From Rational Ignorance to Rational Indignation

Startups like Uber present people with real alternatives. They don’t present people with white papers showing how economically inefficient protectionism is. They don’t try to show how the money is flowing from taxi companies to corrupt politicians. They don’t even have to hire lobbyists to go up against the status quo.

Instead, they change people’s experiences.

New users of services like Uber and Airbnb almost always are shocked by how easy they are to use. For Uber, you just press a button and a car shows up. You tell the driver where you are going and get out. No money ever has to change hands, you don’t have to worry about getting lost thanks to a GPS built into the app, and you aren’t berated to bring cash rather than a credit card.

Now consumers have a real alternative against which they can compare the status quo.

When regulators and politicians, like DeBlasio, come along and try to crack down on these plucky upstarts, now consumers have a personal reason to put pressure on city hall and get angry. When before it was only that “hey, some alternatives might hypothetically be hurt in the future,” now it is, “hey, they are trying to take this away from you!”

Uber pretty much said exactly this with the “De Blasio” option they rolled out in NYC. Source: Techcrunch

Uber’s request that drivers keep working in areas where the service is illegal is a sign that they know people want the service. The fact that people keep using the service while it is illegal shows that entrepreneurship outpaces politics. While they are technically engaged in civil disobedience, users likely neither care nor know the legal status of the services.

Airbnb hosts rent out their apartments against the terms of their leases. They probably violate some hospitality regulations in their cities. They don’t really care. The experience is so positive that both hosts and users win.

What makes this entrepreneurship new is that the barrier to entry is so low for somebody to engage in the exchange. When before somebody would have to apply for a job or go directly to consume a service, one becomes a user and an employee at the press of the button. The ease at which experiences can be created and benefits can flow is magnitudes greater than under older models of business.