Saturday, April 15, 2017

Uber's Ace in the Hole is Regime Uncertainty

The "Success" of Uber does not come from its technology, but from its ability to recognize and exploit regime uncertainty.

I quote from Peter Schiff's article, "Making America Confused Again,"

"It looks likely the next four years will bring an unprecedented level of regime uncertainty. This is a term coined by economist Robert Higgs. It describes a pervasive lack of confidence among investors in their ability to foresee the extent to which future government actions will alter their private-property rights. Higgs uses this concept to explain the seriousness and prolonged duration of some economic crises, like the Great Depression."

Those engaged in the taxi industry know only too well how government actions alter their property rights. The sudden, pivotal re-writing of taxi bylaws across North America over the last few years has completely destroyed the lifetime investments of thousands of taxi drivers and license owners. (See, "How Much has Uber Stolen?") The Uber phenomenon serves as a perfect example of how regime uncertainty can impact some sectors.

Uberpeople.net contributor, Jfr1 said it best,

"These medallions are not pure "investment instruments", they're not GICs, TDs, mortages, etc. They're licenses to operate a business in a restricted market... not substantially different than a Tim Hortons franchise. That business includes purchasing a car, outfitting it for taxi-use, and either driving it, or employing specially licensed drivers to operate it on your behalf. That's what they get used for.

Obviously, any time you invest in a business, it carries risk; however, no amount of due diligence could've predicted that the city and law enforcement would all of a sudden one day simply fail to enforce the laws of society; without us having gone to a zombie apocalypse."

The fact that most jurisdictions simply changed the laws of society, after failing to enforce them, in order to accommodate Uber, does not detract from the truth of this statement.

There is no reason to believe that this type of expropriation is, nor will be, limited to the taxi market. The crucial ingredient to Uber's success is not its distractive technology, but its skillful exploitation of a corrupt, thus uncertain, political system along with all of the fake statesmen who seek, and hold, public office.

Also, given that the taxi industry is disproportionately populated by recent immigrants from third world countries, and I don't care if "third world" is now considered politically incorrect, what message does this send to the new waves of immigrants and refugees looking to build a secure life for themselves?

I'll tell you what message it sends. "Meet your new regime, same as the old regime. Do not work hard and invest your life and savings for the long term, because you now live in a regime where everything can be taken away from you by a simple vote at a city hall."

More Uber News

Uber Accused Of Operating Three Invasive Spy Programs On Riders

Uber reportedly built a secret app to track Lyft drivers

How Uber conquers a city in seven steps

£1m-a-year Rachel, favours to Uber from No10 and the growing smell of scandal: GUY ADAMS investigates the links between Cameron's government and the taxi firm

The growing smell over Uber and the malign power of Cameron's chumocracy

-- Regime Uncertainty, anyone?

Uber deserves credit for demonstrating that the only thing certain is political corruption.

2 comments:

  1. Doctor Block....one failure of your report is that you do not identify why so many people are willing to drive for Uber. You challenge the corrupt government politics, and rightly so, but you do not address the reason why there is an over abundance of people looking to make a few dollars.

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    1. I have addressed that often in other rants. The reasons include a lousy labor market, guys who do the job to meet and/or stalk women, and, mostly, stupidity as innumerate suckers join the "pawn shop" economy to burn up their cars for a few dollars today, only to see those dollars fly right back out the window when the repairs come due.

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