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The Gig Economy Is Being Sued to Death

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Re: The Gig Economy Is Being Sued to Death

#141

Post by rayiner »

pdonis wrote: post #125
rayiner wrote: post #122

Earlier quoted context omitted.

> You can make an argument that consumers are irrational and are unlikely to really look into whether or not the cars / drivers are insured, but that's a different argument than externalization This part makes me think that he did not consider the scenario of a driver hitting someone else. It is precisely the problem of externalization. If the initial liability isn't on the company, it will be on a party (the driver…

> If the initial liability isn't on the company, it will be on a party (the driver or passenger) that won't actually have the assets to pay in the case of an accident. Why not? In the hypothetical Coasian scenario where the company doesn't have liability but the driver and/or passenger will negotiate with the company to change the terms to compensate, the driver and/or passenger know that they are liable and the comp…

Because even though they might be technically liable, they'd never actually have to pay, assuming you don't have a law requiring them to carry commercial insurance. If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.

Re: The Gig Economy Is Being Sued to Death

#142

Post by murbard2 »

murbard2 wrote: post #99
rayiner wrote: post #93

Earlier quoted context omitted.

There's actually two different kinds of laws at play, of which those restricting freedom of contract is only one. The other kind has to do with when a company can be held liable for the conduct of its employees. Companies generally cannot be held liable for the conduct of their contractors, because they don't control that conduct, while they can be held liable for the conduct of their employees. It's uncontroversial,…

Actually no, as Ronald Coase showed, it doesn't matter who the liability falls on initially - If it falls on the driver, the driver will demand higher wages / fares to compensate for the cost of insuring himself. - If it falls on the company, the company will demand higher fares to compensate for the cost of insurance - If it falls on the passenger, the passenger could demand lower fares. However, the company would s…

Ah, nothing like standard, mainstream econ theory to burn karma.

Re: The Gig Economy Is Being Sued to Death

#143

Post by murbard2 »

rayiner wrote: post #103
murbard2 wrote: post #99

Earlier quoted context omitted.

Actually no, as Ronald Coase showed, it doesn't matter who the liability falls on initially - If it falls on the driver, the driver will demand higher wages / fares to compensate for the cost of insuring himself. - If it falls on the company, the company will demand higher fares to compensate for the cost of insurance - If it falls on the passenger, the passenger could demand lower fares. However, the company would s…

Coase's theorem doesn't apply when the parties can't transact with each other to shift the burden. Customers can choose to use properly insured drivers but someone who gets hit or has her property damaged by a driver doesn't get to choose one that has the requisite commercial insurance.

OP was referring to passengers, not pedestrians.

In the case of pedestrians, the liability depends on who owns the street. It the street is owned by the municipality for instance, it may require cars to have civil insurance. This has nothing to do with whether or not Uber drivers are employees or contractors.

Re: The Gig Economy Is Being Sued to Death

#144

Post by murbard2 »

bsder wrote: post #118
murbard2 wrote: post #77

Earlier quoted context omitted.

You're correct in your distinction, but you are giving the impression that this is a bad thing. If some companies like Uber and Instacart can nullify a nefarious law using loopholes, this is a Good Thing. In general, there are strong reason to believe that regulation which restrict the freedom of contract are harmful, and the result of special interests trying to secure a competitive advantage through legislative mea…

Except that there a some quite good reasons why we do things like regulate cabs. You don't get take make statements like this without discussing why the same thing which happened historically that led to the current laws won't happen again. If you don't regulate them, you wind up with a race to the bottom and have unsafe cars, untrained drivers, lack of insurance, etc. And, gee, once Uber wasn't paying top dollar to…

The thing that happened historically is that cabs lobbied for licensing to cut the competition.

Do you have any evidence regarding your safety claims?

Re: The Gig Economy Is Being Sued to Death

#145

Post by gwern »

waps wrote: post #123
gwern wrote: post #116

One question to ask here is why TaskRabbit and Uber and Handy are going so close to the employee/contractor problem in the first place: why, if the risk is so dire and the issue so well-known (which it is, there's been articles occasionally for years now, and most critical articles or pieces will venture the observation that their contractors are really employees) they are putting in place all those requirements and…

1) cost : contractors without work are free. No insurance (not even with ObamaCare). No providing infrastructure. No nothing ... 2) risk : contractor fucks up, contractor is legally responsible. Employee fucks up, firm is reponsible. 3) Ease of firing and the resulting pressure that can be applied to employees. Contractors don't even have to be fired to be fired. 4) Customer/payment risk. Suppose a customer doesn't p…

None of that explains the paradox: why contractors aren't superior in general and why they're trying to turn contractors into quasi-employees, subject to centralized non-market control.

Re: The Gig Economy Is Being Sued to Death

#146

Post by pdonis »

rayiner wrote: post #141
pdonis wrote: post #125

Earlier quoted context omitted.

> If the initial liability isn't on the company, it will be on a party (the driver or passenger) that won't actually have the assets to pay in the case of an accident. Why not? In the hypothetical Coasian scenario where the company doesn't have liability but the driver and/or passenger will negotiate with the company to change the terms to compensate, the driver and/or passenger know that they are liable and the comp…

Because even though they might be technically liable, they'd never actually have to pay, assuming you don't have a law requiring them to carry commercial insurance. If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.

