Wrong targets for enthusiasm

.. It’s all bullshit, folks, and it’s bad for you.. Capitalism coupled with strong laws to prevent abuse is the best way for people to rise above poverty, because it is designed to do one task and do it well – make money for those willing to work hard. Socialism, however, does the opposite on that part – it’s keeping people from rising above poverty because it’s not targeted, it’s not rewarding hard work but in a world of finite resources it tries to define a bottom line only that bottom line is ever rising. Society needs balance between the two, if none of them goes away soon. We’ve seen the result of socialism in Greece and we’ve seen the result of capitalism with weak laws in the recent economic bubbles. What I haven’t seen yet is a system combining the two – socialism in providing public services combined with a type of capitalism where abuse is prevented (proactive) instead of just punished (reactive), and public, transparent policies on cost and quality of service metrics. Hell, feedback vote the politicians for all I care, bar them from office based on their performance. That’s an utopia, I know, but for now, we’re pretty much screwed.

               I don’t think on-demand, part-time economy is the future. I do believe it has at least some good benefits for the consumer, both short-term (improved services, cheaper rates, feedback and better access to services) and long-term (indirect feedback for competitors, they’ll have to improve and adapt themselves or the music stops) but not for the workers. Read that article. There’s only one party in this drama that’s really making money and it’s not the actor – it’s the theatre selling the tickets. And now, there’s talk about doing the same thing everywhere – including health care. Well now, me boy, that’s truly a disaster in the making…

               Ask yourself, what is the target of private enterprise? Profits. Making money. What is the target of the medical profession? Making people healthy. Do I have to draw you a couple of Venn diagrams? The only people (as in patients) who’ll benefit the privatisation of the medical profession are those patients that can be treated fast, easy and cheap. Why? Because there’s more people coughing and suffering from mild colds and muscle pains at any one time than there are leukemia sufferers. Anyone working retail at least once knows there’s less incentive to stock up on expensive things in less wealthy areas, those are rarely sold and you could get more profits from selling something cheap 50 times than something expensive once. Alright, I may be stretching things a bit, but still. Let’s say hospitals are still public service and not “uberized”. Let’s say only those services provided outside emergencies get affected. Your teeth need whitening and you’ve got to have it now or the moon blows up. Sweetheart, do you really? I’ve had hours of waiting in a doctor’s office myself many times and not just for my benefit. There are tons of reasons why we should improve things. However, you don’t even begin to understand why your opinion of fast, cheap and good service is stupid and doesn’t matter.

               Please tell me, know ye of any good things ruined by greater demand? Well, food comes to mind especially since we have been known to hunt various animals to extinction. However, that’s not the case here. You see, Uber may argue all they want about how they drive demand up because they provide cheaper and better services. Short term, they might. Long term? Not so much. There is no infinite demand here. It’s exactly the reason economic bubbles happen – demand can’t increase exponentially because there is a limited amount of people in a certain area. This is the first sign of a bullshit scenario: if one provides a service to people in a certain area, you can’t have more demand than you have people in that area unless you’re depending on tourists. And even then, how many cars you think tourists use when they’re … touring the museums? Well, let’s say there is enough capacity for higher demand – who gets it? Let’s say nothing wrong happens and workers do get bigger paychecks working at their own leisure. Let’s assume there’s no problem with rates and all parties are happy. There’s just 3 problems with this model for it to be a stable, game changing revolution:

Number uno:

               Kids, if you’re willing to read about the California Gold Rush of fable (just one example, there’s tons more), you’ll see that spreading a limited amount of something among a greater number of willing participants, each one gets less and less. It may be enough when there’s only a few people working it but, as you well know, others will come running. Everybody has reasons of their own so you can be sure they’ll want in on this. Again, the demand for those services can go up, but only so much. What happens when the workers get fewer and fewer jobs? Well, for one thing, Uber may want to limit the number of drivers, for instance, or they’ll have too many drivers and very few of those will actually make good money from it. Then again, what the hell did you think taxi companies have been doing? Why do licenses exist if not for that reason? There, there, that’s the point of their attempt at choking public transportation anyway, killing competition to drive demand up. That’s why I really understand why licensed taxi drivers hate Uber – they have to obey rules and pay for licenses while this new kid just struts past them saying they’re not a taxi company so they don’t have to license but still do the exact same thing for which the others have to have a license. No, I’m not taking their side, I do think competition, lower prices, access and quality are important – but this is not a competition, this is like a fight between a boxer with one hand tied behind his back and another one sporting a crowbar. Either remove licenses or license Uber and let them fight – the consumer will still win.

