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Is A Second OPEC Cut On The Cards?

By Tsvetana Paraskova for Oilprice.com

OPEC's coordinated effort to curtail global supply has so far managed to put a floor under oil prices, which have been sitting modestly above US$50 since the deal was announced at the end of November last year. But resurging U.S. shale has been capping the upside, and Brent has not breached US$58 per barrel. Analysts and experts are now mostly predicting that oil prices will remain below US$60 this year.

The supply-cut deal has so far resulted in a surprisingly high OPEC compliance of more than 90 percent, thanks to the cartel's leader and biggest producer, Saudi Arabia, which has been cutting deeper than pledged. But the market has already priced in this high compliance, and although oil prices jump for a few hours on every report of ‘extraordinary efforts' and reassurance that members will strive for ‘full conformity', they are stuck in a narrow band, kept in check by U.S. shale and record high inventoriesin America.

A key upside driver for prices would be an extension of the OPEC deal beyond its original expiry date at the end of June. Just over a month had passed since the beginning of the production cut deal when talk of extending the agreement started to intensify. OPEC is said to be prepared to extend the deal, and may also increase the cuts, if inventories fail to drop to a specified level, sources from the group told Reuters.

The cartel has always claimed that the primary goal of the cut was to draw down excessive supply and bring the market back into balance. According to its latest Monthly Oil Market Reportpublished in February, total OECD commercial oil stocks fell in December 2016 (before the cuts took effect) to stand at 2.999 billion barrels. At this level, OECD commercial oil stocks were 299 million barrels above the five-year average, OPEC said.

The February Oil Market report by the International Energy Agency (IEA) said that OECD total oil stocks had already dropped nearly 800,000 bpd in the fourth quarter of 2016, the largest fall in three years. Inventories at end-December were below 3 billion barrels for the first time since December 2015. Global oil supplies plunged nearly 1.5 million bpd in January 2017, with both OPEC and non-OPEC countries producing less, the IEA noted. The agency also pointed out that the Brent contango narrowed in the first month of this year.

The contango has been steadily shrinking, and the futures curve suggests that the market is tightening, which could help to draw down excessive storage that has been kept for sale at a later date.

Although OPEC's secondary goal may be to change the market structure to backwardation, the IEA said in its February report that stocks were still 286 million barrels above their five-year average and “by the end of 1H17 will remain significantly above average levels”.

So the end of the first half of 2017 may not be time enough to cause the oversupply to dwindle, and OPEC may decide at its meeting in May to further tighten the market by extending the period of the supply cut. The cartel and non-OPEC Russia have said that a possible extension is still too earlyto assess—a fact that will not keep them from talking up oil prices with hints and comments in the coming weeks and months.

On the flipside, a possible extension of the deal – assuming compliance is high and cheating is low – would give more confidence to the U.S. drillers to increase output at higher oil prices.

At the end of the day, OPEC may have to choose between giving rival higher-cost producers a reason to pump more, or cutting back its supply (and some market share) for the sake of higher prices and market balance. And of course, giving its own member states all the more reasons to cheat.

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Striking York University Food Service Workers Win $15 and Fairness

By Alia Karim and David Bush. This article was first published on Socialist Project.

On Monday March 6th, striking York University food service workers, represented by Unite Here Local 75, voted to accept their new contract. The workers went on strike for and won a $15/hour starting wage and fair working conditions. Their victory paves the way for workers right across the province to achieve $15 and fairness.

On Strike for Justice

The workers won major improvements to their contract in the nearly three week strike. They will see an immediate bump in their starting wage from $12.21 per hour to $13.21, which will apply retroactively back to last September. There will be a further wage increase this coming September and by the end of the first year of the contract, the starting wage for all workers will be $15.

The workers won improvements in contract language which will protect union work and breaks. They also achieved a significant victory by getting Aramark to fully cover the dental plan, which the company has never done for any of its workers in North America. By the end of the contract, all workers, both full-time and part-time, will be on the health and dental plan.

The 160 Aramark food service workers at York University had been preparing for this round of contract negotiations since last year. The low pay, bullying, racial discrimination by management, and the poor working conditions bred widespread discontent amongst the workers. They built up the confidence to take on a powerful multinational corporation and the York University administration by marching on their boss, holding demonstrations, and organizing mass meetings with other food service workers across the GTA. Through months of organizing, the workers in the union were able to produce a 100 per cent strike ratification vote.

On February 2, the food service workers walked off the job on a one-day strike, shutting down all Aramark locations at York University. The workers marched on campus, held multiple rallies, and demonstrated their strength to the employer and the administration.

Workers then went on indefinite strike on February 16. They held a picket line at the main gate and organized two marches on campus a day. During York's reading week, which was on the second week of the strike, the union organized a week of actions downtown targeting the company. They were joined by the striking food service workers from UofT Scarborough (who are still on strike).

Building Support

The workers’ picket line was at the main entrance of the University. Although most of the Aramark locations were shutdown on campus, as the strike proceeded management and a small amount of workers crossing the picket line allowed the company to open a couple of locations.

Food service workers were not engaged in this struggle alone. Other workers and students organized an extensive solidarity campaign to help the workers achieve a victory.

This work did not begin when the strike started or even in the weeks leading up to the strike. In fact, organizing began many months before. The Real Food Real Jobs campaign started in the winter semester of 2016 at York University. The goal of this campaign was to build solidarity with York food service workers and fight for healthier food options on campus. The Fight for $15 and Fairness, a provincial wide campaign to fight for labour law and employment standards reform, formed an active group on the York campus at the end of the 2015, and then joined in the efforts of Real Food Real Jobs last spring.

These groups spent months doing outreach, raising awareness about the food service workers’ struggle, and about the need to improve the minimum standards of work for all workers. They organized a solid routine of tabling, petitioning, class talks, MPP visits, postering, and fun creative actions to raise awareness. The orientation was not to debate or talk to the already converted, but to win over a majority of students and workers on campus to support a $15 minimum wage and fairness at work.

The groups operated under the assumption that the best way to build solidarity was not to simply argue that students should support food service workers because Aramark workers had it rough. This was true, but the goal was to get students to see that a victory for the food service workers made it easier for other workers on campus and right across the province to achieve similar victories. With a large percentage of students working low-wage jobs and many more expecting to, making this link was an important part of the solidarity effort.

The Cross Campus Alliance (CCA), a coalition with representatives from the main employee associations and student federations on campus, was also a crucial element in the solidarity campaign. The CCA produced thousands of solidarity posters which students put up right across campus. The CCA also helped set up a website, York15.ca, which generated a solidarity letter for all community members to sign on to that would automatically be sent to the president, the chair of the Board of Governors, and all of the vice-presidents. Members of the York community filled out the solidarity letter and flooded the administrations’ emails. The CCA was instrumental in preventing the administration from isolating the food service workers from the other trade unions and student unions on campus. The CCA also got an amazing videographer to produce a series of videos explaining the issues and documenting the strike and solidarity efforts. These videos were invaluable for class talks and promoting the struggle on social media.

In the lead up to the strike, these groups helped organize a series of successful demonstrations on campus that traveled to the main cafeteria and other Aramark food service locations. The rallies were used as an opportunity to show all the workers that they did not stand alone, to build further awareness about the strike with the wider York community, and to demonstrate to Aramark management that the workers had broad support. In fact, when management saw that students were supporting workers and faculty began to cancel catering with Aramark, they became visibly upset.

Engaging in Solidarity

When the strike was called, a wide range of solidarity actions were initiated to get more students and community members involved. As workers walked the picket line they were joined at points by various student and union groups. Some faculty even visited the picket line with their students.

One tactic that proved successful was the solidarity coffee. On campus, management opened a select few locations to break the strike. In an effort to blunt management's efforts and reinforce the boycott, the CCA, Real Food Real Jobs, $15 and Fairness, and the Osgoode Law Union coordinated a series of coffee stations set up right next to a management-run Tim Hortons or Starbucks. Everyone entering the location was handed a leaflet, got an explanation about the strike from a volunteer about why they should support the workers, and then was offered free coffee. The solidarity coffee actions were extremely effective and often resulted in little to no business going to Aramark. These actions would not have been possible without the York Federation of Students taking the lead on the logistics.

But providing free coffee six days a week all day while workers walked the picket was expensive and unsustainable. On days and at locations where solidarity coffee wasn't being provided, mass leafleting at open Aramark locations was organized. While many students knew about the strike, there was some confusion about which sites on campus were on strike and which weren't. On such a large campus, it was a mistake to assume that everyone already knew about all the issues. The leafleting provided more opportunities to educate students about the issues.

The goal of the solidarity work was to build a large base of support for the striking workers on campus and to get those supporters to put the heat on the university administration to help settle the strike. The York administration had repeatedly denied that strike had anything to do with them, but they had subcontracted out the work to Aramark and they had essentially created a budget line for food services on campus.

Beyond the thousands of posters, leaflets, and emails targeting the university administration, the solidarity campaign also set its sights on disrupting the “Experience York” Day. On Sunday March 5 at Glendon campus and on Saturday March 11, York hosts its two big recruitment and orientation days in which it tries to convince students to enroll for the upcoming fall semester. The solidarity campaign planned a big “Experience York on Strike” greeting for prospective students and their families. The website which mirrored the official website for the day was set-up and was actually shared by members of the administration and the official York social media accounts.

The York administration, feeling the pressure from students and workers and concerned about any hit to potential enrollment, began to get involved informally in the negotiations in the week leading up to the settlement. Aramark, which cares little about its already tarnished brand, was upset that its client was being targeted because that could endanger any future contract.

