Erdogan not getting the point of market economies - Credit Novosti

The Turkish President, Tayyip Erdogan, has just closed down Uber in that country. In the process he’s shown, once again, that he doesn’t really quite get how market economies work nor why we use them. The aim is to find out what the consumers want, not what the producers do. Thus if someone launches a service, produces a good, which people want we should let them get on with it. Not close it down because other producers complain. To do that last isn’t a market economy, it’s corporatism:

Turkey’s president Recep Tayyip Erdogan has said ride hailing app Uber is finished in Turkey, following pressure from Istanbul taxi drivers who said it was providing an illegal service and called for it to be banned.

We don’t say that if GM complains about the competition then Ford should be closed down. Quite the opposite in fact, that GM is upset by Ford shows that the latter is doing something right. Producing cars which people prefer to those of GM perhaps. We think that’s a good thing:

Erdogan’s statement came after new regulations were announced in recent weeks tightening transport licensing requirements, making it more difficult for drivers to register with Uber and threatening a two-year ban for violations.

“This thing called Uber emerged. That business is finished. That does not exist anymore,” he said in a speech in Istanbul late on Friday.

Sure, we get it, the taxi drivers are pissed at the competition. But that’s the entire point of allowing people to compete, the idea behind that market economy thing:

Uber said that about 2000 yellow cab drivers use its app to find customers, while another 5000 work for UberXL, using large vans to transport groups to parties, or take people with bulky luggage to Istanbul’s airports.

The basic ground rules of how it should be are pretty simple. Our aim, our desire, is for the people – you and me – to have as much of what they want as it is possible for them to get. What can be produced, and how, is a constantly changing feast. Thus we want people to be able to enter the market an offer new things. Or even old things in a new manner. It is in this way that we find out that sweet spot of what can be produced that people actually want to have produced.

And that’s it, that really is it.

The system, of course, not working if those who do things the old way are able to prevent people from offering whatever it is produced in the new.

Erdogan’s banning of Uber in Turkey is an idiot economic decision. It’s also likely to be a pretty popular political move. But that’s just further proof that we shouldn’t be allowing politics to determine the economy, isn’t it?

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8 COMMENTS

  1. Since Erdogan appears entirely driven by a lust for power it’s hardly surprising. He rode the streetcar called democracy until he got where he wanted, he appears to have done the same with a certain branch of Islam. Poor Turks.

  2. Uber is the most visible sign of humankind doing what benefits us most, devising new and more efficient ways of satisfying customers. Erdogan’s racketeering is anti-human-development.

    Now, why does anyone favor expanding a common market to a nation that does not believe in markets?

    “We don’t say that if GM complains about the competition then Ford should be closed down. Quite the opposite in fact, that GM is upset by Ford shows that the latter is doing something right.” Yup, but when Ford complains about Mexicans producing car parts for $3 an hour, Ford argues that Mexico should be shut down, and Lightheiser and Trump carry its argument to Ottawa. A worker’s “right” to keep doing his old job in his old way should not become government policy unless we decide we no longer want a brighter future.

  3. Not sure if you’re being a little naive, here. Uber is the sort of service will work in a high trust society. If you’ve ever had anything to do with Turks, or from anywhere else in the Muslim world, you’ll know that trustworthiness isn’t one of their distinguishing features. London you can reckon on a Uber driver having had some sort of background check, a roadworthy vehicle & insurance. Place like Turkey, all you could count on is they might have the relevant piece of paper. If the Uber manager has requested it rather than a back-hander. Maybe the the fleet of professional taxi drivers is the only way to get a fleet taxis you’d want to use.

    • Taxi drivers are some of the more fly-by-night businessmen anywhere. (By the same token, the profession is an inexpensive way for immigrants to enter the legitimate economy.) Inability to rely on reputation was what led to taxi licensing, though the problem was already being solved by large companies branding taxis, vetting their drivers, and putting the corporate name on the line. Uber solved the credibility problem cheaper, with ratings via blog. Uber has a global brand on the line, and will probably not be bribed as easily as a Turkish official. Threatening the value of the taxi medallion, and the rackets that prop it up, is Uber’s real problem — in every country.

    • Exactly the reverse.

      I pick up a random cab in Turkey it can be any old scripted in any old car, and they can charge random amounts. As a person who has travelled various low trust countries, taking a tab is a real lottery. I’ve had one refuse to let our bags out until we paid a surprise surcharge, and not using the meter is standard.

      Uber makes it considerably safer. The fee is booked in advance. The drivers are rated.

      In the Arab country I lived in, people took Uber because it was far better. Note, not cheaper.

      The Turkish cab drivers aren’t opposing Uber because it is bent. But because it is honest.

  4. If Uber are already breaking the law, there’s no need for a new law. And any taxi license regulations would catch existing taxi operators as well as Uber. All Erdogan has done is paint in large letters that the rule of law cannot be trusted in Turkey (cf Congo a few days ago).