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My grandfather always tells a cheesy joke about a donut shop owner who, when it is pointed out that he loses money on every donut responds, "But I'll make it up

by ksdale 7y ago

My grandfather always tells a cheesy joke about a donut shop owner who, when it is pointed out that he loses money on every donut responds, "But I'll make it up on volume." The article makes that passage sound sinister, but how will they ever make money? What are the chances that every other transportation option dies before Uber runs out of money and then literally no one decides to create other transportation options when prices start to go back up?

xyzzyz 7y ago
What are the chances that every other transportation option dies before Uber runs out of money and then literally no one decides to create other transportation options when prices start to go back up? I don't understand the scenario you're proposing. The government can always decide to run public transportation. They are not constrained by supply and demand, as they can simply cover the cost from the taxes, like they do right now. If public transit was expected to pay for itself, you'd pay $15 for a bus ride. Because of this, Uber's entry to the market doesn't make a huge difference: it's already wildly unprofitable to run public transit, and VC money doesn't make it worse, because Uber even with VC subsidies is much more expensive than public transit with taxpayer subsidies.
- munk-a 7y ago
  Public transit also shouldn't be required to turn a profit as it's something that's been demonstrated to provide clear societal benefits. The loss that public transit suffers is helping to subsidize all sorts of local businesses.
  - xyzzyz 7y ago
    These "societal benefits", while surely exist (e.g. improved access for poor or elderly, reduced congestion), are far from clear. I don't think anyone has ever considered any estimate of these when deciding whether to run public transit or not. We run public transit because we feel like it, not because of some cost-benefit analysis.
- ksdale 7y ago
  Right, I agree completely. I was saying that it doesn’t make sense for the article to spin this situation as sinister. Who cares if Uber undercuts public transportation? If they provide it cheaper, the public wins, if they don’t, there is public transportation, and the public wins. It seems like an unalloyed good to me that VC money is getting funneled through to consumers, regardless of how much market share Uber wins because Uber will never be able to raise prices enough to harm consumers.

by ksdale 7y ago

xyzzyz 7y ago

What are the chances that every other transportation option dies before Uber runs out of money and then literally no one decides to create other transportation options when prices start to go back up? I don't understand the scenario you're proposing. The government can always decide to run public transportation. They are not constrained by supply and demand, as they can simply cover the cost from the taxes, like they do right now. If public transit was expected to pay for itself, you'd pay $15 for a bus ride. Because of this, Uber's entry to the market doesn't make a huge difference: it's already wildly unprofitable to run public transit, and VC money doesn't make it worse, because Uber even with VC subsidies is much more expensive than public transit with taxpayer subsidies.

munk-a 7y ago
Public transit also shouldn't be required to turn a profit as it's something that's been demonstrated to provide clear societal benefits. The loss that public transit suffers is helping to subsidize all sorts of local businesses.
- xyzzyz 7y ago
  These "societal benefits", while surely exist (e.g. improved access for poor or elderly, reduced congestion), are far from clear. I don't think anyone has ever considered any estimate of these when deciding whether to run public transit or not. We run public transit because we feel like it, not because of some cost-benefit analysis.
ksdale 7y ago
Right, I agree completely. I was saying that it doesn’t make sense for the article to spin this situation as sinister. Who cares if Uber undercuts public transportation? If they provide it cheaper, the public wins, if they don’t, there is public transportation, and the public wins. It seems like an unalloyed good to me that VC money is getting funneled through to consumers, regardless of how much market share Uber wins because Uber will never be able to raise prices enough to harm consumers.