Uber and the free market

Insights Newsletter
5 December, 2014

For anyone who has used Uber, knows someone who has used it, or is aware it exists, the crowd consensus seems to be that it is pretty great. Uber, which recently entered the New Zealand market, is an app that offers an alternative to taxis by allowing users to order a driver to get them to their destination for a set price.
As the app becomes more widely adopted in New Zealand, it will probably become common to hear phrases such as “why aren’t you using Uber? I’ve saved so much money avoiding drivers who take the scenic route I never asked for.” It will probably be less common, but nonetheless just as accurate, to hear “Uber is a ringing endorsement of the free market at work, but wouldn’t it be great to see that kind of innovation expanded across more markets?”
The Freeman recently published 5 Priceless Tips I Gave My Uber Driver: Big ideas most people don’t understand about the economy. These “priceless tips” include the ideas that trade is a win-win; that entrepreneurs create value; that everything has a cost; that order can emerge from voluntary choices rather than from central dictates; and that markets are moral. These notions are fundamental to the free market and entrepreneurial innovations like Uber. While hardly revelatory gems for economists, they are the lessons everyone from our Prime Minister to your Uber driver should know.
As Richard Lorenc, writing for The Freeman argues, “the Uber phenomenon represents something important happening now in the human consciousness, and millennials (people born between 1980 and 2000, roughly) may be noticing it the most.” Lorenc believes many millennials, are “now beginning to see a real choice between the philosophy of control versus the philosophy of freedom.”
But unless these ideas on freedom that are supposedly permeating the consciousness of millennials are expressed out loud and often, freedom remains precarious.
It is still all too common, especially among millennials, to wax lyrical about Uber, and then demand a higher minimum wage, banning zero-hours contracts, higher taxes for the rich, and tougher regulations on big business. Sometimes all in the same breath.
Perhaps I can translate some economics-speak for millennials: freedom is like a cell-phone, it’s hard to express gratitude for it because it feels like we’ve always had it, and can’t imagine life without it. But the potential for what freedom can achieve is still developing. Saying we’re happy to preserve what we have now and limit any future developments is like saying we’re satisfied with an old Nokia brick, when there’s an iPhone just around the corner.

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