Thou Shalt Not Share

Thou Shalt Not Share

But the sharing economy is winning

Conspiracy Theorist

By Mark Luedtke

Publication date: 120616

Taxi companies have declared war. In a handful of years, Uber and its ridesharing model went from nothing to the most valuable startup in history. Two and a half years ago, Uber was worth $18.2 billion. The New York Times valued Uber at $62.5 billion in December of 2015. Clearly this valuation is a product of the bubble, but there’s no arguing with Uber’s stratospheric growth.

There’s a reason for this. Uber is superior to taxi companies. That’s because taxi companies are organized and cartelized by governments. Uber’s cars tend to be cleaner, the drivers friendlier, and the service more reliable. So for government-controlled taxi companies, there’s only one thing to do: get governments worldwide to use their power of coercion to degrade and shut down the competition, harming consumers in the process.

That plan is working well in Europe. The Stack reports, “Global ride-sharing crusader Uber, which rarely passes a day without skirmish in one of its target markets worldwide, has had a particularly tough 24 hours, as France fines it for running an ‘illegal taxi service’ and German courts uphold a protested ban on running an ‘unlicensed’ service.”

Germany, France, Spain and Italy have banned Uber. France also prosecuted and fined Uber executives. But in the European Union (EU), unelected continental bureaucrats have the final say. Fortune informs, “Uber will seek to convince Europe’s top court next week that it is a digital service, not a transport company, in a case that could determine whether app-based startups should be exempt from strict laws meant for regular companies.”

That difference is at the heart of all of Uber’s legal battles which it’s also fighting all over the US. The facts are not important in any of these cases. Neither are Uber’s social benefits, like reducing drunk driving. The only thing that matters is who pays rulers the most so rulings favor the most politically-connected party which has been the taxi companies. Uber recently figured that out and responded in kind. Now it’s winning those battles at least in the US. “The success [in Colorado], says Justin Kintz, Uber’s head of public policy for North America, is ‘a tale as old as time—it’s the power of the people,’” writes Bloomberg. “It’s also a tale about the power of backroom lobbying. Although Uber promotes itself as a great disrupter, it’s quickly mastered the old art of political influence. Over the past year, Uber built one of the largest and most successful lobbying forces in the country, with a presence in almost every statehouse. It has 250 lobbyists and 29 lobbying firms registered in capitols around the nation, at least a third more than Wal-Mart Stores. That doesn’t count municipal lobbyists.”

This illustrates how rulers drag businesses into the parasitic political economy. Rulers forced Uber to waste resources fighting coercive attacks from government that could have been used to improve the quality of life of consumers.

So far, Uber has managed to avoid being banned by major US cities except Austin, Tx. Dayton’s taxi drivers want Dayton’s rulers to do the same.

Government doesn’t just target Uber. It targets all sharing apps including Uber’s competitors and home-sharing. Home-sharing app Airbnb is under attack because it threatens the politically connected hotel companies. The Mises Institute relates, “Late last week, Governor Cuomo signed legislation which made his position on the sharing economy painfully clear to New York City residents. Capitulating to the whims of the traditional hotel industry, Cuomo made history by adopting the nation’s strictest home-sharing regulations, essentially banning the home-sharing industry from operating within city limits.”

Similarly, the Federal Aviation Administration (FAA) shut down flight-sharing apps. Government is about protecting the status quo from improvement by shutting down innovative competitors to politically-connected businesses. That’s why Massachusetts taxes ride-sharing to fund taxis.

Despite losing numerous regulatory battles, ride-sharing companies are clearly winning the war. Uber facilitated its billionth ride last December. Like the word google entered common lexicon as a specialized substitute for the word search, the word uber has already entered common lexicon as an alternative to the word taxi, and it’s done so more rapidly.

And Uber continues to innovate. It added technology to compete with buses. Lack of regulations in Pittsburgh convinced Uber to use the city to test its self-driving fleet. Its self-driving truck recently delivered 2,000 cases of beer.

We would live in a Jetsons’ world if we would just get government out of our way.

