I’ve written a lot about Uber. I was very early to start its post mortem, I didn’t want to wait till its body got cold. You can catch up with these gems:
- Uber Interment
- The confidence game. Uber comes undone
- The end of Uber. Movable object meets unstoppable force
- Uber v. the anti-corporate open source insurgency
- Uber. Beginning the postmortem
This post is something else, it’s ‘why’ Government intervened against Uber. They joined the open sourced anti-corporate (in this instance Uber) insurgency, and they won.
Their is a government battle over the “gig economy,. Companies like Uber coordinate the contact between independent contractors and customers, disavowing the role of “employers” and all of the regulations it entails. But politicians accuse these companies of evading “worker protections,” by which they mean a vast network of labor regulations. Of course, that’s the whole point, and it’s the main reason for the success of these services: their ability to perform an end run around extra costs and bureaucracy.
The new economy is crashing against the old political systems.
Silicon Valley likes nothing better than to “disrupt” existing systems. But they think they’re disrupting economic systems. What they don’t realize is what they’re disrupting is a political system, and not just one part of it, but the core of it. And it’s a political system they’re not really ideologically prepared to take on.
It’s easy to think of the innovation in a company like Uber being technological, since the technological interface is what we see. But that’s just the mechanism by which Uber operates, not the actual essence of its business. They are automating the middle man.
The problem is that the old statist politics needs the bureaucratic middleman. In fact, the corporate bureaucracy is central to their vision of our economic system. They like companies to be big, to have brick-and-mortar facilities, to have specific people working for them in a specific place, because that kind of company can be regulated, taxed, and controlled. Local governments, regulators, and inspectors can take their own cut of the money, whether above board, through taxes and fees.
The politicians aren’t just taking care of themselves. They are also taking care of their political clients. In exchange for being regulated, companies were protected by barriers to entry and de facto monopolies—for example, the old taxi medallion system—that gave them a captive market. For their part, workers got all of those “protections”: mandates dictatoring their pay and benefits and the terms under which they could be hired and fired.
This is more than just a cynical trading of favors. It is a whole vision for the economy, a kind of corporate-welfare-state hybrid. The goal is to require private businesses to operate like miniature welfare states—in effect, to become organs of the welfare state. Why set up a guaranteed minimum income paid by government, when you can dictate a minimum wage paid by employers? Why have government provide people with medical care directly, when you can mandate that their employers provide health care benefits? Why have the government guarantee everyone a job for life or a certain amount of vacation, when you can pass regulations limiting the ability of private companies to fire anyone, or mandating paid vacation? And if the workers happen to be gathered into a union or some other kind of political interest group, the better to express their thanks, that’s just an extra benefit that helps preserve the system.
The mistake of our new crop of technological entrepreneurs is that they think the systems they are disrupting are there because of mere tradition or inertia or thoughtlessness or outdated technology. But remember the Law of Intended Consequences. The bureaucracy and inefficiency and extra costs are not accidents of the system. They are the system. It’s all part of the corporate-welfare-state system, and that’s what is attempting to re-assert itself. Call it the Uber Imperative: government always remakes the private economy in its own image. It always seeks to co-opt private companies into a system for distributing handouts and special favors in exchange for votes.
This is a triangular system involving politicians, so-called “crony capitalists,” and (frequently unionized) workers. The politicians get electoral support, in exchange for which they demand welfare-state-style benefits for workers, but to mollify the employers they also offer protections against competition. The actual costumer, of course, gets scarce, expensive, lower-quality service.