In Spring 2007 we were preparing our first senior class at Global Enterprise High School for graduation. We encouraged those students who were totally up with their credits and Regents to complete the last semester of English and Social Studies requirements with supervised internships or individual projects. We got some interesting work, too. One boy, now an elementary teacher in New Orleans, interned with the consulate of Antigua and Barbuda. They loved him (honestly, everybody loves this kid) and he had the opportunity to travel for them to tourist-industry fairs and to meet their government ministers. Another boy simply began pursuing his career goals as a magician and a booking agent for other magicians. His presentation of his work was very professional, did not include illusions, and showed a lot of learning. He is now deeply involved in the work of Magicians Without Borders.
Then there was M. When he first began trying to map out a project for himself, he was passionate about mountain biking. We spent a lot of time figuring out a challenge that would involve actual learning and fill his days. After much metaphoric spinning of wheels, he switched his interest to tuning and racing import cars. It was easier to imagine study and work with this topic, but not without amounts of capital that he did not have. Around that time a friend of M's dad announced that he was starting a new business and would be happy to have M intern with him. Since Global Enterprise was a business-themed school, with a four-year sequence in marketing, business planning, accounting, etc. this was not a bad idea. The challenge, as with any internship, was to ensure that learning was primary. The business was ice cream distribution and I imagined how easy it would be for M to simply be an unpaid helper on the truck, loading and unloading that ice cream. His journals and our weekly meetings were going to have to be very directed.
In the event, the learning only required his attentive observation to what this business really entailed. It was another example of large corporations turning to independent contractors to do the work of their employees... or simply turning their employees into independent contractors. M's mentor had purchased a route from Haagen Dazs. He had purchased a used truck from Haagen Dasz. He now had to insure that truck. He had to maintain that truck. He had to purchase health insurance for himself and his family. He had to do his own accounting, billing and quarterly taxes. It appeared to me that Haagen Dasz had simply offloaded all the costs of an employee while keeping the profits. I had heard of this phenomenon, but it was really eye-opening to see it up close. M's mentor started with the core idea of being his own boss, but as the months went by, he wondered whether he was.
I am reminded of this today because of the parallel successes and disruptions we are seeing in the rise of Airbnb and Uber. These two companies exist without any significant fixed capital. They are both still privately owned and so their market valuation is different than publicly-traded companies, but Airbnb is valued at $10 billion and Uber at $18 billion. They are essentially apps for transferring costs to workers, but they can be imagined in many different ways, depending on the angle at which you look.
Airbnb is an app for matching people looking for a room with people who have a room. Homeowners facing foreclosure have been able to keep their homes by renting rooms. People in apartments in tourist destinations have been able to turn them into a supplementary source of income. Travelers have been able to find less-expensive lodging with real people in real neighborhoods. Like any good matching app, Airbnb can be a win-win for people who otherwise would never have been able to find each other. For the hotel industry, Airbnb is a competitor that has found a way to operate without an inventory of rooms, without staff to maintain and clean those rooms, without security staff, without insurance and without licensing. When an Airbnb lodger robs or trashes a home, all the cost is born by the "host." The success of Airbnb eliminates the jobs associated with the lodging industry by putting all the work of cleaning and security on the "host." I live in New York City. I can certainly see the appeal of generating side income by having strangers in my house. But I cannot see how the collapse of the hotel industry here would be good for the city. And, honestly, rereading that previous sentence, I can see the appeal of side income, but I cannot see the appeal of strangers in my house. It only emphasizes the fact that Airbnb would allow my employer to pay me less than a living wage because I can make up the difference by lodging strangers.
Uber represents the same phenomenon for public transportation. It is an app matching people with cars with people needing rides. Initially an improved mechanism for getting a car service (a non-yellow livery cab) to your location, it has expanded to any kind of car or driver. A livery driver can use Uber to find fares without time-wasting (and gas-guzzling) cruising. But anybody who owns a car can also supplement their income with Uber if they spend a few hours ferrying people around. Again, for both the medallion taxi and livery industries, Uber is a competitor that has found a way to operate without investing in cars, insurance or maintenance, without licensing, and without employees. But riders don't know who they are getting in with. Drivers are on their own and discover that their conventional auto insurance will not cover them for anything that happens to them, their cars, or their Uber passengers while they are "working." I think the possibility of supplementing own's income with Uber is just another way of elongating the work day and allowing my primary employer to underpay me.
The power of markets is in their ability to make things available. I can go to a store and buy beans even though I don't know anybody who farms them. I can buy a book online that nobody near me would have thought about stocking on their shelves. Nowadays I can even generate startup capital for an art project on the internet. But a free market in labor has always been another beast entirely. It denies our humanity, reducing us to that single element that generates money. It devalues our children and our elderly. It drives our working people into poverty. Even capitalists with vision recognize that paying market rates (meaning the lowest wages possible) means reducing the market for their products. And most employers really don't want workers leaving at 9:45 am because they hear about another 10¢ an hour up the street. Or suddenly demanding a new, higher rate in the middle of a harvest because otherwise the crop will spoil. In fact, our capitalist class is very interested in normalizing employee relations where it benefits them.
The rise of Airbnb and Uber is a new phase in the war of each against each. That is just a phrase for the radical individualism that denies any "we". It denies our mutual responsibility to each other. It would have fire fighters arrive at our homes with credit card scanners, unwilling to turn on the hydrants until our payment clears. It would have us pay tolls every time we drive onto a highway, with a lower toll for a crowded lane and a higher toll for a freely-moving lane. It would, as our newly-reelected governor said last week, break "one of the only remaining public monopolies:" in other words, do away with public schools. Some people associate this crazy ideology with Ayn Rand, others with so-called "Austrian economics." For some advocates it is mainly a belief system. For others it represents a chance to cash in on the privatization of a public service.
But Airbnb and Uber represent something different than we have seen before. Corrections Corporation of America profits from incarceration, but they actually have to build, maintain and guard their private prisons. Cofiroute, SA profits from its variable congestion pricing on the private toll roads of Southern California, but they actually have to build and maintain those roads and install the electronic transponders for toll collection. Airbnb and Uber don't have to build, own or maintain anything. And they depend for their existence on us cannibalizing the parts of our private lives: our homes and our cars. We have heard anecdotes from other countries of people selling organs to buy iPhones, and of families selling one child to raise enough money to care for their others. The internet market model could systematize and regularize these practices. Somewhere, right now, somebody with more entrepreneurial imagination than I possess is concocting a scheme for the next company that will offer me the opportunity to surrender some part of me for money. And they will make enough money with this that they can also privatize our political process. Oh, wait. That has already happened.
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