Uber an example of capitalism at work
Some people misunderstand the basic fundamentals of capitalism. As such, I feel it might be helpful to provide an example.
Uber is a good illustration of capitalism at work. Beginning in San Francisco in 2009, entrepreneurs Garrett Camp and Travis Kalanick pursued an idea to integrate smartphone technology and carpooling. By downloading the Uber app and using a credit card, customers can discreetly hail a ride from anywhere.
While the Uber concept may seem like a no-brainer now, it was an untested innovative alternative to the taxi industry, and it required private investors to put their own capital at risk to get the idea moving. As an incentive for doing this, they hope to earn an above-average return on their money. Uber received $200,000 in seed funding in its first year followed by an additional $1.25 million a year later. Today, as the term Uber is becoming part of our vernacular, Uber Technologies Inc. remains a private company. Ultimately, its success depends on its ability to attract customers and earn profits, but there are no guarantees as companies like Lyft are also competing for market share.
A vital tenet of capitalism is "laissez faire." Let people choose freely, and leave the market alone. This implies freedom from government intervention such as regulations, subsidies, tariffs, and special privileges. Critics of capitalism proclaim it is broken and refer to bailouts and special deals for elite executives, but these examples are contrary to free markets at work. Are we to believe that similar cronyism does not exist under other economic systems?
Under capitalism, when businesses repeatedly fail to compete effectively, as measured by an inability to earn profits, they will eventually be forced out of business. Likewise, when corporations take careless risks, they should be held accountable for any poor results. “Too big to fail” is unacceptable, and being able to transfer burdens to taxpayers is not a solution to improving conduct going forward.
The government plays a valuable role in creating laws that protect people from fraud and abuse, but it should avoid actions that influence behavior to affect outcomes, thus creating market inefficiencies.