Uber/Grab Taxi Conversations

Sun Star Cebu (July 2017)

In Cebu, Philippines, I had very interesting conversations with Filipino drivers. Grab, a Singaporean company, competes with Uber. (As of July 2017, Lyft's international footprint is non-existent.) Grab's app is like Uber's but more intuitive. Grab users can message faster with drivers and can take advantage of a "notes" section when booking. I use the notes to tell the driver what I'm wearing ("red shirt, sunglasses, 6 ft," etc.). Interestingly, Grab uses Google Maps whereas Uber appears to use its own mapping system. (Update: in Indonesia, both Grab and Uber drivers do not trust any of the navigation apps and so rely on their own memories/knowledge or other people's directions. I'm not surprised--Google maps told my driver to turn into a one-way street several times.) 

Because Grab and Uber are fairly new entrants to countries outside North America, most drivers have worked for them less than a year. I heard two very interesting stories from Grab drivers I'd like to share and paraphrase:

Driver 1: Been working less than three months for Grab. Before, he worked in SEO. Speaks perfect English. Attended college but left with one semester to graduate. Why didn't he finish? He realized he didn't want to work in the profession. (In the Philippines, when you attend a college program, your final year consists of actual on-the-job experience.)

He's 37 but looks much younger. 

He's married to a Chinese woman. Much to my surprise and delight, Chinese women and Filipino men are becoming a more common pairing. If you don't already know, Filipinos do not generally like the Chinese--their cultures are completely different. In this case, the wife's entire family had college degrees, so they imposed a requirement on him to get a degree before he could join the family. I guess by the fourth year, the family realized the love was real and didn't need a piece of paper from an accredited college for verification. My Pinay friend, after hearing the story, remarked, "Ah, the Chinese."

He works about 14 hours more each week driving than in his SEO job but makes slightly less money. Why doesn't he go back to SEO? He controls his schedule as a Grab driver, and he can see his family more often.

Driver 2: Been working one month as a Grab driver. Before this, he supplied lechon (pork) to restaurants and restaurant suppliers. (Cebu is famous for two products: lechon and mangoes.) 

He owned his own business selling lechon. Why did he quit? He wasn't paid on time. Most customers would pay 50% up front and 50% when the lechon was sold. Enough people stiffed him that he's better off working as a Grab driver, where payment is guaranteed if the work is done.

Does he work more or less than before? He works more. He works from 6AM to 10PM, seven days a week(!). Getting paid timely is always a struggle as a small business anywhere, and I'm surprised no one has created an app that evaluates people and business's ability to pay suppliers and vendors. The app would be straightforward. Businesses and vendors would confirm when payment was made; whether it was timely; and if not, how many days late. The data would be used to create a "reputation" score for each business and vendor accepting products from suppliers. Over time, payments could be made directly into an escrow account handled by the app's company, creating a more accurate paper trail--and a very profitable, useful business. Why hasn't this app been created already?

The startup costs would force unprofitability for years, as the app's customer service reps mediated conflicting information about when payment was made. They would also need to identify forgeries and fakes, as well as build relationships with banks. With all the bad press banks have received, you'd think they'd be at the forefront of such small-business friendly apps. It tells you something about American capitalism that banks have invested so much in Fintech and online shopping but not in a version of the app I've just described.

Small businesses can benefit tremendously from technology and have benefited greatly as costs have declined. For example, savvy American business owners can use Intuit products to improve efficiency, avoiding expensive experts. Broadband access usually makes everything easier by leveling the playing field in terms of information access. Although Westlaw/Lexis and other accounts can be very expensive, they are still faster than having to go to a library and sift through hardcover volumes for hours to find what you need. Yet, somehow, in the year 2017, no one has figured out how to improve the basics--getting paid on time--for small businesses that lack a substantial online presence, a category that covers most small businesses in the world. What a shame. 

Days of Yesteryear: Newspaper Edition

In high school, I eagerly awaited Sunday's newspaper so I could read syndicated columns by Dave Barry, Mike Royko, Thomas Sowell, and Charles Krauthammer, as well as the Calvin & Hobbes comic strip. I didn't care about anyone's political affiliation. Most writers who made it into the Sunday paper were undeniably authentic and had in-depth personal knowledge. I was interested because each of them cared about the topic discussed and provided relevant research, even if only anecdotal. If any journalist had a chip on his or her shoulder, I couldn't feel it on my ink-stained fingers. I would save articles I loved in my cabinet, a shrine to the many words of wisdom I felt lucky to read. 

