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Against Sharing (jacobinmag.com)
198 points by smacktoward on Sept 19, 2014 | hide | past | web | favorite | 143 comments



At some point in the next 10-15 years, there's going to be some kind of reckoning over the "sourcing and allocating independent contractors" model of business. Right now, companies can insulate themselves from labor laws almost entirely by (a) not providing employees with equipment and (b) using structured customer feedback and expectations in lieu of training and supervision. There are instances where this model can be fair to all parties, but there are also obviously instances where it's abusive.

My intuition, which is probably wrong, is that the model fails most straightforwardly when there are monopsonies playing the "source and allocate" role. The trouble is that many of these companies work on a "winner take all" go-to-market plan, which almost dictates that they end up controlling the market.

There have already been low-grade rumblings over this in the past. For instance, the Microsoft "Permatemp" scandal. But we can see the model taking hold across the economy --- see: drivers, housecleaning. My guess is that the long-term resolution for this is going to be legislative, and it's not going to make companies like Uber happy.


JustEat and their companions are a nice example of that.

Essentially these are all simply lead generators with a feedback loop that have found a way to insert themselves directly into the billing process so merchants / suppliers become dependent on them. They can be a very hard habit to kick.

For instance, in NL we have 'thuisbezorgd' which started out very reasonable and is now positively extorting the restaurants they book their deliveries with.


In labor sourcing and allocation markets and under US law, these companies are essentially gaming the employment classification test: they're doing everything they can to appear to customers like a simple, monolithic, one-stop-shop (often with amusing disclaimers buried somewhere in their fine print) while adhering to the letter of the FLSA's classification scheme.

It probably won't take that many more items in FLSA's classification list to fix the situation.


It might be simple but it's definitely not easy to fix that situation.


> For instance, in NL we have 'thuisbezorgd' which started out very reasonable and is now positively extorting the restaurants they book their deliveries with.

Oh! I did not know that - do you have any good resources on that story? (I'm interested because I'm their customer)


Yes, definitely.

But not online (I can put you in touch with someone who is much more directly involved). The chances of retaliation are just too large.


Are you sure you are not their product?


Yes. I order pizza through them and give them money.


Delivery has failed to these recipients or groups:

info@superset.eu The email address you entered couldn't be found or is invalid.


Sorry, should get that fixed. Replace 'info' by 'egbert'.


it also had 'hello@' so I used that instead, did it arrive?

j.


> Right now, companies can insulate themselves from labor laws almost entirely by (a) not providing employees with equipment and (b) using structured customer feedback and expectations in lieu of training and supervision. There are instances where this model can be fair to all parties, but there are also obviously instances where it's abusive.

The problem is that the distinction is silly to begin with. If large companies have to provide various insurance and benefits but sole proprietors don't, the market is going to shift to the entity structure with lower operating costs. You either have to do it everywhere or not at all. But nobody wants to tell legitimate small business owners that they have to buy various insurance for themselves the cost of which would in actual fact make them uncompetitive against larger competitors.

The fundamental cause is that this is what capitalism does in markets where the supply of labor outstrips demand. What did people expect to happen when suddenly you could make $20/hour from unskilled labor? High prices spur an increase in supply and drive down prices. Works for labor the same as it does for bushels of wheat.

This is why the unionization attempts never work. Uber doesn't have a huge barrier to entry in its market. If you can provide an app to source rides which provides lower fares, customers are going to switch. So if Uber's drivers unionized and successfully demanded higher fares, customers would immediately switch to Lyft and Uber would go out of business. If Lyft's drivers then unionized it would create a market opportunity for a new competitor to come in and drive Lyft out of business by offering lower fares with non-union labor.

The problem for these drivers is not Uber, it's that there are many other drivers willing to do the same job for less money.


You act as if the 20th century never existed.

Your description why unions don't work is in fact the explanation why unions organize workers across different employers.

Your description why cheap labor will skip out on the unions is in fact the explanations why unions make economic sense for its members. You earn more in them than out of them.

Organized labor creates a level playing field across markets, simply because they have a shared interest with the unionized companies that they thrive and provide work for its members. It is a natural part of a healthy free market.

I don't think the problem described in the article is particularly unique or interesting. We've seen it before and we know the solution. What is new is that workers are called contractors and not workers, but the markets dynamics is largely the same.


OT: He writes as if the 20th century never happened. We have no idea how he acts. The distinction is important for civil debate. Among other things: we may be miscontruing, or he may be expressing his idea imprecisely.


I think it should be fairly clear from the context that it is the act of self expression that is alluded to, in this particular case the act of writing.

It is similar to the use of the word act in "you act surprised". This is something you can say, even in writing, and people will generally understand what is meant.

What is important for a civil debate is not to pick on words, but to try to understand one another. If someone you are responding to writes something that can be understood in several ways, choose the one that is more flattering to their side of the argument.


Sure. The last sentence you wrote is a restatement of the principle of charity, which is something HN is supposed to embrace but manifestly does not.


> The last sentence you wrote is a restatement of the principle of charity. Do you mean "clarity" instead of "charity"? sorry I wouldn't bother on a simple typo if it wasn't for the word "clarity".


Charity.


> Your description why unions don't work is in fact the explanation why unions organize workers across different employers.

That doesn't work when the employer's market has low entry barriers and the employees have low skills. As soon as you unionize all the existing employers you get a new employer hiring non-union employees and putting all the union employers out of business by charging lower prices.

> Your description why cheap labor will skip out on the unions is in fact the explanations why unions make economic sense for its members. You earn more in them than out of them.

It's not the union employees who go to work for the non-union employers. It's the unemployed. Until the non-union employers charging lower prices cause the union employers to lay off workers or go out of business, at which point the previously union employees become the unemployed and go work for the non-union employer since they can no longer work for the union employer.

> Organized labor creates a level playing field across markets, simply because they have a shared interest with the unionized companies that they thrive and provide work for its members. It is a natural part of a healthy free market.

Organized labor is an attempt to create a cartel of workers to balance a cartel of employers. The problem is it turns into a mess unless the balance is even and there is nothing to ensure that it is.


I'm not sure I follow. It sounds like you're suggesting that for any costly responsibility placed on employers, there will always be a laborer willing to work without it. Ok, sure. There are also surely families who would be willing to send their children to work in a mine. But that doesn't happen anymore.

