On an overcast Friday in May, Uber began trading on the New York Stock Exchange. The ride-hail behemoth’s stock was down slightly; it had been a rough morning with President Donald Trump waging a trade war against China. It wasn’t as if no one was getting filthy rich, though. At $42 a share, Uber had a valuation of about $75 billion, enough to mint a new generation of millionaires and billionaires with a lifetime of leisure in front of them.
Uber had been hungry for more. Initially, the company was seeking a $120 billion valuation—more than the combined market capitalization of General Motors and FedEx. Lyft, their top competitor, set expectations high when their shares rose nearly ten percent on the first day of trading in March. Both companies talk often about growth rates and market domination. Both companies do not make money.
The preceding paragraphs would have read as poorly baked satire less than a decade ago, with its reference to a president named Trump and a company whose greatest innovation is getting people to take cars from one location to another. Uber, Lyft, and their competitors operate from a premise that most human beings, especially those living in urban areas, do not crave public transportation as much as a convenient ride. Many want to live like wealthy people—with black cars to ferry them place to place, through the rabble. Like Sherman McCoy skipping the subway for a cab to whisk him downtown to trade stocks with the Masters of the Universe, the millions who summon cars with apps are living out their own quiet fantasy, paying a lot extra for the ease of a sleek vehicle that is always purring nearby.
If our transit can’t do the job, Uber and its friends will. Their gamble is a good one, if evaluated by the sheer amount of cash investors are willing to pour into them. Even with the various PR hits Uber took over the predatory, boorish behavior of their old CEO and employees, as well as a defiance of a taxi strike to protest Trump’s Muslim ban, the app remains wildly popular. Few people have forsaken the ability to summon a car with their phones. For some, that’s like forsaking air. Growth continues.
In the same week Uber went public, the New York Times published another exposé about Trump’s finances. For those who have followed Trump’s business career, none of it was a surprise. Nevertheless, it was welcome to see a couple of dogged reporters establish some new facts to further erode Trump’s foundational myth. Acquiring tax records from the years 1985 to 1994, during Trump’s first swell of media-enabled kitsch fame, the Times found Trump was losing a lot of money: $1.17 billion over a decade.
As debts piled up, Trump resorted to head-faking investors, suggesting he would take over a company. He would acquire stock in the company with borrowed money and discretely sell when the stock price rose. The strategy worked until it didn’t. Investors realized Trump never had the intention (or the capital) to acquire these corporations. Trump’s casino business was a failure, as was his attempt to run an airline. Since he posted an adjusted gross income in the red over the time span the Times analyzed, he could not deduct any charitable contributions.
America had no shortage of such grifts of personality, but Trump, as we know now, reigns supreme over history.
Trump remained Trump, however, and this is what mattered most. He was never perceived as a pauper or a loser. His standard of living did not decline. He did not abdicate his gilded throne. Why? Because the losses weren’t his losses. He was losing other people’s money. Banks and bond investors believed enough in the farce to underwrite his disasters. And when in doubt, he always had his father to rescue him, a capitalist in the traditional sense. Fred Trump didn’t lose money.
American capitalism is not a monolith. There are strains and mutations, spinoffs defined by new technologies and eras. If capitalism is inherently amoral—profit must be placed ahead of the human condition—it can at least possess a center of gravity, if practiced in the way we once understood it. Fred Trump became rich and successful turning profits in the home-building business. His robber baron predecessors, for all their predation, also needed to obey certain rules of profiteering on the path to world dominance. They created products of value that could be sustained through the business of buying and selling. They were nefarious and exploitative, yes, but there was nothing illusionary about Standard Oil, Carnegie Steel, Ford, or even Microsoft. Below them rested real, hard capital.
Trump reaped the rewards of a naïve tabloid culture obsessed with celebrity and caricature, feeding gossip “scoops” to desperate journalists, appearing on television a lot when there was no better way to reach a mass audience, and flagrantly lying about his wealth. America had no shortage of such grifts of personality, but Trump, as we know now, reigns supreme over history. Trump built his brand by lying enough until some of it seemed true. Investors followed suit long enough to sear Trump into the American consciousness. By the time they wised up, it was too late.
