Category: Economics Page 3 of 93

Uber started in 2009. It incurred losses every year until 2023 except for a profit in 2019 which was due to selling subsidiaries in various countries. Numbers before the IPO are difficult to obtain, but it lost 31.5 billion from 2016 to 2022. Let’s assume a loss of equal to funding during the pre-IPO period, so 24.7 billion. This seems reasonable, since Uber never made a profit during the period.

So we’ll estimate Uber’s total losses at 86.2 billion from 2009-2022.

In 2023 Uber made a profit of 1.9 billion and in 2024 it made a profit of a little under ten billion. Prices for rides on Uber are between ten to twenty percent higher than taxi rides, rising to as much as 50% higher during surge pricing periods (when there’s the most demand.) Driver’s on average, get paid less than taxi drivers used to.

So–the workers get less, the customers pay more.

The strategy, as many people noted, including myself, was for Uber and Lyft to drive taxis out of business by undercutting their prices. Uber and Lyft didn’t need to make a profit, while taxi companies did. Once they had gained dominant market share, they raised prices and took oligopoly profits.

Everyone knew this was the play, and that people were getting subsidized rides now (Uber was much cheaper than taxis in the early years) in exchange for getting fucked over later. Well we’re now in the sandpaper condom period of “ride sharing”, where investors earn back their investment by hurting everyone else.

This should never have been allowed. Uber and Lyft violated massive numbers of laws and were just allowed to do so thru non-enforcement. The end result was obvious and it’s here now: worse wages, higher prices and less ability to regulate the industry.

This sort of stupid is why everything keeps getting worse. Every part of the “sharing economy” (which is no such thing) has made the lives of ordinary people worse. AirBnB in particular helped drive the rise in rental prices in hundreds of cities.

All that most tech-bro firms do is find a place where there isn’t market power, and try to add it. Same with Private Equity, which buys up entire industries in order to form oligopolies and monopolies, as it’s doing in the housing market now.

Market power always means more money for a few rich people and higher prices and worse income for everyone else involved in any given industry.

Welcome to the tech-bro future and remember, Soylent Green is people and so are high profits, always.

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Ending Resource Separatism in Alberta and Canada

By Ian Welsh

On July 24, 2025

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Alberta is a province in Canada with a lot of oil and a moderate but not yet dangerous separatism problem that polls a little below 30%. That’s far less than needed to win a referendum, but enough to support an insurrection or a large campaign of civil disobedience. It’s also a sufficient level of support for America to take advantage of in one of their patented color revolutions.

Though the level is higher than in the past, it’s nowhere near new. Growing up in the 70s and 80s in British Columbia I remember the anger.

Because there’s a lot of resentment in Alberta and out West in general it also gums up the works politically: the Premier of Alberta has been truculent and unwilling to join in on national efforts to resist Trump’s trade war, for example.

Alberta has oil. Lots of it. Most of it is crap, tar sands oil. It is because of Alberta oil that Canada has a trade surplus with America, in fact, we have a goods and services deficit.

Like all resource rich areas Alberta lives from boom to boom, and the good jobs are in the resource sector. At one time that resource sector was heavily taxed, but that’s far in the past and it is now heavily subsidized. So anything that seems to hurt the resource sector which the Federal government does, like environmental regulations or even renewable energy initiatives is resented. A lot of Albertans identify with oil company interests.

So, this issue needs to be dealt with. Its legs need to be cut out from under it.

The approach which will work is simple enough.

The federal government should either nationalize the oil industry or tax it at high levels when oil prices are high and take the money and just give checks to people in resource rich areas. (Not just Alberta, but also Saskatchewan in particular.)

Put 50% of profits or taxes into a sovereign development fund which invests in new non-resource businesses in resource areas in proportion to the income it receives from them (because resources always run out and one doesn’t want the West to turn into the Maritimes economically), and simply cut checks for the other 50% directly to people who live in the areas.

Make it so that the people of Alberta, Saskatchewan and other resource rich areas see the federal government as the one responsible for their prosperity and personal income, not oil barons.

Of course there are more steps which should be taken, but this is the first and fundamental one: reverse the underlying issue.

