Government Cartels Lose to The Free Market

Big Time. Uber is the free market’s answer to the government cartelized and protected taxi service. I travel a lot for work, and hated taking taxis for a few reasons. First, if you ever need to take a taxi to the airport for an early morning flight talking to the taxi dispatcher the night before is hit or miss. The cab shows up within 5 minutes of the appointed time about half of the time. Same thing if you’re trying to hail a cab – “did they see me?” Uber solves this problem with an app that shows your driver’s position on the map and an ETA.

Second problem with the cabbie cartel is the cab line’s iron clad protection of every rattletrap, stinking, beater cab ever made. Grocery stores let you choose from the entire produce bin, but you can’t pick a nicely maintained cab? Madness! This is a major way the cartel attempts to provide above market returns for members, by protecting shoddy service. Uber solves this and many other problems with a 5-star rating system. Drivers who are impolite or drive dangerously, cars that smell like wet dog are downrated, and no longer eligible to be Uber drivers. It works both ways, too – riders are rated by drivers so everyone is on the most polite behavior.

The third problem with a cab is paying and getting out-sitting there as the driver pretends the credit card reader isn’t working today so they can get your cash, writing on a slip of paper the size of something from The Shawshank Redemption, and fumbling with credit cards, wallet, laptop case, luggage as you get out. Uber takes care of all of this at registration. Put your credit card in one time only when you get the app and thank the driver as you exit.

This is what entrepreneurs do-systematically analyze human wants and needs to create something better. In this case, Uber is so far superior to cabs that they’ve massively grown this established market. In San Francisco, the Uber experience has people taking Uber cabs in droves. Yes, they’ve cannibalized the taxi market, but they’ve quadrupled the size of the overall market from $140MM for cabs to $640MM for cabs and Uber. Taxi drivers are hanging up their (overpriced) medallions and driving for themselves via Uber. Mention that the next time some statist tells you the free market is good for some things, but needs regulation and the government must provide services like “defense” and “law enforcement”.

Follow me on Twitter: @johnakeller
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10:22 am on January 20, 2015

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