Why This Matters

The victory is a huge win for racialized workers in low-wage industries who are forced to take the hardest and least desirable jobs without basic labour protections. The majority of Aramark food service workers are women of colour. Harassment and intimidation from managers was targeted at women, physically pushing them to work harder and if they didn't comply they would be disciplined through suspension or a cut in hours. Some female workers were told they are not going to be promoted because they were Muslim and wore a hijab. There were pregnant women who were bullied and harassed to continue working despite their need for proper breaks.

These women decided to fight back and were very vocal about their experiences at work. They asked for an end to harassment, racism and Islamophobia and for respect and dignity. Their struggle shows that $15 and Fairness is not just about economic justice for workers, but it is also about justice for racialized women who face intersecting exclusion on the basis of class, race, sex, gender, and status. Their demands for respect and dignity were inherently tied to demands for higher wages and fair working conditions. Their victory is a huge win for racialized women who bear the brunt of precarious work and shows how $15 and Fairness demands can effectively push back against systemic inequalities in the labour market.

The victory at York belongs above all to the workers, whose confidence and organizing galvanized the entire York community and the whole Fight for $15 and Fairness movement. The strike was also a victory for the students and other unions on campus. The victory for improved working conditions for the food service workers make it possible to think of fighting to make all of York a $15 and fairness campus. The new networks of students and workers forged in this fight can continue the struggle after the settlement.

The lesson for those engaged in the solidarity work is that doing sustained mass outreach and consciousness building about the issues – and even broader concepts like striking, scabbing and unions – is essential. This was made easier by the existence of the $15 and Fairness campaign, which spoke to the direct interests and concerns of students and other workers on campus. Instead of making the support for the service workers contingent upon an abstract sense of solidarity, it allowed people in the York community to concretely understand that a victory for food service workers would make it easier to achieve $15 and fairness for all workers.

The solidarity effort fed off the strength of the workers. Their courage and convictions were the scaffolding of the work done by all the groups on campus. No one group aimed to divide, dominate, or take credit for the solidarity because the striking workers anchored and clarified what needed to be done. Everyone came to operate under the premise that many hands make light work.

The strike also shows the true power of the Fight for $15 and Fairness campaign. The campaign is aiming to reform labour law for unionized and non-unionized workers alike. The goal is not just to win legislative reform, it is also to build the confidence and capacity of workers to engage in this fight.

What this successful strike demonstrates is that the campaign can be used by workers to achieve substantive victories in the collective bargaining process. What we saw firsthand was the Fight for $15 and Fairness can raise expectations, it can help build a wide layer of support, and it can be a useful framework to galvanize workers and students into action. By building a broad based class movement for all workers, the campaign can help raise the floor of working standards so that unionized workers can have the power and confidence to fight for more. •

Alia Karim and David Bush are Ph.D. students at York University. They are members of the Fight for $15 and Fairness club at York University. This article first published on the RankandFile.ca website.

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The Crisis in the ATU: Labour Shoots Itself in the Foot

By Sam Gindin and Herman Rosenfeld. This article was first published on Socialist Project.

A sign of the tragic disarray of the Canadian labour movement is the extent to which its misadventures keep piling up. As the turmoil within the union representing the Ontario government's unionized employees (Ontario Public Service Employees Union – OPSEU) hits the press, the chaos continues in Local 113 of the Amalgamated Transit Union (ATU). The 10,500 members in that local – over a third of the ATU's Canadian membership – operate and maintain Toronto's transit system, North America's third largest public transit system, behind only New York and Mexico City. As with OPSEU, the acrimonious story is not about a tough strike or a response to an anti-union government. Rather, at a time when the union should be leading the charge to address popular frustrations with the failures in the city's transit system, the local is preoccupied with a messy internal battle.

Members of ATU Local 113 who work for Veolia Tansport on strike

Members of ATU Local 113 who work for Veolia Tansport on strike, October 2011 to Januay 2012.

Local 113 President Bob Kinnear had attempted to break away from its American-based parent and, in what was quickly apparent, to join Unifor, Canada's largest private sector union. For the time being he has clearly failed. The tale is mired in territorial conflicts over the members involved, legacies of personal nastiness among Canadian union leaders, whispers of conspiracy on the part of Unifor and the Canadian Labour Congress (CLC), of national flag waving and charges of U.S. imperialism, counter-denunciations of ‘nationalism’ and undermining international solidarity, opposing interpretations of democracy, a remarkable – if challenged – court decision, and miscellaneous elements impenetrable to either inside or outside observers.

Though we can't avoid delving into some of the sordid details of this development, we'll try to limit the noise of the various intrigues involved (for a blow-by-blow see: “ATU Trusteeship, Unifor Raid, CLC Crisis”).[1] The two crucial but difficult tasks are to get to the basic principles at stake and – above all – to figure out where the members stand and how their voices might play a more direct role in resolving this sordid clash.

Breaking Away

In trying to get a handle on this, a useful starting point is to compare it to an earlier breakaway from an American-based parent, one that is now generally even if not unanimously seen in positive terms: the formation of the Canadian Auto Workers (CAW) a little over three decades ago. The following differences are significant:

  1. The formation of the CAW involved a nation-wide section of an international union (the United Auto Workers – UAW) breaking away. ATU Local 113 is a local in one city.
  2. The autoworkers’ major bargaining was fully integrated across Canada and the USA. Local 113 bargains autonomously.
  3. The autoworkers’ split revolved around a clear and historic question: how to respond to concessions and the right of Canadians to make that decision themselves – in the face of actions taken by the international UAW to deny that right. No clear, agreed upon, issue has been articulated by Local 113.
  4. The Canadian autoworkers had established an overwhelming unity before it moved to break from their parent. Not only are the rest of the ATU locals (almost 2/3 of the Canadian members) apparently supportive of their international ties but even within Local 113, a clear majority of the executive board and an even larger proportion of the stewards have taken a stand against Kinnear and the split, with little or no indication (other than the usual rumblings in any union) of a rank and file rebellion against the parent.
  5. The Canadian autoworkers patiently developed the membership support for taking on the risks of breaking away. The union first withdrew from its cross-border collective agreement with Chrysler and struck the corporation on its own for the very first time. It later went on strike against GM in spite of pressures from its American parent, the UAW. Following that, it asked the UAW to take measures that concretely reflected Canadian autonomy. It was only after this was denied that the Canadians took the next, and very reluctant step of setting up their own Canadian union. All the while it brought its members into discussions of the growing tensions and went to the members to ratify the decision to break away. In the case of Local 113 on the other hand, the initiative by the president of the local to leave ATU seemed to very much come out of the blue.
  6. Finally, while it was easy to identify the Canadian autoworkers as representing progressive unionism against the faltering UAW, in the ATU conflict it is the Americans who apparently have the greater claim to that mantle. Larry Hanley, the president of the ATU, came to office with strong credentials in fighting for democratic unionism and won against the tired incumbents by promising to revive the union. He was one of the handful of U.S. union leaders who openly supported Bernie Sanders and has been moving to complement the workplace power of his members with community support through the organizing of a ‘bus riders’ union’. Hanley has as well dramatically expanded education and leadership training to ATU locals including in Canada. Local 113, according to Hanley, stands out as the one Canadian local that has abstained from these programs.

International Union, Canadian Members

The point is that the attempted breakaway from the ATU by Local 113 has no parallel to breakaways such as that of the CAW (now Unifor). It cannot be assumed – as Canadians generally tend to do – that the tag ‘Canadian” necessarily makes a group more progressive. Nevertheless, Canadian locals cannot be simply treated as any local in the U.S. with the same formal standing. No other country is penetrated by international unions centred elsewhere to anywhere near the extent that occurs in Canada and this fact demands great sensitivity on the part of unions that call themselves ‘internationals’ but which are in fact U.S.-based and controlled.

Unions straddling the Canada-U.S. border have, to varying extents, acknowledged this difference. Most have introduced structures and practices that move toward satisfying the principle of Canadian workers having the power to run their own affairs and determine their own policies, hopefully in solidarity with their American counterparts (The Canadian labour movement itself recognizes Quebec as a distinct region and its governing and operational procedures often apply differently in Quebec.) But even such accommodation can't foreclose the possibility of Canadian workers choosing to follow the general international pattern of establishing their own national unions.

In this regard, certain elements of the ATU's constitution are extremely troubling. As the court case launched against the receivership of the local by Kinnear and financed by Unifor noted, it is outrageously undemocratic to state that if only 10 workers decide to stay in the ATU, it is sufficient for those staying to retain the assets and ignore the votes of the other 99.9% of the membership. It is true that this rule – rooted in the 1930s and the desire to keep locals alive even if raided – doesn't prevent the workers from deciding to leave the local in spite of the assets. And in this particular case it can be expected that the subsequent support from Unifor or another suitor would offset that loss and so make a democratic exit possible. But this clause is anachronistic and should be unilaterally dropped by any union respecting the democratic process.

Similarly, though Canadian delegates elect a Canadian Director of the ATU, that position is alleged (though disputed by the ATU) to have little or no resources or power. Greater weight resides in the election of a Canadian to serve as an international vice-president of the ATU as a whole. But that position is elected by all the delegates to the ATU Convention, not just the Canadians. This conflicts with CLC policy going back to 1974 and is an affront to Canadian democratic autonomy. (Note that when the ATU imposed its trusteeship on the local, it was the international vice-president that was put in charge.)

The Process...