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CPI Isn’t: Health Insurance Cost Index

By Ian Welsh

On July 23, 2025

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The Consumer Price Index is taken as a proxy for how much consumers pay for goods and services. It isn’t, for a wide variety of reasons. Here’s another:

This is a component of overall CPI, but what it tracks is actually retained earnings. The justification is that if retained earnings are down, more of premiums are being spent on healthcare! Of course you don’t care about that, what you care about is how much your insurance costs.

Now there might be some technical argument for this IF all the other components of medical care costs were tracked accurately, but like everything else they are subject to hedonic adjustments and various other hand waving.

As a reminder, hedonic adjustments lead to conclusions like “there was recently a 20 year period during which car prices didn’t rise.”

I will be clearer, the US economy has been shrinking for some time. I’m not sure how long because the numbers are so poisoned it’s impossible to tell. The maximal case is since the early 90s recession (hedonomic adjustments for computers were off the charts, but the evidence finds no overall increase in productivity from computers.) The “almost for sure” case is from the financial crisis, so late 2007.

Almost everyone in the US is worse off, surveys find that two-thirds of Americans can’t afford a decent lifestyle and wealth is shrinking for everyone except the top 1%. This is all concealed by bullshit top line economic statistics.

Properly accounted for I doubt if the American economy is half the size of China’s, and where it matters (manufacturing and resources) it’s probably closer to a third the size. No, “will you have fries with that” and “my job is to write 1,000 page reports” jobs do not count. The second in particular is actively detrimental to the real economy, as is essentially everything done by finance, crypto, and at least half of what American tech companies do.

As I’ve noted before, Trump is accelerating the decline. We’ll go back to Trump’s “unique accelerationist genius” soon.

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The Actual Mission Of Business Is Why We Can’t Have Good Things

By Ian Welsh

On July 18, 2025

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Yesterday we talked about AI: how business has been adopting it wholesale even though so far most of the evidence is that it performs worse than humans on almost all tasks. They do this because bosses don’t want to deal with employees: they want drones that just do what they’re told, and hope that AI can replace humans.

Socrates famously said that people should eat to live, not live to eat.

Business provide services or goods to make money, they don’t make money to provide services or goods, and that’s the fundamental problem with our economy and capitalism.

If businesses were run for employees, by employees, they’d use automation and AI to make jobs better, not just to get rid of employees and hope to make more cash. If they were run for customers, then they’d use AI and automation to improve their services and goods. That might mean making them cheaper, in an economy with money, but there wouldn’t be a huge drive to get rid of employees. The question would be “does this make what we provide our customers better?”

This goes far beyond AI and automation, though. It’s why everything becomes crappified. Google, to give an obvious example, made Google Search crap to make more money. Facebook’s algo is hell, and makes Facebook worse, but it boosts engagement and make more money, while every study shows it makes people who use it more unhappy and depressed and spreads vast amounts of misinfo, optimizing for anger and outrage.

Pick whatever service or good you want (tractors are a good one) and the drive for profit over mission (despite all the BS in business books about mission) is why it’s getting worse and more expensive.

Organizations (not necessarily businesses) which optimized for good services and products wouldn’t act this way. They would also be more viable long run. Google is vulnerable to replacement (and some loss of search dominance is showing up) because their service is crap. Facebook has never managed to produce another good product and everything they buy, they crappify. But if people genuinely loved their services (and early Facebook — a timeline just of people you chose to follow, in reverse chronological order) was good, just as Google search, at the start, was breathtakingly good.

Profit first, and shareholders being the only people who matter, has the economy crap. It’s also one of the main reasons (along with oligopolization) for why the US has fallen behind China. Chinese businesses, though they have to make money, exist in a competitive market with an activist government which steps in when it sees excessive crapification. So they make their products better (including cheaper) to compete.

We need to find a new way to organize our society, which doesn’t optimize for profit, but optimizes for organization mission. When we do so, crappification will become the exception, not the rule.