What am I missing about your argument?


>I'm not sure I follow. It sounds like you're suggesting that for any costly responsibility placed on employers, there will always be a laborer willing to work without it. Ok, sure. There are also surely families who would be willing to send their children to work in a mine. But that doesn't happen anymore.

The problem is people want to pretend that the choices they're making are not trade offs when they are.

You can't give the drivers a 50% raise and expect the money to come from Uber when Uber is taking 20% and have their own expenses. So the money has to come from passengers. But that violates the narrative of the evil corporation oppressing the poor workers. The passengers are mostly regular working class people. Transferring wealth to the working class from the working class is hardly social justice. Meanwhile supply and demand is still in operation so when the cost of rides go up the demand goes down, which means some of the drivers are going to lose their jobs and some of the passengers are going to try to drive home drunk.

The unions like to take credit for every good thing that came out of the 20th century, but the reason American kids today don't work in the mines has less to do with labor laws and more to do with the fact that a) modern American mines and manufacturing are highly automated and b) American families no longer need to send their kids into the mines.

Which is exactly how the labor situation should be addressed. Automate every crappy job we can so nobody has to suffer them, then take part of the massive productivity enhancement that brings and use it to provide a basic income. The basic income allows people to turn down unreasonable working conditions without starving and to make a living with a job that has reasonable working conditions but low pay.


People don't send their children down mines any more because there are children in the 3rd world who go down mines or work in factories for less money.


People who lucked into a first world life don't send their children down mines any more because there are children in the 3rd world who go down mines or work in factories for less money.


If your point is that people in the first world are complicit in benefitting from child labor, fair enough. But that's not exactly the topic. The topic is, we stopped child labor here, and, in fact, we did it in era of far less globalization than the present.

I don't think that there's any historical truth to a notion that we simply one-to-one replaced domestic child labor with foreign child labor. And even if we did, putting aside the morality of it, why would it be a replacement and not a supplement? That is, if a hypothetical person is okay with child labor, why not have both their children AND foreign children go down into mines?


> The problem for these drivers is not Uber, it's that there are many other drivers willing to do the same job for less money.

That is the point of a union.


> If large companies have to provide various insurance and benefits...

> The fundamental cause is that this is what capitalism does in markets...

I'd argue that the current employer-provided insurance scheme in the U.S. is not an inevitability of capitalism but a historical accident resulting in nonsense-but-untouchable tax code. Health insurance should be taxed as income or should be deductible on personal income taxes. Employers-provided healthcare shouldn't be discounted.

> the supply of labor outstrips demand

This is a good point, though. And if the surplus of unskilled labor is a problem, why hasn't relaxed immigration enforcement come up in this discussion yet? If labor doesn't have enough leverage, wouldn't flooding the market with unskilled laborers be a much more important factor than employment status and business models?


IMO, immigration has very little to do with the problem, and is more of a political whip.

We as a country are simply eroding our own need for (or at least focus on) unskilled labor. In fact, we're eroding "almost" all of our labor, unskilled, skilled, artistic, etc... Engineers, software devs/coders, and machinists are some of the only ones that have really escaped the purge, and even they're being eaten by foreign labor and technology. By its nature, entrepreneurs who want to make money try to find areas of the market where there is a cost/supply, productivity, or other form of inefficiency, and then fix it.

And they're doing a good job.

Whole ranges of American labor have been automated, crowd-sourced, or offshored right out of existence in the US (and world). See this chart by the MIT Tech Review that talks about it. [1] In particular, note the effect of changes in the service industries, such as Uber, which already make up a ridiculously large portion of our economy. Purely speculation, but I'm generally on the side of folks that think "first world problems" is very shortly going to represent having tons of productivity and no actual jobs.

[1] http://www.technologyreview.com/sites/default/files/images/d...


I just said that, especially in an immigrant-heavy industry like driving, it's odd that the subject isn't even broached.

I'm actually pro-immigration, but I do think wages and working conditions for native-born Americans would be better if large swaths of the economy weren't dominated by imported labor. It just seems like we're trying to have our cake and eat it to with respect to open borders and labor.

I do suspect that longer-term trends point to less demand for "unskilled" labor, but I believe that people have an unquenchable appetite for new things (artisanal carbon-neutral Bolivian gherkins) that can't be easily invented, sold, and managed by computers, even if certain tasks are performed entirely or partially be robots.


>Health insurance should be taxed as income or should be deductible on personal income taxes.

What about other startup benefits? Laundry, parking,air hockey tables, free food etc? Isn't the whole point of these benefits to increase effective salaries without increasing taxable wages? I've heard talk of looking at total employee compensation from an HR perspective, but the government doesn't see those as earnings.


Benefits like those would be very difficult to tax in a practical way, and would definitely have undesired consequences. The better your work environment the more the company withholds from your check? No thanks.

Health insurance is entirely different, as it's fundamentally monetary in nature (in the form of premiums and underwriting other expenses). Not only should it be treated as (or more like) income, but having it funded so much by employers mean that a lot of people don't even know what they are paying for health care. It keeps them uninformed, which is yet another way it's not a "free market".


They wouldn't be very difficult to tax, you could easily tax them by looking at how much they cost to provide, divided by the number of employees receiving them. Services all have a price tag.

Health Care, like most services, is something we pay for. I agree that it would be better if it were less byzantine and it would be much more practical if healthcare were in priced independent of employment status. As it stands though, practically it is quite similar to any other benefit, except that sometimes, the cost is split between the employer and the employee. If you applied this logic to free startup food, it would be akin to allowing you to opt-in to the free food if you wanted it, with the company covering some percentage of the cost.

_

Its not a practical matter of whether or not we want to be taxed more, its how much we value the society our government enables and how much more we want to enable it. Our government could use a great deal of work to become more efficient, but that is not to say that the projects facing it don't also have a nearly infinite price tag (things could always be better)


> They wouldn't be very difficult to tax, you could easily tax them by looking at how much they cost to provide, divided by the number of employees receiving them. Services all have a price tag.