Canadian unions have, via the Canadian Labour Congress (CLC) come together to reach a consensus on how to avoid the destructiveness of the conflicts that came with Canadian attempts to break away from U.S.-based parents and which overlapped with questions of raiding. This involved a step by step procedure enshrined in the CLC constitution (Article 4: CLC Constitution, Amended May 2014). This called for abstaining from tampering with another union's members, application by a Canadian union/local to the CLC for a negotiated process to be put in place, a review of the complaints and an opportunity for the international to correct the problem, an independent report if there is no agreement reached, and finally a supervised membership vote if necessary backed by sanctions if that is blocked. In this case, however, this process did not get off the ground as both sides accused the other of undermining the process.

The ATU argued that Unifor President Jerry Dias had been secretly meeting Kinnear (“tampering”) and that Kinnear had no mandate from his executive or members to apply to the CLC for support in a breakaway. Dias countered that Unifor had started no raiding drive and signed no cards, and that Unifor's financial support for Kinnear's court challenge was primarily in support of the right of Local 113's members to democratically determine their own future. In the court decision, the judge noted that the ATU's quick strike to put the local into trusteeship and exile Kinnear served to block free speech within the local. In reaction to the trusteeship, CLC President Hassan Yussuff – it did not ease suspicions that Yussuff came out of Unifor – took the unprecedented step of temporarily suspending the CLC process (under Article 4 of the CLC's constitution). This led to angry accusations, from international and national unions alike, that Yussuff was siding with Dias.

Suspending Article 4 formally allowed Unifor to raid Local 113, but with a trusteeship in place and no signs of serious membership support, a raid was clearly not on. The affiliates’ anger reflected a deeper concern: setting a dangerous precedent. Trusteeships are not uncommon in many Canadian unions; in condemning the ATU trusteeship and linking this to suspending protection against raiding, it seemed that raiding in cases of trusteeship was being endorsed. The strong reaction against this promptly led the CLC to reverse its position and reinstate Article 4.

Though the judge ruled that the rapid-fire trusteeship of the ATU wasn't justified, the story doesn't end here. If the judge's decision is upheld in a challenge, Kinnear remains president. But with a profoundly antagonistic board and steward body, and a membership hardly rushing to his defense, Kinnear has for the time being not been coming into the union office. If the court's decision is reversed, Kinnear will be formally gone but ATU's overall reputation as a progressive, democratic union will be damaged by the continuing charges of heavy-handed intervention.

As for Unifor, it seems to have walked into a minefield it was unprepared for. It will argue that its commitment to defending the right of Canadian workers to make their own decisions has been reinforced by the court's critical and precedent-setting decision for other Canadian workers contemplating a break from their parent. Even if the court order is reversed, the issue of greater or full Canadian autonomy has been highlighted. With the likelihood of Local 113 leaving the ATU seemingly foreclosed, at least for the time being, the ATU should be farsighted enough to consolidate this victory by consulting its Canadian locals on extending greater autonomy to them while deepening the impressive plans it has for strengthening the union and its locals’ activism more generally.

Closure to this sad chapter won't however end without addressing the great silence of the members. The survival of Local 113 is ultimately based – as is the case in all unions – not on the behind-the-scenes-machinations of union executives or even consensus-based constitutional procedures, as important as these might be, but on democratic decisions directly made by the rank-and-file membership. This could occur through a CLC supervised vote (unlikely given the current chaos around the use of the CLC's Article 4), or an ATU-initiated but independently-supervised ratification vote in Local 113 for staying in the union (also unlikely because of ATU concern for the precedent it sets for inviting such votes), or take some other form. But unless some democratic expression of membership sentiments emerges a cloud will continue to hang over all the parties involved.

Deeper Issues Confronting the Canadian Labour Movement

The dispiriting events piling up in the North American and Canadian labour movements are symptoms of the labour movement's disorientation. Underlying the tensions exposed by the conflict in Local 113 are three deeper issues confronting the Canadian labour movement. First, once workers join a union, they cannot be treated as the property of the union. Procedures for democratically leaving to join another union must be accepted and this is true whether it is a national or international union. Trusteeships to prevent this are undemocratic and, of course, the combination of an imposed trusteeship and it originating from a foreign-based parent makes such interventions particularly poisonous. Of course applying this principle universally is not always clear-cut. It would obviously be destructive if members decided to shop around for another home – rather than fight to change their union – because of a particular slight or imperfect end to bargaining. And local trusteeships determined by a central body on behalf of union-wide concerns are in fact sometimes necessary, as when there is corruption that is also linked to blocking internal democracy.

The problems with raiding is not just that it is destructive to class solidarity but that it tends to offer an easy ‘fix’ to tougher problems and serves as a diversion from these challenges.

Second, this emphasis on the right to leave might suggest that what is negatively labelled ‘raiding’ might be validated as contributing to ‘liberating’ workers from an oppressive union. This will in some cases be true, but this defense of raiding is very often only a glib justification of expanding one union's dues collecting power at the expense of another. The problems with raiding is not just that it is destructive to class solidarity but that it tends to offer an easy ‘fix’ to tougher problems and serves as a diversion from these challenges.

Those familiar challenges include: How can unions correct their generally sorry record in organizing new members? Can unions actually demonstrate real solidarity and introduce joint campaigns to organize new members independent of which of them gets the ultimate dues (or whether none do as new unions are set up)? And is the key to organizing better techniques, or does it start with the kind of radical internal revival and reorientation that leaves unions both more attractive to non-union workers and more likely to mobilize the internal disposition and resources to make creative organizing breakthroughs possible?

Third, in the particular case of international unions, it is often said that globalization strengthens the case for international unions. In fact, however, because the main impact on workers’ lives has shifts from collective bargaining outcomes to the policies of the state – e.g. social service cutbacks, privatization, back-to-work legislation, inequitable tax reform, and free trade – the strategic importance of national class alliances becomes correspondingly more significant than cross border ties established in an earlier period. In this case, demanding the autonomy to genuinely address the development of class power within Canada – up to and including breaking away from the U.S.-based parent – may make perfect sense. And it need not be inconsistent with greater overall internationalism (the CAW became significantly more internationalist after it broke with the UAW).

But this involves more than reducing the serious step of a breakaway to an abstract nationalism. Working class sovereignty can only have legitimate meaning if it starts with the Canadian rank and file as the final arbiters of changes in Canadian structures. It demands building the working class in both Canada and the U.S. through bringing more workers into unions rather than fighting over dues. And it means collectively struggling with how to reinvent our unions and extend their boundaries into all dimensions of working class lives. •

Sam Gindin was an assistant to Bob White when he was CAW president, research director of the Canadian Auto Workers from 1974–2000 and is now an adjunct professor (retired) at York University in Toronto. He is the author of The Canadian Auto Workers: The Birth and Transformation of a Union.

Herman Rosenfeld is a Toronto-based socialist activist, educator, organizer and writer. He is a retired national staffperson with the Canadian Auto Workers (now Unifor), and worked in their Education Department.

Endnotes:

1. We attempted to talk to Bob Kinnear before writing this piece, but for whatever reason he did not get back to us.

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The Oligarch Files: Did a billionaire fertiliser baron bail out Trump by paying millions over the odds for this gaudy pleasure palace? And is THIS the Russian connection that could return to haunt the presidency?

By James S Henry. This article was first published on Daily Mail.

  • Trumps’s election campaign was bedevilled by allegations of links with Kremlin
  • Story of Maison de l’Amitie is example of Donald Trump’s connections to Moscow
  • Close scrutiny of The Donald’s business history now suggests that if there is a real concern about Russian connections, it may instead lie in hard financial facts

 

The story of the Maison de l’Amitie is another striking example of President Donald Trump’s connections to Moscow
The story of the Maison de l’Amitie is another striking example of President Donald Trump’s connections to Moscow

Last summer, the bulldozers moved in to demolish America’s most expensive private home.

The Maison de l’Amitie, a gaudy 33,000 sq ft French Regency-style mansion on six prime acres with 475 ft of waterfront in Florida’s Palm Beach was subdivided and the first lot sold at a substantial loss.

At first glance, the sad fate of the grandiose building – it had 18 bedrooms, 22 bathrooms, a ballroom, art gallery and 50-car garage – is an indictment of the American property bubble, whose sudden collapse in 2008 led to the worldwide financial crisis.

But the story of the Maison de l’Amitie is much more than that. It is another striking example of President Donald Trump’s connections to Moscow and Russian money – and comes against a background of potentially devastating claims from elsewhere.

Trumps’s election campaign was bedevilled by allegations of links with the Kremlin and financiers who owe loyalty to Vladimir Putin.

Now the fledgling presidency is mired in a fast-moving scandal that revolves around allegations that the Russian Secret Services interfered to swing the election and that members of Trump’s team have had repeated contacts with Russian diplomats and middlemen.

Last month, Trump appointed a new Commerce Secretary, Wilbur Ross, a man with multiple and well-established links to Russian financiers. His National Security Adviser Michael Flynn resigned over his contacts with the Russians.

Last week it emerged that Trump’s new Attorney General Jeff Sessions met the Russian ambassador twice in 2016, despite having denied meeting Russian officials under oath.

Mr Trump has dismissed the furore over Russian links as ‘fake news’, reiterating that he has ‘no business deals in Russia’.

Strictly speaking, that might be correct – if we overlook his £11 million deal to take Miss Universe to Moscow in 2013. But the real question is not about deals ‘in Russia’, but about his relationship with Russians, including oligarchs from former Soviet states.

