How Capitalism Saves You Money

Not my local cab company but wish it was

When Uber first came on the scene I largely ignored them.  I thought the idea was great, one of those “Why didn’t I think of that” ideas that’s both simple and revolutionary.  I love seeing industries get disrupted, especially old ones like the taxicab industry.

But I don’t need taxis very often because I’d rather bike or walk.  In addition, I live in the DC area where we have a “U.S. class” metro system (it’s not world class, and if you think it is you haven’t been to many metros around the world).

But cab rides for me were, and still are, pretty rare.  When I take them it’s almost always to the airport, because of either excessive baggage for my climbing trips, or oppressive summer heat that would render me a big ball of sweat if I walked or biked.

When I was still a faux important big-wig at my W2 job and working full time, I traveled about every 6 weeks or so.  I started using Uber around 2015 and really liked it.  My main impetus to use them was that I hated using cash. 

Prior to using Uber about half of the taxis I took wouldn’t take credit card.  As a savvy financial independence proponent, I put everything on credit card to track my expenses easily and to get lots of free stuff.  No brainer. 

Uber was also cheaper than the local cab company.  Bonus.  Most importantly of all, Uber had a “killer app” – the map that showed me where the driver was was!  What seems like just a cool feature to most is absolutely crucial in the DC area.  Why?

The DC Metro area has the worst traffic in the country, we usually tie Los Angeles for first place in that prestigious and life destroying category.  So numerous times I found myself nervously waiting for a cab to arrive, as I mentally computed whether or not I’d make my flight. 

In our area, 1 mile can take 15 minutes or longer on any given day.  It’s that bad.  I’ve missed flights before from being stuck in traffic, and the anxiety of wondering where the hell my taxi is frankly sucks.  You’re just stuck sweating it out in your living room waiting for that blessed yellow car to come down the street. 

With Uber, I could watch the car coming on my phone in real time on the map.  And if it appeared the car was stuck in gridlock I could cancel, hop in my car, and still try to get to the airport on time.  So I switched to Uber and largely forgot about my local cab company.

 

The Taxi Company Wakes Up

I wrote this post so I could find cool cab pics

Then one day I went to the Uber app to go to the airport and the service was down.  So I resigned myself to going back to the cab company, no big deal. 

With the cab company, you still had to call them and talk to someone.  Old school. 

Well it had been about 2 years since I’d done it, and when I called this time instead of having to actually talk to a human being, which we all know is annoying these days, they had a quick automated system. 

“Well” I thought, “…that’s new”.  So I played. 

I told the system where I wanted to go and my pick up address and it said “A cab is on the way” in a pleasant computer generated voice. 

Then I remembered “Oh great, I have no map to check.  Who knows how long they’ll take.  They might get hung up in traffic.  I want to be able to tell if I need to abandon the cab and go in my own car to make my flight.  I miss Uber now.”

Right after that I got an automated text from the cab company, and it had a link.  It said “Track your taxi’s progress here”. 

I clicked it, and a beautiful mapping app popped up showing my cab, the driver’s name, and his live movement!

Whuuuuut?  Is this the stone-aged cab company that I knew?

It gets better.  When I got to the airport the price was significantly lower than Uber, and they took credit card!  I asked the cabbie and he said they converted all of their cabs to credit card the year prior.  

So within two years they went from having a human dispatcher to taking calls automatically.  They went from no tracking or mapping application to having a really great one.  And their usual price to the airport which I had been accustomed to for a long time dropped about 25%. 

I was now paying less to go to the airport than I was 8 or 9 years before, before even adjusting for inflation.

All because Uber threatened them, disrupted them, and was taking away their business.  

That’s why capitalism is the best system.  It spawns innovation and creates the best value for customers.  I didn’t get to financial independence by paying more for things.  I got there by having choices to pay less, and I used them. 

Another example is Airbnb and how they’re disrupting the hotel industry, big time.  They’re forcing hotels to compete, by bringing down prices and adding amenities like full kitchens. 

I don’t want to go out to eat every night when I’m on a trip.  Restaurant food is unhealthy and expensive.  I like Airbnb’s because they’re cheaper and I can get a full kitchen.  Hotels are being forced to deal with it.  We win.