Originally published in the Dayton City Paper.

Government Exacerbates Income Inequality

President Obama thinks income inequality is the biggest problem facing Americans. The Pope thinks it’s the most important issue in the world. The two men recently met to discuss it, but if they were honest, the solution would be readily apparent to both of them. Obama’s policies, and the economic policies of all governments, create the outrageous income inequality we see around the world today.

Still, income inequality is far from the worst problem facing society. For example, income inequality in China today is far greater than it was when Mao Zedong killed 65 million equally poor people in his Great Leap of Mass Murder. Obama is a great demagogue of income inequality because it benefits him personally. The reality is older people tend to make more money because they’re more skilled and they tend to have amassed more wealth because they’ve worked longer. If government hadn’t broken our economy, young people would do the same.

There’s nothing inherently wrong with income inequality when it’s based on merit. Every individual is unique, with different strengths, weaknesses and priorities. In a free market, better businessmen would make more money than worse businessmen, and business owners would make more money than workers in general in because business owners incur more risk than workers. More skilled workers would earn more than less skilled workers in general because there would be a smaller supply of higher skilled workers. The incentive of earning more income based on merit would create an environment of generally increasing productivity that would benefit everybody.

At the same time, no business owner would earn outrageously more income than others, at least not for long, because as soon as they did, competitors would enter the market to take a share of those profits until unrestrained competition lowered the profits back into the normal range.

On the other hand, it’s grossly unfair when government uses it power of coercion to enrich some at the expense of others, but that’s the only reason government as we know it exists. It’s a law of economics that taxes and regulations benefit the richest by protecting them from competition because their big businesses can absorb the additional expenses better than smaller competitors. Taxes, regulations and printing money are the tools government uses to create giant banks, corporations and the fantastic salaries of the plutocrats while making everybody else poorer. The problem of income inequality Obama pretends to care about is caused by US government interventions in the marketplace that keep the economy from being a meritocracy, and Obama is the worst interventionist of my lifetime. Bush the Younger was the worst before him. The more government intervenes, the wealthier the plutocrats get. It has nothing to do with partisanship. It’s the nature of all coercive governments at every level.

The Mises.org blog identifies Obama’s policies as one source of income inequality, “He has presided over corporate bailouts, not only declaring the Wall Street banks too big to fail, while a multitude of small businesses did fail, his policies continue to support the banking industry through low interest rates and the payment of interest on reserves held at the Fed. Banks holding bad mortgages were bailed out while individual homeowners were evicted from their homes.”

Economist George Reisman writes of another source, “Credit expansion is responsible for sharply increased economic inequality, in which the wealthier strata of the population appear to increase their wealth dramatically relative to the rest of the population and for no good reason.” All central banks including the Federal Reserve (Fed) expand credit by counterfeiting funny-money and handing it out to their big bank cronies. The Fed is a quasi-private entity whose owners are secret, but run primarily by political appointees. It was created by Congress for the benefit of the government and plutocrat bankers. Because it is a legalized counterfeiting organization, it could not exist without government.

So-called intellectual property rights - patents and copyright - are another source of income inequality government uses to quash competition, artificially enriching giant corporations by raising prices for consumers. Patents are described as grants of privilege, but they’re better understood as bans on competition. They are grants of monopoly. Government creates monopolies, not the free market. Patents and copyright create high tech, music and movie plutocrats.

The defining issue of our times is economic freedom or, since every decision is an economic decision, freedom. Countries with greater economic freedom invariably enjoy greater prosperity, security, health and happiness. They also invariably enjoy greater economic growth. Economic freedom in the US fell under Bush and plummeted under Obama. The Heritage Foundation ranks US twelfth in economic freedom in 2014, below Estonia. 63 percent of Americans believe the country is going in the wrong direction, and this collapse in economic freedom is why. All you have to do is look around to see Americans were better off when we were more free. When the debt bubble collapses, we’ll realize how bad income inequality really is. We’ll be stuck with a modern version of feudalism much like survivors after the fall of Rome.