
The Silicon Valley Economy Is Here. and It’s a Nightmare - smacktoward
https://newrepublic.com/article/156202/silicon-valley-economy-here-its-nightmare
======
rbranson
Oh brother. Silicon Valley deserves to be dragged for a lot of garbage...
truly... but calling the whole SoftBank funded clusterfuck the “Silicon Valley
Economy” is just nakedly intellectually dishonest.

Does the contemporary New York Economy connect people around the world and put
all the worlds knowledge at your fingertips? Oh no, they just wreck the
economy as a whole and feed us garbage like how they create value through
“liquidity.”

How about the Washington DC economy? You know, the old joyful military-
industrial complex that sucks in taxpayer money and converts it into dead
civilians in the Middle East.

Or maybe the other geographically centralized titan of the US, The Texas
Economy? You know, the one responsible for many of the major geopolitical
conflicts in recent history that is also a huge part of what is turning the
only planet we have into an unlivable hellscape.

And as far as I can tell the whole SoftBank funded fake tech masquerade thing
is starting to melt down, so?

~~~
Lammy
You can see the mindset everywhere in the Valley; it's just easiest with the
"gig economy" companies that put it right in our collective faces.

For example, compare what was described in the linked article to how brutally
companies like Facebook and Google resist treating their campus staff like
"real employees": [https://gizmodo.com/google-and-facebooks-security-guards-
are...](https://gizmodo.com/google-and-facebooks-security-guards-are-fighting-
to-ea-1826104897)

~~~
spaced-out
Why do you only name Google and Facebook when this is common practice all over
corporate America?

At least they pay their workers as opposed to the entertainment and fashion
industries which are notorious for abusing unpaid "interns".

~~~
Lammy
I can only have fair opinions of environments I’ve personally experienced, and
this thread is about SV companies.

~~~
neo4sure
The only issue I have with this is the people that are wrecking the planet are
not getting criticized at all IE BIG OIL. Somehow I think they are the winners
in all of this.

------
hprotagonist
_The Deliverator used to make software. Still does, sometimes. But if life
were a mellow elementary school run by well-meaning education Ph.D.s, the
Deliverator 's report card would say: "Hiro is so bright and creative but
needs to work harder on his cooperation skills."

So now he has this other job. No brightness or creativity involved -- but no
cooperation either. Just a single principle: The Deliverator stands tall, your
pie in thirty minutes or you can have it free, shoot the driver, take his
car,file a class-action suit. The Deliverator has been working this job for
six months, a rich and lengthy tenure by his standards, and has never
delivered a pizza in more than twenty-one minutes._

~~~
adamwong246
This book was so prescient, it even predicted the rise of a media tycoon
joining forces with American religion to rule the world through memes.

~~~
hprotagonist
Somehow i preferred a parody of ted turner to hobby lobby...

------
stanferder
> ...forces unleashed by Silicon Valley—rising housing costs, choked
> infrastructure.

Housing costs and choked infrastructure were unleashed by policies designed to
deter population growth.

What wasn't anticipated is that the incumbent residents would have less
economic power than the new arrivals almost overnight, putting them on the
"deterred" side of the bargain unless they'd already locked in their housing
costs by buying.

The unfortunate thing is that the incumbent residents least likely to benefit
from anti-growth policies, i.e. long-time renters and paycheck-to-paycheck
workers, are the first to bear the brunt of the shortages.

~~~
DataWorker
What anti-growth policies? And how greedy should we be in terms of the growth
target? Would you be ok with 1% or 30% in a decade? Serious question, what
level of growth do you think we should shoot for? Can you think of any reasons
we would want to slow down growth if it gets out of pace? Do you understand
basic economics on the matter because it seems to me like growth isn’t being
set via policy levers, it’s the job market which seems to thrive despite or at
least orthogonally to local public policy choices. In fact that’s the real
problem.

