Most people are bad at calculating financial implications of decisions before them. There are lots of reasons for this (limited finance/math knowledge, impenetrable language in which conditions are layed out...) or actually don't have better options so they can literally be taken advantage of. Some may be even stupid, but there's no need or reason to reach for that as an explanation.
This is such a horrible take and reeks of nanny state oversight. Millions of small business owners make these decisions all the time. Markets have a way of quickly rooting out those who aren’t making good decisions. Government has proven itself to be far less financially competent.
Millions of small business owners, me including, make these kind (and other) mistakes all the time for various reasons. We are all very much fallible and don't go out of business because most of the time our mistakes don't have huge consequences and everyone else makes their own mistakes too.
(1) Most business owners ("millions of small business owners"), especially those that are independent LLC owners, do not fully understand the cost implications of their business's financial health. By their very nature, they do not have dedicated financial expertise, typically lack strong accounting principles, etc. My sister, a personal trainer, is a great example of this. I had to explain to her what "writing off" expenses actually meant.
more importantly:
(2) Uber knows this and exploits it.
All based on there being a large chunk of people[1] that don't really understand how money works.
[1] I'd put that number based on anecdata, at least at around 20-30% of the population.