Juno News - The Ford government interferes in the free market

00:00:00.000 So there's a story out this week that Ontario is going to move to cap delivery app fees in

00:00:09.260 regions where indoor dining is bad. Now these delivery apps we're talking about are things

00:00:12.920 like Uber Eats or DoorDash. They basically offer you delivery for a restaurant or a place of

00:00:17.900 business that normally doesn't have delivery. So you can get them from Tim Hortons, McDonald's,

00:00:21.620 or any small restaurant that isn't normally doing delivery. So what is the goal here? Well,

00:00:26.680 the goal of this policy seems to be to prevent people from getting price gouged. Apparently some

00:00:31.320 people were being charged about 30%. Now I myself tried to order a, I think it was a potato wedges

00:00:36.980 from Tim Hortons through one of the companies and I'll post up that picture, but the associated

00:00:42.220 fees made it come out to like $12. So it's clearly a lot more than 30% on just some small order and

00:00:47.800 let's just say I really just felt like some fries or potato wedges and so I have to pay about $12

00:00:51.960 for that if I don't want anything else. Now there are a couple of problems with this policy and

00:00:57.640 number one, as a conservative, it's not really something they should be doing in getting involved

00:01:03.060 in a free market transaction between two consenting parties. To me as the consenting party, I really,

00:01:08.380 really would like potato wedges right now and they are more than happy and willing to deliver me some

00:01:13.220 potato wedges. The only thing is they're going to charge me about $10 of fees. So, I mean, if that's

00:01:18.980 what we are interested in, I don't really see why the government should use force, which government

00:01:23.980 is, government is basically force. I don't see why the government should use force to stop us from

00:01:28.480 conducting that transaction freely. So that is problem number one. But the larger problem is not

00:01:34.500 necessarily the government stopping people from having free choices, which again, this is what

00:01:38.380 they're doing in essence. But the larger problem is the direction that the policy is going to go and

00:01:44.280 what they actually want it to do. Now, what they wanted to do is to stop people from getting price

00:01:49.620 gouged. They feel that a lot of people are maybe not going to restaurants. They're not supporting

00:01:54.160 their local businesses or they're simply not eating out as much. And again, obviously it's, you know,

00:01:58.120 there's a pandemic going on. People are maybe banned from eating indoors or simply trying to save money.

00:02:03.020 They're afraid of getting coronavirus, et cetera. So restaurants are definitely suffering at this

00:02:07.140 time. And the goal is to maybe prevent people from getting price gouged and also help these

00:02:12.420 restaurants to get some increased business from the otherwise, from the people who otherwise would

00:02:16.840 not frequent or frequent or shop there. Now, this is, I think, one of the policy goals. The problem is

00:02:22.760 that what can happen is that the people who are using DoorDash or Uber Eats or any one of those

00:02:28.160 companies right now, and they're like me, they're like that example where I just wanted some potato

00:02:31.840 wedges. Maybe they just want a coffee and a donut, something small. If you're going to cap those fees and

00:02:35.960 you're going to make it that it is now illegal to charge more than 20%, if we're talking about a small order

00:02:40.600 at Tim's that's five or $6 and they can only charge me 20%, you know, what are we really looking at

00:02:46.760 here? Like a buck, you know, two bucks on a really small order that might not make it worth it for

00:02:51.840 these companies to deliver. And so what can happen is that these companies will simply decide, well,

00:02:56.100 we're not going to do that. Or maybe they're going to try and find some sort of loophole in the

00:03:00.020 legislation and say, we're not charging you a service fee. We're charging you a mandatory tip for

00:03:04.100 the driver of X amount or some other kind of loophole where the company is still going to get that

00:03:09.140 money, but they are now going to call it something else. So that is one possibility. But the other

00:03:14.120 possibility is like I alluded to just a second ago, that they're just not going to do it. They're

00:03:18.360 going to stop offering service to these places. And what's going to happen is that the consumer or

00:03:22.960 the person who wanted to eat for the, from that place and was more than happy to pay the fee. I mean,

00:03:27.200 well, maybe they weren't happy about it, but they were willing to pay that fee. Maybe now Uber Eats or,

00:03:32.400 you know, DoorDash or one of those companies, they're just going to stop offering service to that

00:03:35.820 restaurant because they can no longer meet their profit margin that they require to stay in business.

00:03:40.420 Now, again, I'm not a shareholder in any of these companies. I'm not privy to what goes on. I'm not

00:03:44.460 a driver for any of these companies. So I have no idea what margins they make, how much profit they

00:03:48.600 make, how much they share with the driver. But again, these are all in a free market. These are all

00:03:52.680 transactions made by consenting people. And so you have to assume that they're not being coerced and

00:03:57.300 they're more than happy to engage in this type of business. So by the government coming in and

00:04:01.960 capping, so they're basically putting a price control, but the government putting a price

00:04:05.340 control, they are now not only limiting people's options, but they may cause incentives or disincentives

00:04:11.000 for the company to continue operating the way that they were previously. So this is often what

00:04:15.500 happens when the government tries to step in and, you know, right a wrong as they see it. And all they

00:04:20.640 end up doing is just limiting options. And it's a bit interesting or, you know, maybe even disappointing

00:04:25.140 that a conservative government is doing it because again, this is not in line with any of the free

00:04:31.640 market principles that you might expect from such a government. So again, you know, very interesting

00:04:36.260 stuff. And I really hope that policymakers think about what it is that they want to achieve. And

00:04:40.640 maybe that a policy like this is not the best way to achieve that, because again, there are many

00:04:44.900 loopholes as we just discussed, but you know, who knows, I'm just a commentator who knows if they

00:04:49.520 will listen or not. So for TrueNorth, I'm Sam Ashkenazi. Thank you so, so much for watching.

00:04:53.940 Have yourselves a great day.

Juno News - November 28, 2020

The Ford government interferes in the free market

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