Counterfeit Capitalism: Why A Monopolized Economy Leads To Inflation And Shortages | WHAT REALLY HAPPENED

Counterfeit Capitalism: Why A Monopolized Economy Leads To Inflation And Shortages

I’ve lived in Washington, D.C. for fifteen years, and one of the many unacknowledged changes has been the disappearance of taxis. While the city has good public transportation, you could jump into a taxi for a reasonably priced convenient ride around commercial areas. Around 2012, Uber and Lyft came into the market, and for the next seven years, it got even better, with cheaper Uber fares within minutes. At the time, everyone knew that Uber, and its tech economy cousins, were heavily subsidized by investors, with Uber losing up to $1 million a week. But the cheap rides were too good a deal to pass up.

It couldn’t last forever, and it didn’t. Slowly, cabs, under pressure from ride shares, disappeared. Taxis had been a reasonable business in D.C., and the drivers had middle class lifestyles, but there was a tipping point, and the industry collapsed. Similarly, driving for Uber, once a reasonable side job, became worse as the firm cut the amount paid to drivers. Now, cabs are mostly gone. And today, ride shares are often a ten to twenty minute wait, and more expensive. It’s not just a D.C. problem; nationally, Uber/Lyft prices up 92% over the last year and a half. And at least in Washington, cabs, though they could now go back to their previous pricing, have not returned. In other words, there is both inflation, and in some ways, a shortage of taxi services.

Professional class people not being able to cheaply zip around is not the biggest problem in the world, but the story I just told you about why that service shriveled isn’t an isolated incident. While once ride shares were plentiful, now they are not. A would-be monopolist both raised prices to consumers, cut wages to drivers, and reduced the amount of driving services available in general.

And this story brings us to the problem of shortages and inflation.