Raw Deal

. . . another horizon just as disturbing, what I call the “Economic Singularity”—the tipping point at which our economy implodes from too little consumer demand because the wealth has been captured by a small number of powerful economic players who extract the best of our nation for their own private use. Everyone else will be left to scramble for the scraps via the sharing economy.

Thomas Piketty demonstrated in his book Capital in the Twenty-First Century, this trend of “elite magnification” is near-certain to continue and even accelerate without sensible policy intervention.

It’s like some malevolent force is unraveling over two centuries of progress toward a more fair and egalitarian society and turning back the clock to a previous era when the monarchs and aristocrats of old lorded over the peasants and serfs. Indeed, economist Juliet Schor has called the sharing economy and freelance society the “post-industrial peasant model.” Some have compared the current techno-feudalism trajectory to turning back the clock’s hands to the Gilded Age of the late 19th century. During that era, the level of inequality was shocking, workers had few rights, safety net or job security, . .

As Steven Hill opens his book, Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers, we are confronted with his view of a Post-New Deal, Post-Industrial, Post-Progressive era world. In many ways this new era defies belief. After over a century of progress in the fields of workers’ rights, employee benefits, health & safety protections, child labor laws, and the like, he finds the world, and the US in particular, heading into an abyss of regression. He describes the ironies of how our new technology, and the huge efficiencies it brings, is breaking down the hard won social gains achieved through decades of gradual progress. He’s not just telling us this story from afar, or analyzing it from an ivory tower, he’s living it. He is one of the thousands, probably millions, who have been uberized, that is, thrown under the freelance gig-preneur bus, going from job to job not knowing from where or when the next check is coming. It’s this new involuntary “freedom” that worries him, not merely for himself, but for everyone who’s been robo-digitized out of a reliable job. The most alarming part of it is that most jobs, and even specialized professions, are subject to the eventual artificial “intelligence” takeover.

When referring to the new internet/mobile app-enabled services, he lambasts those who have professionalized it. “At this point, it’s just feral capitalism, and there is little ‘sharing’ about it.” His point being that once well-healed investors get into the game, the whole landscape changes. It’s no longer about swapping flats or letting out a spare room; it’s about market domination. That doesn’t make for a friendly market, and it crowds out the very people who were supposed to benefit from the practice.

Unquestionably, Airbnb’s rise from its humble beginnings in Brian Chesky and Joe Gebbia’s apartment living room is a remarkable story, a made-in-America rags-to-riches fable. But it’s clear that Airbnb, like Uber and Lyft (which we will consider in the next chapter) and other venture-funded “sharing economy” companies, has a different goal entirely besides “sharing.” It’s called profit—they want you to share your home or your car with paying guests, while they skim off the top a sizable amount of each and every transaction[my emphasis], all the while keeping their overhead low and providing relatively few jobs (a thousand employees worldwide is minuscule for a company with a $25 billion valuation—Hyatt Hotels employs about 45,000 people worldwide).

. . .they [Airbnb] have become another merchant of rentier capitalism, siphoning off profit from the property and labor of others while increasing the anxiety and crisis of many working- and middle-class people. Airbnb’s disruption of the hospitality industry has pushed down prices for tourists but at the cost of hurting those “regular people” too vulnerable to defend themselves. Apparently for Brian Chesky and his cofounder Joe Gebbia, making some tweaks to their business model—in a true spirit of sharing and caring, and of leading a real sharing and belonging economy—is incompatible with what they believe is necessary to lead a large company locked into a single-minded focus on revenue growth and market share.

He bolsters his argument with mounds of well researched, and blatantly in your face but ignored, data. He reveals facts about the media’s techno-hero darlings which are astounding in their nature, and with a second thought, more astounding since the perpetrators of these atrocities actually brag about their unearned hegemony.

In the murky world of Silicon Valley, where hype and “vaporware” often substitute for substance, Uber has been assessed a jaw-dropping market valuation of $51 billion—to put that in perspective, that’s higher than Facebook’s valuation at a similar point in its growth, is greater than Delta ($39 billion) and United Airlines ($26 billion), and has nearly overtaken the king itself, General Motors, the largest U.S. automaker ($52.6 billion value). Not bad for a company that doesn’t actually make anything or own any cars or directly employ any drivers (since the drivers are all treated as independent contractors).

