Thursday, April 3, 2014

How does the 'Free Market' work?

Down at the grass roots it is very simple. You got something I want, I got something you want, we make a deal, we both walk away “richer” for the transaction. Man I love garage sales, don't you?

An example that I found today concerns the ride sharing service 'Lyft' in San Francisco [which is spreading across the country except where do-gooder government is getting in the way]. Now Lyft uses a computer app to connect people that need a ride with people that have a ride.

They talk.

They make a deal.

They both 'ride' away 'richer' for the transaction.

Grass roots, free market economics at work.

Now this app has spawned economic growth. Sort of like the TV 'spin off' shows from 'All In The Family'. You remember them don't you? [Maude, Good Times, The Jeffersons, Checking In, etc.]

In San Francisco there are some folks that want to get in on providing this ride sharing but they have a problem. They don't have a car. Well, another startup company called Breeze has stepped in to help. Now guess what [drum roll], Breeze rents cars to these people that don't have cars but who want to share rides. The CEO and co-founder of Breeze, Jeff Pang, saw a demand: “There is huge demand from people who don’t own cars to be part of the ride-sharing economy...” and he jumped into this Free Market to meet that demand and, as collateral damage, is making a profit for himself. Yes, I know, just another evil, rich, greedy, fat cat wanting to make a profit off the backs of the poor working class, but I digress.

Who would have thunk' it. The need for some folk to get a ride is met by a simple computer app which generates the demand for other folks to have a car to provide the ride and everyone is richer for the deal. Well, most everyone. In the Free Market there will always be some folks that fail. The price we pay for taking risk in a Free Market [can't the government do something about that and keep folks from failing?]

BTW: Would you believe that there are unintended consequences? Aren't there always? The unintended consequences that I can think of off the top of my head are: More people carpooling which leads to less fossil fuel used which leads to a reduction in CO2 emissions which leads to less global warming [you get the idea]. That's the big one but then we can go with: More people carpooling which leads to less traffic congestion which leads to reduction in the need for parking which leads to more open space in the city which leads to more parks with trees which leads to the absorption of CO2 emissions which leads to less global warming [sorry, already gone there.


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