About Nick: i am an economist based in malaysia. I write about development economics, while sneaking in a pop culture reference or two.

Towards Logical Consistency: Uber and Immigration

Published in The Edge Malaysia, 3 - 9 November 2014.

When Malaysia’s Jabatan Pengangkutan Jalan (JPJ) announced that it would take legal action on individuals or companies that offered taxi-like service with private vehicles, my Facebook feed erupted with loads of comments from Facebook friends decrying the action and lambasting JPJ’s decision to essentially place sanctions on Uber, an ‘app’ technology that enables (matches) people who want rides from one place to another with people who want to offer those rides.

A quick Google search showed many media portals that compiled complaints from social media and from Uber users that echoed those sentiments. For the most part, arguments against the banning of Uber (or at least the private vehicles to which Uber enables access) center around the superior transportation service enabled by Uber vis-à-vis other forms of public transportation, particularly taxis. The most common argument is that if Uber can provide more affordable, reliable and safe rides from point A to point B, why should the government ban Uber instead of encouraging the Malaysian taxi operators to step up their game and compete?

The argument against Uber tends to boil down to legalities; private cars do not have permits to transport people commercially. Another argument is that while metered taxis have passenger liability insurance, private cars do not. These arguments are, to me, unconvincing. For the former, I can just consider my Uber driver a friend who prefers cash compensation (as opposed to a meal at a restaurant) for doing me a favor of driving me from point A to point B. There is little difference between that scenario and a friend buying me a Kentucky Fried Chicken meal as compensation for my driving that friend to the airport. On the latter, I think it really does not matter. If the driver chooses to take that risk, why is it the government’s business to regulate that choice? Furthermore, the incentive is to drive more safely which is certainly a good thing.

It should be quite clear by now that I do not believe the government should regulate Uber whatsoever. If I choose to enter into a transaction for a service in Malaysia with a willing supplier of that service, it should not be the government’s business. If the government wants to ban private drivers, it might as well ban private music teachers or private freelance writers. After all, they add competition to ‘legally permitted’ music teachers and writers too, do they not? Therefore, it is silly to think that banning private transportation services enabled by Uber makes much logical sense and it is simply worth acknowledging that the decision is a highly political one; the government wants to appease taxi drivers who may or may not be an important vote bank and do have some collective action power.

Now, let’s suppose an individual believes that private transportation providers – despite not having ‘legal permits’ – provide more reliable, less costly and more safe means of transportation. That individual then chooses to consume that private transportation at the expense of other forms of transportation such as taxis and therefore knowingly adversely affecting the livelihoods of these taxi drivers. Putting it more generally, this individual is choosing a technically illegal choice because that service is thought to be more beneficial to that individual, even if choosing that choice is at the expense of other more costly providers of that service. Furthermore, that individual is very unlikely to recommend banning that technically illegal service; rather, that individual is more likely to recommend legalizing that technically illegal service.

How is this any different from illegal immigrants from Bangladesh, Burma, Indonesia, Nepal and wherever else in Malaysia? In the latter case, employers, particularly those in low-skilled service provision, may choose immigrant workers because they do a decent enough job, they are usually less costly and they are culturally less averse to menial work. Employing these workers usually means that the employer does not employ local Malaysians (who may or may not want to do those jobs in the first place). Yet, when it comes to the case of Bangladeshi migrants, for example, we are, as a society, so quick to pronounce them as a scourge to our society. On the other hand, with Uber – the cool contemporary technology – we are so eager to welcome disruptive technology. Why are we not as quick to welcome disruptive labor market movements?

For the record, I am all for free migration. If a person can move from Kuala Selangor to Kuala Lumpur to look for work, another human being should be able to move from Dhaka to Kuala Lumpur to look for work as well. If the country in which you are born is entirely arbitrary (which it is), then there is no moral ground for the prevention of migration flows. There is also much economic literature that argues for greater labor mobility across nations. Aversion to free migration is usually due to political reasons (at the government level) and bigotry reasons (at the individual level).

I recognize that bigotry is a strong word, but restricting a particular group of people from a given activity due to some arbitrary attribute (whether it is race, gender or, in this case, nation of birth) is, by definition, bigoted. The less we label and define individuals by their arbitrary attributes, the less friction the world will have. In fact, I would argue that the failure to legalize illegal immigrants is even more morally backward than the failure to legalize private individuals to transport passengers for compensation. The former is discrimination based on a person’s arbitrary attribute, the latter is based on a person’s choice. In either case, however, I argue fully that restrictions are unjustifiable from a moral perspective. It is the political perspective that such restrictions gain traction.

Therefore, if we are to be consistent in our principles behind supporting Uber, we must acknowledge as well that those same principles apply to illegal immigrants in Malaysia. If we are to believe that the type of drivers under Uber should not be restricted or even possibly legalized, then we must believe that the illegal Bangladeshis, Burmese, Nepalese who want to work in Malaysia and carve out better lives for themselves – essentially, who only want what our ancestors wanted – should not be restricted in their movements and even possibly legalized.

What do Malaysians Want? A (Brief) Investigation into the World Values Survey

The Primacy of the Median Voter