Uber and Lyft are only economically viable because they offload their cost of capital -- the investment and depreciation on cars and the cost of keeping a driver fed and healthy -- onto the drivers, who are only willing to accept such a bad deal because the labor market sucks.
Businesses that can't cover their costs of capital are not sustainable without some source of subsidy (like the food-stamps for McDonald's and Walmart workers that we all pay for). If the labor market improves and workers decline to continue to subsidize rideshare companies they'll need to find some way to get the government or the capital markets to subsidize them or they'll collapse.
The market will not miraculously produce a capital replacing living wage. If it does so in any particular market it is happenstance; luck, not social physics.
This is a social action problem; a race to the bottom issue. It makes sense, individually, to race to the bottom. Company execs and investors get rich, consumers get cheaper rides and drivers get money they need. But this isn’t win, win, win. It is win, win, lose over the not very long run.
The cheaper wages paid to drivers, and thus the cheaper rides, also drive business with capital structures which make social sense out of business. They can’t compete with “drive your car into the ground, make less than minimum wage”.
The Market Fairy will not solve the problems of Uber and Lyft
(Image: Uber Sidecar Lyft, Colin@TheTruthAbout, CC-BY-SA)
(via Naked Capitalism)
Documents on an unprotected, network-connected drive owned by an employee of Nokia shed light on the inner workings of Russia’s networked surveillance system known as SORM (Russian: COPM).
Thomas Piketty, the French economist behind 2014's game-changing Capital in the 21st Century, has a new book, Capital and Ideology (out in France now, coming in English in 2020), which uses the same long-run economic series that Capital 21C benefited from to understand the relationship between wealth and ideology. Central to Piketty's thesis: that it's […]
The real estate bubble is in trouble: London's luxury housing market has been in freefall for years, and New York's retail vacancy has been soaring, even as global super-luxe housing is also tanking.
If you’re part of the maker community, you know Make:. Though Make: magazine is off the shelves as of this year, the eBooks and resources put out by Maker Media are still a fantastic resource for the new generation of tinkerers, hackers, and robotics geeks. If you’re in that tribe, listen up: they’ve released a […]
Life isn’t getting any less hectic, and pressure cookers are a quick, healthy solution for a growing number of kitchens. But if you thought your Instant Pot was versatile, there’s a major upgrade on the market: The Yedi 9-in-1 Total Package Instant Programmable Pressure Cooker. If you’ve somehow never used a pressure cooker before, try […]
When it comes to data analytics or deep learning, there’s one language behind the apps and algorithms that power the biggest companies of today: Python. The best part about this tool is that as versatile as it is, it’s actually fairly easy to learn. But mastery? For that, you need more than just a beginners’ […]