Last summer, bulldozers moved in to demolish America’s most expensive private home. The Maison de l’Amitie (pictured), a 33,000 sq ft French Regency-style mansion on six prime acres with 475 ft of waterfront in Florida’s Palm Beach was subdivided and the first lot sold at a  loss

Last summer, bulldozers moved in to demolish America’s most expensive private home. The Maison de l’Amitie (pictured), a 33,000 sq ft French Regency-style mansion on six prime acres with 475 ft of waterfront in Florida’s Palm Beach was subdivided and the first lot sold at a loss

Now, for the first time, material is emerging that is quite different from the distasteful and unproven suggestions of seedy sex sessions in Russian hotels, the so-called ‘Kompromat’, or compromising material allegedly held by Russian secret services.

Close scrutiny of The Donald’s business history now suggests that if there is a real concern about Russian connections, it may instead lie in hard financial facts and figures.

In particular, the story of the Maison de l’Amitie, goes to the heart of President Trump’s good fortune in keeping his property empire afloat despite a very mixed business track record.

This embraces six corporate bankruptcies, numerous failed limited partnerships and the widely reported refusal of every leading Wall Street bank except Deutsche Bank to lend to him after his 1990s casino ventures in Atlantic City repeatedly went bust.

According to Trump, he survived because of a combination of brilliant deal-making, brand power and raw animal spirit. But like much that comes out of Trump’s mouth, this official story is open to question.

Since at least the late 1990s, it appears that Trump may indeed have been doing business with the abundant new sources of global finance, including figures from kleptocracies such as Russia and the countries of the former Soviet Union. As his son Donald Trump Jr told a Manhattan real estate conference in 2008: ‘Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia.’

Not that today the newly crowned President Trump is in much hurry to acknowledge his Russian ‘friends’.

THE FERTILISER KING

For all his wealth now, it is often forgotten that in 2008 Donald Trump found himself in deep financial trouble. American property prices had crashed and were still falling.

However, some areas such as Miami fared better and that’s where Trump had a significant asset – the Maison de l’Amitie, for which the records show he had paid $41 million (£32 million) four years earlier.

It was widely reported that Wall Street had stopped lending to Trump and now the charismatic property developer was embroiled in legal action against Deutsche Bank, one of the few international banks that would do business with him.

Trump owed it £32.5 million after personally guaranteeing a loan to a failing hotel project in Chicago. He missed a major payment date and stalled for time by suing the bank, claiming that the financial crash was an ‘Act of God’.

Then, a buyer turned up for his Florida mansion in the shape of oligarch Dmitry Rybolovlev, a 41-year-old former cardiologist who had secured the rights to Russia’s vast potash fertiliser reserves after the collapse of the Soviet Union.

In 2008 Donald Trump found himself in deep financial trouble. Then, a buyer turned up for his Florida mansion in the shape of oligarch Dmitry Rybolovlev (pictured with daughter Ekaterin) , a former cardiologist who had secured the rights to Russia’s vast potash fertiliser reserves
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In 2008 Donald Trump found himself in deep financial trouble. Then, a buyer turned up for his Florida mansion in the shape of oligarch Dmitry Rybolovlev (pictured with daughter Ekaterin) , a former cardiologist who had secured the rights to Russia’s vast potash fertiliser reserves

Trump had already slashed the asking price by nearly a quarter. Having already expressed an interest two years earlier, Rybolovlev was agreeing to pay Trump $95 million (£48 million) for the house in June 2008, according to US property records.

This was viewed as a surprisingly high price in a crashing market and the most that had ever been paid for a single house in America – even if, as some reports suggest, Trump had made substantial improvements. Other reports say that it was riddled with mould. With typical braggadocio, Trump said of the deal at the time: ‘I love breaking records, and this is a record.’

It certainly aroused comment.

‘There are a lot of suggestions that Rybolovlev drastically overpaid for this property,’ said lawyer David Newman, partner in Sills, Cummis & Gross of New York, who represented Rybolovlev’s wife Elena in her divorce from the Russian oligarch. ‘If you look at the four years between Trump’s purchase and his sale to Rybolovlev, there were very few things that increased that much in value.

‘It raises a lot of issues, and nobody knows the answers except Rybolovlev and his close associates.’

As an advocate for the former Mrs Rybolovlev, he might, of course, be parti pris; naturally the transaction has its defenders, too.

These include Paulette Koch, a leading Florida luxury estate agent who was entrusted by Donald Trump with the sale of Maison de L’Amitie. She thinks the Russian got a good deal, saying: ‘It has a lot of acreage on the ocean, and that’s in finite supply and great demand.’

Other Palm Beach estate agents agree with her that this gargantuan sum was worth it for ‘a beautiful piece of land’ – although, again, it might be said they have an interest in backing high property prices in their locality.

Rybolovlev, whose formerly state-owned company Uralkali accounted for 30 per cent of the world’s fertiliser sales, is fabulously wealthy.

In 2014, a court in Geneva ordered him to pay £3.7 billion to Elena in what is thought to be the world’s biggest divorce settlement.

Last month, Trump appointed a new Commerce Secretary, Wilbur Ross (centre), a man with multiple and well-established links to Russian financiers. Trump’s son-in-law and senior adviser Jared Kushner (right) had undisclosed meetings with the Russian ambassador
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Last month, Trump appointed a new Commerce Secretary, Wilbur Ross (centre), a man with multiple and well-established links to Russian financiers. Trump’s son-in-law and senior adviser Jared Kushner (right) had undisclosed meetings with the Russian ambassador

(Although on appeal the ultimately undisclosed settlement was probably much lower.)

It is not merely financial clout that makes Rybolovlev a figure of significance to Trump sceptics.

It is notoriously difficult for Russians with that scale of wealth to continue to prosper without the approval of the political establishment – and that usually means the new tsar himself. Oligarchs such as Mikhail Khodorkovsky who have rebelled against Putin have been imprisoned. Others, such as Boris Berezovsky, have met unexplained deaths.

Rybolovlev had risen quickly in the violent wild west world of post-Soviet Russia. In 1995, at the age of 29, he became chairman of the giant Uralkali empire.

But ‘Rybo’ wanted to move as much money as possible out of Russia, where both health and wealth can depend on remaining on good terms with the Kremlin.

This explains his interest in buying assets in America. But the value of Trump’s Florida property dropped precipitously after Rybolovlev bought it.

By 2013, it was independently estimated at $60 million (£38 million) on Palm Beach county’s tax rolls.

Last year, after tearing the mansion down, he sold 2.74 acres of land, including 183ft of ocean-front, for £28 million – a huge pro rata loss approaching £10 million over nine years, or nearly 25 per cent.

For Rybolovlev, an astute businessman, the deal seems unusually poor.

For Trump, it was a potentially life-saving cash injection that let him stave off Deutsche Bank and avoid having to dump his very best New York buildings –Trump Tower and 40 Wall Street – at firesale prices. At the very least, it looks as though Trump owes Dmitry Rybolovlev a little gratitude.

Rybolovlev was agreeing to pay Trump $95 million (£48 million) for the house in June 2008, according to US property records. This was viewed as a surprisingly high price in a crashing market and the most that had ever been paid for a single house in America
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Rybolovlev was agreeing to pay Trump $95 million (£48 million) for the house in June 2008, according to US property records. This was viewed as a surprisingly high price in a crashing market and the most that had ever been paid for a single house in America

PUTIN’S BANKERS

Rybolovlev could well afford the loss. Since disposing of Uralkali, he has bought Monaco Football Club, yachts, private jets and trophy houses around the globe –including an £18 million mansion in Hawaii that once belonged to actor Will Smith and the Greek island of Skorpios, where Aristotle Onassis married Jacqueline Kennedy.

He also – reportedly – bought 9.7 per cent of the Bank of Cyprus for £190 million, becoming its largest single investor. According to experts, the Bank of Cyprus has been up to its ears in Russian ‘flight’ capital – money transferred abroad to avoid taxes, inflation or maybe seizure by the state.

While the bank’s identity records, even for large shareholders, are murky, Rybolovlev appears to have retained up to a 3.3 per cent stake, even after the 2013 crash when the island’s entire financial sector failed (and had to be bailed out by the European Central Bank and the IMF).

This is where a second intriguing connection between Rybolovlev and Trump comes in, this time through the President’s new Commerce Secretary. In July 2014, Wilbur Ross and his investment group bought a 17 per cent stake in the Bank of Cyprus – one of the key havens for Russian finance and an offshore financial nexus of Russian oligarchs and ‘friends of Putin’. Ross became the bank’s co-chairman.

His fellow investors have included Vladimir Strzhalkovsky, said to be a former KGB agent and a long-time Putin associate, and Viktor Vekselberg, reportedly the seventh wealthiest Russian.

The links between Ross and Trump are strong, going back to at least the early 1990s, when he helped to salvage one of Trump’s failing Atlantic City casinos.

Ross was also a generous donor to Trump’s 2016 campaign.

None of this suggests any wrongdoing whatsoever by Mr Trump –but it makes the point that his links with Russian money are numerous and part of a chain, or series of chains, that go back ultimately to the Russian establishment. And the world of Russian finance is not without its problems.

Then, in 2014 at the age of 77, Wilbur Ross decided to get involved in the Cyprus bank.

In fact, he has played a very active role recruiting its senior management team, especially its board chairman, Josef Ackermann, a long-time former chairman of Deutsche Bank which has a history of doing business with… Donald Trump.

