[danieltillett]

It probably is closer to destroy rather than transfer. Yes there will be a shift of capital from investors pockets (pension funds ultimately) to drivers and consumers, but a lot of this capital will be squandered on drivers driving at less than full capacity and consumers not paying the true economic price. Neither of these is a very productive use of capital - there is of course the environmental cost of half-empty cars driving around too.

[OmarIsmail]

I see consumers not paying the true economic price as a form of stimulus. They're receiving more value than they are paying for, and so they presumably are living better lives and will be able to spend that saved money elsewhere (movies, food, etc). Similarly, if drivers are at less than full capacity that means there are more drivers than there would be without the funding, and thus more drivers getting paid.

No arguing against the environmental impact of course, other than the hope that cheap ride-sharing reduces the likelihood of car ownership.

[danieltillett]

This sort of stimulus is like paying people to dig holes and fill them back up again. Given the money being spent is mostly workers pensions I am not too sure that this is the best use of their future retirement income.

[mahyarm]

No it's more like providing very cheap transit fares, or free maid service. It's a useful transient service to most people who's value doesn't show a specific investment benefit like free daycare would. Digging ditches and filling them again provides no economic side value.

[danieltillett]

No it really is like digging holes. There is no long term value being created here. If they could afford to subsidise cheap transport indefinitely then there might be some value, but providing a service like this for a short period of time is providing no long term economic benefit.

We would be better off calling one side the winner and just giving each person using uber and lyft the subsidy in cash and letting them spend it in the most efficient manner.

[mahyarm]

My examples were short term benefits. Once the transit fares are not cheap anymore, or the maid service stops, then the benefit goes away. But people still had a short term benefit.

Digging holes and filling them has zero economic benefit. That is the difference.

[danieltillett]

Providing a service that is not sustainable will have more negative long term effects than digging holes. Digging holes is just a means of transferring cash to the hole diggers, creating a service that people start to use will create negative externalities once removed (people take jobs further from where they live because the cost of transport is lower, or all alternative transport services like taxis go out of business). If the externalities are greater than the short term benefit then the overall economic benefit will be negative.

I see a price war that results in a loss of transport competitors as being long term negative. This doesn’t exist with hole digging.