounds, and an
opposition to expansive liberalising trade deals. The result?
Higher prices, and a less dynamic economy.

Third, there’s the reach for the nationalisation of
everything. In the aftermath of the Uber decision, some Corbynistas
are already urging TfL to create what is in effect a
publicly-owned, or “mutually-owned, publicly-backed”,
version of Uber called “Khan’s Cars” — a
play on the “Boris bike” scheme. Talk about reinventing
the wheel (or, rather, the app).

Far from viewing the role of government as to supply only what
cannot be provided efficiently by the market, these guys reach for
the state as the first resort for provision.

And to what end? Uber was innovatively providing its service
cheaply to Londoners, with some critics even claiming it was
subsidising journeys to encourage use. So either a publicly-owned
scheme would be more expensive for consumers, or else it would
instead be subsidised by taxpayers — increasing the tax
burden further for no good reason beyond an ideological pet
project. Wasteful spending would proliferate.

Fourth, and perhaps most worrying, is the arbitrary nature of
the views held by Corbynistas about why Uber shouldn’t be
able to operate, and what this would therefore mean for the role of
government.

TfL had specific concerns (at least in the public reasoning for
its decision) about Uber’s reporting of criminal offences and
the use of its controversial “Greyball” technology.

But others have since thrown in other gripes, egged-on by the
black cab trade, for why Uber should be banned — from its
role increasing congestion, to its contractor model and tax
structure. The well-connected Corbynista journalist Paul Mason even
tweeted that Uber “erodes social capital” as an
apparent reason to oppose its existence.

This arbitrary, rather than rules-based, decision-making leads
both to emboldened vested interests (in this case, the black cab
trade, which played on Labour gripes with Uber in their
campaigning), and businesses second-guessing the ideological
preferences of the government.

The willingness to revoke licenses and stop businesses operating
at short notice creates substantial uncertainty, deterring
investment and innovation.

But worse is the longer term consequence for remaining firms.
Rather than spending time meeting the wants and needs of customers,
companies would essentially become lapdogs to the Labour agenda
— getting treats and tax breaks when they did something
“progressive”, and the newspaper to the nose when they
did not.

This is the ideal world, according to the anti-Uber
Corbynistas.

Ryan Bourne
occupies the R Evan Scharf Chair in the Public Understanding of
Economics at the Cato Institute in Washington DC.