Fooling the Classifiers (part 3)

Lyft, 2012

Lyft and Uber notoriously disrupted the taxi medallion monopoly by providing a cab-like service and calling it ridesharing. But the bigger trick they pulled was employing drivers and calling them independent contractors, thus avoiding overhead costs like health insurance and social security and workers’ comp.

To the drivers, Lyft and Uber position themselves as “platforms”, a place where enterprising individuals could be their own boss, work their own hours. For a time, Uber referred to its drivers as “Partners”. Partners with no equity, but whatever.

The East Coast creates value through laws and restrictions that lead to artificial scarcity. Silicon Valley creates value by disintermediating the rent-seekers. The US economy is just a line of people digging up holes and filling them back in.

AB 5 is a bill that reclassifies contract workers as employees, forcing employers to pay all the benefits that entails. Uber and Lyft have just been ordered to comply, but company spokespeople seem confident they’ll find a way out. Most likely outcome is that we’ll be stuck with all of the unintended consequences of AB 5 and none of the benefits.

Regulators tend to fight backwards-looking battles. Meanwhile, Uber has been shifting its engineering jobs to India, which led to the resignation of CTO Thuan Pham. Maybe the end game is that all the engineers will become contractors while drivers are full-time employees.

In other tech news, there’s some antitrust noise going around. The NY Post Hunter Biden story sheds some light on the power of social media monopolies.

Clearly, not powerful enough! Mark Zuckerberg says Facebook removes 89% of hate speech before anyone sees it on the platform. As if that’s a good thing, where problematic user content instantly redirects to a sinkhole.

The government pretends to be anti-monopoly, but what they actually dislike are unorganized monopolies. The ideal scenario is to have all the competing entities assembled in a cartel, kind of like the banking system and the Federal Reserve. Instead of hauling bank CEOs before the Senate every time shit goes down, the Federal Reserve holds regular Open Market Committee meetings to decide how to best manipulate the market.

Tech regulation is already well underway. The social media coalition that was formed to “secure the election” will become a permanent fixture that decides what to preemptively censor next. Maybe they’ll call it the Federal Free Expression Committee.

2 thoughts on “Fooling the Classifiers (part 3)

  1. The East Coast creates value through laws and restrictions that lead to artificial scarcity. Silicon Valley creates value by disintermediating the rent-seekers. The US economy is just a line of people digging up holes and filling them back in.

    Terrific phrase.

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