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Mysteriously Unexploited Opportunities

from Cafe Hayek Don Boudreaux writes An Intellectual Identifies Yet Another Mysteriously Unexploited Profit Opportunity

Excerpt:

I believe that I’ve put my finger on what ails the American economy!  The people who possess the information, insight, wisdom, and vision to identify profit opportunities are people who lack the interest and practical skills necessary to exploit these opportunities, while the people with the interest and skills necessary to exploit profit opportunities are people not only themselves singularly lacking the information, insight, wisdom, and vision to identify profit opportunities, but who are also too stupid to heed the investment and other business tips forever being dispensed to them by the likes of James Surowiecki and other intellectuals who do know where such opportunities are.  It’s a damn shame that those who most clearly see profit opportunities either will not or cannot take advantage of them, while those who are eager and able to take advantage of such opportunities remain incurably blind to them.  Perhaps business people should spend more time reading the likes of the New Yorker and the New York Times, as well as attending seminars at prestigious universities.

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Uberal Opportunities

From the Washington Post The future of new business is disrupting old business by Barry Ritholtz

excerpts:

There are many lessons to be learned from Uber, the taxi- ­ and car-hailing start-up that came out of nowhere and is valued at $41 billion. Less than three years ago, Uber had zero drivers. Now it has more than 160,000 active drivers who have collected $656.8 million in fares (net of what they pay Uber).

Among the lessons, some point to the rise of the sharing economy, which also includes firms such as Airbnb, Snapgoods, RelayRides, TaskRabbit and Lending Club. Others talk about the “on-demand economy,” which creates a new class of labor that straddles the line between being self-employment and working for a firm.

I prefer a Big Picture view to get the proper perspective on these start-ups. From 30,000 feet, we see what all of these newcomers have in common: They attack an existing market dominated by entrenched incumbents that are inefficient, expensive or both.

What other industries are ripe for disruption? All of the following have some form of restriction which limits supply and reduces competition, thereby keeping prices high even when providing poor service.

Credit transactions: How is it that every time a consumer uses a credit card, the retailer pays a 3 percent (or more) transaction fee to credit-card companies? Most of the new transaction processors — whether it’s Apple Pay, Square or PayPal — still process the back end through the major credit-card firms. This area is long overdue for a new competitor that will be cheaper to the retailer (and, therefore, to the consumer) and more convenient to the shopper.

 Mortgages: The way we finance homes in this country is slow, filled with middlemen, who run a nonstandardized evaluation process. This makes financing a home cumbersome and difficult. Whoever figures out how to replace this inefficient process stands to make a fortune in residential real estate. The same is true for commercial loans.

read the article fro the rest  of the list.

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Uber and DUIs

In LA Weekly Dennis Romero writes IS UBER REDUCING DUIS IN L.A?

In a vast, 4,000-square-mile county, it’s hard for many folks to get around without a car. And that has meant that DUIs have become a much-feared epidemic.

But ride-sharing apps like Uber, Lyft and Sidecar have become a go-to Godsend for party people in L.A. And it’s conceivable that they’re starting have their impact on DUI statistics, possibly making streets safer for everyone.

How many friends do you know who now “Uber it” rather than get behind the wheel for a night out?

Brewer told us that she’s not sure why there’s such a serious drop in DUIs for Labor Day weekend….

HKO

This data is still being greeted with some skepticism, but I believe it will prove significant. This same report is being repeated in several cities.  There are just too many anecdotes and stories from passengers and drivers and the incredible growth in the use of Uber make the conclusion one that would be logically expected.

Further the elimination of cash payments reduces theft, and there may be some social (crime reducing) benefits from the increase of the sense of community these service engender.  That last benefit may be a stretch, but the DUI reduction should be expected.

In New York there are stories of people getting rid of their cars in light of the ease and availability of Uber type services.  This may be unique to New York given the high costs of car ownership there.

Government efforts to limit Uber in an effort to protect the taxi franchise may be coming at a high cost.

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Public Workers vs the Public

Amity Shlaes reviews “Government Against Itself: Public Union Power and Its Consequences” by Daniel DiSalvo in the Wall Street Journal:

Excerpts:

The facts: Public-sector unions are not underdogs. Since 2009, membership in unions such as the American Federation of State, County and Municipal Employees and the National Education Association has totaled more than the membership in traditional private-sector unions. The United Mine Workers, the union that resulted from the Harlan County conflict, counts under 50,000 active members, while the NEA boasts 2.5 million.

As Mr. DiSalvo shows, public-sector unions are also rich. Taken together, they spend hundreds of millions of dollars annually lobbying governments on behalf of their members. Our courts have ensured that funding for political activity will flow in the future by upholding rules that require payments from workers. Opponents of public-sector unions must content themselves with minor victories such as the recent Supreme Court opinion in Harris v. Quinn, which grants home-care workers, a narrow group, the right not to pay union dues.

This modern imbalance exists because of some long-ago shifts in federal law. In 1962 President John F. Kennedy signed Executive Order 10988, permitting collective bargaining for federal employees. State and city workers, teachers and firemen were also unionizing.

The trend is a shame and a drag on the economy. For the costs of public-sector unions are great. “The byproduct of political management of the economy is waste,” the author notes. Second, pension and benefit obligations weigh down our cities. Trash disposal in Chicago costs $231 per ton, versus $74 in non-union Dallas. Increasingly, such a burden is fatal. When Detroit declared bankruptcy in 2013, a full half of the city’s$18.2 billion long-term debt was owed for employee pensions and health benefits. Even before the next downturn, other cities and some states will find themselves faltering because of similarly massive obligations.

There is something grotesque about public workers fighting for benefits whose provision will hurt the public. Citizens who vote Democratic may choose not to acknowledge the perversity out of party loyalty. But over the years a few well-known Democrats have sided against the public-sector unions. “The process of collective bargaining as usually understood cannot be transplanted into the public service,” a Democratic politician once declared. His name? Franklin Roosevelt.

 

 

 

 

 

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Politically Disruptive Technology

Uber A

from Bloomberg, Is Uber Democratic or Republican? by Emily Greenhouse notes that Marco Rubio noted the impact that Uber has on the youth’s perception of regulation.

The students in my class were genuinely intrigued by this innovative service and wondered why they didn’t have it in Miami. I explained to them that it was because of regulations created by government. Politicians, I said, had passed rules to stifle competition that might threaten their constituents and supporters in the existing taxi and sedan service industry. In Miami, for example, there was a government-created cap on the number of sedan medallions allowed in the city. That regulation effectively shut out any competition to the existing car service companies—competition like Uber.

As my progressive young students listened to me explain why government was preventing them from using their cell phones to get home from the bars on Saturday night, I could see their minds change. They went from fervently believing that big government is necessary to protect the little guy to realizing that big government is often used to stick it to the little guy. Before I knew it, I was talking to a bunch of 20- and 21-year-old anti-regulatory activists.

HKO

Great minds think alike. This is the same politically disruptive trend I noted in Uber Libertarians in American Thinker.