Just because some people are willing to pay for something, doesn't mean it's right. People in general are very happy to pay for things that have huge externalities not directly affecting them.
Maybe I could have phrased it better. I was making a wider point ("people in general...") than Uber here. Uber's externalities are mostly related to insurance, worker abuse and damage to the fabric of society (what example do they give by being able to get away with blatant disregard for law?). Some of that should (and probably eventually will) be handled by union.
But my point is - willingness of some people to pay for something in no way makes something worth existing. People do pay for kidnapping and murder.
Or more day-to-day, mundane examples - why do we have spam, both electronic and the shitton of leaflets that go to trash every day in every city? Because someone paid for it. The Internet as a useful resource of knowledge is in constant battle with people paying for SEO. I could write hundreds of such everyday examples.
The point is, people are optimizing extremely locally when it comes to their decisions. Sometimes because they simply don't care, often because they don't know better. But just because they're willing to pay for something doesn't make it good or validate its existence.
Uninsured Uber driver causes traffic accident. Pedestrian is severely injured. Uber driver cannot pay for the medical expenses and there is no insurance company involved who could.
Either the pedestrian is ruined for life, or society has to pick up the bill.
That's one of the clearest examples of externality you will ever see.
Our free choice evangelists try to frame the whole issue as "one Uber driver, one satified customer who only exercised a choice, and no one else exist in the world".
First of all, if that was true it would be a failure of the healthcare system ("society paying the bill" is just insurance with economies of scale). But that's not true. A lot of people are not aware of recent developments with uber. Uber offers commercial comprehensive insurance on all rides. When there is a passenger in the car, there is full commercial insurance.
When there are no pax, many insurance providers DO cover it under personal insurance. Some (like geico) don't, but I would wager that the majority of Uber are insured every second of the day.
Even if the healthcare system eats the cost (as it would in my country), it's not supposed to. That's akin to entering a health insurance contract and then demanding the insurer pays for the theft of your iPhone.
Road traffic is insured by car insurers. The Uber driver doesn't have any, the car insurer therefore doesn't pay, so someone else pays. It doesn't matter if you rationalize it with "oh, that someone else is also some insurer". It is someone not involved at all. Ergo an externality.
So, I'm from Russia. In Russia, there's a great variety of cheap taxis, great mobile apps with reviews, gps location of taxis and stuff like that. Very good infrastructure. All simply because government doesn't regulate that.
I am yet to meet a single person complaining that this is bad. There is no increase in road accidents. The service is great. The drivers are very polite and are always on time. One must wonder, how can you be so blind to an obvious example of free market at work?
