There are days when I wonder whether Salon is for real, or whether it’s an elaborate gag, similar to the theory that all of Paul Krugman’s and Tom Friedman’s columns are actually written by a bunch of madcap interns at the Heritage Foundation wondering how long it will take New York Times readers to figure out.
We’ve commented here before about how Uber, the app-based car service, is catching on and roiling the comfortable taxi cartels in city after city. A few taxi operators have actually been cleaning up their cars, and giving extra training to their drivers to be more polite and customer friendly. Funny how competition does that sometimes. Of course, Uber is not the only app-based car service start up; Uber is now facing stiff competition from Lyft.
Today Salon outdoes itself with “Why Uber Must Be Stopped.” Be sure to take in the artwork nearby of how they understand the story pictured nearby, but also savor the indignation that Uber and Lyft might stoop to unscrupulous practices to gain a competitive edge over each other:
What is Uber? A paragon of free market efficiency and technological innovation serving the greater convenience and comfort of the general public? Or living proof for why capitalist societies require regulation?
You won’t really have much trouble guessing where Salon comes out on this last question will you? Anyway. . .
. . . if you are inclined to see Uber as the acme of ruthless and amoral profit-seeking, then the latest news on Uber’s “deceptive tactics” is just one more confirmation of how the company will do anything to win. . . There’s little doubt that Uber is the closest thing we’ve got today to the living, breathing essence of unrestrained capitalism. This is like watching Andrew Carnegie or John D. Rockefeller in action. This is how robber barons play. From top to bottom, the company flaunts a street-fighter ethos.
Liberals have always been able to go from zero-to-Robber Baron faster than a Porsche can do zero-to-60. And it always ends the same way: Monopoly! We must regulate!
So here’s what’s going to happen. Society is going to realize that power as great as Uber’s needs to be checked. Uber, by virtue of its own success, will demonstrate where the lines need to be drawn for the general good. When Uber is the only game in town, the necessity for comprehensive requirements for commercial insurance and background checks will be obvious. When Uber starts using its logistics clout and unlimited investment capital to go after UPS and Hertz and FedEx, regulators will start wondering about antitrust issues.
Liberalism uber alles! Or at least over Uber!
One weakness of Uber’s business model is that it is easy to replicate, but so are cheap hamburgers, which is why we have lots of fast-food burger chains and we don’t need a Big Mac regulator, and why Uber is unlikely to achieve any kind of durable monopoly position. One way they actually might, however, is if app-based car services become subject to government regulation, in which case the industry will become cartelized for the benefit of incumbent firms. The scholarship on this point, and the empirical evidence behind it, is overwhelming—so overwhelming that you’d think even Salon might get it.
Then, too, we must make the obligatory reference to Schumpeter on how creative destruction is the heart of a dynamic market economy:
But in capitalist reality as distinguished from its textbook picture, it is not that kind of [price] competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.
In thinking about the hardball Uber is playing against Lyft, you’d think there’s never been a case of, for example, a Procter and Gamble salesperson browbeating a supermarket chain into filling its shelves exclusively with P&G products, or a movie studio demanding preferred placement in a theater chain, etc.
Or perhaps we might wonder how Salon might have covered other instances of new business models upending the competition. Wonder no more. Here’s how Salon would read if it had been around for the last 100 years:
Why Airplanes Must Be Stopped
These greedy Wright brothers are threatening to upend city-to-city rail service with their dangerous flying contraptions . . . Wait, what? You mean the railroads were the original Robber Barons? Oh, never mind. . .
Why Southwest Airlines Must Be Stopped
We can’t allow this Greyhound bus with wings to offer $19 fares from Dallas to San Antonio: what will happen to TWA and Pan Am if this business model catches on?
Why Trucks Must Be Stopped
As if airplanes weren’t enough of a threat to railroads, now we have all these truckers hauling cargo all over the place. What’s that? Jimmy Hoffa you say? He says what?—The drivers can be unionized? Oh, never thought of that. . .
Why FedEx Must Be Stopped
We can’t allow overnight package delivery by airplane! It will undermine package delivery by truck and the speedy and polite parcel delivery service of the Post Office. . .
Why FAX Machines Must Be Stopped
We can’t let people have FAX machines. It will undermine the Post Office’s first class mail delivery.
[The Post Office actually did want to prohibit privately-owned and operated FAX machines.]
Why Email Must Be Stopped
We can’t allow email! It will make FAX machines obsolete! And undermine the Post Office’s first class mail.
Why Amazon Must Be Stopped
We can’t allow Amazon: it will kill off independent bookstores.
Why Salon.com Must Be Stopped
It is lowering the IQ of liberals everywhere. Oh, wait—never mind. Carry on in fact.