I meant more that the second-order effects would probably be negative. I'm not interested in paying "my share" of tax for a new pool table, can I opt out by swearing that I'll never use it? Does my employer then have to police who uses it? Are there enough people willing to pay for it - even with the negative feedback of people opting out making it more expensive for those who opt in?

I think when you get into the area of free services (day care, dry cleaning, etc) it's much murkier. In many cases the free benefit replaces one that I would normally pay for, so it's not in the end much different from (say) a cash day care allowance.


Unionization do work. Just look at current labour laws now and 100 years ago. Usually unions band together and elect politicals who change the law to benefit the worker.


It's not just labour conditions that improved. All conditions improved. Houses are nicer, food is plentiful, streets are cleaner....

You could say that it was due to new legislation in those areas but it could as well be that we simply became richer and richer people buy various comforts.

Post hoc ergo propter hoc and all that.


Compare USA today to (say) western european countries now. Same level of technology, yet the employee standards (how hard it is to fire, how munch paid time off there is, employee anti-discrimination law) are higher for lower paid jobs in western europe.


Sure but Americans are more productive and make way more money. It's a trade-off, not a lower standard. The standard may be even higher since many Europeans trade labour protections for more money by starting single-person companies and still can't reach American wages.


> The problem is that the distinction is silly to begin with. If large companies have to provide various insurance and benefits but sole proprietors don't, the market is going to shift to the entity structure with lower operating costs.

The costs are not usually lower; contractors can and should be charging a higher hourly rate than they would receive as staff, for exactly this reason: to cover benefits and ancillary costs.

Companies prefer contractors not because of lower employment expenses, but because it avoids a whole raft of employee/employer liability related to hiring and firing. Unlike employees, the liabilities between two companies are usually nearly completely constrained by the language of the contract.


Considering how well politically connected these labour brokerages are and how little bargaining power labour has in the US, I cannot see a clampdown on 1099-type pseudo-employment happen. The country would be better off if it took place, but the political realities are against it.


http://realtytimes.com/agentnews/agentadvice1/item/27521-201...

http://america.aljazeera.com/opinions/2014/5/wrestling-labor...

I don't hold as much hope for this as you do. It's not a new situation, although the fact that I'm citing really recent coverage here is evidence that there may be some movement in the air. There are a lot of lobbying dollars going in the other direction, though.


I spoke with my UberX driver about unionization the other day; it's honestly the only way forward for the drivers.

Without unionizing, the prices will continue to be cut and they will continue to lose out. Going even further, lots of people are talking about the job creation boom associated with the sharing economy. However, in the case of Uber and Lyft, that's short term. In 10-15 years, does anyone actually think people will be driving cars for Uber in San Francisco? With the way things are going, auto-driving cars will take their place.

Unions could lobby the state legislature to make for auto-driving cab or ride services illegal without a driver in the car. Right now, they could make a serious case for that as a safety thing, since the technology is unproven. In 5-10 years, that won't be the case.

So yes, from the driver perspective, they have to unionize. If they don't they're finished sooner or later.


That sounds pretty ethically terrifying. Car related death and injury is something we put up with today because it is a "necessity" for the way we run our society. With the advent of driverless cars, politically keeping humans in the driving seat will mean keeping around these unneeded deaths solely for the sake of a special interest group. Even if they aren't driving but merely sitting there (when the argument is purely job based and not safety based), the result would be that the cost of running a driverless car will be similar to a car with a driver, thus making the transition less economically obvious and slower, in turn slowing down the reduction of accidents.


And it is a near-infinite performance multiplier. Every driverless car is very useful work being done without anyone having to do work, besides maintain the thing. And Tesla is leading the way with repair facilities that are almost completely automated themselves, and when you have autonomous vehicles capable of driving around other defective goods to automated factories for repair, it becomes even more profound.

Every worker replaced by a robot is tremendous productivity gains for the economy. Or, moreso, for their boss. The sooner we accept that many people will soon be unemployable, and that is a good thing, the sooner we can move on with our society and not need to try forming unions to prevent progress out of fear of jobs that have no reason to exist and thus are a drain on everything.


you have to solve the "unemployable people" problem first, before you take away unions. Unions at the very least serve to slow the process of worker replacement so that technological changes don't thrust large masses at once into instant poverty, which has its own negative effects on the economy.


I don't think giving people useless jobs is superior to letting more efficient tech replace them. Instead of just wasting a potential efficiency gain, the government could use a part of the gains to either give the resources to workers directly or spend on training and education. Anyway, there are plently of useful things you could do with workers besides just wasting the efficiency gain.


When did being a trained auto mechanic become a 'useless job'? It's easy to hand waive away all this work as bullshit, but so is most of software development. Yes we want to figure out how to make it more productive, but completely eliminating jobs and making people unemployed has a huge negative cost. When you have someone working FT they are growing their productivity through experience, plus training, plus any process improvements. If they are unemployed, their productivity is atrophying away.

The difference between slowly transitioning from one role to another and just getting cast aside as unemployed is profound.


I hadn't seen the degrading skills side, so good point -- perhaps a little cushion is due. But it would be even better to instead spend the freed resources to train them to do a more demanded job (yea I didn't mean useless, just not-demanded), assign them into related government jobs, or other skill-conserving tasks!


Who pays for those "plenty of useful things"?

Since we don't want to pay higher taxes, the government can't do it, since we don't want to make our infrastructure, national parks, etc into for profit companies, neither can they. A big problem with all of this free labor thats becomes available, is you need another company or the government to hire them to do something, the money has to come from somewhere.


The increase in efficiency adds to the economy: taking a taxi example, the taxi company doesn't have to pay workers anymore, so those resources are freed. The government could simply tax a large part of that freed income (but not all of it of course) and use that to train the workers. The government doesn't even need to tax the resources directly, it can confidently pay assistance to the workers by increasing taxes anywhere since the economy essentially increased in value "globally".


An increase in efficiency only leads to an economic benefit if the aggregate demand can go up...freed resources would be a balancing act in this case. Is the marginal reduction in cost of a taxi worth the loss of all the earnings and expenditure of that person? Probably not, since not every dollar saved ever gets spent, while a person has a necessary level of consumption. Things have to be significantly more efficient to offset the loss of jobs.