Incredible, no? And with a third thought, one wonders, how can these hyped-up vapor companies with almost no assets, few employees, producing nothing, and in many cases not even producing a profit, actually have any value? Are we watching the emperor marching down the street naked, cheering him on, while convincing ourselves we see infinitely beautiful robes of incomparable glory? It baffles me, and worries me. When enough people realize it’s all smoke and mirrors, there’s going to be some real disruption. He gives us plenty of examples, some that have already happened.

. . . SnapGoods went out of business in August 2012. If one does a search on any of the dozen or so online magazines that write about the tech industry and Silicon Valley, strangely there is not a single article that discusses the collapse of SnapGoods. It just disappeared—poof—without a trace, yet goes on living in the imagination of sharing economy boosters. I conducted a Twitter interview with its former CEO, Ron J. Williams, as well as with whatever wizard currently lurks behind the faux curtain of the SnapGoods Twitter account, and the only comment they would make is that “we pivoted and communicated to our 50,000 users that we had bigger fish to try.” Getting even vaguer, they insisted “we decided to build tech to strengthen social relationships and facilitate trust”—classic sharing economy speak for producing vaporware instead of substance from a company that had vanished with barely a trace.

He guides the reader further down into the lower levels of a Dantean hellhole of independent gigging. We get full coverage of the probable future of the “sharing” economy, which he has a tasty turn of phrase to more accurately describe the direction this trend is heading. Odd job apps with reverse auction bidding, that is, the seller bids against himself until someone bites, is a major concern for Hill. It clearly takes building a career or landing a steady job off the table, leaving workers in the air, exploited and demeaned.

That’s why the share-the-crumbs economy is more than a labor tragedy—it’s an existential challenge. In short, the gurus of the sharing economy have been at the vanguard of an audacious attempt to forge an economic system in which individuals and businesses with “more money than time” are able to use faceless interactions via brokerage websites and apps to force an online bidding war among lower-income people to see who will charge the least for their labor, or to rent out their personal property (such as their car or home). It’s practically a medieval system in all its modern glory, yet all wrapped under the New Agey mantle of “sharing”—without the employers having to worry about labor protections, minimum wage, safety nets, health care, retirement, enforceable contracts or ongoing relationships of noblesse oblige toward those they hire.

These fabulous new ways of making extra money, or covering your butt between jobs, or making up for not having had a raise in several years, or to fill the income gap because you took a job at half what you were making in your previous job, turn out to be not so fab when you’re working for lower and lower wages and you subtract out your time searching for work and scrambling from gig to gig. Of course, these new freelance gigs were never intended to be full time. But with more and more workers being downsized by technology, it’s becoming a means of subsistence for many. Nonetheless, extra pocket change is not sufficient to pay all the bills, and it’s no way to build an independent career or become an entrepreneur. The sales pitch is proving to be pie in the sky. It’s not forging new opportunities and independence for millions, rather, it’s let them eat cake crumbs.

In a nutshell, his book is about the atrocity of greed, the ‘anarchonomics’ of the wild-west-world we’ve allowed to happen right under our noses, and with our consent. The efficiencies that our technologies have afforded us are not benefiting everyone as promised. All the gains are going to the top, and the higher up the pyramid you are, the greater the gains. Our time saving conveniences that assured us of having more free time, more leisure, more personal expression, have not delivered. They have not been distributed evenly or fairly. They have been appropriated by the outlaws of Wall Street and the utopian turncoats of Silicon Valley. They’ve stolen our future. While the common person should have a shorter workweek, more vacation, better benefits, and more time to pursue one’s dreams, develop new skills, explore new advocations, improve the mind, John Doe is, instead, working longer hours, struggling to make ends meet, worn down, and left with little time leftover for self improvement. The riches the digital world provide are not for him to enjoy. 

Hill’s book is a read that goes along the same vein as many other books I’ve reviewed. It’s another notch in the bedpost of the mounting evidence against the idea that unbridled capitalism is good. Free markets are good at the personal, small scale one-to-one level. At the grand national/global scale, free markets run fierce and feral. Large scale free markets haven’t a conscience. They don’t feel pain. They run on speculation fueled by boom & bust. But real ordinary people do not benefit from a system of explosive expansion and bursting bubbles. Real people get hurt and are left to fend for themselves in the remains of the devastation. The rich merely suffer an inconvenient setback, only to repeat the process again and again and again and. . .

Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers, Steven Hill, St. Martin’s Press, 2015

Also read—
Conspicuous Predation
Dubble Bubble
Who Owns the Future?
Dreaming the American Dream
Competition Makes the World Go’round