Sources

Uber-Appalling Bogota Taxis Bring Competition On Themselves

Arguments for blocking the car service Uber are based exclusively on the fact that it brings unwelcome competition to cab drivers, and not at all on the welfare of drivers and passengers.

Taxis in Bogota, Colombia
Taxis in Bogota, Colombia
Juan Francisco Ortega

-Analysis-

BOGOTÁ â€" Some debates ultimately get us all involved, and the one about whether Colombia should block that most populist of transportation options, the Uber car service, is one of them.

Across the world, city authorities issue transportation licences on the basis of particular conditions. The idea â€" in theory at least â€" is that by restricting competition and obstructing free entry into this market through licencing and other norms, the government is assuring drivers adequate revenues and consumers a decent, secure service. If taxi drivers are well paid and competition is limited, the logic goes, cars will be properly maintained and the service smooth.

But nobody in their right mind who lives and moves in the Colombian capital of Bogota would say that's how things happen here. On the contrary, most taxis are very poorly maintained. Though some drivers are professional, most aren't friendly. As for their service, most locals will say that typical practices include taking passengers to unwanted destinations and dropping them off halfway through the drive. The words "don't go that far" (Hasta allá no llego) have even become an everyday expression in our city.

That's despite the fact that city norms and the agreements drivers sign with transport authorities oblige them to take passengers where they want to go. It's not optional. The fine for breaching this can reach the equivalent of $270, and repeated violations can lead a driver to lose his licence.

And by contrast ...

Enter Uber, a platform that provides cars in mint condition, with polite and educated drivers who arrive on time and generally offer impeccable service. No cash is handled because payments are electronic. It's safe and comfortable. Though a little more expensive, its users are prepared to pay the slight premium for a better experience. Virtually no one argues the fact that it provides a better service for customers, so why are city authorities so opposed to it?

One reason at least is political, as one of our columnists recently explained. Another reason is that while the taxi syndicate is united, Uber users are individuals with hardly any corporate representation and therefore no collective political capital. Consumer assocations are practically nonexistent in Colombia, and authorities have done very little to encourage them.

If there were one (thin) defense of an otherwise indefensible sector that has worked hard to earn customer contempt it would be the degree to which Uber "exploits" its drivers. The company until now has taken 20% of their earnings, but starting in San Francisco next month Uber will eat into driver earnings by taking an unprecedented 25% share from new driver recruits. Meanwhile, the drivers are entirely responsible for the cars, which they own.

But here's why that argument is so flimsy: If Uber is somehow a pimp for taking its cut, what does that make the authorities who issue taxi permits and to the companies hiring those cab drivers? The difference between the working conditions of taxi drivers and Uber collaborators is that the former are in a much worse position, working as they do for the taxi owners and licence holders, who typically pay drivers just 40% to 50% of the daily fares collected (the "yield" as Bogotá taxis call it).

So who's the pimp now?

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
THE LATEST
FOCUS
TRENDING TOPICS
MOST READ