The worker after all is suddenly saddled with being negatively valuable, in that he has to continue to meet his living expenses, and has to be retrained, either at the cost of his employer, himself, or the government OR he can go on welfare.


Note that this argument only applies to skilled workers; taxi divers are not highly skilled.


Robots cost money to build and maintain. Eventually if enough people are displaced from their jobs by their use, the cost of labor will drop. At some point it will make it cheaper to employ people, than use robots for a given task.

(That assumes that these people aren't used for something else considered to be useful for society: Consider the people who were displaced by using the computer to automate calculation or telephone operators. Basically, if robots cause mass unemployment in the long term people will become cheap).


I get really riled up when people are simultaneously cheering the low interest rate environment that we have and lamenting the decline of employment here in the US.

At 1% interest a $1mm robot costs about $4.5k/mo on a 20 year note. At 6% it's $7k and at 10% it's nearly $10k.

When interest costs are so negligible it's very hard to justify hiring people and having to deal with all the regulations regarding employment. That might be another $500/mo or more and then there are benefits on top of that.

I'm not necessarily anti-regulation but I think a better statement would be pro-simplification. Don't eliminate protections for workers but do make it easy to comply by systematically refactoring the laws to get say 90% of the desired effect with substantially less words, statutes and loopholes.

Further, get the interest rate up to something approaching reasonable. Yeah housing prices will go down and people will be under-water in houses but at least the labor market can get reasonable again. Better that people have to declare bankruptcy but have jobs to continue to live and eat than to have a great priced house and no jobs to speak of.

The idea that the Fed is doing a great job of managing the economy should start to look more and more like a joke if you pay attention.


In the long term, I would rather start thinking about whether we really want to keep driver-type jobs around. I think people have to start to accept that certain types of mindless jobs will be gone sooner or later, and that (as hard as it might seem) everyone needs to educate themselves and work towards jobs that cannot be automated.


This is the sort of thing you generally hear from people who assume their job is not among those that can be automated.

Many of those people are going to be unpleasantly surprised.


On the contrary, I think anyone who is thinking seriously about automation acknowledges that their job is on the list, especially for a lot of software work like debugging, updating libraries, refactoring code, etc. There's nothing wrong with that. Automation means more free time to do things people actually enjoy, but only if we properly distribute the benefits. The challenge is not to prevent automation of any kind of work but rather to ensure that people are fairly compensated for that automation and all the benefits don't go to the people at the top.


This. I'm glad some people see this as a problem. We can only automate so far without providing credits, or redistributing wealth to some degree. If we decrease the number of jobs, and don't make any attempt to provide those "left out" of the economy with a reasonable income, we're going to systematically lower Aggregate Demand in our economy. There is no stimulus package that can effectively combat consistently falling Aggregate Demand.


Letting people artificially keep jobs that could be automated cheaper and safer is not giving the people a job.

It is giving the people daycare. I do not relish the thought of a kindergarten society.

Note: I have nothing against spending on unemployed people (education etc) or welfare spending in other ways, I just don't like keep-busy kinds of activities.


And that changes exactly what? Yes, most people whose jobs will be automated think they are safe. However, it is very likely that automation of jobs is a Nash equilibrium outcome and fighting against it without global consensus is useless.

We should channel our efforts to other ventures that would provide food, housing and health security for those losing their jobs due to automation.


That was grandparent's point. As long as software keeps automating tasks, there are very few jobs that are safe and most of them are in developing or maintaining software that automates the jobs.

Software can automate a really huge swath of jobs. From research (performing experiments) to art to physical checkup, it's a list that keeps growing.

While I essentially agree that such programs should lead to extremely high taxes followed by redistribution of tax money to people, right now it's not the model most western countries are moving towards.


You also hear this from people who know their job will be automated as well, but understand that this is good for humanity.


There won't be enough jobs. Not even close.

What's needed is a different path to remuneration. Or a different way of allocation. A market failure that cannot be patched has already arrived in Europe and will come here, too.


In cases like this, unions would be creating negative externalities for the society, while supporting outdated technology. It is not sustainable, the cause is lost.

The best way forward would be reeducation and training of professional drivers. One way to fund it would be recognizing the imminent future and creating a special tax on Uber-like businesses to channel funds toward driver training programs.


So, what are they going to do?

We're automating faster than we can create new jobs. In the long run, we'll figure something out. In the long run, however, we'll all be dead.


> Going even further, lots of people are talking about the job creation boom associated with the sharing economy.

Is there any evidence of this? My assumption was that people are using Uber in situations where they otherwise would have called a regular taxi.


I think the demand for taxi services has gone up since Uber entered the marketplace. Uber made it easier to call a cab and see when the cab would show up. Since the product was easier and better, more people wanted to use it.

I don't have any hard data to support my claim. I can provide some anecdata about waiting for a Yellow Cab in SF in the mid 2000s. Sometimes they would arrive and other times they wouldn't.


I actually think, that auto-driving cabs would be bad for Uber's business model. There model is to shift all risks and hard assets (car) to contractors. With auto-driven cab the contractors could run a lot of cars or even for several companies or Uber had to run them on their own. With the necessity to carry the risks and all the costs.

But I agree, without a union the drivers won't get anything done. I think also the state should see those drivers as what they are, Uber employees. It shouldn't matter what Uber calls them. If someone works full time for one company they are employees of that company.


How is Uber considered "sharing economy"? If the term is to have any meaning, then it refers to people having spare capacity in an asset and allowing others to use it.

Airbnb: Have a room in your home or can leave your home, and allow others to rent it.

Taskrabbit: Have extra time you can sell

Say what you want about the ethics of either company, but users are free to negotiate prices.

A "sharing economy" car company would monetize spare capacity in cars and allows drivers/passengers post rates.

But that would be complicated. So Uber has adopted a fixed rate model. Whatever it's virtues, it's not sharing. It's just service for hire at a fixed rate.


Outside of split ownership, the word "sharing" becomes a bit of a misnomer. What Airbnb or Uber does is not sharing in any generally accepted sense of the term. That is to say, these are not co-ops in which the owners and the users are one and the same. Rather, they are creating a market for very short-term sublets. There is precisely zero sharing involved.

