Subsidized Bike Rentals in Paris – Failure

From the NY Times, via the Mises Blog:

Many of the specially designed bikes, which, when the system’s startup and maintenance expenses are included, cost $3,500 each, are showing up on black markets in Eastern Europe and northern Africa. Many others are being spirited away for urban joy rides, then ditched by roadsides, their wheels bent and tires stripped.

With 80 percent of the initial 20,600 bicycles stolen or damaged, the program’s organizers have had to hire several hundred people just to fix them. And along with the dent in the city-subsidized budget has been a blow to the Parisian psyche.

I’m going to go out on a limb and say that, while possibly well-intended, the bicycle sharing idea, with the lack of rules and measures of protection, is wholly irrational. Such is the case for many “well intended” government-subsidized ventures. Would such an operation exist in the real marketplace? Absolutely not. Without any of the proper, rational mechanisms to protect the investment in the product/operation (i.e. GPS, collateral, et al), it will invariably fail, as is seen in Paris.

Alternatively, if measures were put into place to prevent theft and hold both the business (the bike rental company) and the renter accountable, then there would be a stronger chance for success. Bureaucrats and government bodies can’t make decisions about business. And with the backing of said government, where is the incentive to make a profit, be successful? Businesses need to be mindful of the long-term. They need to understand their target audience, their market, and act accordingly. They need, above all, to be cognizant of what it is that makes them a successful, healthy, thriving operation.

This venture, sadly, is not one of these.

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