Phineas discovers markets. Phineas doesn’t like markets
Zipcar, the world’s largest carsharing club, is leaving the UK. The company, which operates about 3,000 shared vehicles in Britain, has announced plans to shutter its UK operations at the end of the month. The news comes as a bitter blow to the hundreds of thousands of Britons who regularly rely on carsharing, and is a major setback in efforts to reduce emissions and traffic congestion.
I’m particularly gutted. This year I finally learned to drive, specifically in order to become a Zipcar member for the rare occasions when I need a vehicle.
Well, OK. Standard journalism, illustrate the larger point with the personal anecdote. Generalise from the specific and all that. Except the wrong generalisation is being produced from the example.
Providing shared ownership cars costs something. We can track this as money, we can track it as resources used - money and prices being the way we can track resource use as compared to other uses of those same resources. Whatever uses we make of resources we want them to be of higher value than those other, potential and alternative, uses. This is how civilisation becomes richer, that resources are directed to their most valuable use.
ZipCar has found that running shared ownership cars in Britain makes a loss. This is the opposite of adding value to said resources, it is a subtraction from them. This means that - at least in the ZipCar format - shared car ownership makes Britain poorer. By exactly the amount of losses from running ZipCar in Britain.
Phineas and his desires meet the market. At the price Phineas - and others - are prepared to pay for shared car ownership the idea makes Britain poorer. The joy of markets is that they test such desires and willingness to pay for them. Nope, sorry, you’re too skinflint to command those resources might not be the message Phineas - and others - wish to hear but it is the one reality is insisting upon.
The reaction of Phineas - and others - is of course to demand subsidies so that the rest of us pay for their desires and control of resources. To which there is a good Anglo Saxon vernacular response.
The generalisation to make from this is that this is why we use markets and prices. It’s wholly possible to talk up a storm in favour of near any idea. Prices in markets concentrate attention on the viability of said ideas as compared with the other things that can be done. That is, test that talking storm against reality.
Killing shared car ownership schemes is not a failure of markets, not a problem with markets, it’s the point of using markets. That it annoys Phineas is just one of those little extra pleasures of the system.
Tim Worstall