And that's just fine. In terms of producing greater efficiencies from a fixed stock of privately held material resources, this approach can be a very good thing. However, you have to be careful when dealing with people who are too nervous or deluded to be honest about what they're actually doing, and who opt for a thick slathering of bullshit instead.

It would be wise to ditch the dishonesty a.s.a.p. Sticking with it runs the risk of being disrupted by organizations that can deal with regulation more effectively thanks to greater comfort with general transparency and basic integrity.


I agree. If you're doing Uber full-time it's not sharing at all. It's just business.


Not even a business. From the sounds of it in the article, it seems that these drivers think that they are employees. They even "bought and rented cars in order to..." do this activity. Well, the examples cited anyways, not all of them.

I can totally see why people are giving Uber and Lyft a bad rap now. Because the drivers are treating it like a job. And no wonder that they're now using employee-like terms such as "minimum wage" and "living wage".

Not to mention that so many people are probably desperate for an easy (to get and to hold) job like this that they've flooded the market. No wonder that Uber/Lyft is able to command their prices.


There are pleanty of people using a property fulltime for AirBnB.


Agree, but there's a difference between renting out an investment property full-time, renting out a spare room, and renting your place while away vacation. The later two are what I define as "sharing economy", while the former is more of a business transaction.

AirBnB and Uber facilitate both sharing and business type transactions, but the article seems to mixing these up to me in terms of the problem being expressed.


I don't like the phrase either, for this reason.


Uber is not a monopoly and the barriers to entry are lower than people think.

Now that the idea is proven, there's nothing stopping more competitors from building local app driven services to compete with them.

If you can organize thousands of drivers, you shouldn't bother with a union. You should just have them collectively fund their own driver owned app and compete with uber instead of asking for crumbs.


You might be underestimating the value of brand awareness.

Sure, it might not be hard to write a ride allocation app that works like Uber. But getting a large number of people to change their habits to use the new service instead of Uber will be hard. Just getting them to be consistently aware of this new option will be expensive.

As a first mover, Uber benefited from enormous amounts of earned press. An Uber clone today will not get so much free coverage, and will have to spend money on marketing. That is a significant barrier to entry.


>> Uber is not a monopoly and the barriers to entry are lower than people think.

That is actually a large part of the problem. Competition from Lyft will force Uber to lower fares. Competition from a driver-union-app would force them to be even lower.

At some point, lowering fares will directly hurt uber. Prior to that point, it's hurting the drivers because uber doesn't care at all about drivers costs, and drivers are either not good at taking that into account, or have been screwed by falling fares.


Presumably, if prices are driven down enough by competition, then price vs quality differentiation. Cheaper prices vs better/nicer drivers.


Creating a driver-owned replacement for Uber's service could certainly work to give drivers a better deal, but unionizing existing drivers is a better means to that end. Uber certainly adds value—they've got a good app, and it's great that I can land in a new city and know the same service will work the same way.


If the drivers had an effective app, then they could provide an api for Uber, Lyft, or whatever brand to route rides into. The rate paid to the driver, possibly combined with convenience and other qualitative factors, would naturally determine placement. There would still be value in building a brand that customers recognize, but the overall system might be more sustainable.


Part of the blame needs to be on the drivers, who are likely bad at estimating the true cost of operating a vehicle. Uber could probably do better at making this clear, but it's not really in their interest. Long story short: traditional taxi pricing seems expensive but is actually pretty fair once you account for costs and a decent wage.

Airbnb has given the sharing economy an inflated reputation, because they feed off a great business model: renting a scarce asset (land) with minimal marginal cost.


> traditional taxi pricing seems expensive but is actually pretty fair once you account for costs and a decent wage.

This isn't true in some cities, such as Boston, where weird politics have driven the cost of a medallions, required to operate a taxi, up to ridiculous levels (The Boston Globe did an excellent article series on this http://www.bostonglobe.com/metro/2013/03/30/spotlight/9eVWW7..., there are a lot of factors that go into cab fares, and some of them genuinely are stupid and antiquated.


It's easy to put blame on the drivers who have no visibility to Uber's pricing and potential revenue. It hasn't been talked much in public but Uber is also providing financing for drivers.


The biggest unmentioned thing I'm noticing, is when are these car hailing apps going to start competing in how much of a cut they take? The marginal cost of their software is near %0.

When will amazon-uber come up and say to uber: "Your [20% profit] margin is my opportunity".


The vast majority of that 20% goes into overheads associated with operating the service - e.g. insurance, background checks, etc.

What's left to cover engineering & profit is probably only 2-3%.


The drivers have to pay for their own insurance, so it's not that. Hard to see how a background check requires 20% of all revenue.


Uber has their own insurance as well, in case a driver isn't insured. And the "etc." part of what I said is probably no less than 100 major things, so seems pretty silly to to make that statement.


Do you have a source for that?



Rockefeller recognized that potential weakness in Standard Oil, that's why he focused on volume over margins. He knew that if Standard ran with high margins, he would be provided an opening for a competitor to best him.


I'm no marxist, but this is exactly what Karl Marx railed against: exploitation of the masses by capitalists. Of course a market economist sees this as an optimization of a market. If people suffer enough what usually happens is change, sometimes violent change.


> I'm no marxist

You will be when your job gets automated. The challenge is to be able to think ahead of that event and not be left to react to it.


My job will be the one making the automation of my job. So thinking ahead of the event will mean doing a poor job.


Uber must have a lot of drivers if "Arman, an Uber driver in LA" isn't specific enough to be identified.

It would be tragically ironic if this article resulted in his being 'deactivated'.


Elsewhere in the comments someone claims to have found his Facebook profile, and perhaps they did. But as a counterpoint, my hometown of Glendale (Northeast LA-adjacent) has the largest population of Armenians anywhere in the Western Hemisphere. Lots of Armenians == Lots of guys named Armon/Armen/Arman. We can safely assume at least two of them drive for Uber.


Not sure if that article is really about shifting risks from corporates to workers and weakening their protections.

It is more like a kind of gatekeeper discussion. Digitalization has moved the gate keeper role from media dinosaurs to agile startups and companies.

Uber can de-activate their users as well as Facebook can reduce organic visibility of fan pages or Google may kick you out of their index. The open internet that we have is still built upon the gate keeper behavior.