Number two:

               The whole point of the on-demand economy is not to provide flexible working arrangements for those who need them, it’s right in the title, dummy… The point is to provide the consumers with what they need, when they need it. That’s the big thing, the whole pinata, the new revolution in economics. It’s not a revolution, it’s a scam. If they really wanted to, other companies would have done the same thing. But the scam isn’t in the technology, it’s in who gets the profits. You see, there were catering businesses providing on-line services before, hell, my pizza provider has a website too. Phone orders too. The scam is the provider skipping costs, tip-toeing above the law and making you demand it. They can have lower operational costs because they don’t have to call their workers employees. They can have lower operational costs because they get you to pay for the infrastructure and repairs. Airbnb doesn’t own rooms. Uber doesn’t own cars. You do, as their employee-but-not-really. You get to do the repairs. You get to pay for maintenance. They make you believe that you have to do those tasks anyway, you already own that apartment, car or whatever so you might as well get some money in return for it. They don’t tell you that your car gets more mileage if you drive for them. They don’t tell you an increase in use makes things break down faster. Hell, the customer doesn’t care about that – it’s their convenience, they demand it, other workers say it’s profitable for them ergo you’ll suddenly have an itch you want to scratch. Well, I already own a car, might as well make some money on the side, innit?

Numero trois:

               On every decision you make, there are 4 attributes you can choose from but there’s a catch: you can only pick 3 of them. Three, at most, according to the holy scriptures (Murphy’s Laws in my case). You can choose between having something fast, good, healthy and cheap. Go. Yes, you read that right. If all four align, you can bet your whole month’s allowance somebody got scammed and it may even be somebody else. In this case, it’s the person providing the service. There are many of them, all wanting to work for some reason that’s beyond me (see, I can do sarcasm too). The top reason to work in the fabled on-demand economy is choosing your own schedule. And it’s some bullshit that can’t be easily topped. How many people need transportation at 4am? Coincidentally, the same demographic also uses the latest gadgets, has the most vocal approval of this “on-demand” thing and also gets, on average, a 30% income subsidy from third parties (including parents). The thing is, everything is sort of predictable. A taxi company can’t pay too many employees to be available at 4am because of the costs – but Uber can actually pull it off because it costs them nothing to keep you on call – you pay them for the benefit of making money through them. When is the highest demand for catering? Hint, it involves what rumor has it is called “the three meals of the day” – breakfast, lunch and dinner. Anybody need steak for breakfast besides me? Well, I don’t call Ghostbusters for that, I cook it myself. That’s the reason cheap restaurants have their menus tailored accordingly – having the same menu 24 hours a day means you must have somebody who knows how to make it, ergo they have to pay at least 2 chefs instead of one, for instance. Same thing everywhere. It doesn’t make economic sense to do it even if a couple of customers a month don’t like it. The innovation? Skip paying chefs and you’ve got a deal. Everybody’s happy, including the ones who had no problem with it to begin with. Except not everybody’s happy – there is one demographic who gets screwed royally – those who actually need the flexible schedule jobs. In this case, the chefs. Elsewhere, it’s the poor. They get fewer jobs because the jobs are in limited supply and are spread across increasing numbers. And there’s a reason it’s called flexible schedule as opposed to the standard 9 to 5 (or 6, or 8, or 10) – it’s about businesses covering the lower demand without increased costs. They’re willing to work 2-4 hours a night, for instance, when that same area might otherwise need a full-time employee – therefore the employer gets reduced costs, the customers who need their fix at that time get it and the part-time employee gets a job and money. They may be needing the money to pay for beer, car repairs, loans or education, it doesn’t matter the reason, they now get fewer jobs because more people compete for them. Sooner or later, it all comes crashing down with finger-pointing at everybody except those responsible (the “platforms”).

               Those three reasons alone will get all this undone, I guarantee it. The customers and the so-called “platforms” may be overjoyed but I’ll bet you 1 to 5 odds against my best knickers the ones actually doing the work aren’t happy. Not by a long shot. They know the model changed, they know they have to pay for access to work and they know that today, anybody who’s paying for a job interview is scammed. They still do it because it’s still a wee bit profitable but even that’s changing. The problem is, by that time it’ll be common knowledge who got the bigger slice and it ain’t the workers, that’s for sure.

