Atlas Shrugged: The Mocking

Friday, October 2, 2015

A Real Piece Of Work

Megan McArdle wants you to do piecework because she hopes to benefit from your desperation.

Imagine that I am sitting at home one night, and I would love to go meet some friends for a drink. Unfortunately, it’s hard to get cabs to come to my neighborhood, it’s not quite safe to walk alone at night, and driving to the outing would defeat the purpose, since I couldn’t drink once I got there. So instead, I sit at home and watch reruns.

Lowering the transaction costs makes it easier for me to find someone who is willing to drive me over to the bar. This hasn’t displaced someone else’s job; it’s an entirely new piece of economic activity that simply wouldn’t have happened if the transaction costs had remained high. We get additional employment, additional consumption and additional happy hours with our friends, drinking margaritas and arguing about "Game of Thrones."

Kevin Drum does not.

 All this has Kevin Drum concerned: “It now seems as though the 'sharing economy' is any job that's somehow related to a scheduling app and provides workers only with odd bits and pieces of work at the employer's whim. In other words, sort of like manual laborers in the Victorian era, but with smartphones and better pay.”

 McArdle hears his concern but is not convinced. Lots of people would love to have two or three or four jobs.
Of course, some workers would rather be [fully employed]. But what about people who use these jobs to “moonlight” around other obligations, like day jobs, school or child care? Worker supply, as well as consumer demand, seems likely to fall.
The real concern, I think, is that these jobs will become substitutes for better jobs: more stable, better paid. This is obviously going to concern left-wing commentators, many of whom have already expressed worry that the “gig economy” is bad for American workers. 
That may be.
However, just because workers would suffer doesn't mean workers would suffer.

But proving that someone got hurt is not the same as proving a net decline in the position of workers.

But so what? It's not like they can get a good job anymore anyway.

But that rests on the hidden, and so far unproven, assumption that the gig economy is in fact displacing workers by driving down the value of the work they do, rather than creating new economic activity that simply wouldn’t exist if it weren’t for these apps -- and possibly in the process providing work for workers displaced from other industries, for reasons that have nothing to do with Uber or Instacart.

I think there are real concerns about what has happened to the wages of American workers. But so far, I don’t see much evidence that Uber or Airbnb is the cause. Most of it seems to come from automation of low- to medium-skilled work in the manufacturing and clerical sectors, or the outsourcing of those jobs abroad. Trying to fix those problems by destroying Uber’s business model is like trying to cure your headache by taking a hammer to the bottle of aspirin.

Just as McArdle thought that Africans would be lucky to "slave" for $21 a month in a sweatshop, her fellow Americans would be lucky to get whatever work they could scrape up in their spare time, if there is any work.

Kevin is, of course, right that these apps somewhat mimic the casual labor market of the 19th century. But there’s a difference beyond the labor conditions: The apps radically drive down the transaction costs to providing these sorts of services. A Victorian laborer might have had to tromp from house to house looking for work, or stand outside for hours waiting for someone to come by looking for workers. No longer.

Just think about how much easier your life of poverty would be if you could wait to be contacted via app instead of waiting in the parking lot of Home Depot in the hopes of getting a painting or construction job.

Besides, those full-time jobs with benefits were problematic to begin with. Your company is bound to screw you over anyway.

But doing those things internally, rather than buying services in the market, is expensive. It makes the employer less flexible, and raises its fixed costs. It has to recover those costs somehow, which can happen in one of three ways:
  1. Charge customers more, which will reduce demand and result in fewer hours of labor being consumed
  2. Lower the wage paid to the workers
  3. Exert a lot more control over worker schedules and conditions to maximize the ratio of work to overhead. Workers will probably not be allowed to show up whenever they feel like and work as long as they want. They will, for example, probably have their hours capped to prevent them from qualifying for health insurance.

If employers have to pay you steady wages and benefits you'd never get a job.

How much better it would be to just accept your impoverished and precarious situation. And let's face it, how much better it would be for Megan McArdle if you were powerless, and forced to ferry her from her $300,000 gentrified Victorian rowhouse to her favorite bars and back again for the lowest fees the market could provide.


Ellis Weiner said...

