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Uber

The recent slap down of Uber in Germany was prompted by the taxi monopoly.  The monopoly granted to the taxi drivers by the regulators is threatened by this application of ride sharing.  The Uber application threatened the monopoly incomes earned by the taxi drivers as well as the perceived usefulness of the regulators.

The lesson here is when attacking a giant monopoly – be it singular such as one person or one company or a community such as steel- makers, sugar growers or taxi owners that those monopolies granted by regulatory fiat are the most difficult to dislodge.  We are seeing a similar response from the banking industry dealing with shadow banks.

As the regulatory burden and regulatory reach increases the regulators and the regulated act more and more in concert to protect the dominion crafted between the regulated and the regulators.

Similar events are unfolding in banking as the bankers are granted a deposit taking function monopoly through licensure. As part of this licensure they are required to act in such ways as the regulators required to maintain their monopoly.  The regulations  have grown so burdensome that more and more competition has sprung up to take money in, loan money out and even deal with payment systems.

It shall be interesting to watch Germany and how they deal swiftly with Uber as well as to draw parallels with what they will try to do to the more powerful shadow bankers.

It is a question we have to ask ourselves. Do we embrace change and support new services and ideas, or do we allow the tyranny of the status quo to dominate?  While this is an age old question, the battles are happening more often and more frequently than ever before.

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