In the Uber case that clearly affects individuals, like taxi drivers, but in the case of Facebook, Twitter and Uber that can affect large companies, too.

So, may I read this article also as a manifest against "attention" monopolists?


> Not sure if that article is really about shifting risks from corporates to workers and weakening their protections.

Jacobin articles are rarely 'about' anything. Their primary mode of reasoning is like folk etymology on a discourse level. There's usually a fair amount of factual evidence included, but it's forced through a narrative -- that's there for the sake of appearing novel -- into a conclusion that doesn't logically follow from anything presented.

(I haven't read this one yet, but if it's anything like Against Chairs[1], my criticism should apply. Admittedly I'm doing the same thing in this comment that I'm criticizing Jacobin for doing.)

[1] https://www.jacobinmag.com/2012/04/against-chairs/


The problem is when one technology company that uses this model reaches critical mass stage, they create a chicken-and-egg problem for anyone that wants to attempt to disrupt their market. You can't get contractors without clients and if you don't have contractors, clients won't want to wait. The problem has been getting worse with the rise of the internet and global connectivity as these companies can more easily expand into an entire industry and quickly dominate the technology side.

This domination of the tech side of old industries makes it especially hard for tech companies that want to disrupt the "old" companies because the market often assumes there is only room for one technological provider/disruptor per market service. This is similar to the first to market principle. If you get your service out there and generating new users before your competitor, you have an innate advantage over all the competition AND a great advantage over future companies using a similar model to yours. In the process of shutting out new, small tech companies, the competition is narrowed down to the "old" companies/interests in which the tech company has a clear new, tech-inspired advantage over, else why would they be called a disrupting tech startup?

So you have situations where 1 tech company, slowly morphing into a giant, effectively shuts out both the entrenched interests who cannot adapt fast enough to stem the hemorrhage of customers and the new interests who can't compete on either price or availability without a long ramp up and generally necessary venture capital. This creates a situation in which the contractors are taken advantage of, due to the lack of competition and complete monopoly that is slowly being acquired by the tech company.


Several über drivers are also lyft drivers. Über is trying to prevent this by requiring drivers to accept a minimum percent of rides, but a company could get critical mass in a large city using 5% time from a large number of drivers. Growing from there would easily enable full time drivers.

Which means über can only maintain a monopoly with thin margins which is generally considered ok.


When I first saw Uber it seemed obvious to me that drivers would be squeezed. In the regulated hodge-podge of companies that Uber and Lyft are replacing, drivers didn't make very much. Uber and Lyft drivers got a "raise" when they signed up, but that came from Uber and Lyft's cash-on-hand and their rally to sign up drivers.

The fact is that there is no scarcity of people who can drive, so prices will be driven down to the point where a consumer can make a choice between a college student who is part-timing with a ten year old car and a full time driver with a brand new Prius. You might pay a small premium for the latter, but the former will be dirt cheap and they'll be paid next to nothing.

AirBnb is a sharing company that won't have this squeeze because the supply of properties is more bounded than the supply of drivers.


To clarify, neither Uber nor Lyft would allow someone to drive a 10 year old car... And I would think a lot of people using those services wouldn't get into a 10 year old car.

So even if there was a service that allowed old cars, there would probably be some segmentation.


That's my point. In this model it's a race to the bottom.

If Uber or Lyft don't take advantage of the supply of drivers with 10 year old cars someone else will. So Uber and Lyft can either take that low-cost market under a different name and hope that they can maintain income at a quality point that doesn't pollute their brand, or someone else steps in and Uber/Lyft become merely services for people who would take limos.


Both Lyft and Uber vary their requirements by city, so they may have such allowances somewhere. When Lyft and Sidecar started in SF all they required was year 2000 or newer.

Also, neither Lyft or Uber has much control over drivers signing up one car, then using a different one. It happens all the time.

Finally, many limousines are actually this old or older.


Against 'Sharing Economy'.

Maybe I'm splitting hairs, but does it bother anyone else that the 'Sharing Economy' is not sharing at all? Renting your assets out for use when you're not using them is entirely different than giving them to someone else to use and expecting nothing in return.


Yes.

I think that this type of employer-employee relationship described is just being rebranded as "sharing economy" and "disruptor."


From a recent Oxford Economics study sponsored by SAP/SuccessFactors:

"As the economy evolves to a state where nearly everything can be delivered as a service, companies are increasingly tapping external expertise and resources they need — and on an as-needed basis — to fill skills and resource gaps and to accommodate rapidly changing business and customer demands. That means more temporary staff, more consultants and contract workers, and even “crowd-sourced” projects. In fact, of those companies surveyed as part of Workforce 2020, 83 percent of executives say they will be increasing the use of contingent, intermittent or consultant employees. " (Source, Workforce 2020 study, Oxford Economics, SAP)(http://www.successfactors.com/en_us/lp/workforce-2020-insigh... - need to register to download)

I laughed when I first heard the term "contingent labor". We all know that companies like Uber, and a whole host of companies that rely on contractor drivers/deliverydrivers will be the first to buy self-driving cars. That Uber would tout their job-creating function is pretty low. They would love to cut out the drivers and run 24/7. The sad part is, engineers could probably figure out optimizing algorithms that would make the service better if it didn't have human drivers, and maybe even cheaper.

I haven't reached the point yet where I give up on these kind of services, but its close. I feel badly that we aren't coming up with jobs as fast as we are coming up with ways to get rid of them.


I just want to know who owns the cars. To me, it is beyond belief that each of the Uber and Lyft drivers I've had ponied up and bought a fresh new car to participate in "sharing."

There's more polish on an Uber vehicle than any car or cab in my neighborhood. It seems odd to use the word "sharing" for something that seems like ultra professional service - even on the low UberX end.

Is Uber offering financing?


If any other company did what uber does, they would be branded as evil, and the mob would have pitchforks out, and calling for boycotts. They exploit their employees, they skirt and out right break laws, they appear to commit fraud to disrupt competitors. Yet because they perform a service that many here like, many sing the praises... And keep using the service.


Economists could do some solid and useful work by researching historical as well as current cost/benefit scenarios. So much at least of general public knowledge and reporting in the realm is focused upon "prediction". How about painting some clear pictures of what has happened; why; and who paid and who benefited?

