How the ‘Uber Economy’ Is Killing Innovation, Prosperity, and Entrepreneurship
We need to shift our focus from disrupting markets to creating them
Today, it seems that almost everyone wants to be the “Uber” of something, and why not? With very little capital investment, the company has completely disrupted the taxicab industry and attained a market value of around $60 billion. In an earlier era, it would have taken decades to have created that kind of impact on a global scale.
Still, we’re not exactly talking about Henry Ford and his Model T here. Or even the Boeing 707 or the IBM 360. Like Uber, those innovations quickly grew to dominance, but also unleashed incredible productivity. Uber, on the other hand, still gushes red ink even after more than a decade and $25 billion invested. Just last year it lost more than $6 billion.
The truth is that we have a major problem and, while Uber didn’t cause it, the company is emblematic of it. Put simply, a market economy runs on innovation. It is only through consistent gains in productivity that we can create real prosperity. The data and evidence strongly suggests that we have failed to do that for the past 50 years. We need to do better.
The Productivity Paradox Writ Large
The 20th century was, for the most part, an era of unprecedented prosperity. The emergence of electricity and internal combustion kicked off a 50-year productivity boom between 1920 and 1970. Yet after that, gains in productivity mysteriously disappeared even as business investment in computing technology increased, causing economist Robert Solow to observe that “You can see the computer age everywhere but in the productivity statistics.”
When the internet emerged in the mid-’90s things improved and everybody assumed that the mystery of the productivity paradox had been resolved. However, after 2004 productivity growth disappeared once again. Today, despite the hype surrounding things such as Web 2.0, the mobile internet and, most recently, artificial intelligence, productivity continues to slump.
Take a closer look at Uber and you can begin to see why. Compare the $25 billion invested in the ride-sharing company with the $5 billion (worth…