In July 2014, Wilbur Ross (pictured) and his investment group bought a 17 per cent stake in the Bank of Cyprus – one of the key havens for Russian finance and an offshore financial nexus of Russian oligarchs and ‘friends of Putin’. Ross became the bank’s co-chairman
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In July 2014, Wilbur Ross (pictured) and his investment group bought a 17 per cent stake in the Bank of Cyprus – one of the key havens for Russian finance and an offshore financial nexus of Russian oligarchs and ‘friends of Putin’. Ross became the bank’s co-chairman

It is now acknowledged that Ackermann’s tenure at Deutsche Bank was a period of spectacular chicanery. This includes anything from sanctions busting, interest rate rigging, and mortgage fraud to facilitating tax dodging, illicit trading, illegal foreclosures, rigging energy markets and laundering Russian money, which has since resulted in it facing fines and settlements totalling £16 billion.

From 2002 to 2012, under Ackermann, Deutsche Bank had become Trump’s largest bank creditor by far, with more than £530 million of loans to the Trump Organization and even more to other Trump partnerships. Trump’s 2016 financial disclosures show the Trump Organization still owes £300 million.

Deutsche Bank has recently been fined more than £506 million for failing to prevent £10 billion of Russian money laundering.

THE TRUMPSKI TEAM

The Trump team’s connections with Russia go beyond Rybolovlev and Ross.

His pick as National Security Adviser, Michael Flynn, was forced to resign within days of taking office after repeated contacts with the Russian Ambassador to Washington, Sergey Kislyak, became known.

Jeff Sessions, the new US Attorney General who swore under oath he had not met representatives of the Russian government, is currently mired in controversy after it emerged he met the Russian ambassador twice during 2006.

Trump’s son-in-law and senior adviser Jared Kushner also had undisclosed meetings with the ambassador. Trump’s Secretary of State, Rex Tillerson, signed a huge Russian oil deal when he was boss of ExxonMobil. Putin bestowed the Order of Friendship on him in 2013.

Trump’s former campaign manager Paul Manafort spent years working for the Putin-friendly former Ukrainian president Viktor Yanukovych.

Another Trump adviser, Felix Sater, was involved with the recent backdoor Ukraine ‘peace plan’ to oust the current Ukrainian president and lift sanctions against Russia.

He was also MD of Bayrock LLC, which allegedly injected Kazakh and Russian money into Trump construction projects.

Michael Cohen, Trump’s personal lawyer, met with far-Right Ukrainian MP Andrey Artemenko and Sater to thrash out the Ukraine ‘peace plan’.

Trump’s former foreign policy adviser Carter Page is another with suspected links to Moscow.

The intelligence dossier produced by former British spy Christopher Steele claimed Rosneft CEO Igor Sechin offered Page and his associates the brokerage of the sale of a 19 per cent stake in the giant state-owned energy company in exchange for lifting US sanctions on Russia. (Although there has been some scepticism about the reliability of the dossier.)

MYSTERY FLIGHTS TO DULLSVILLE

Did Dmitry Rybolovlev’s ties to Donald Trump end with the rescue –deliberate or fortuitous – of the Trump property empire in 2008?

The oligarch has a private Airbus A319 whose registration M-KATE – named after one of his two daughters, Ekaterina – allows it to be tracked online.

M-KATE is normally based in Moscow or Switzerland, but made numerous flights all over the US from August 2016 through November 2016, the peak season for last year’s presidential campaign – right at the moment when American intelligence agencies believe Moscow was supposedly hijacking the election on Trump’s behalf.

According to flight logs from respected plane logging sites FlightRadar24 and PlaneFinder, as well as photos of planes on the ground during the campaign, M-KATE showed up at the very same cities, and the very same (otherwise unremarkable) airports where Trump happened to be – Charlotte, North Carolina, Concord, North Carolina, Las Vegas and Miami.

Indeed, early last month – on Friday, February 10 – M-KATE flew from Switzerland to Miami, where the President was due to party with hedge fund mogul Stephen Schwarzman. Why would Rybolovlev’s plane scurry back and forth from Moscow to odd destinations such as Charlotte and Concord, or to Las Vegas, New York and Miami, precisely when Trump and his team were in the neighbourhood? Was Rybolovlev some sort of Putin emissary, a go-between for Trump and Moscow?

The allegations swirling around Trump have been based on claims and rumour, there are also real deals and actual connections to examine. It is evidence that raises important questions about the true extent of Trump’s dealings with Putin (pictured) and the Moscow money men
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The allegations swirling around Trump have been based on claims and rumour, there are also real deals and actual connections to examine. It is evidence that raises important questions about the true extent of Trump’s dealings with Putin (pictured) and the Moscow money men

The flights remain a genuine enigma; there are no eyewitness reports that the two men actually met or indeed of who was on the plane. It is not unknown for jets to be chartered out.

A White House spokesman denied contact between the two men, adding: ‘No member of the Trump campaign or Mr Trump met with Mr Rybolovlev during the campaign or any other time.’

Rybolovlev’s New York spokesman Brian Cattell denied the widespread speculation about the Russian oligarch’s Florida property dealings, and said: ‘We are aware of a number of rumours and far-fetched theories circulating, but none of them has any basis in fact. Mr Rybolovlev has never met Donald Trump.’

But these coincidences certainly deserve further scrutiny – as do

It is evidence that raises important questions about the true extent of Trump’s dealings with Putin and the Moscow money men.

James S. Henry is an investigative economist and lawyer who has written widely about offshore and onshore tax havens, kleptocracy, and pirate banking. www.globalhavenindustry.com

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Can Uber Ever Deliver? Part Nine: The 1990s Koch Funded Propaganda Program That is Uber’s True Origin Story

By Yves Smith. This article was first published on Naked Capitalism.

Yves here. For those of you who are late to this series, the underlying reason that Uber is not a bona fide tech success is that the fact that it has cars available at affordable (cheap) prices is solely the result of massive, unsustainable investor subsidies. There are no network economies in running any transportation network because beyond a baseline service level, there is an inherent tradeoff between service frequency (size of fleet and staff) and profits. Uber’s app is trivial technologically and does not create a barrier to entry or confer scale advantages.

Even though Uber’s long-term investment success would require it to achieve a monopoly or dominant position in an oligopoly, local transportation services do not have high barriers to entry. In fact, ironically, Uber’s war against local licensed cabs is lowering barriers to entry. But if Uber were to achieve a dominant position in some markets, its end-game would require it to jack up prices considerably to cover its full current costs plus recoup past losses plus achieve an adequate profit level. That level of price would drive many current users away plus create a price umbrella that would encourage new competitors to jump in.

By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants

Uber’s business model is radically different from past tech unicorns and has (and will continue to) massively reduce overall economic welfare

Most of this series has focused on the economics of Uber, and how the growth of Uber has, and will continue to massively reduce overall economic welfare. Earlier posts presented a wide range of evidence documenting Uber’s hugely unprofitable operations and how its growth had been driven by predatory behaviorits uncompetitive costs, its false claims about innovation and competitive advantage, and that investor returns always depended on industry dominance and anti-competitive market power.

The growth of Uber is massively misallocating resources because Uber is a less efficient producer of urban cars services than the operators it has been driving out of business. Uber cannot achieve sustainable profits or investor returns without achieving the quasi-monopoly industry dominance it has been aggressively pursuing and exploiting anti-competitive market power

The original growth of companies like Google, Amazon, Ebay and Facebook was driven by powerful competitive efficiency advantages and natural scale/network economies that generated massive consumer welfare benefits, although these welfare gains were somewhat offset by the ability to exploit market power once they achieved industry dominance.

Uber is radically different from these past unicorns because its business model is focused entirely on the second (exploit anti-competitive market power) part of this equation[1]. It skipped the difficult first part, which requires creating a totally new product that consumers value, or finding major efficiency breakthroughs so consumers can enjoy much more service at much lower cost.

As a result, Uber required a massively greater investment base than any prior unicorn in order to fund years of predatory subsidies. Amazon could fund much of its growth out of the positive cash flow generated by legitimate competitive advantages and scale/network economies. Uber’s growth required $13 billion in cash — 1600 times Amazon’s pre-IPO investment funding.

While these massive subsidies may have provided some temporary benefits to consumers and drivers they are not sustainable. In reality, they are hugely welfare-reducing because they are designed to destroy more efficient industry capacity and create the anti-competitive market power Uber’s investors need in order to eventually earn returns on that $13 billion.

Achieving sustainable profits requires going beyond taxi “deregulation” so that Uber’s investors seize full control over the laws governing taxi markets

Since its inception, Uber has understood that its biggest challenge was not the marketplace battle between Uber and Yellow Cab over taxi passengers, but between Uber’s Silicon Valley investors and local citizens over control of the laws governing the urban car service market. Given the billions in profit improvement Uber needs just to reach breakeven, its investors cannot take the risk that cities respond to Uber dominance by reimposing pricing and service requirements, or other steps designed to restore meaningful competition.

Many have incorrectly referred to this process as a fight for taxi deregulation. In past transport deregulation processes, industry and government officials debated whether alternate industry structures (levels of competition and government oversight) would maximize overall economic welfare. Past reforms considered the needs of operators (taxi owners and drivers needed to make money) but also recognized that unregulated taxis would underprovide welfare enhancing benefits such as safety, insurance and access to jobs and housing that were poorly served by public transit.

In certain cases reforms designed to increase competition between independent providers subject to “level playing field” rules were judged to be the best way to increase industry efficiency and overall welfare. However, the importance of the government oversight to protect the public interest in maximizing welfare was never questioned.

Uber’s objective was not to maximize competition subject to “level playing field” rules, but to seize control of the entire playing field and to eliminate meaningful competition. Uber was not presenting evidence showing how an unregulated monopoly provider would greater overall economic welfare than a competitive industry subject to regulations. It wanted to establish the absolute preeminence of its pursuit of shareholder returns over any public interest, such as protecting competition, safety, consumer protection, employee rights, or any other welfare enhancing benefits.