> even though they might be technically liable, they'd never actually have to pay, assuming you don't have a law requiring them to carry commercial insurance

Um, I had assumed that "liable" meant "liable", not "technically liable but not actually liable". We're not comparing scenarios where the law is the same but we arbitrarily shift the "liable" label from one party to another. We're comparing scenarios where:

(a) the law says the company is legally liable when any driver they contract hits someone while driving a passenger under that contract, and has to carry insurance accordingly, vs.

(b) the law says the driver is legally liable when they hit someone, and has to carry insurance accordingly--commercial insurance for when they're carrying passengers under contract, and ordinary insurance for when they're driving for personal reasons.

The Coasian point is simply that under legal regime (b), as compared to (a), the drivers will negotiate for higher wages or other additional compensation to offset the increased cost of their insurance.

> If you do have such a law, then we're not talking about anything Coasian--we have just picked the driver to carry the cost of accidents.

Sigh. This is just case (b) above, and the Coasian point about the comparison with case (a) does apply.

Re: The Gig Economy Is Being Sued to Death

#147

Post by CPLX »

GauntletWizard wrote: post #114
CPLX wrote: post #43

Earlier quoted context omitted.

You are correct. Most of the obfuscation comes from the fact that people don't like to follow the rules. It's actually not that hard to sum up the difference between a contractor and an employee. If the suspected employer regulates the time, place, and manner of the work being performed, chances are they're not contractors. Yes, there's more nuance than that. But most of the supposed controversy usually involves peop…

Huh; This is the best argument I've heard for Uber drivers being Contractors rather than Employees. In fact, it's a pretty good argument for all of 'gig culture' being contractors, since you can accept and reject jobs. I'd previously been strongly on the other side.

In my personal opinion, the driving services are a legitimate and genuine gray area. A person who is a professional driver, owns their own equipment (the car of course), can pick their own shifts and accept or reject a ride, can drive to different areas if they want, and does in fact have the ability to solicit work from multiple customers, could be considered independent. I can also see the flip side of that, but it's at least arguable.

I think the time, place, and manner argument comes into much sharper focus with the personal service type "gigs" that are out there. Low level janitorial work is really not likely to be an independent gig, and whatever claims to that were had by the company in the original post start to evaporate when they dictate bathroom breaks, what shirt is being worn, etc.

There's really not much to argue here. They don't get to pick the times (booked by the customer via the employer) the places (same) and the manner (as the article states) by which they complete their work. They are part time workers for janitorial service that solicits business online.

Re: The Gig Economy Is Being Sued to Death

#148

Post by hobbyjogger »

murbard2 wrote: post #99
rayiner wrote: post #93

Earlier quoted context omitted.

There's actually two different kinds of laws at play, of which those restricting freedom of contract is only one. The other kind has to do with when a company can be held liable for the conduct of its employees. Companies generally cannot be held liable for the conduct of their contractors, because they don't control that conduct, while they can be held liable for the conduct of their employees. It's uncontroversial,…

Actually no, as Ronald Coase showed, it doesn't matter who the liability falls on initially - If it falls on the driver, the driver will demand higher wages / fares to compensate for the cost of insuring himself. - If it falls on the company, the company will demand higher fares to compensate for the cost of insurance - If it falls on the passenger, the passenger could demand lower fares. However, the company would s…

That is literally the exact opposite of what Coase said.

Coase said that in a world without transaction costs it doesn't matter who the liability falls upon. When you turn to the real world, the fact that it matters greatly who the liability falls on shows just how important transaction costs are.

Coase was trying to get economist to stop ignoring transaction costs and pretending that the type of bargaining in your comment will solve all our problems.

Here's Coase himself:

  The world of zero transaction costs has often been 
  described as a Coasian world. Nothing could be further 
  from the truth. It is the world of modern economic 
  theory, one which I was hoping to persuade economists 
  to leave
Here, read this (pdf). It explains your misunderstanding (shared by many others) in great detail: http://www.deirdremccloskey.com/docs/pdf/Article_306.pdf

Re: The Gig Economy Is Being Sued to Death

#149

Post by hobbyjogger »

murbard2 wrote: post #142
murbard2 wrote: post #99

Earlier quoted context omitted.

Actually no, as Ronald Coase showed, it doesn't matter who the liability falls on initially - If it falls on the driver, the driver will demand higher wages / fares to compensate for the cost of insuring himself. - If it falls on the company, the company will demand higher fares to compensate for the cost of insurance - If it falls on the passenger, the passenger could demand lower fares. However, the company would s…

Ah, nothing like standard, mainstream econ theory to burn karma.

See my other comment to your first post. What you posted was, ironically, the exact opposite of what Coast was trying to show.

To be fair, however, yours is a mistake than many, many people have made -- including some very successful economists.

Re: The Gig Economy Is Being Sued to Death

#150

Post by murbard2 »

hobbyjogger wrote: post #149
murbard2 wrote: post #142

Earlier quoted context omitted.

Ah, nothing like standard, mainstream econ theory to burn karma.

See my other comment to your first post. What you posted was, ironically, the exact opposite of what Coast was trying to show. To be fair, however, yours is a mistake than many, many people have made -- including some very successful economists.

You're correct, and I'm aware that the point is that transaction costs exists and that you want the law to allocate rights by default to the least cost avoiders. However, it is a very valuable insight that, on the first order, allocation doesn't matter.

It's also interesting to notice that the Internet and IT in general is lowering transaction costs and pushing us further into a Coasian world.

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