~~~
helen___keller
> Can you think of any reasons we would want to slow down growth if it gets
> out of pace? Do you understand basic economics on the matter because it
> seems to me like growth isn’t being set via policy levers, it’s the job
> market which seems to thrive despite or at least orthogonally to local
> public policy choices. In fact that’s the real problem.

I'm assuming GP is referring to policy that affects population growth
specifically - such as antiquated zoning restrictions that were made under
postwar suburban growth mindset and a lack of expansion of high quality public
transit. Superstar regions tend to be quite pro-growth with regards to jobs,
almost by definition.

Can you imagine if starting a new business in the bay area was as onerous as
starting a development on a new apartment building? Your entire seed round
would go to hiring lawyers to appeal the zoning board for an exception, and
your series A to fight off subsequent legal challenges by the community.

------
frankbreetz
I am surprised that getting rid of tipping is not a bigger political platform.
It would benefit both the consumer, by being more upfront about pricing, and
the workers, by being able to have a more predictable income. The only one it
wouldn't benefit is the companies who use tipping to display dishonest
pricing.

~~~
leetcrew
there's not really consensus on tipping. when I worked in restaurants, we
certainly didn't enjoy the variable cashflow, but my peers and I generally
agreed that made more money on average than we would at nontipped jobs of a
similar level. from the perspective of the customer, some people hate having
to figure out what an appropriate tip is, while others like being able to
essentially bid for service. I know people like to post studies that show it
doesn't actually work this way, but I damn sure remembered people who
consistently tipped well and I always made them a priority.

~~~
xzel
In some European countries people still tip for good service so that could
still be factor (the dynamic between increase waiter attentiveness to high
tipper). Hopefully, jobs "of that similar level" could pay a better wage in
general.

~~~
mercer
I always tip, and usually rounded up from at least 10%. Often even 20% if it's
a small amount. Mostly because I've worked service industry jobs and the
experience was awful compared to my current work.

That said, there's no pressure whatsoever on tipping, and while it's common
enough that the service workers aren't 'surprised', I regularly have friends
making a comment about how they never tip.

I do vaguely remember quite a few places having tip jars though, but my memory
is fuzzy on that.

------
virtuous_signal
I've had nagging doubts about this narrative ever since the first exposés
about Uber were coming out.

1) What job would the subject have been working say, 4 years ago, before
instacart expanded to the entire US? Would that job have been better?

2) Did Instacart destroy that other potential job, leaving Instacart as the
only option?

I guess these are variations on the theme of "No one forced you to take this
job". I'm all for these news articles being written, and for workers banding
together to demand better treatment. But at some point we have to realize that
if the company is not destroying other industries and creating monopolies,
then one can just choose to work somewhere else. Even better, one could try to
gain the skills necessary for obtaining less contingent work.

~~~
toss1
Two Issues

First, the problem is described in the article but not specifically called out

It is Bait-and-Switch.

The initial wages are rather generous, enough to get workers to move to their
platform from other potential employers.

The initial rate of $22 to deliver a basket of groceries looks pretty doable,
and if you can do a couple per hour, likely reasonably profitable.

Now it's down to $3. Not even close to any minimum or sustainable wage.

They committed to one sort of condition, and then are screwed, sunk costs,
missed opportunities, etc.

This has happened even worse under Uber, where drivers took out car loans
assuming one pay structure, then Uber changes the deal...

Second, the trope that if someone accepts a low payment, it must be OK.

At a theoretical level, that might be true, but the theory makes the bad
assumption that all actors in the economy have equal power in the transaction.
This assumption is massively false.

The vast difference in power between these workers vs the SV corps is exactly
what allows the exploitation. The choice to be exploited is only marginally
less horrible than the other choices.

For a clearer and more extreme example, you are lost in a desert dying of
dehydration, I drive by with a 5gal jug of water and a map to guide you to
safety. I say: "hand over the title to your house and I'll give you both" \-
will you do it? Of course you will, losing your house is less bad than losing
your life. Does that mean that it is a free and fair transaction? Not even
close.

