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What do you mean "true" supply and demand? What was happening before was true supply and demand. They offered a rate, people were capable of consenting to the terms while accounting for expenses, and they did. Then an intermediary stepped between the consenting transactors and told them that they could no longer accept those terms, and now those transactions can no longer transpire, regardless of whether or not both parties would like to engage. How is that true supply and demand?



When you charge far less than the actual cost of service you're going to get demand that does not reflect the actual market, hence not true "true" supply and demand. If I was selling dollar bills for 50 cents I would sell a lot of dollars bills. We've seen this before it's called Groupon. A key difference between Uber and Groupon is there are more drivers to con then there are businesses. Uber is losing billions dollars subsidizing rides, that is not a legitimate market. This is a farce to sell a growth story to raise capital and allow early investors to make huge gains, again see Groupon.

Uber was saying drivers could make 90k a year back in 2014 see: https://www.businessinsider.com/uber-drivers-salary-90000-20...

Which lead to this https://www.vox.com/2017/2/28/14766964/video-uber-travis-kal...


Even then, having the city of New York set the price according to "utilization" isn't supply and demand either. It's price fixing.


One man's price fixing is another's correction of socially harmful behavior.

The free market will almost always devolve into worker exploitation unless there are rules.


It was a bad measure to try and solve the problem of Uber fixing it's own prices in order to create the current market dynamic. The cost of an uber ride AND the drivers wage are both subsidized by Ubers losses. If they didn't do that rates would go up necessarily. The Uber we know now simply can't exist forever, New York tried a bad way to illuminate the real price of the service so that the rest of the driving industry had a level playing field.


How many billions of stilts are needed to prop Uber up before it becomes obvious that it can't stand up at all and should be laid to rest?

It was a measure aimed at preventing Uber from externalizing their costs on society.


Uber isn't externalizing costs on society. Uber pays drivers more than they are worth, using venture capital. Drivers have an income they wouldn't otherwise have. Riders pay less than they otherwise would have.

The only ones who lose here are Taxi drivers who are being undercut. Taxi drivers don't represent "society", they represent the taxi lobby.


In the process replacing an industry that it may not able to sustain.

So what does a post Uber/post VC ad hoc transit market look like?

Once the VC dries up the market will start to show it's true colors and it may be that the model isn't sustainable, although I think it probably should be once rates rise.


If you are saying that venture capitalists and naive investors are paying for part of my ride each time I take an Uber why wouldn’t I want to get as many subsidized rides in as I can before they go broke? How am I as a consumer not gaining every time this happens?


https://en.wikipedia.org/wiki/Predatory_pricing

The idea is that while it is nice to enjoy subsidized rides at the moment, as a consumer you may suffer in the future due to Uber establishing a monopoly.


Uber has no moat, so cannot possibly exploit a monopoly. The hardest part of their service to replicate is the drivers, and since they're all contractors they are free to work for Uber's competitors!

Even if Uber gained 100% share of car rides in an area, if they decided to exploit that by increasing their prices it would be relatively easy to create a competing company and undercut them.


Uber can only compete on price, they have nothing novel that can't be replicated. Hard to imagine how they could control the supply in a meaningful way.


You are gaining as a consumer but many new retail investors in the stock or through ETFs may get burned when the business model stops working. Most of the shared economy startups are a house of cards expecting a magic bullet to solve their cost problem (self driving cars). The current stock holders are providing the hang time till that happens or not. The early investors will probably be all gone by then.


Do you have a pension? Pension and index funds buying Uber are the ultimate bagholders here.

Uber is basically a legal Ponzi scheme.


Your index fund is investing in a bad investment and you say the fault is that the bad investment exists? Why not choose a different fund?

We shouldn't put bubble wrap around everything in the hopes that no one can ever do anything that might harm themselves. This kind of mindset restricts the freedom of everybody.


You do know that an index fund has no choice to invest in the companies that make up the index?

Anyway the point I was making is that the bagholders are the little people.


> They offered a rate

Uber offered a rate that was subsidized by investors. That is not true supply and demand.


Isn't moving the demand curve by burning capital still a matter of supply and demand?


Yes. Supply and demand curves capture all of these things.

Subsidies just increase the supply at the lower prices on the curve.


>They offered a rate, people were capable of consenting to the terms while accounting for expenses

See, on party here has a lot more data on said expenses, and all the incentives in the world to be misleading about them.

The existing demand was not "true" under the reasonable assumption that nobody wants to work for less than minimum wage after expenses.


There are definitely people who are willing to work below minimum wage. It's actually quantifiable if you look at the workforce reduction after minimum wage hikes in locales.


> There are definitely people who are willing to work below minimum wage.

Yes, and there are also people willing to work in unsafe conditions, work in illegal industries, and trade with the country's enemies. The "free market", as implemented almost anywhere, has never been synonymous with trading with whoever you want on whatever terms.


>It's actually quantifiable if you look at the workforce reduction after minimum wage hikes in locales.

People definitely are willing to work below minimum wage; that's exactly why we need minimum wage!


It's not that simple. No one can agree if a given minimum wage increase results in a workforce reduction, and if it does by how much. There is no consensus here, which probably means at the minimum wage increases we've seen, the effect is negligible.


> No one can agree if a given minimum wage increase results in a workforce reduction, and if it does by how much.

It's certainly not a nice analytic function, but clearly the higher the minimum wage, the fewer jobs make economic sense.

If I could pay someone a couple of bucks a day to open and close my garage door, I could afford that. But the minimum wage is far beyond that, so I got an electric door opener instead.


There are 2nd order effects though. Higher minimum wage has a direct impact on the income velocity of money because it tends to move money towards lower income workers, who spend money faster. This effect can actually result in more jobs overall.


If they buy more things, then surely it depends highly on where those things are produced though. Of course it'll mean a bit more jobs in the retail sector, but with most being online, won't the primary increase be at the production end?

If it allows more people to buy iPhones then most of the jobs created by that is made in China, which doesn't help local economy much.


Online sales are only projected to account for about 12% of retail in 2020, and retail is only a small percentage of the overall economy.

>If it allows more people to buy iPhones then most of the jobs created by that is made in China

Only a small part of the value of an iPhone is captured by China. Not much of it goes to the local economy either, but luxury electronics are also a small fraction of the economy.

Dining out, groceries, retail, housing, transportation, entertainment, travel, child care, home repair, cell phone repair, medical care etc... the local economy captures a large percentage of all of those.


The existing demand was not "true" under the reasonable assumption that nobody wants to work for less than minimum wage after expenses.

"Want" is a complicated term in this context, but there are plenty of non-gig employees earning minimum wage or above, but less than minimum wage after subtracting expenses like commuting.


> The existing demand was not "true" under the reasonable assumption that nobody wants to work for less than minimum wage after expenses.

That's an unreasonable assumption, especially when that "minimum wage" is 17$.




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