The Big Lie that keeps the Uber bezzle alive

A credulous press continues to report massive losses as profitability.

Uber is (still) a bezzle (“the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it”). And every bezzle — every bezzle — ends.

Uber entered the market with an absurd proposition, which they papered over with an idiotic narrative…which the world ate up with a spoon.

The absurd proposition: Uber could use apps to reinvent taxis, and turn a low-margin business into a high-margin business by sprinkling it with high-tech pixie dust.

The idiotic narrative: Uber could establish itself in the market by pouring billions down the drain, losing 41 cents on every dollar it brought in, subsidizing unprofitable rides at unsustainable rates…but someday, it would make it up in volume.

Here’s how that proposition worked: Uber loses a lot of money on every ride. But someday, it will corner the market on transit (not just taxi journeys, but all transit), and it will be able to raise prices and cut wages and recover all those loses and turn a profit.

Obviously, this is stupid. Even if Uber manages to blow through its investors’ billions in habituating us to rideshares over cabs and buses, even if they manage to bribe or bully cities into allowing takeovers by unlicensed cabs, even if they manage to rewrite labor laws so they can treat their employees as contractors…

Even if all of that, then what? Then you have a market that is structured for dominance by unlicensed taxis driven by misclassified employees — that anyone can enter. The (mythical) day Uber attains dominance and profitability, someone else can start a competitor that provides exactly the same services, with exactly the same drivers and exactly the same passengers. The only difference? That new service won’t be $31 billion in the hole, unlike Uber.

In reality Uber was, is, and always will be a bezzle. The company used billions from the Saudi royal family to build up a giant, money-losing business (albeit one that maimed or killed taxi and transit services around the world through predatory pricing). All the while, they told…