What forces them to take the job is the paucity of other options.

There's plenty of research on how poverty is extremely expensive, and these
companies are exploiting that.

~~~
virtuous_signal
Agreed on the bait and switch. It is wrong. But the only reason it settles at
such a low equilibrium is that people still decide that it's worth it.

My unease with this focus completely on gig economy jobs is that they are all
_new_. There was no Uber, Instacart, Lime, etc. a mere 10 years ago. What
would Uber drivers be complaining about if Uber did not exist? Perhaps about
how inflexible and low-paid some fast food or grocery store jobs are. But the
fact that they don't switch to those jobs now, is proof that they consider
their gig job better, whether due to flexibility or higher pay.

Is there a structural problem with the economy as a whole? Sure -- what I'm
saying is that people will complain about whichever employer employs lower-
skilled workers, whether it's Walmart back then or Uber right now. But I don't
think there is anything uniquely evil about Uber.

~~~
toss1
Part of the reason they don't switch to other jobs is that squandering years
on gig jobs does zero for your resume.

The logic above is simply restating the same fallacy that allows for the
exploitation -- just because there's nothing better, it means that they are
good.

The fact is, that in a modern society, any job that does not allow it's
workers to make a living wage is not only exploitative, but it also
constitutes welfare for the employer -- the taxpayers subsidize the companies
to the extent that they subsidize their workers. WalMart has actual classes on
how to get govt benefits.

If the business isn't viable providing a living wage, it is not viable in a
modern society.

~~~
virtuous_signal
I don't think I've committed that fallacy because I've never called these jobs
"good" even if they are, for a particular person, the best among alternatives.

Whether a business deserves to survive based on how it treats its lowest rung
of workers requires a lot of value judgments I'm not prepared to make. Off the
top of my head, Walmart provides access to low prices (saving money) to orders
of magnitudes more customers, than workers it exploits. Their current starting
salary is $11/hr. Whose job is it to make sure someone has enough money to
live on? The term "living wage" ignores those who for some reason or other
don't work. Who gave Walmart the responsibility to provide their employees a
"living amount" of money, and whose responsibility is it for the unemployed?

~~~
toss1
Whether or not we call them "good", the fallacy is that if a person takes an
exploitative job as their least-worst option, that this is somehow acceptable.

Perhaps in some idealized distopia, but not in any kind of modern society that
is sustainable.

>>who gave Walmart the responsibility to provide their employees a "living
amount" of money, and whose responsibility is it for the unemployed?

The same govt that sets the minimum wage, pay 7 overtime requirements, work
safety requirements, etc.

The entire structure of worker protection was developed precisely because
previous generations finally figured out that the arguments you make are empty
- Allowing unfetterd exploitation of workers results in a few rich
capitalists, horrific Dickensian living conditions for most, and ends in
revolution with even worse conditions.

If you don't want to "make value judgements", you need only to look at whether
practices will sustainably improve society.

However, by avoiding those value judgements and the answer above, you are also
basically saying that it is perfectly OK with you that I took the title to
your house for that 5gal of water and map. I wonder if you are comfortable
with that kind of value judgement.

------
rb808
I think low interest rates are a huge part of this. Rates dropped again
recently and prices are taking off all around the world. Its nuts.

~~~
born_a_skeptic
It's supply and demand.

------
specialist
The Gig Economy is the concessionaire business model.

Concessions are pay to play, and the host grants you a meager allowance for
the privilege of making them rich.

Say you run a hotdog stand in a stadium. You provide the capital. You pay
rent. Aramark sells you the supplies (cups, buns, etc). Aramark provides the
labor, that you pay for. You pay for any spoilage. You eat any losses to
theft, returns, bad bookkeeping. There is no appeal. The host is the law,
their word is final.

Not franchisees, not contracting, not share cropping, not debt bonded, not
MLM, not small business owner. No, it's worse. None of these other
arrangements fully capture the entirety of the power imbalance.

(I'm embarrassed it took me this long to correctly identify this pathology.)