A few days ago, when a newspaper--from the same publisher--unexpectedly arrived on my parents' porch, I went to throw it in the recycling bin, asking my mom along the way whether she wanted it. She demurred, and off to the bin it went, unopened. How times have changed. But why? 

Despite more information publicly available than ever before, I learn more about a scientific topic by speaking to my sister, a PhD scientist, for 5 minutes than anything online. Writers can fit only so much context in a short article, but they don't have much competition--the number of experts able to provide "big picture" context is extremely limited. As the always interesting Nassim Taleb might say, oftentimes, it's not what you say, but what you leave out. 

A lawyer/analyst recently published an article arguing record consumer debt wasn't a cataclysmic problem but missed an issue: are his numbers and data based on organic, sustainable growth--such as steady, predictable tax receipts--or artificial, unsustainable catalysts, such as government borrowing at ever-increasing interest rates? Without knowing the answer to the aforementioned question, the entire article as well as its research is useless. This author, the editor of the blog, The Big Picture, somehow missed the big picture--despite doing considerable research and using diverse data sets. 

I emailed him, saying, "You... failed to list overall liabilities, such as pension and other local gov obligations. If local and state govs borrow more and transfer their debt/revenue to local residents, of course the overall picture will appear better." 

He responded, "These are current, not future liabilities." 

This expert accepts an analytical approach where if 100 people owe 1 million dollars now and have jobs that can reasonably cover the interest on their debts now, it doesn't matter if their government--local, state, and federal--or their private sector employer owes 100 billion in bond or other payments due tomorrow. 

But without knowing present and future liabilities, one cannot determine whether last year's tax receipts and accompanying job growth are sustainable. If governments or private employers owe 100 billion tomorrow, they might require higher taxes, fewer new hires, and more debt (presumably at different interest rates, impacting present-day revenue). 

If the debt is pension-related, then more revenue would be needed to replace the retired workers as well as to pay ongoing pensions unless the pension fund was 100% funded. In short, future liabilities can dramatically change the assumed rates of job growth, tax revenue, consumer demand and inflation, rendering prior data almost useless. It's as if there's a Black Swan event we can actually predict, but no one wants to do the additional math because it's too complicated. 

So I wrote Barry Ritholtz back: "[I]f we have a bill due tomorrow, analyzing only today's liabilities and GDP makes no sense if the entire structure depends on rolling over massive debt and other financial engineering." 

That's when it got interesting--and slightly snippy: 

My response: 

The value you were trying to provide was context, not knocking down a strawman, I hope. 

If since 2007, govs have borrowed more money and transferred that money to their residents on local, state, and fed levels while doing little to resolve systemic issues such as lowering pension obligation interest rates, etc., then the result won't be the same. It'll be different, of course, but serious problems will remain, meaning your article promotes complacency rather than true context.  You want the "big picture"? So do I. 

Barry: "See how it's totally not the same because of a lack of defaults and overall population and other changes that I'm going to examine without trying to see if the growth is merely because govs borrowed more money?" 

Skeptical Guy: "Dude, analyzing only today's data makes no sense if you're unable to determine that consumer/mortgage borrowing wasn't merely replaced by gov borrowing, which then was transferred to residents, leaving systemic issues alive and well, but with a larger fuse and more dependence on low interest rates."  

Barry: "Dude, I was just analyzing why it ain't exactly the same." 

Guy: "What value is that if your goal is to analyze the big picture?"

And that's where the conversation ended.  

When I opened my newspaper in the 1990s, I never once suspected Mike Royko wasn't an expert on everything Chicago. When Peggy Noonan taught me politics is all about "Whose ox is being gored," I knew she was speaking from a reservoir of personal experience. Today, in contrast, when I click on content, I sense people consider themselves experts after one-hit wonders or because they know the "right" people. Worse, I sense journalists and experts no longer have power behind their pen. Even if they manage to capture eyeballs, the public's threshold for outrage has risen so high, nothing will be done unless an army of paid meme creators and politically-connected groups manufacture simplistic slogans that fail to capture any complexity. 

Maybe that should be the modern journalist's motto (and epitaph): "So simple, you'll be outraged and demand change without really understanding a damn thing."