Uber’s quest for market control faces both “factual economic” and “democratic process” obstacles. No one can legitimately claim that consumers would achieve Google/Amazon type service/pricing gains under Uber dominance. Uber dominance cannot be defended as something that resulted from the impartial judgement of the “market” since Uber has not shown that it can profitably produce better taxi service under competitive conditions. A battle between fragmented, poorly capitalized incumbents and Silicon Valley billionaires supplying billions in predatory subsidies is not neutral market competition.

All independent academic analysis has rejected the hypothesis that Uberesque laissez-faire taxi competition would improve industry efficiency or consumer welfare, findings that were confirmed when test cases of milder forms of deregulation in 17 cities failed to produce any public benefits.[2]. No democratically elected city government accountable to voters would openly eliminate all citizen oversight of local taxi service (including protections against monopoly power abuses) and grant total control of that service to private investors.

How could Uber’s investors seize full control of urban taxi markets given uncompetitive economics, given the clear evidence that taxi deregulation would not benefit consumers, and given that no government accountable to voters would openly agree to major industry changes without compelling evidence of consumer pricing and service benefits?

The answer is that Uber is attempting to implement an innovative and disruptive strategy for achieving market control — a strategy radical different from every prior tech oriented startup — but those disruptive innovations have nothing to do with technology or the efficient production of urban car services.

From its inception, Uber correctly understood that the battle between its Silicon Valley investors and local citizens over control of the laws and regulations governing the urban car service market was a political fight, and had to be fought using the techniques that had proven successful in political fights.

Luckily for Uber, pro-corporate/libertarian/objectivist oriented think tanks had conducted a major taxi deregulation campaign in the 1990s advocating the same complete elimination of all forms of legal/regulatory restrictions on the freedom of capital accumulators that Uber is seeking, and laid out a detailed communication program that Uber copied, almost word-for-word, when it began its fight for market control.

Most tech companies have “origin stories”; Uber usually points to times when Garrett Cook and Travis Kalanick could not immediately summon a taxi (a Paris tech conference, the Obama inaugural) when the idea “push a button, get a car” crystalizes. Brad Stone points to the time Cook noticed the graphical tracking software on James Bond’s phone in the movie Casino Royale.

But Uber’s growth was not driven by the user interface on its app; it was driven by its political strategy to take over an industry that it could not win on the basis of competitive economics. Thus Uber’s real origin dates to the political strategy these think tanks established when they set out to eliminate all forms of government oversight over the taxi industry.

The 90s think tanks based their campaign on the type of political propaganda commonly found in large scale partisan campaigns, designed to obscure underlying agendas and motives. Relevant definitions of propaganda include a deliberate, systematic attempt to shape perceptions, manipulate cognition and direct behavior in ways that block interactive discussion in order to further the objective of the propagandist,[3] and communications designed to win over the public for special interests through a massive orchestration of attractive conclusions packaged to conceal both their actual purpose and lack of sound supporting reasons.[4]

Other tech companies convinced the world they would achieve industry dominance by providing independent outsiders with objective evidence of huge efficiency and scale advantages and demonstrating that they could profitably produce better service at lower cost.

Uber used its massive predatory subsidies to create the appearance of better service at lower cost, and a propaganda narrative that convinced journalists and industry analysts that not only was it hugely competitive but its eventual success was so inevitable that there was no need to investigate its actual competitiveness or financial results. Uber supplemented its propaganda narrative with actions establishing a hyper-ruthless corporate image, designed to convince any competitors, local governments or unconvinced journalists that any efforts to resist Uber’s inevitable dominance would be futile.

The think tank taxi deregulation campaign blocked discussion of industry reforms based on economic evidence of potential impacts on efficiency and welfare with an emotive/tribal battle framing that precluded compromise.

Neither the think tank campaign nor the earlier 17 city deregulation push was the result of local citizens organizing to address local transportation issues. Both were entirely organized and financed by external interests who systematically repeated its key messages across a range of contexts and publications.[5]

The descriptions of the think tank taxi deregulation campaign below are based on twenty-nine articles from this period, twenty of which were published between 1993 and 2000.[6] Twenty-two of the pieces were published by pro-corporate/libertarian/objectivist oriented advocacy groups that received major funding from Charles and David Koch, including 6 by Reason and 5 by the Institute for Justice and 8 by similar state-level groups.[7] The others were opinion pieces in mainstream outlets that uncritically publicized the claims of those advocacy groups.

The higher-level political objective these papers was defined as the “liberty principle” ,[8] a belief that only a very narrow range of governmental activities were legitimate, fully consistent with the Uber/Silicon Valley political view that any governmental actions limiting the freedom of capital accumulators are illegitimate.[9]

The campaign worked to shift all industry discussion from a technical economic efficiency/consumer welfare frame based on industry economic evidence to a narrative where a single simplistic change could solve all industry problems. Attractive conclusions were highlighted — their central claim that regulation is the cause of all of the industry’s problems is endlessly repeated – but none of the papers presented any supporting evidence based on actual taxi industry economics. For instance: “…[M]ore could be done to improve the quality of urban transportation and perhaps abate the current fiscal shortfall through the process of deregulation than through almost any other policy strategy.”[10]

The papers all claim that ending economic regulation of taxis will lead to better quality service, lower fares, shorter wait times and increased employment. But since none of the papers even mentions concepts such as operating efficiency, utilization or productivity, they fail to consider, much the less explain, where these gains will come from, or how existing regulations might have caused these problems.

The papers assert that deregulation will solve the problems of long wait times in peak periods and poor service to lower-income neighborhoods, but none of the authors had any understanding of the actual costs of those services and nor made an attempt to explain how deregulation would reduce those costs. Regulation is attacked as an obstacle to innovation, but no one can cite any specific innovations that have been blocked.

The papers reframed all industry issues around an emotive black-and-white, us-versus-them ideological/tribal battle narrative. The fictional hero was the “entrepreneur”, often portrayed as a struggling immigrant anxious to embrace the free market, who would transform taxi service but for the evils of regulation. This reimaged a fight for greater corporate freedom, funded by billionaires, into a fight to help an oppressed underdog. The impact of regulation on these storybook entrepreneur wannabes “is devastating. It impairs their ability to earn a decent living for themselves and for their families. It limits their opportunity to work for themselves, instead of for others. It destroys their dream of a brighter future.”[11]

In reality these thwarted entrepreneurs were close to non-existent and consumers had not been harmed, since the few that did enter were not competitive with incumbents and quickly went out of business.[12] The fictional villains were the malicious forces of the “Cab Cartel” working in cahoots with corrupt government regulators. “The current regulatory scheme in Boston benefits no one but the existing medallion holders, their lobbyists, and their lawyers”.[13] Framing the “heroic entrepreneur vs corrupt regulator” fight as a battle for progress, innovation and economic freedom precluded reasoned, factual discussion about alternate paths forward based on actual industry economics.

Having first reframed regulatory issues into a moral battle where data was irrelevant and compromise was unacceptable, the think tanks then expanded the scope of supposedly deleterioius regulations from the pricing and entry restrictions that had been the focus of every previous “deregulation” debate to any rule that might ever constrain the freedom of capital.

These papers specifically rejected calls “for more or “better” regulations [but] that an improved taxicab market can arise by removing regulation”[14] including regulations designed to prevent monopoly or protect public safety.[15] The think tanks insisted that giving the owners of capital complete, unfettered control of the industry would automatically eliminate any externalities and inefficiencies, implying there was no actual need to protect competition. “If it weren’t for government interference, the laws of supply and demand would govern the taxi trade with almost frictionless efficiency: cabs would be plentiful, fares would be reasonable, and service would be available nearly everywhere it was wanted.”[16]

The think tanks claimed they were just like the airline deregulation reforms of the 80s in order to obscure their much different objectives and to falsely imply taxi deregulation would produce the same large efficiency and consumer benefits. The papers included assertions such as “eliminate medallions and fares would drop, just as they did when the airlines were deregulated[17]and “there is no reason, however, why the same [airline deregulation] principles cannot be successfully applied to urban transportation as well.”[18] In addition to the false claim that medallion values had been directly extracted from consumers[19] (claims refuted in part six of this series), it claimed that the failed 17 city taxi deregulation test had actually been a great success.[20]

The 90s think tank taxi deregulation campaign failed to generate any support outside the ideological/political circles already predisposed against most forms of governmental activity, and thus failed to overcome the “democratic process” obstacles. Local governments and taxi industry participants may not have grasped the radical nature of the changes proposed in these papers, but knew that past deregulation efforts had failed to produce any benefits, knew that these papers had not provided any credible evidence of potential public benefits, and knew that any explicit political decision to totally abandon public oversight of taxis would be rejected by the public.

Uber adopted the think tank propaganda approach almost word-for-word as the foundation for its market control battle

Uber immediately adapted the 90s think tank propaganda narrative as its communication template because it directly addressed the obstacles Uber would face in its pursuit of full market control.

Uber needed to reframe all public discussion around an emotive, ideological/tribal narrative that would limit scrutiny of its uncompetitive economics and would also enlist a base of dedicated supporters, who would see Uber’s battle against longstanding laws and regulations as a moral battle where compromise was unacceptable.

Uber needed a simple regulation-based explanation for the industry problems it would allegedly solve, but did not want anyone to reexamine the actual history of taxi deregulation, or to understand the huge difference between pricing/entry liberalization and the total market control they were seeking.

