Skip to comments.Try It, You'll Like It, Or: Economics for Beginners
Posted on 07/17/2014 11:12:29 AM PDT by Kaslin
Do you like convenience, service, simplicity, competition, more jobs and all the other features of a free market that stays free and ever productive?
Then you'll love a service like Uber or Lyft, which use private drivers to give customers a, yes, lyft. No waiting forever, just door-to-door or even corner-to-corner service. Provided by friendly folks who use their own cars and stand to collect the lion's share of the fares, the worker being worthy of his hire. Who wouldn't like it? It's good for the customer, good for the driver, and good for the local economy.
Here's who wouldn't like it: the kind of vested interests, like cab companies, who long ago formed a cozy relationship with local government to keep any competition out by imposing a whole web of onerous rules and regulations that mainly benefit themselves.
It was Jonathan Swift who observed long ago, "When a true genius appears, you can know him by this sign: that all the dunces are in a confederacy against him." In the same way, you can spot a true -- and useful -- innovation in the economy by this sign: that all the vested interests form a confederacy of monopolists against it. Which is how a dynamic system like capitalism becomes encrusted with special privileges and inefficient bottlenecks that make it anything but dynamic.
That's how the economic powers that be, and that are determined to stay, substitute government-issue paralysis for capitalism's usual cycle of destruction and creation, which an Austrian (and later American) economist named Joseph Schumpeter (1883-1950) labeled Creative Destruction -- a process that continues to alarm those opposed to both the creativity and the necessary destruction that leads to it.
How stop that never-ending process? Simple. All the vested interests need do is ally themselves with the kind of compliant politicos who impose all those rules and regs. This unholy alliance has come to be known in our time as crony capitalism, which is a lot more crony than capitalism.
Naturally creative outfits like Uber and Lyft keep running into the same wall of vested interests in city after city -- like Little Rock, Ark., this week. Which is why its city attorney has been writing lawyer-letters to both companies demanding that they cease and desist their subversive attempt to practice free enterprise. And he's waving the law in their faces -- the kind of law imposed by local politicians all too willing to do crony capitalism's bidding -- local politicians like Joan Adcock on Little Rock's city council. Alderwoman Adcock sounds much disturbed by these ominous signs that free enterprise is breaking out in Little Rock's comfortably closed market for cab rides. Let ordinary citizens use their apps to summon a ride quickly, conveniently, efficiently and economically, and where will it all end?
The alderwoman can provide a limitless supply of doomsday visions. She foresees a horde of unqualified drivers, or worse, invading the public streets. Let free enterprise get a foot inside this door and the public safety will be at risk, unlicensed drivers will run rampant, and the sky will fall.
Anybody who's ever used a service like Uber or Lyft elsewhere, or just glanced at those operations' actual policies, knows better. As a spokesman for Uber points out, the company does extensive background checks before accepting drivers, provides liability coverage, and is careful to screen those offering drives.
To see how such operations really work, Alderwoman Adcock might try one -- like Lyft in San Francisco -- and experience the ease, economy and convenience of it for herself. Try it, and I bet she'd like it.
And here's one more factor for the alderwoman and Little Rock's other city fathers/mothers to consider: When a new enterprise enters the economic picture, it may not so much supplant older, established companies as supplement them, for it could offer a different range or level of service. And the customer base for both old and new businesses could grow.
As usual when competition enters the picture, both old and new enterprises benefit by learning from each other, and the whole industry improves. Whether the stultifying monopoly is in public transportation or public education, the effect of such a stranglehold can be equally paralyzing, and its being broken can prove just as energizing.
Exactly. That's what's behind most business and professional licensing. Raising barriers to entry, quashing potential competition, and limiting potential competitors to those willing to play the game, to go along to get along. Protecting themselves from fierce competitors.
Best ever economics book:
Basic Economics: A Citizen’s Guide to the Economy
so what if the guy’s a pervert, or murderer, or thief? or what if his car turns out to be a piece of junk and breaks? or if the guy’s a bad driver who is more likely to get into an accident? or even licensed? or insured?
The article stated “extensive background checks.”
Read the fourth paragraph from the end.
All that stuff is background checked.
Car is inspected, must be of a certain “newness”, driver is background checked, etc.
ok that’s better, thanx for the clarification
“so what if the guys a pervert, or murderer, or thief? or what if his car turns out to be a piece of junk and breaks? or if the guys a bad driver who is more likely to get into an accident? or even licensed? or insured?”
You just described a person in NY City who borrows the cab from a friend a couple of nights a week to make some extra cash.
are you tellign me that i can borrow a NYC taxi for a few mights a week to make extra cash? that someone who pays up to a half million bucks for a medallion would lend me his livlihood like that? in New york city?
We need to contact our local governments. Even local politicians are often corrupt (that’s where corrupt national politicians like Obama come from), but they still want to be reelected. We need to let them know that backing these barriers to entry is bad for voters, and we will resent it.
RIAA and it’s attempts to kill MP3 sharing come to mind.
“are you tellign me that i can borrow a NYC taxi for a few mights a week to make extra cash? that someone who pays up to a half million bucks for a medallion would lend me his livlihood like that? in New york city?”
My dad did it for a couple of years. He also drove livery.
Not saying it is smart. Saying it does happen.
Yeah. And the Lyft service might not be so great either.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. - Adam Smith, Wealth of Nations