The Times Are A’Changing – Uber Style
Well at least in my head.
One of the reasons this year’s presidential election is so interesting is that it is the first where younger voters – aka the “millennial generation” – will make up the same proportion of the electorate as do baby boomers. The times, as the baby boomer song goes, are a’changing.
Indeed if I recall the words to that song it urges the older folk to get out of the way if they can’t help the changes that are on their way.
How perfectly symmetrical.
Hillary Clinton is, in my view, the perfect baby boomer politician. She is steeped in, and scarred by, the trench warfare of the great cultural wars unleashed by the civil, women’s, and gay rights movements that have pushed most Western democracies far away from where they were in the 1960’s. Clinton came of age, worked, and has aged all within the vortex of those wars. And, to the extent that progress has been made, feels complacent and self congratulatory over that progress.
None of which matters to the younger voters.
They are emerging into adulthood in a vastly different landscape. Their issues are not those cultural battles, which for them seem settled or uncontroversial, but are predominantly economic. They are the first generation for whom the bromides of neoclassical economics and the notion of never-ending rising prosperity courtesy of so-called free markets ring distinctly hollow. They are deeply suspicious of the mainstream arguments being thrown back at Bernie Sanders, not because they are naive young fools, but because they are experiencing, first hand, the consequences of overly expensive education, paucity of opportunity, high debt levels, and severely limited upside potential for the majority. They are learning to cope with limited means. They are not at all afraid of more extreme solutions precisely because they are not feeling the security that lulled their parents into the grip of neoliberalism back in the 1980’s.
This crosses over into economics.
An entire generation of economists could fall into the trap of believing in the superiority of markets under all circumstances because their world that around them, appeared to justify such extreme thought. Thus that generation could, without too much imagination, talk of the never-ending cornucopia that markets bring if left unfettered. The degradation and the inequality was only beginning to accumulate when that generation learned its trade. It is only later in life that the reality set in.
Outside of economics the reality set in much earlier. The current you voter generation lived through seeing their parents steadily stripped of financial, retirement, and job security in the name of a distant idea called shareholder value. In particular they saw the total disinterest of the baby-boomers in maintaining the heritage of the economy they inherited: the rotting infrastructure that surrounds us is no accident, it is the consequence of decades of deliberate avoidance of responsibility – and cost – on the part of a generation obsessed with, and seduced by, market driven economics.
One of those baby-boomer economists – Alan Krueger – has put his name to a paper describing the benefits of Uber and, presumably, the Uber-like employment arrangements that Silicon Valley is so enamored of. Krueger, to be fair, is open about his paid association with Uber so we cannot fault his ethics. What we can fault is his continued starry-eyed adherence to market driven economics.
One of the purposes of the paper, as far as I can tell, is to debunk the idea that Uber drivers are unhappy, sullen, bit-worker types who would prefer a full time job. On the contrary, they are, apparently, very happy. At least according to the Krueger paper. Here is a typical paragraph:
“One theme that emerges from the analysis that follows is that a tremendous amount of sorting takes place in the sharing economy, and, by dint of their backgrounds, family circumstances, and other pursuits, Uber’s driver-partners are well matched to the type of work they are doing. Notably, Uber’s driver-partners are attracted to the flexible schedules that driving on the Uber platform affords. The hours that driver-partners spend using the Uber platform can, and do, vary considerably from day to day and week to week, depending on workers’ desires in light of market conditions. In addition, most driver-partners do not turn to Uber out of desperation or because they face an absence of other opportunities in the job market – only eight percent were unemployed just before they started working with the Uber platform – but rather because the nature of the work, the flexibility, and the compensation appeals to them.”
Great.
As homilies to Uber go the paper is a good one. It sets out in great detail the demographics and assorted facts that describe what Uber euphemistically call its “partners”. It turns out that Uber drivers like what they do because they appreciate the work schedule flexibility and the higher earnings they receive. Uber workers drivers are more typical of the average workforce than traditional taxi drivers or chauffeurs. And that flexibility means that they work fewer hours on average than their traditional peers.
Great again.
And as a matter of personal anecdote I can attest to the fact that the one Uber driver I have talked with would agree with Krueger’s analysis: better hours and better pay are always a good thing.
But.
At what price?
And this is where Kruger starts to gloss over. There’s this for instance in the conclusion:
“First, the U.S. economy was operating at less than full employment during the period studied, and more highly educated and younger workers may have had fewer alternatives available than is normally the case in this time period.”
Do I smell a hint of dumbing down here? Or of an economy in which an education gets you to be an Uber-partner? Is being an Uber-partner – not a worker naturally – what our young can aspire to? After all, as Krueger points out, Uber-partners are representative of the workforce in terms of demographics. So is this the workforce of the future?
I don’t want to belabor this. The paper speaks for itself. But I do want to bring us back to the election and to why baby-boomer economists are in a twist.
You see, elsewhere in his paper Krueger says something very enlightening, and I thank him for making the point:
“In addition, as changes to the health care system help reduce job lock—by making health insurance more readily available and accessible to individuals —more people are likely to become entrepreneurs and take advantage of the flexibility and income-generating potential made possible by the sharing economy.”
Pay attention to this comment.
It is the argument I have been making for ages.
As the economy shifts towards less long term employment and towards flexible hours, contingent work, and what some call the “gig economy”, the benefits associated with the old working arrangements, and which were normally acquired only after major confrontation with business owners and management, are being lost. Krueger carefully avoids delving into an analysis of the total after-cost net income an Uber-partner makes when the loss of those benefits is taken into account. His analysis is thus typical of a capital tinted viewpoint: the “partners” are now responsible for their own benefits.
But the point is this: people may not be hyper-rational in the way market-magic economists like to claim, but they aren’t stupid either. They still want those benefits. They still need those benefits. And if private capitalists aren’t going to provide them, then someone has to. And that someone turns out to be the government. Uber is not providing such a great premium that its “partners” can pay for private insurance, which we all know is prohibitively expensive. What Uber is doing is classic: it is doing a “Walmart” by outsourcing what used to be an employer responsibility onto the state.
What is different between younger voters and their baby-boomer parents is the realization that if the private sector wants to rent seek and exploit workers, then that action has an inevitable reaction. The victims of the rent seeking and outsourcing will seek to redress their loss and re-establish their personal security using other means. Younger workers are behaving, ironically, exactly as Krueger suggests they might: they are empowered by flexibility, but want to balance that with security.
And that implies a greater willingness to deploy the state in the provision of services that used to be called benefits. And hence the enthusiasm for Bernie Sanders, who of all our candidates, is offering exactly such a program. It’s called social democracy, and the rent-seekers like Uber are creating the ideal conditions in which it can flourish. Rent seekers of the world unite: you are creating the conditions for leftward lurch in politics.
Which brings me to one last point: all of the above is consistent with what Alan Krueger wrote. With one exception: he was one of the infamous “four top leftish economists” who signed a recent letter decrying the Sanders program as being outrageous and unattainable. It seems that once a mainstream economist always a mainstream economist. Albeit a leftish one. Krueger cannot fathom the appeal of the Sanders program and how it could be forced into being inside the so-called new economy of contingent employment. Yet the answer is right in front of him. In his own paper.
Now who’s being inconsistent? Now who’s not understanding basic economic forces?