 

I’m A Cab Guy

I’ve checked Uber since and they’re still a good deal more expensive from my house to the airport than a taxi.  So I’m sticking with the taxis.

The taxis adapted, innovated, and caught up.  All to survive.

So for all you smart geeks out there getting ready to disrupt industries, I say do it!  Make old school and stale business models and institutions adapt and get better.  Keep capitalism going!  Go forth and disrupt, it saves me money!

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Dave @ Accidental FIRE

I reached financial independence and semi-retired in my mid-40's through hard work, smart living, and investing. This blog chronicles my journey and explores many aspects of personal finance including the psychological and behavioral factors that drive our habits.

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28 Responses

  1. Xrayvsn says:

    Capitalism is indeed great. Competition benefits the consumer in so many ways. First the price goes down to a true market value rather than having a monopoly by a single company that can raise its rates and suffer not many consequences.

    It also spurs innovation as each company is trying to increase its market share by gaining a competitive advantage. Your example of Uber and the map tracking is a perfect example. Of course the competitors will soon adapt like the taxis and the original company can’t rest on its laurels and needs to innovate more. It’s a great cycle to be in as a consumer.

  2. When I was at the Greece Chautuaqua, Alan Donegan gave a talk that included a quote from Tom Goodwin, that is amazingly 4 years old:

    “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

    I had never stopped to realize that these businesses started with nothing and have nothing. Sort of reminds me of FIRE blogs that are disrupting the Suze Orman’s of the world. The times, they are a changin!

    • Dave @ Accidental FIRE says:

      VERY cool, and true. I never thought of it quite like that. And going back further, Angie from Angie’s list made millions asking everyone to write for her on her site, then selling access to the very things everyone wrote for her – back to them! Ingenious!!

      Yes, we FIRE folks are kind of disrupting the traditional money industry – and they hate hate hate it!

  3. Hmm…maybe your DC cabs could teach my Philly cabs a thing…or three. I like Uber better for a number reasons, including all of your reasons, but what has driven me to Uber over and over and over is how much cabbies will rip you off! After more than 7 years in NYC and nearly 8 in Philly, I have countless stories of them trying different scams on me, but that’s the story the world over. They are the biggest opportunists I’ve found and that’s mainly why I focus on Uber — I know what I’m paying and I have their details in case they try anything scammy, but I’ve never had that issue with Uber. Regardless, I’m a huge fan of capitalism! I like progress and innovation and it should be rewarded accordingly. 🙂

    • Dave @ Accidental FIRE says:

      Yikes, I know that kind of stuff happens in NYC a lot, esp to tourists, but didn’t realize you Philly folks get it too. I’ve been lucky, never had an incident Although I’m not taking cabs in the city per se, I live outside in one of the close burbs. Probably a bit different.

      Bottom line, if they keep behaving that way the market will make them extinct, because others like you will go elsewhere. If word gets out, people will choose the alternate and they’ll eventually have to cut the crap to survive, or that’s how it should work 🙂

  4. i kinda always felt for the taxis with all the regulations and the high barrier to entry with medallion costs. i’m glad they’re figuring it out. i want some egghead to figure out a daycare hack and healthcare should be on the list too. i’m too busy drinking wine to get to work on those.

    • Dave @ Accidental FIRE says:

      They are regulated to death, and Uber/Lyft are increasingly too. The latter 2 can’t pick up from the airports here, not allowed. They did that to protect the cabbies. It’s kind of a war.

  5. Richard says:

    I’m from Singapore, and out here, it’s Grab who bought out Uber. Since buying them out though, prices have gone up again, though new competition is always coming in to keep things fresh!

  6. Rohan | Passive Income NZ says:

    I’m in the same boat. Haven’t booked a taxi in years. Next time I might try and see if they have improved their service. Capitalism is great for that, you have to innovate to keep up with the competition or die being stuck in your old ways.

  7. When I was in Chicago last month, I found taxis to be cheaper and faster to arrive than Uber. After Uber couldn’t “find” me a couple of times in the middle of downtown, I gave up on them.

  8. TVs are a great example of this. It is such a competitive market, the features, resolution, etc. get better and prices continue to fall. It’s awesome!