And as our knowledge, e.g. of long-term health effects, continues to grow, such topics remain open for further analysis and refinement.

Perhaps Ken Burns could put together a series on the economic history of the U.S., for example. (Perhaps those spreadsheets are more interesting when subjected to a slow pan... ;-)

Seriously, though. Last year I got sucked into yet another discussion of recent politics, and I suggested putting the whole situation under a comprehensive cost accounting analysis. For the other parties in the discussion, it -- a bit surprisingly, to me -- seemed to be something of a "lightbulb moment".


The original Jacobins were mostly libertarians and would presumably like Uber's model. The idea that they were anti-capitalists is wrong. In the US, "Jacobin" was used as a pejorative to describe Jefferson.

It's unfortunate people associate the Jacobins and the Revolution with Robespierre, when it was much more Thomas Paine-esque.


It seems like this article is about Uber, not the sharing economy as whole. We don't have enough data to say if a "sharing" economy is viable or ethical. Companies skirting around laws and exploiting their employees (or whatever they choose to call them) such as Uber don't reflect well on this, though.


I have an intuitive understanding that these "socialist" publications about the danger and perils of sharing economy are absolutely useless.

Either developed countries implement some variation of basic income or the social order will go down in flames. Unskilled labour, such as taxi drivers, will be commoditized and become interchangable. If anti-Uber initiatives and quasi-unions will get more power it will only increase the incentives to getting self-controlled cars on the roads. The automation-worker conflict can't be won by humans and can't be wished away.

Socialists (an outdated term for the society to come) should choose their battles much more wisely and concentrate efforts on developing and implementing of sustainable models of creating and redistributing wealth geared towards 90% of population.

Anti-Uber sentiment and the likes aren't sustainable and will fail.


I would call myself a socialist and my biggest reason for disliking Uber is that it is filling the highways with drivers who no longer have valid insurance, and whose vehicles are not adhering to the level of maintenance checks usually required for commercial vehicles that spend all day on the road. So anti-Uber sentiment can exist for much more mundane reasons like insurance coverage.

The comoditization of labour (skilled and unskilled - don't think that you are immune) is already well underway anyway, and Uber makes little difference to the process. The number of Uber drivers is tiny compared to the number of warehouse pickers, fast food workers, cleaners, social carers, designers, labourers, mechanics etc etc who are on zero hours contracts or have been reclassified as self employed contractors.

The main reason to talk about Uber is that it's in the public consciousness at the moment, not because transport drivers are a special case. I guess it also has a lot of high profile backers. So we can talk about how Paul Graham thinks European countries lack 'entrepreneurial spirit' because they want drivers on their roads to be insured. Uber is a case where the capitalists got their order of attack slightly off. They needed to 'disrupt' the idea of insurance first, because at the moment there is a widespread understanding of the need for driver insurance and going against that just makes you look like a massive asshole. It's always helpful in a debate when your opponent keeps scoring own-goals, as Ubers cheerleaders do.

The example of Uber is appealing, because it's probably an easy victory. Maybe Uber will get insurance laws rewritten and in a few years we will all be enjoying the freedom of driving on roads without the regulative burden of mandatory insurance. That won't be an easy argument to win though, even with massive wealth of their backers and assistance from lobbyists like ALEC . So I strongly disagree with your description of anti-uber sentiment as doomed to failure.


Uber doesn't matter in the grand scheme of things. I don't care if you or anyone are a socialist, a capitalist or a subscriber of other garden variety ideology.

Either you act on strategy that sustainably benefits the poor and the middle class or you attack "capitalists". When a self-professed socialist regurgitates same points about the evil ways of Uber (which may be absolutely true), he or she doesn't help the poor. Or even drivers in the long-term.

Concentrate on the important issues. Even if you win against Uber, cars will be automated sooner. That's all.

Anti-Uber articles certainly increase the author pageviews though.

Oh, and I am perfectly sure that my job as an entrepreneur, programmer and marketer will be automated, too. A little bit later, but the Singularity won't spare anyone's job.


> Either developed countries implement some variation of basic income or the social order will go down in flames.

And they better start soon. Unless there is a path to obtaining material comfort outside of a free-market economy, the only people with comfortable lives will be those who start their lives with capital, those who win the genetic lottery, and those who have a strong guild-like organization putting a thumb on the scales on their behalf.

This will become evident in Europe when QE-like measures fail to do anything about unemployment.

> Anti-Uber sentiment and the likes aren't sustainable and will fail.

Obviously. Uber will evolve into a marketplace for renting out privately owned self-driving vehicles. The humans are not needed.


>And they better start soon. Unless there is a path to obtaining material comfort outside of a free-market economy, the only people with comfortable lives will be those who start their lives with capital, those who win the genetic lottery, and those who have a strong guild-like organization putting a thumb on the scales on their behalf.

Absoltely. However, developing countries will be hit sooner and much harder. Factories and large industries will be brought back to developed countries and automated with extreme efficiency. China, India, Southeast Asia, any country where economies are reliant on cheap labour and export of manufuctured goods to developed countries will be ravaged with rapid increase of unemployment. Governments are clueless, social safety nets are nearly absent, educational facilities are subpar. There is currently very little that can be done by individual countries to even mitigate the fallout, forget about fixing it.

The storm is coming.

Only really cheap energy and resources can literally save the world. That's why I am hopeful for asteroid mining and nuclear/fusion energy. However, the fair distribution of the newly created wealth is extremely important too. But humanity as a collective is really bad at that.


From your other comments I'm surprised you are so techno-optimistic. Avoiding a super-crash at the end of the oil age, and the bad news about the population curve means we're screwed without putting safe nuclear energy into assembly-line production a couple decades ago. Asteroid mining will require huge amounts of energy and we'll be lucky not to be living like peasants when oil gets tight.


I also have an intuitive understanding that the sharing economy is not fully positive.


Sounds a lot like another sharing economy: prostitution.


According to wiki: sharing economy is socio-economic system built around the sharing of human and physical resources. For ridesharing industry, the resources are drivers and their personal resources. Uber/Lyft/... are intent to become the gateway or dispatch or distribution layer to some extent. They are competing to "own" these resources and become monopoly. But for the drivers and the customers, it will always be in their interest to keep it a more "perfect competition" situation. Some third party shall come in to facilitate the conflict of interest -- maybe government, union or others.