               On demand enthusiasts forget the cardinal rule of economics – there is no free lunch. I’ve seen companies fight by price wars only to have the survivor massively increase the price because they now had no competition. Do you want that to be true? No, there’s no chance at all for that not to happen, somewhere there’s already a con-man raising his eyebrows and rubbing his hands together. Prevent, not punish abuse. Let public services be public, improve their quality and costs if you want but keep them out of private hands. Education, healthcare, social security, police, firefighters – those are way too important to risk the lives of those needing them because we didn’t think enough. By all means, knock yourself out with everything else. You’ll see the truth soon enough, when it hits the news.

               Companies work for money, for profits. Employees work for money, too. But public services exist not for money or profits but for public benefit. They provide their services to all who need them, irrelevant of wealth. They could be better, they could have lower operating costs, they could have better employees, yes to all the above. But why don’t we improve them? Why do we believe that a new “platform” or type of business who already publicly declares to be avoiding the laws is better long-term? You think you know the meaning of the word efficiency? Well, it also means comparing your profits with what you could make from government backed bonds and stocks, risk free as long as that country doesn’t go the way of the dodo. If you’d make less money from some activity than you would by investing in those bonds, you’d quit doing it. You’d find a way to make your money give you a better return. And if that activity was, say, bus service to and from a low-income neighbourhood who depends on it for going to school and working and can’t afford a normal taxi or Uber? Not everything should focus on not losing money, they’re better off if they have a cheap way to go to work even if you don’t like it.

               For those who yell the end of times, a new paradigm and the second coming, it’s like that brit fellow who saved Hitler in WW1. Good principles, very good man, probably – the wrong choice nonetheless. Impossible to hate him, though, unless you’re mentally defective. For those of you needing the extra hint and a whiff of tobacco, this on-demand economy is like being happy for seeing a light at the end of a narrow tunnel only to discover a train is heading your way. Be careful what you wish for, you may actually get it.

               For those of you who do it for a quick extra quid and brag about it, let’s just say it’s like hating stock brokers for their bad services and high rates but loving a company based in some fiscal paradise where it pays no taxes, because you have to pay them to sometimes be a stock broker to other people who pay you, despite having no formal training, all this from the comfort of your home, in your own spare time and you also have to pay for your own subscriptions to financial information and for your own electricity and internet bill. Eh? Yup. Cognitive dissonance time. Go.

Post scriptum:

               I’m not alone in this, I think. But we’re thinking about the wrong things. For instance, an article by Robert Thomson in WP called “Privatize Metro? Be careful what you wish for.” got some angry commenters to completely miss the point. He argues that public service sometimes can’t be profitable and he gets counter-examples like the quality of Japan’s privatized Metro. That person even supposedly lived in Japan for 12 years. Dude, if you even did live there, why are you comparing two different cultures? Japanese employees sometimes only see their families on weekends. They have a culture of work and overtime. Efficiency is a matter of personal pride and even they have issues. But that’s not the point.. Though he’s answering the wrong question, he’s answering a question the author didn’t ask. Public service can’t be profitable all the time. Can it? This is the question you had to answer. Instead, you’re arguing the quality of service and compare public funding with private venture. What?

               What he’s actually saying is there are only 2 alternatives – public funding or private business. It’s important, this covers everything but it’s also dead wrong – there is always another alternative nobody wants to consider either because they don’t know about it or they want to avoid it. Improve the quality of service for public services. Hire smart managers and good staff and evaluate them on the basis of costs and quality. Have them explain every extra expense, make them onto a bidding platform where they can have private enterprise bid on whatever things they need. Pay them well enough to not mind if both the police and the public are watching their every move. Why aren’t we doing that? Why aren’t we asking if that’s not a worthy alternative? Because that’s not what they want.

               Why isn’t Uber profitable as a taxi company (this doesn’t imply at all that it’s profitable now, though)? Why couldn’t it work that way? Because it’s tough fighting with the unions? You betcha it’s tough, that’s why Uber’s been avoiding it like the plague. But soon they’ll change their minds, the unions I mean – they’ve been for ages a resisting force barring the way towards efficient public services but now? They’re facing something else now, something that’s not bound to follow the rules. Politics always went where the money was, so there’s no help from them, ergo we may find ourselves surprised at unions demanding efficiency and productivity at the expense of job security. That’s a new one, I know, and by no means a sure thing. But still, they might surprise us.

To me, all this debate is no debate, it’s like getting rid of the smell of onion in your breath by eating garlic. It works, it’s just not optimal, won’t help you smell better and it certainly won’t end well. But we’ll see, I could be wrong, you shouldn’t trust a drunken fellow with things outside his area of expertise.

Advertisements

Well? Post a comment:

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s