    • Dave @ Accidental FIRE says:

      TV are so cheap it’s ridiculous. I think Walmart had a 62 inch one on sale for $299 for Black Friday. Insane. How that happens is beyond me

  9. Mr. Tako says:

    Yup, there’s millions of examples that exist like this. Competition (via capitalism) brings down the prices of goods and services for consumers. Sometimes to the point where the companies hardly make profits!

    I love that my grocery bill hovers around $500/month for example. There’s so much competition in the grocery space right now that there’s always great deals on food!

    Certainly capitalism isn’t perfect, but it does have some benefits!

    • Dave @ Accidental FIRE says:

      The grocery market has been amazing. I now have 3 Aldi’s near me when just 4 years ago I had none. And Lidl is coming. The old-school stores are losing business and rightly so, they’re too expensive.

      Us for the win!

  10. I love these types of things. The one that gets me on travel is just how ubiquitous electronic payment has become. The last few times I’ve gone international in Europe I didn’t even change money! Contrast that with a decade ago where I was stranded in small town Germany for a Sunday with no Euros and had to cash advance from my hotel to pay for dinner. How things change.

    • Dave @ Accidental FIRE says:

      I went to Germany and Europe before the Euro when they all had their own currencies. Talk about a pain in the butt!

  11. Interesting. I’ve pretty much completely sworn off cabs from a few negative customer service experiences. Maybe I’ll give cabs another chance, but usually they seem to be about twice as much as a ride share.

    Regardless, the competition injected by ride shares has forced cab companies to adapt or die.

    • Dave @ Accidental FIRE says:

      Regular Taxi experiences are highly variant based on your location. FOr instance in NYC they can sometimes try to scam you. My local cab company clearly saw declining business from Uber and Lyft and straightened up their act.

  12. thatfrugalpharmacist says:

    Glad you’ve had good experiences with taxis lately. I didn’t!

    I’ve only ever used Uber once, like two months ago. They don’t have Uber or Lyft where I live… I think you’d even be hard pressed to get a cab. Rural living for you!

    We just got back from Hawaii a couple weeks ago. Flying out, I parked my car at my cousins house and we stayed at a hotel with an airport shuttle.

    Flying home, we had a 5:30 am arrival time, with plenty of luggage and a toddler, and a car seat.

    I figured Uber would be cheaper, but I didn’t want to mess with installing the car seat for the short drive from the airport. I had researched it and found out that cabs, along with busses, and things like the airport shuttle are excused from the car seat law.

    Call me a bad parent… whatever… but no one wants to mess with installing a car seat after a red eye flight from Hawaii with a kid.

    So, we get to the airport, I get the luggage cart to haul all our stuff and carseat and we haul the stroller with kid in tow out to where the cabs are. I found a van cab and started loading our stuff up.

    He was fine with the toddler sitting on my lap.. until he saw the carseat. Then he refused to drive without us installing it.

    Uh, I did my research for a reason… should have just done Uber I guess.

    THEN he starts running the meter while he asks me where he’s going and tried to hunt and peck with readers on to type in the address! Eventually I demanded his phone and put the directions in myself. As the meter had run an additional $3.00 or so by the time this happened I threw a minor fit. He restarted the meter.

    Then we arrived, he pulled the same crap while he fumbled to setup and manually type my credit card number in on his phone for payment… running up the meter another $2.00.

    He did NOT get a tip.

    I’ll try Uber next time.

  13. I found the same thing when we visited NYC – cabs were much less expensive than uber, especially since Uber always seemed to have surge pricing when we needed it. Here in my sleepy little college town? I’ll never get in a cab here. They’re dirty, smelly, and take half an hour to arrive. If you’re lucky.

  14. FI Introvert says:

    Great example of how competition benefits us all.

    The traffic here really can be terrible, especially around Reagan with the construction but using the metro or leaving a little earlier make us travelers no worse for the wear. I use Lyft and get personal credits by using it for business, miles on Delta and JetBlue, and cash back from Ebats and Drop. All that said, maybe the cab is cheaper. I’ll check it out.

    • Dave @ Accidental FIRE says:

      Definitely give them a try again. I’m sure it varies by company and your exact location but right now for me it’s the best option.

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