Stephen Colbert to Uber’s Travis Kalanick: Can you teach me basic economics?

Colbert Travis Kalanick

The Late Show with Stephen Colbert may not be the place where one can find Conan O’Brien-quality humor. It may not be the place where one can find Jimmy Kimmel-quality interviews. It is, however, the best late-night location for viewers who want to find a man who doesn’t understand basic economics.

Uber CEO Travis Kalanick was invited onto The Late Show on Friday for a generally hostile interview. Under the guise of, “Hey, I’m just asking questions!” Colbert treated his “guest” like he does everyone who he’d like to take down a notch. He failed because it’s not a good idea to take on a successful businessman before grasping basic economics.

Colbert: Explain surge pricing to me. Ok, if I’m someplace in say, Australia, and there’s a threat of a terrorist attack, why do prices triple? Is that how we should be treating each other?

Travis Kalanick: Absolutely not.

Colbert: But that happened.

Travis Kalanick: What happens is, when demand outstrips supply, the price comes up in a particular neighborhood or across the city. If it’s in a neighborhood and we see many more people need a car than there are cars available price goes up in that area. The drivers are told. They then go to that place so that more people can get a ride out. Sometimes, something happens in a city. We don’t know what it is. And if it’s an emergency, we basically turn it off because I just think community expectations are — an emergency, major weather events, things like that — we turn it off.

Let us turn to a scenario used by economists like Thomas Sowell. Say there is a hurricane and no power. The demand for flashlights will skyrocket. If the “greedy” store does not raise prices, then rich people (perhaps like Stephen I-brag-about-my-Tesla-car-during-interviews Colbert) are likely to buy many flashlights. Each member of a seven-person family may get a flashlight. If those prices are raised, then it is much more likely that, say, seven different families each buy one flashlight. The flashlights will be allocated much more efficiently. A guy like me, who already has a flashlight, won’t purchase an extra one “just because” I’m there buying water and canned tuna.

On another level, think of what Colbert is saying about how Uber drivers should respond during a terrorist attack (on the anniversary of 9/11, no less). Imagine there is a terrorist attack and you are an Uber driver. In Colbert’s mind (i.e., the mind of a man whose job is to tell jokes in an air-conditioned studio), you would be a jerk for charging more to drive into a life-threatening environment. Guys like Colbert can stand on a moral pedestal precisely because they don’t have to drive cars for money.

The interview continued on (no softball questions for you, Mr. Kalanick), and before long the subject once again turned to insinuating the wealthy businessman is really just looking for ways to exploit his employees until they are no longer necessary.

Colbert: Here’s another thing. I know you talk about how good this is for drivers, but you said you want like self-driving uber cars. That’s not for the driver. That’s just — we’re employing robots at that point. How is that helping … drivers at that point?

Travis Kalanick: Google is doing the driverless thing. Tesla is doing the driverless thing. Apple is doing the driverless thing. This is going to be the world. And so the question for a tech company is, “Do you want to be part of the future, or do you want to resist the future?” And we feel that, in many ways, we want to not be like the taxi industry before us. That’s how we think about it.

Colbert is the type of guy who probably lamented the invention of the internet because the music industry changed and it forced all those Tower Records employees to get a different job and possibly learn a new skill set. Today, however, he probably loves listening to Spotify on demand.

The good thing about The Late Show is that viewers get to see the “real” Stephen Colbert. The downside (for him) is that he can no longer hide his economic ignorance behind false personas.