Maybe it's just my lack of understanding of the subtleties of the situation, but I'm not quite sure why people are surprised that this is happening. Without the constraint of regulatory restrictions on the number of people who can drive, there is more supply than demand for drivers. Additionally, apart from that, when multiple companies start competing in the same market, their prices will drop. Given the supply of drivers and the need for companies to compete on fares, why would anyone expect expect pricing to not reach an equilibrium where margins are as low as drivers will tolerate?


I would love to see a system like Uber or Lyft that used variable pricing and a bid system for drivers. Drivers could enter the minimum fare they're willing to work for and users could take it or leave it.


Sidecar basically has this, but the biggest problem with sidecar: It has too many bells and whistles. Sometimes simpler is better. Moreover, you are simply shifting the pricewar to a finer granularity.

I'm not sure what drivers are grumbling about. As a driver, I have to say, I knew what I was getting in to, and I have a plan to get out of it. I'm still ok, though, since I drive a very fuel-efficient car that seems to have had zero mechanical issues (cross fingers) in the 60,000 miles I have driven for the two services.


The subject of this article frames the argument incorrectly. Some drivers on Uber may have full-time jobs and are just driving for Uber to get a little extra in their spare time. Those people who treat Uber itself as a job, however, have little to do with the "sharing economy". IMO this is just another labor dispute, not really an issue with a sharing. On a side note, it's too bad a company so young and apparently game changing should be risking a labor dispute so early in its life.


I think the root of the problem is that the drivers are contractors not employees, so have fewer rights. And that's at the heart of the idea behind the sharing economy, that independent individuals with a resource can offer that resource to the marketplace at ad hoc times.

Whether or not the article is right is another matter, obviously.


I guess I have a different view of "sharing economy".

There are many other businesses which facilitate the connection of contractor to customer, but we don't call them part of the sharing economy. This is true even when they provide the tools (e.g. car) in addition to their services (e.g. driving). The fundamental difference for me comes down to whether they are providing this service as their primary means of livelihood (in which case it's a job), or are they simply looking to make better use of a resource (e.g. car) that they already own but do not fully utilize.

Uber seems to be used for both "job" and "share," but the problems seem to be with the former.


The article argues pretty strongly that Uber is a horrible company, which isn't really news to anyone. I'm missing, though, the leap from that argument to the idea that (quoting the article tagline) "Sharing economy companies like Uber shift risk from corporations to workers, weaken labor protections, and drive down wages." There are numerous other examples (Lyft, TaskRabbit, JobRunners, even Amazon's Mechanical Turk) where this model seems to work pretty well.


>There are numerous other examples (Lyft, TaskRabbit, JobRunners, even Amazon's Mechanical Turk) where this model seems to work pretty well.

...by shifting risk from corporations to workers, weakening labor protections, and driving down wages.

This article isn't about how to maximize profit, it's about how profit is being maximized.


A simple Google search and I was able to find the Facebook profile of the guy whose last name was not included "out of fear of retribution".


> Uber is just capitalism, in its most naked form.

Considering that the workers own the means of production, this is a curious thing to say.


The article's essential claim is that the workers do not own the means of production in any meaningful sense, despite the careful legal fictions to the contrary.

The claim is that Uber et al have developed a way to own the upsides (aka positive cash flows) associated with the means of production, while externalizing the downsides (repair bills, depreciation, insurance, bodily harm from accidents, etc) onto the workers. And even in a strictly limited literal sense, the cars are bought on credit, so the bank owns them.


Owning a car and being available to drive doesn't "produce" a fare, though. Only Uber's app can do that.


The service being purchased is transportation; the driver is the one who owns the means of production of that service.


They don't, as the app is the magic sauce. It's where all the bookings will be, if things turn out the way Uber and Lyft valutations are based on.


Owning your own time, money, resources, and equipment is very capitalist. There's nothing about capitalism that requires centralized control of anything. It's just classical liberal philosophy applied to economics... individual rights should include property rights.


That's true, but my point was that it's odd for the article to portray Uber as the exploitative capitalist when Uber does not own the capital.


Ah. I just find "means of production" to be an anachronistic term that presumes something like a Marxist worldview, but I guess that was your intention.


The workers very much do not control production.


It seems to me that Uber and Lift are working hard to poach eachother's partner drivers. Perhaps one of them will actually make the leap to make a partner driver union with a seat on the board and a say in policy and pricing changes? Wouldn't that help them poach the other companies employees?

Maybe I'm being overly optimistic here...


Labor organizers ought to use the same tactics to reach Uber drivers as Uber used to reach Lyft drivers.


Doesn't seem like a very fair or intelligent article. It basically says Uber is doing nothing good and just exploiting workers, but if I wrote an Uber clone app, no one would download it, or even hear about it. Then if someone did download it there would be only one or two drivers. Then if they traveled to another city and opened the app there would be no drivers at all.

We developers can often write an app that is technically competent, but then it never pulls in the users. In the case of Uber, they not just have a successful app and brand that people know and download, but the app also needs to have a large network of drivers in it to provide good service. The vast majority of drivers I've ever had gave me their personal business card, but I never use them since I'd have to call and negotiate a time and a price - and the price they start at is often more than just booking them through Uber or SuperShuttle or whatever. So these guys aren't getting the fares on their own, Uber is clearly providing some benefit.


It's not clear, though, that this benefit is positive. The article seems pretty clear on the fact that Uber has pulled a bait-and-switch, offering drivers a living wage only to drop their rates (and thus their wage payout) substantially once they had garnered the network effects you describe.

It is precisely these network effects which are both benefiting Uber and working against the drivers. By training users to go to Uber for their ride-sharing needs, the drivers now have to also use Uber if they want to get passengers. Sure, you have a bunch of individual drivers' business cards, but you're probably _less_ likely to get a ride from any of those drivers than if Uber had never wrangled them in the first place. Meanwhile, the drivers have invested a good deal of money and effort into an industry in which they may not have chosen to participate if Uber hadn't recruited them.


Speaking of the sharing economy, why isn't AirBnB setting price and using surge pricing?


this sounds like a criticism of Uber's practices not sharing in general.




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