If you don't say why you find this argument unsatisfactory then we'll be compelled to assume that you just don't understand supply and demand, just like SF NIMBYs.
You can't know how surge pricing actually works, because Uber's algorithm is proprietary. It could work in theory but not work in practice - people usually report they can beat surges by walking a block or switching to Lyft, and maybe drivers don't care about a 1.2x price surge or can't hear about it in time?