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Trump’s Absolutely Crazed Tariff Policies: Brazil and Copper Edition

By Ian Welsh

On July 9, 2025

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So, Trump sent a letter to Brazil announcing 50% tariffs. His demands are that Brazil stop prosecuting Bolsonaro (ex-President who tried to steal the last election, and stole the one before by getting Lula locked up on bogus charges) and that they let US social media platforms operate unfettered the country. If Brazil puts tariffs on US goods, then the US will increase its tariffs by the same amount.

Here’s the thing, Brazil and the US have essentially even trade:

(light blue is exports, dark blue is imports)

The most recent services data I can find indicates that the US has a services surplus.

But more to the point, Trump wants to interfere in Brazil’s internal politics in a way that no Brazilian patriot could countenance. Nor would would Lula be wise to submit.

And Brazil’s exposure to the US market isn’t as serious as it may seem, the exports amount to a bit less than 2% of Brazil’s GDP. It can weather this storm easily. It’ll just sell more elsewhere or even just eat the loss.

What it does do is encourage Brazil to move away from trade with the US entirely, and the US’s main exports to Brazil are refined petroleum, aircraft and parts, nuclear reactor parts and electrical machinery and parts. With the partial exception of aircraft parts and nuclear parts (for US manufactured aircraft and US designed reactors) there’s nothing there Brazil can’t buy from someone else and Brazil imports the things any sane trade policy would want other countries to import: largely manufactured goods other refined petroleum.

Even with nuclear and aircraft, China is now an alternative for new planes and new plants.

So Trump doesn’t have much leverage, actually. Way less than with Europe and Canada and Mexico and Japan and even Canada, Mexico and Japan have resisted his trade war.

All Trump is doing is pushing Brazil away and into the arms of Chinese, and giving them reason to de-dollarize sooner and faster.

Insanity.

Then there’s Trump’s announced 50% tariff on copper imports. Now, on the face, this makes some sense: copper is important in industrial manufacture and having the US dependent on other countries, especially China is bad.

BUT starting at 50% just means that costs for virtually all manufacturing in the US will go up and US manufacturing will be less competitive.

Once again, the way to do tariffs is announce they will happen in X years, where X is the amount of time it will take to build new mines and refineries in the US. Or you could star them at 1% say, and raise them another percentage point every two months till they reach whatever level is necessary to get people to mine and refine in the US.

Just imposing them is the stupidest possible way to do it.

Trump’s just fundamentally incompetent at policy. He can’t do it. Policy under Trump only works if he lets someone else do it and leaves them alone, but for anything high profile he constantly wants to meddle, and he’s a boob.

Trump’s economicpolicy mix — defunding research wholesale, starting a trade war with the entire world, vastly slashing social welfare, discouraging visitors and immigration and getting rid of migrant workers is just accelerating America’s decline.

Trump is an idiot, a fool and the will likely go down as the President who sealed America end as a hegemonic great power. Among post-war Presidents only Obama and Reagan are in competition with him for last place, but because they started and managed US decline, they will avoid much of the blame.

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Doomed Tesla (RoboTaxi Edition)

By Ian Welsh

On July 1, 2025

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I’ll keep this one short and sweet.

Tesla was contacted by the National Highway Traffic Safety Administration on Monday after videos posted on social media showed the company’s robotaxis driving in a chaotic manner on public roads in Austin, Texas.

Elon Musk’s electric vehicle maker debuted autonomous trips in Austin on Sunday, opening the service to a limited number of riders by invitation only.

In the videos shared widely online, one Tesla robotaxi was spotted traveling the wrong way down a road, and another was shown braking hard in the middle of traffic, responding to “stationary police vehicles outside its driving path,” among several other examples.

Elon Musk is not that smart. He chose to use cameras only, and not Lidar, against the advice of his own engineers.

China has robotaxis already. They work fine. They have Lidar.

Tesla is doomed. Their cars are worse than those of their competitors and more expensive. Robotaxis aren’t going to work. The only thing saving Tesla right now is 100% tariffs on Chinese autos, but even non Chinese electric cars are better and often cheaper.

Meanwhile Musk is in a feud with Trump, Trump has threatened to remove subsidies for Musk enterprises and Musk (again, an idiot) has said Trump should go ahead. And yes, he does need those subsidies.