As Trump is the apotheosis of rank materialism and revanchist nationalism in the political arena, Uber is Silicon Valley’s greatest and most absurd offering to the American public, filling a need we never knew we had with a business model that is nothing short of fantasy. Uber’s power lies in the promise it proffers to multibillion-dollar venture capital firms, a carnival bark that translates into making the unsustainable somehow sustainable. Deeply discounted car rides can turn a profit someday, somehow, because people will like them enough. Make us bigger so we can grow. We won’t let you down because this time is different. This is the nature of capitalism on Uber: the dream doesn’t end when you wake up.
For most of its existence, politicians—Democratic and Republican alike—celebrated Uber’s expansion. To resist such a company was to be perceived as a luddite, against tech and progress and what makes this an allegedly great nation. Jeb Bush, when he was briefly a presidential front-runner, turned Uber into a campaign prop, and Democrats in cities across America welcomed what they believed to be any politician’s fetish object: a thing that makes jobs. Uber had jobs, lots of them, never mind the pay. There wasn’t much critical thinking about the economics and morality of ride-hail apps at this juncture. Coincidentally or not, this was before 2016. Times were simpler. Reality TV hosts could run for president, but they couldn’t win.
Uber and Lyft are Trumpian to their core.
Uber and Lyft are Trumpian to their core. Its liberal benefactors, employees, and users don’t want to hear this. It’s one thing to contemplate the pitfalls of casino economics; it’s another to Uber six blocks crosstown to meet your pal for dinner because you’re running late and who takes the bus, really? In the last three years, Uber lost more than $10 billion. This is a staggering amount of money and would be a deathblow for most enterprises operating on the planet. Lyft, whose stock is tumbling of late, already said it may never be profitable. Uber murmurs about such a thing but has no serious path to getting there. It only hopes investors keep the faith.
Uber thrives on the delusions of people with money and people without. Trump not only needed wealthy investors and banks to believe in him; he needed the American public too. They would bless the con with their willful worship. Uber’s con sprung from a rather simple idea: we can be a taxi company without taxi regulations. We can expand ad infinitum because we are popular. Over this decade of tumult and lies, Uber blitzed city after city, ignoring existing laws to flood constrained streetscapes with black cars. These cars, discounted tremendously due to endless investment capital and the easy credit of the post-crash years—as pointed out by the Manhattan Institute’s Nicole Gelinas—quickly became de rigueur for any urbanite on the move. With prices for a ride at an artificial low, demand reached an artificial high. Public transit was slowly neglected while car traffic surged. We read a lot of alarming news about climate change killing us from the backseat of a gas-guzzling, carbon dioxide-spewing Uber, the dull glow of our smartphones in our eyes.
It is fitting that Trump’s Labor Department, in a ruling in early May, allowed Uber and Lyft to sustain themselves a little while longer. Breaking with a precedent set by the Obama administration, regulators suggested that an unnamed company did not have to offer its workers the federal minimum wage or overtime. The Labor Department’s judgement lends both ride-hail giants new ammunition in their fight against their own workers: the taxi drivers classified as contractors, not employees, who are agitating for higher pay and benefits.
In advance of Uber’s IPO, drivers went on strike across the world. Financially, they are faring little better than the taxi drivers who have been literally killing themselves over the destruction of their livelihoods. One study found that in New York City, about half of ride-hailing drivers are supporting families with children. Their earnings are so pitiful that 40 percent of all drivers qualify for Medicaid and nearly 20 percent qualify for food stamps. The business model is essentially feudal, and one Trump, notorious for stiffing his contractors in the good old days, would be proud of, were he ever to pay attention to these particulars.
Underpaid drivers produce the value, undertaking the expense of purchasing and maintaining their vehicles as stockholders absorb all the wealth. Uber has no incentive to heed the demands of their drivers. As long as capitalism produces the conditions for unemployment and underemployment, a labor force will be at the ready, prepared to struggle for survival. Uber’s real aim is automating its labor force out of existence, getting self-driving cars onto the market as soon as possible. Eliminating human beings still may not help Uber turn a profit (the economics of the enterprise are that warped), but it could salvage some stock value. Again, their success won’t be tied to any kind of innovation they pioneered. The hope, like any good grifter, is to piggyback off the breakthroughs of someone else. Uber’s creators simply tied an unregulated taxi company to an app made possible by smartphone technology they played no role in conceiving. If the company eventually tanks—the IPO is off to a grim start—it will be beside the point for them. They had their pay day. Just as Trump got his presidency, they got a lifetime devoid of obligations and consequences. They were, as F. Scott Fitzgerald once wrote, careless people who smashed up things and creatures and then retreated back into their money.