Firesign Theatre have an album about transport to "the future," and a PSA for the service has a guy saying, "This is the Honorable Chester B. Cadaver. Sure, understanding today's complex world of the future IS a little like having bees live inside your head. But...there they are."

McArdle could deliver that speech with a straight face. "Sure, the System has flaws. But it's better than a better System would be, because this System has to remain the same, and it can't remain the same if it changes."

Susan of Texas said...

If you change your low-wage system, wages will go down.

We could keep this up for quite a while.

Susan of Texas said...

I picked up Ross Douthat's Crunch Con book. So far Ross is right and you are wrong and Ross would like to explain it to you in great detail.

Ellis Weiner said...

(sighs) Douthat? Or Dreher?

Susan of Texas said...

Every. Damn. Time.

Ufotofu9 said...

Whenever I hear somebody use the phrase "But so far, I don’t see much evidence of..." in an argument, it just sounds to me like a gussied up way of saying, "I can't be bothered to check the facts myself.

Susan of Texas said...

Research cuts into her drinking time and nobody cares if she makes everything up anyway.

In fact I'm amazed that she hasn't outsourced her writing to an impoverished student. Piecework for pennies on the dollar. Although any actual scholarship would give the game away immediately, and I do think she would miss sharpening her claws on the backs of liberals.

tony in san diego said...

"In fact I'm amazed that she hasn't outsourced her writing to an impoverished student."
There is not an app for that yet.

Susan of Texas said...


Kathy said...

Instead of getting a real poor person to drive her to the bar she could just invite the bar's patrons to her home!

Its so hard to read anything she writes, that faux intellectual faux Briddish accent, that faux intelligence. Ug. It gives me hives inside my head, which is worse than bees, I can tell you.

Its hard to imagine Arglebargle really discussing GOT. Too complicated for her.

Clever Pseudonym said...

Who argues about "Game of Thrones" anyway? Do they all show up in "Team Stark" and "Team Lannister" t- shirts to pick a side? I suspect it's a part of her faux intellectualism shtick, as she's demonstrated herself to be one of them who thinks anything with a British accent is smart. Like "Downton Abbey," as much as I enjoy both shows, they're essentially period drama soap operas that are hardly exercises in mental rigor once you sort the players out.

And neither of them would be fun bar conversations as far as I'm concerned.

Kathy said...

I haven't seen GOT since the 2nd season, tho I did like it (not as good as "Breaking Bad"). What friends & I talked about was WTH? is going on? What just happened? Who was that? Why did he-? and so on. Then I cancelled cable & got Netflix.

Clever Pseudonym said...

I just started season 4 and I've become gradually bored with the GOT bloody violence, gratuitous sex and plots that go nowhere outside of killing off half the cast and introducing a new one just as unlikable as the last. At least the dragons are cool. (PS... Team Lannister wins the death match, season 3, episode 9 ).

Anonymous said...

Megan can certainly afford one.

Susan of Texas said...

I think I know what she does.

1. Wait until someone far smarter than she posts on the subject.
2. Add quotes from anonymous sources/someone she once interviewed/a book she read 10 years ago.
3. Interpret the above through her personal prejudices and biases.
4. Write a post with what she is certain is Dorothy Parkeresque wit and charm.

mew said...

> it’s hard to get cabs to come to my neighborhood

It isn't hard to get a cab in your neighborhood. It's difficult to get a cab to drive you a mile and a half to the bar for an $8 fare. Call a cab to bring you to the airport and they won't have a problem coming to your neighborhood.

Susan of Texas said...

Good point.

Ken Houghton said...

So when she gets an Uber driver to take her home from the bar, but they get into an accident where she is injured and their insurance company correctly refuses to pay any of those costs because the policy doesn't cover commercial use (nor does the Uber driver have commercial plates), she'll still be cheering the Free Market in Action, right?

Ken Houghton said...

Oh, and I forgot, nor does the Uber driver have a Commercial Driver's Licence.

Because those are all Barriers to Entry, not proof of skill.

Just like Brandon Lee getting shot and killed by a "blank" on the set of The Crow in a Right-to-Die State was the Market in Action.

Susan of Texas said...

I guess if she's hurt her own insurance will pay for her healthcare. We know she won't have to worry about bankruptcy because she's out of work and still has medical bills because she told us that doesn't happen very often.