The majority of Musk’s wealth is tied up in Tesla, and it’s days are numbered. Meanwhile Starship keeps exploding, the last time during fueling, not even after launch. There are a lot of competitors to SpaceX, and w/o NASA contracts SpaceX doesn’t look so hot either. Right now NASA is stuck with Musk, but that’s not going to last.

Musk isn’t going to be the world’s richest man much longer.

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When Financiers Win, They Lose

By Ian Welsh

On June 4, 2025

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One of the simplest lenses to look at an industrial society is whether it’s run by financiers or capitalists.

Socrates famously noted that some people live to eat and others eat to live.

Capitalists need money so they can do things. Financiers do things so they can get money. To a financier it doesn’t matter how money is made, so long as they won’t go to prison. All that matters is rate of return.

A capitalist has something they want to do: Ford wanted to build cars. Edison wanted to invent. The Wright Brothers wanted to fly. They need money so they can do whatever it is that turns their crank.

Capitalists create great societies. Financiers destroy them.

As soon as rate of return becomes the only consideration, a society becomes less interested in doing new things or doing old things well and starts searching for “unfair advantages.” They offshore and outsource jobs to lower cost domiciles: either for labor or for environmental regulations. They seek a monopoly or oligopoly positions in businesses where people have to buy: healthcare is the gold standard. They buy functioning businesses and load them up with debt. The business dies, but they are richer than they would have been had they run it.

Systematically they run the economy down. They become rich, but the society suffers.

This isn’t to say that finance isn’t necessary. As the saying runs “financiers make good servants and terrible masters.” But when finance becomes the primary driver of any economy: when it becomes a better way to get rich than being a capitalist, they ruin societies.

You can see this clearly in the West, especially in America and Britain. Sixty percent of people now can’t afford a decent lifestyle in the US, but America has the richest rich who ever lived.

This may seem like a victory for financiers, but it’s a Pyrric on. Yes, the America’s rich in 1950 or 1980 or even 2000 were not nearly as rich as America’s rich today, BUT America was the most powerful nation in the world, with the strongest economy. Now American elites are filthy rich, but rule of the second strongest economy, and China is pulling away from them: the difference is accelerating.

Do you want to be king shit of turd mountain? That’s the choice that America’s elites made. “Our country will suck ass and no longer be dominant but we will be rich, rich, rich!”

Ask Britain’s elites how that worked out. Would you rather be a British industrialist in 1870 or today, even if today you’re richer?

And as financialization destroys a country, that money matters less and less. In time, American elites will have to buy the best from China: cars, planes, electronics, etc, etc… Most of what they really want, America won’t make, because America will be backwards.

All this before losing the joys of being a super power.

Financialization is the destruction of countries, and the elites who pursue it lose more than they gain. Better to be a millionaire in 1955’s America, than a billionaire in America today, because wealth is always trumped by power.

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The Unifying Goal of Right & Center Elites

By Ian Welsh

On May 15, 2025

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Getting elites attention

What the right wants from its followers is for them to be riven by hatred of any difference, thus making them easy to manipulate and willing to sell out their economic values in exchange for seeing brown people beaten, and women and trans people losing control over their own bodies.

What neoliberals want is for their followers to be convinced that each group, even each micro group, is on its own, unable to understand each other and thus that solidarity is impossible and all one can hope for is that some member of the identity group is allowed to join the elite, while most of all groups remain in poverty.

They’re very similar, really. In both cases hatred of other groups is inculcated as the core value, as a way of making manipulation easy and avoiding having to actually deal with broad issues of well being.

Both of these are variations on “divide and conquer”. It costs a lot less to give a few people something than to give many people something. “Want some women and minorities in power? Sure. Costs us almost nothing.”

“Want women to be forced to bear rape children and die in pregnancy due to lack of necessary abortions? Sure, costs us nothing. Our women can still get abortions.

“Want trans people excluded and denied health care? Sure, they’re a tiny part of the population and rich trans people will be fine.”

On the other hand giving everyone healthcare would cut a lot of profits. Giving everyone a liveable wage or assistance to those who can’t work or find jobs: that would cost a lot of profits.

“You can have anything you want, as long as it doesn’t make elites poorer.”

On that the right and center are unified.

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