Uber needed to establish the image of a battle between cutting-edge technologists fighting to disrupt a backward industry so that people outside of its core of supporters would view Uber as the heroic good guys.

Uber needed to create a strong association between its disruptive innovation and its meteoric growth in order to create the impression they were following the proven model of Amazon and other successful unicorns and thus would inevitably achieve strong profitability and industry dominance just as they had. Establishing Uber as an innovative good guy with a business model just an innovative as Amazon would eliminate the need to investigate whether they actually had similarly powerful inventions, or to figure out why the losses investors were subsidizing were so large and persistent.

To build a base of ideological/tribal supporters Uber CEO Travis Kalanick emphasized the company’s affinity with the tech industry and its libertarian/objectivist values. He highlighted his famous Silicon Valley investors, his use of Ayn Rand as his Twitter avatar, and described himself as a “trustbuster” and a “freedom fighter.” “It’s like Braveheart. Like, ‘freeeeeduuuuuuuuum.”[21]

Uber evoked the same us-versus-them imagery with entrenched and corrupt political forces, but substituted the heroic technology innovator for the heroic entrepreneur the think tanks had used. Kalanick described Uber as an avatar of progress “a transportation technology innovator, boldly going where no man has gone before;” its loyal supporters would be amply rewarded in the end because ultimately, progress and innovation win.”

Despite massive funding from Silicon Valley billionaires, Uber faced overwhelming disadvantages in its battle against a powerful “Taxi Cartel” (alternatively the “Taxi Medallion Cartel”). “Over the years, what I’ve come to realize is that this controversy exists because we are in the middle of a political campaign and it turns out the candidate is Uber” and the opponent is “an asshole named taxi.” “Our opponent — the Big Taxi cartel — has used decades of political contributions and influence to restrict competition, reduce choice for consumers, and put a stranglehold on economic opportunity for its drivers”. “When we do so, we don’t do so fighting anybody. The fight is brought to us by those who don’t want to have to compete, don’t want to innovate and who like the status quo for what it is, which is not to the benefit of consumers or drivers.”

Given the long-term objective of total market control, the propaganda narrative made the uphill battle with the evil Taxi Cartel into a struggle over core values where total annihilation of the enemy was a moral imperative. “Nobody likes him, he’s not a nice character, but he’s so woven into the political machinery and fabric that a lot of people owe him favors…We have to bring out the truth about how dark and dangerous and evil the taxi side is.” Kalanick made it clear that truth and justice were totally on Uber’s side and any accommodation with incumbent operators or taxi regulators was out of the question. “If you’re operating from strong principles, you can compromise when the person on the other side is operating from principles you respect,” he says.

Despite Uber’s transparent interest in destroying all incumbent operators in order to establish global industry dominance, Kalanick insists Uber is just trying to increase competitive options. “When it’s about protecting incumbent industry, when it’s about providing less choices for citizens to get around the city, then there’s less to talk about.”

Following the think tank template, Uber emphasized attractive outcomes (e.g. hiring Uber would soon be cheaper than buying a car, Uber would eliminate waiting for cabs on Saturday night, and the company had “generat[ed] 20,000 new driver jobs every month” that had no factual basis and were totally inconsistent with actual industry economics.

Uber insisted that the emergence of an unregulated, Uber dominated industry had nothing to do with multi-billion dollar subsidies but was strictly the result of the free choices of consumers in a competitive market and therefore must reflect the efficient results that markets always produce. But as law professor Eric Posner points out, “…[this] is a response that any monopolist could make…But whether or not Uber does overcharge people now, sooner or later — once it displaces taxis and dominates markets —it will.”[22]

Echoing the struggling immigrants in the think tank narrative, it valorized its “driver-partners” as “small business entrepreneurs” who had been generously granted a unique opportunity. Uber forced drivers to bear much greater costs than traditional taxi drivers faced, could fire their “driver-partners” at will, and aggressively lied to them about their true earnings potential. In 2016, once drivers were locked into vehicle financing obligations, Uber slashed their compensation by over $1 billion.[23]

But Kalanick perversely defended a business model whose economics and service standards are controlled tightly by Uber as a way to empower workers. “When you empower drivers to own and operate their own vehicles, they can take control over their own income, their hours, and they can improve their lives.”

Uber’s public claims quickly coalesced into a PR/propaganda[24] narrative that can be readily summarized. Uber’s huge valuation was justified by its powerful business model that was based on cutting-edge technological innovation; it has created a totally new product category (“ridesharing”) an industry (the “on-demand” or “sharing economy”) that is totally different from traditional taxis; its meteoric demand growth was the result of consumers freely choosing their vastly superior product in open, competitive markets; resistance to Uber’s growth was due to the coalition of the evil Taxi Cartel and corrupt regulators who were willing to block major innovations and job creation in order to protect an inefficient status quo; that startup losses will soon give way to strong profits, just like past unicorns that rapidly grew into profitability; robust long-term growth is certain because its business model is so powerful that it can overwhelm competition in any city and any country and inevitably achieve global industry dominance and because it will become so efficient that it will significantly displace car ownership.

Uber’s PR/propaganda narrative was powerfully amplified by journalists following the tech industry

There is no legitimate, verifiable economic evidence supporting any part of Uber’s PR/propaganda narrative. But the effectiveness of propaganda campaigns does not depend on analytical rigor. It depends on their ability to get seemingly objective outsiders to amplify the message and give it greater credibility.

The media had completely ignored the 1990s think tank propagandists’ explicit attacks on all aspects of taxi regulation, but when the exact same narrative was repackaged in the context of an epic power struggle where cutting edge technologists backed by the best and brightest in Silicon Valley would inevitably overwhelm a backward industry, it became widely repeated in the tech industry and mainstream business press as if it was established truth that had been independently verified.

Uber’s narrative exploited the myopia of tech industry journalists embedded in a Silicon Valley tribal culture that sees itself as the avatar of economic progress, who readily embraced Uber’s framing of a heroic battle against a backward industry.

Given the awesome benefits that Silicon Valley-led “disruptive innovation” would inevitably bring, there was never any need to interview anyone knowledgeable about the industry being disrupted, or consider whether the Uber’s claimed innovations had ever transformed any other industry.

Journalists focused on the wealth and status of Uber’s Silicon Valley investors within the venture capital world. The presumption they must know what they are doing eliminated the need to find evidence that would explain how they had found tens of billions of economic value no one else had ever seen, or whether their interests coincided with any broader economic interests.

Part eight of this series uses Brad Stone’s recent Uber/Airbnb book as an example of tech journalist bias. Stone, the senior executive editor for technology at Bloomberg News, manages to endorse every element of Uber’s narrative while finding excuses for everything contradicting it (e.g. the massive failure of Uber China). Stone fails to mention Uber’s multi-billion dollar losses or any other aspect of its uncompetitive economics, and cannot explain where profits or returns to investors might come from. Part seven of this series provides examples of much more open-minded, independent tech journalists, willing to acknowledge contradictory evidence and obvious Uber flaws Yet even they maintained that Uber it an ideal example of how the tech industry is the avatar of innovation and progress.

Since Uber’s narrative provided a fully self-contained explanation of its inevitable success, even journalists without strong tribal tech industry ties had little need to undertake any independent investigation. Given Uber’s overwhelming financial advantage, one could assume the battle had been decided before it started, and thus there was no need to dig into complicated competitive issues. The press treated Lyft (with a mere $2 billion in funding) as an also-ran and the entire incumbent taxi industry as a complete irrelevancy. Given its rapid growth, journalists accepted the Uber narrative implication that it was following the exact model that Amazon and Ebay had followed.

The huge industry-wide losses caused by the massive increase in less efficient capacity was never considered newsworthy, and was never blamed on Uber; since Amazon and Ebay had converted large initial losses to sustainable profits there was no reason to doubt that Uber would as well.

Uber’s successful creation of the perception that it was the new Amazon/Ebay caliber tech winner created a virtuous circle, increasing the amount of highly favorable press Uber received. Aside from being locked out of access on one of the biggest stories on their beat, Silicon Valley journalists would also risk reputation in fighting the image version of a massive momentum trade.

It also meant that the press ignored the question of whether Uber actually had the Amazon-like scale economies needed to eventually achieve profitability, and ignored the arithmetic showing that an Uber recovery from its multi-billion dollar losses would constitute one of the greatest corporate turnarounds in history.

Uber’s us-versus-them narrative also provided built in-responses to critics; people who raised questions about reduced driver earnings or whether the app was actually a technological breakthrough or Uber’s eventual profitability could be dismissed as an Luddites who opposed empowerment and progress. Those who complained about Uber’s ruthless behavior and disregard for legal requirements were bleeding hearts who did not understand what was required to create billions in corporate value. The combination of Uber’s aggressive PR efforts, and a weak, disorganized and marginalized opposition created the impression that there was only one side to this story.

Of the thousands of Uber stories in the mainstream press, none included any interviews with independent experts on urban transport, none investigated the pros and cons of the longstanding taxi regulations Uber was disobeying, and none investigated whether “innovations” like Uber’s app or surge pricing practices had ever driven major competitive changes in any other industry.

Since Uber was popular (and traditional cab service was decidedly unpopular) with many of the urban elites who were a major audience for these media outlets, there was little motivation to expose the unsustainable subsidies that popularity possible, or to point out that the service they liked was reducing the already poor working conditions of drivers and also threatened affordable late night taxi service for low-wage workers.

