Self-Regulation in America

A long-time personal acquaintance has been complaining for decades that self-regulation doesn't work. Instead, it is mostly a cover for companies, congress, special interests and professions such as doctors and lawyers to protect themselves and profits from transparency, accountability and liability. The Washington Post describes an interesting example in an article today of how self-regulation can work.

WaPo describes how Uber protects itself from liability by have an investigating unit of employees look into bad experiences that passengers sometimes have with some Uber drivers. The top priority for company investigators is to protect the company first. Passenger safety is a secondary concern. WaPo writes:

“Uber has a three-strikes system, investigators said, but executives have made exceptions to keep drivers on the road. For instance, a New York-area driver allegedly made three separate sexual advances on riders, said an investigator assigned to the case. After an executive overruled the investigator, the driver was allowed to continue working until a fourth incident, when a rider claimed he raped her.

The agents are forbidden by Uber from routing allegations to police or from advising victims to seek legal counsel or make their own police reports, even when they get confessions of felonies, said Lilli Flores, a former investigator in Phoenix — a guideline corroborated in interviews with investigators, alleged victims and plaintiffs’ attorneys.”

The top priority is to protect Uber from liability. Even if Uber kicks a driver out because felonies were committed, the company does not report driver’s crimes to local police, other ride-share companies or background check firms. In other words, an Uber driver who commits felonies against customers can just go to work for Lyft and continue to commit felonies.

Uber does this for obvious reasons -- liability avoidance and profit maximization. Uber insists its drivers are not employees but are independent contractors. Therefore the company isn’t liable for illegal actions by bad drivers. Uber isn't alone in using independent contractors as a liability shield tactic. As discussed here before, Amazon claims that its drivers are independent contractors to avoid liability for driving accidents.

California recently passed a law that consider drivers for companies including Uber and Lyft to be employees, not independent contractors, thus opening the companies up to liability for employee bad acts, taxes, employee benefits and fuel and vehicle insurance costs. Not surprisingly, gig economy companies that had rejected employees over independent contractors are fighting the California law tooth and claw.

In essence, what companies that reject employees in favor of independent contractors does is privatize profit, while socializing cost as much as possible. These companies assert that they are doing their best for society. For example, Uber denies that the top priority of its own investigations unit is to protect the company first. Instead, Uber claims its top priority is to protect customers. However, the rationale is nonsense because it is irrational. WaPo writes:

“At the end of the day, we’re not the judge and jury to determine whether a crime has occurred,” said Tracey Breeden, Uber’s global head of women’s safety. “We’re here to gather information, make a business decision. We’re not law enforcement.”

Is that rationale convincing? It does not explain how a simple referral of criminal actions to police to a company by its customers amounts to being a judge, jury, law enforcement or anything of the sort. Reporting crime amounts to a responsible, moral corporate citizen reporting to police, nothing more.

On the other hand, irresponsible, immoral corporate citizens help hide criminal acts to protect their profit and shift corporate liability to society. Arguably, one consider self-regulation as trickle up for profit and trickle down for liability.

Is that a reasonable, fair analysis of how the profit and liability game is played under self-regulation rules and morals?