Economic Disruption in a Gig Economy

On March 14th, the bike couriers of Deliveroo Brighton will stage a strike on their company to underline their demands:

  • £5 per drop
  • Recruitment freeze

To get at why the Gig Economy impedes the distribution of resources, first one needs to look at externalities.  Externalities, in the macro-economic sense, are the cost of doing business.  The Real Cost.  For instance, the well-known costs of driving a car is its purchase price, gas, parking, taxes, registration and tolls.  Lobbyists for car manufacturers do an excellent job obscuring the externalities, or the real cost of car ownership.  To list a few, damage to the environment, destruction of human life, and road maintenance costs.  These are just the biggest externalities.  To break each of them down would result in numbers that, if you were to calculate that into the true cost of purchasing a car, only a very few people on the planet could afford to own one.

The externalities are generally borne either by the public, the government and in a very limited way, companies.  So, the damage that car manufacturers do to the planet and humanity as a cost, if manufacturers were forced to pay that cost, would instantly put them out of business.

In Buffalo, there is a commercial airing non-stop on local network TV pushing for upstate New York to vote to allow Uber, Lyft and other “ride-sharing” apps into the ride-hailing market.  They claim that ride-share improves the economy.  The fiction that ride sharing will attract business and visitors to Buffalo completely ignores the fact that it is making the working poor, even poorer.  Economies grow when the poor move up into the middle class.  This is because, with more discretionary income, they tend to spend more of it.  Unlike rich people who stuff their discretionary funds away in tax sheltered investments, and off-shore accounts, the money that the working poor and the middle class spend creates “churn” in the economy.  Rich peoples’ hoarded millions only make money for them.  Poor and middle class peoples’ money drives the economy.

 

A great national example of this phenomenon is China.  Since 1981, some 500 million Chinese have moved out poverty.  Coinciding with this upward mobility and increased discretionary income is the highest period of sustained growth of a country in the world over the same period.  So, when Sam the Uber driver, or Margaret the bike courier, make better than starvation wages, they, not Uber, Deliveroo or City Sprint, grow the economy.  They will go out and treat themselves to a nice meal, buy a new vehicle, new clothes, all the consumer goods that keep other people employed in say, manufacturing.  Whereas, when Travis Kalanick cashes his check, he might buy himself some nice electronic toys and hookers, but chances are he’s putting a big percentage of it into some growth intensive investment for the rainy day when his board finally realizes they need to act like grown-ups and oust him.  One Travis Kalanick buying a fancy T.V. versus 150,000 Uber drivers able to buy a regular T.V.  Who will have more impact on the economy?

So why does the March 14th strike in Brighton, England and the March 15th nationwide strike in France matter to you?  This is where the economy is going.  This is Trumpian economics, bleed the little guy until they’re too beat down to fight back.  The Hunger/Power Concept has worked for 69 years in North Korea.  Corporations are busy figuring out how to increase “shareholder value” by “Uberizing” their workforces.  Just know, Travis Kalanick (Fast forward to 3:45) and the Lords of the Gig Economy are only going to blame you for your problems.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s