Uber’s hyper-ruthless corporate behavior powerfully complemented its PR/propaganda strategy

Space does not allow the full story of Uber’s strategy for market control to be told here, but its highly effective PR/propaganda program was the key (in conjunction with its $13 billion investment base) to convincing the world that success was inevitable. By capturing the tech industry and mainstream business media, Uber rendered any local politicians that might have wanted to enforce longstanding regulations powerless, and ensured that outside critics questioning Uber’s business practices or competitive economics were never taken seriously.

To summarize briefly, the other key component to Uber’s market control strategy was the development of a highly ruthless corporate image. While the PR/propaganda campaign told the world that success was inevitable, Uber’s vicious behavior towards local politicians, competitors and critical journalists told the world that resistance was futile.

Recent articles about Uber’s rogue culture, exemplified by Susan Fowler’s descriptions of systemic protections for sexual harassers within management, the Greyball software used to obstruct local law enforcement and the Google/Waymo intellectual property theft lawsuit treat this type of behavior as aberrant and fixable because they consider it totally outside the context of Uber’s operations. In fact, this behavior and Uber’s monomaniacal focus on total market control is an absolutely central part of its business model. Change the culture, and you destroy what made Uber’s growth to date possible.

In an ideal world, competitive markets help allocate resources efficiently because consumers, workers and investors respond to information indicating which companies have better products, efficiency and profit potential. Uber’s pursuit of industry dominance and market control has been based on massive distortions of market information. Its multi-billion dollar predatory subsidies grossly distort competitive pricing and service information. It has gone to great lengths to hide the financial and competitive information capital markets require, and in several cases it has resorted to blatant dishonesty about things like driver earnings potential and market performance. Its PR/propaganda program was designed to replace legitimate economic evidence markets need with a narrative explaining its inevitable success that had been manufactured out of thin air.

_______________

[1] The outside returns Silicon Valley venture capital community that funded Uber seeks has always focused on the monopoly power that could support significant rent-extraction and supra-competitive profits. For example Peter Thiel said “Always aim for a monopoly. It’s one big transgressive idea, and you’re not allowed to talk about it… From society’s perspective, it’s complicated. But from the inside, I always want to have a monopoly.” Cook, J., Peter Thiel: ‘Always aim for a monopoly. I always want to have a monopoly’, Business Insider, 2 May 2015 Separately Thiel argued that “Actually, capitalism and competition are opposites. Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.” Thiel, Peter, Competition Is for Losers, Wall Street Journal, 12 Sep 2014

[2] The history of academic taxi deregulation analysis and test cases, with citations to original sources can be provided on request

[3] Jowett, Garth & O’Donnell, Victoria, Propaganda and Persuasion, Sage Books, 1,6,24 (1999).

[4] Sproule, J.M., Channels of Propaganda ERIC Press Indiana University, 8 (1994).

[5] A review of deregulation in Seattle noted that no local consumer or civic groups had been advocating deregulation; the chief proponent was a libertarian-leaning City Council member who argued that “the best way to improve taxi service to the public was…for the government not to interfere with private industry” and justified the move in terms of the recent success of airline deregulation. Leisy, C., Taxicab Deregulation and Reregulation in Seattle: Lessons Learned, International Association of Transportation Regulators (2001).

[6] Berliner, D., How Detroit Drives Out Motor City Entrepreneurs, Institute for Justice, (1996); Boroski J, & Mildner G., An Economic Analysis of Taxicab Regulation in Portland, Cascade Policy Institute (1998); Bullock, S. G., Baltimore: No Harbor for Entrepreneurs, Institute for Justice (1996); Cervero, R., Deregulating Urban Transportation, Cato J., 5, 219 (1985); Corcoran, T., Taken For A $1 Billion Taxi Ride, Toronto Globe and Mail, 5 May1997 (author was employed by the Consumer Policy Institute); Filley, D., Taken for a Ride: How the Taxi Cartel and the State Are Disserving Denver’s Economy. Independence Institute Transportation Policy Center (1993); Goldsmith, S., Regulation and the Urban Marketplace, Regulation, 17, 76 (1994); Gordon, P. & Richardson, H. W., The Counterplan For Transportation In Southern California: Spend Less, Serve More, Reason Foundation (1994); Hardaway, R., Taxi and Limousines: The Last Bastion of Economic Regulation, Hamline Journal of Public Law and Policy, 21(319) (2000); Harris, L., Taxicab Economics The Freedom to Contract for a Ride, 1 GEO. JL & PUB. POL’Y, 195 (2002); Jacoby, J., Break Open The Taxicab Monopoly, Boston Globe, 5 Dec 1995; Kramer, J. E., & Mellor, W. H., Opening Boston’s Taxicab Market, Institute for Justice (1996); Lephardt, G. & Bast J., The Economics of Taxicab Deregulation, The Heartland Institute (1985); Lopez, N. Barriers to Entrepreneurship: How Government Undermines Economic Opportunity, Institute for Policy Innovation (1999); Mellor, W. H., Is New York City Killing Entrepreneurship?, Institute for Justice (1996); Mellor, W & Kramer, J., Open the Door To Portland’s Taxi Entrepreneurs, Cascade Policy Institute (1997); Moore, A. T. Indianapolis’s Road to Regulatory Reform: A New Path in Licensing and Permits, Regulation, 21, 49 (1998); Moore, A. T., Competition and Entry in the Market for Taxis, Limousines, For Hire Vehicles and Related Services, Liberty Justice Center (2013); Moore, A. & Balaker T., Do Economists Reach a Conclusion on Taxi Deregulation?, Econ Journal Watch, 3(1), 109-132 (2006); Moore, A., & Rose, T., Regulatory Reform at the Local Level, Reason Public Policy Institute Policy Study, (1998); Novack, J., Regulation at its Worst, Forbes (1988); Selzer, I., Abolish The Taxi Medallion System, American Enterprise Institute (1996); Seymour, D., The Case For Taxi Deregulation, Frontier Center for Public Policy (2009); Staley, S., Taxicab Regulation in Ohio’s Largest Cities, Buckeye Institute for Public Policy Solutions (1996); Staley, S., How Cities Put the Brakes on Taxicabs: Stifling Regulations Thwart Entrepreneurs and Economic Growth, Foundation For Economic Education, 48, 147-150 (1998); Staley, S., Toward A 21st Century Taxicab Regulatory Framework: The Case of Madison, Reason Foundation (2000); Staley, S., Taxi Regulation and the Failures of Progressivism, Foundation for Economic Education (2012); Staley. S.,Husock, H., Bobb, D. J., Burnett, S., Crasy, L., & Hudson, W., Giving a Leg Up to Bootstrap Entrepreneurship: Expanding Economic Opportunity in America’s Urban Centers, Reason Public Policy Institute (2001); Styring, William, How Indianapolis won the War of the Taxis, Indiana Policy Review, 31-35 (Spring 1994).

[7] The establishment of these think-tanks as political advocacy groups by the Koch Brothers is described in chapter 5 of Mayer, Jane, Dark Money, Random House (2016); the role of Mellor in the establishment of the Institute for Justice is described at 232-3.

[8] The “liberty principle”, and the role these papers played in supporting it was defined by the editor of the Moore & Balaker paper (supra note 117) as the belief that any governmental activity outside the realm of police and military protections (including taxi regulation) must bear the full burden of justifying their existence, while any reduction in government activity (such as taxi deregulation) does not bear any burden of proof. “Certain interventions [including taxi regulation] that are hallowed and important to statist ethos and mythos are wrongheaded and fail to meet the liberal burden of proof.” Klein, D. B., The ForsakenLiberty Syndrome: Looking at Published Judgments to Say Whether Economists Reach a Conclusion. American Journal of Economics and Sociology, 71(5), 1250 (2012)..

[9] Supra notes 77 and 78.

[10] Cevero,

[11] Mellor & Kramer, but every article discussing “entrepreneurs” uses similar language.

[12] And could not have existed, given the dominant industry model of taxi owners leasing to independent contractors. When Indianapolis allowed open entry, only one person that wasn’t already working in the industry applied for a license.

[13] Kramer & Mellor

[14] Boroski & Mildner

[15] Berliner, Bullock and Kramer attack regulations for mechanical inspections of taxicabs and the requirement that cab drivers obtain commercial licenses.

[16] Jacoby.

[17] Seltzer and Hardaway also argued that taxi regulation was justified by the success of airline deregulation.

[18] Cevero

[19] Kramer, Hardaway, Moore & Balaker;

[20] Most papers ignored the 17 city tests, but the ones that mentioned them cited the initial expansion of capacity, but failed to mention that the new entry was unsustainable, and that almost every city restored previous regulations. Cevero, Moore (1998), Seymour, Styring,.

[21] Citations for Uber’s public statements are omitted here but are available on request

[22] Posner, Eric, Why Uber Will—and Should—Be Regulated, Slate, 5 Jan 2015. http://www.slate.com/articles/news_and_politics/view_from_chicago/2015/01/uber_surge_pricing_federal_regulation_over_taxis_and_car_ride_services.html

[23] See 2016 financial data summarized in part six

[24] The focus on “propaganda” is designed to highlight the enormous differences between Uber’s communication program, designed to serve broad objectives related to industry structure and control and “marketing-based” corporate communication, focused on tangible product attributes (price, features) serving much narrower objectives related to consumer purchase decisions in competitive markets, or investor decisions in capital markets. The term “propaganda” is often misused to disparage communication serving objectives one dislikes, even though it is commonly deployed on behalf of all types of political objectives, likeable or not. Edward Bernays argued that propaganda was simply the “mechanism by which ideas are disseminated on a large scale,” was central to all public relations practices, and (like all of education, business and politics) was not inherently ethical or unethical. Bernays, Edward, Propaganda, Routledge (1928) 20, 133.

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