Introducing Price-Gouging's Uglier Side: Time-Gouging

Uber, a San Francisco startup, is ruffling lots of regulatory feathers, as reported recently in the New York Times.  I also wrote about my experience with Uber back in 2010.

I'll be the first to agree that car sharing services like Uber and Lyft present difficult problems for regulators.  But that's not what this post is about.

My problem is with a statement made by Matthew Daus, the former chairman of NYC's taxi & limousine commission.  He said, "New Yorkers deserve an apology from Uber for price-gouging them during the hurricane."  Besides having a hopeless conflict of interest as the former commissioner, he's throwing out the bully phrase "price-gouging" as if basic supply & demand economics didn't apply to him or his industry.

If Uber doubling its rates (or more) after hurricane Sandy to adjust supply with demand is price-gouging, then I'd like to coin an equally demeaning term:  "time-gouging."

"Time-gouging" is when rates are set artificially low by some regulatory agency such that demand outstrips supply.

Time-gouging happens when I can't find a cab in the rain because everyone else wants one too, and I have to get soaked for 30 minutes while I try.

Time-gouging happens when I get to the Las Vegas airport and I have to wait for an hour in a taxi cab line.

Regulators love to time-gouge, because they don't place any value on the public's time.

What Matthew Daus is forgetting to factor into his calculus is that there's a cost to everything.  There's a cost to interfering with efficient capital markets.  And often, that cost is time in the form of lost productivity from our economy.  And the greatest irony here is that time is the most precious asset that any of us have, and we never know exactly how much of it we have left.

I applaud Uber for moving to a market-based pricing system.  I applaud Uber for motivating that executive car driver to get out of his warm bed to slog through rainy streets when nobody else would, because the fare justifies the effort.  I applaud Uber for motivating that driver to find gasoline somewhere so he can pick up a rider who desperately needs to get across town to see a sick parent, or to deliver food to an incapacitated friend.

Next time you hear someone talk about price-gouging, think about the other side of that bully coin:  the time-gouging that happens otherwise.