~~~
virtuous_signal
You're going to need to expound a lot if you're going to convince anyone that
(say) Instacart shopping is worse than debt bondage. In particular how do you
address the fact that the Instacart shopper can just _decide_ not to be a part
of that system? And if you are an aspiring grocery deliveryperson, why can't
you make your own platform to sell your services?

~~~
specialist
I don't know anything about Instacart. This story makes them sound like
Doordash.

As a driver for Uber, the gig economy exemplar, you provide the capital. With
debt bondage, the land lord (lender) provides the capital. On very unfavorable
terms, sure. But Uber is stealing your savings. Transferring wealth from your
past vs future self.

I didn't say anything about shoppers (consumers). But since you mentioned it,
in the concessionaire model, the host controls the choices. Sure, you can opt
out or smuggle your own stuff in. But sometimes you want a cold beer and a hot
dog.

Sure, you can always go solo. Try to keep more of the surplus (profit) for
yourself. Try to succeed in your own marketplace of one. Many jurisdictions
make that hard. But some manage it.

------
sschueller
Are these e-scooters profitable yet? At what point will the VCs pull their
money out?

------
spamizbad
I'm normally critical of SV culture where it's merited but this article is
just blaming SV for stuff it doesn't like

1) Silicon Valley isn't to blame for the fact that in the 90s landowners
tightly constrained the construction of new housing in an effort to maintain
the housing stock as an investment vehicle for existing homeowners. And while
supply/demand doesn't perfectly explain the housing market, the fact is the
United States no longer has the political will to build housing units where
demand is, because of entrenched landowner interests. You can't build "dense"
housing because it will "ruin" the character of a neighborhood. You can't
build subsidized affordable housing because it will "attract crime". So you
get nothing... well, that's not true: You're priced out, but maybe you can buy
a 2800sqft home in an exurb that's a 90 minute drive from your job. Too big,
too expensive, or too far for you? Too bad!

2) Scooters are good, actually: When we had them in Chicago were shown to
connect people between public transit access points. Unlike Uber/Lyft, which
cut into public transit utilization, e-scooters seem to actually encourage
public transit use.

3) The gig economy is a symptom, not the cause, of a larger economic shift
away from general prosperity. The social contract used to at least hint at the
idea that if you worked hard and did an honest days labor you would at least
be entitled to a roof over your head, food in your belly, and the ability to
support a family. There was a marked shift away from this in the 1970s, in the
name of "meritocracy" to allow higher earnings for those who "deserve" it in
exchange for lower wages for those don't. The late Paul Volcker is said to
have carried around a card containing auto worker wages in his pocket as a
reminder of this so-called injustice. Basically: the college-educated
workforce should be entitled to higher wages at the expense of workers who
don't. A somewhat tragic view now in an age where your barista may hold a
graduate degree. I think this thinking was more widespread among elite
babyboomers and (thankfully) hasn't been adopted by millennials or zoomers,
but the social stigma around the trades still exists.

~~~
CPLX
Your #1 is not a fair generalization. Here in NYC there’s a consensus that
building large amounts of dense housing is necessary to have a functioning
city and society. So it happens. Apartments got way way more expensive but a
lot of new buildings have started to push pricing back down.

California is different on this topic, and the Bay Area is positively
pathological. It’s completely reasonable to call out SV specifically for that
mindset.

~~~
SpicyLemonZest
SV tech companies, and their employees, are almost universally in favor of
building large amounts of dense housing. Google and Facebook are even building
housing themselves because they don't think local developers are building
enough.

~~~
CPLX
Apple just put 12,000 employees into a low rise complex surrounded by parking
lots with no access to mass transit of any kind.

------
unknown_apostle
Socialism every time the financial system needs to be bailed out with massive
liquidity injections. But ultra aggressive capitalism for lower and middle
class people.

~~~
34679
Socialized losses and privatized gains. It's become The American Way.

