California is cracking down on the gig economy

If you think about the labor market as a market, individual employers/employees are willing to pay a variety of prices. Some people will be willing to work for $10, 12, or 14/hr, etc and some business can afford to pay $20/hr and some only $10 without going under. So if the labor price goes up from $10 to $12 there will be more workers (since the people willing to work for $12 are now in the pool), and if the labor price goes down from $20/hr to $10/hr there will be more jobs (since business that are only viable at $10/hr will exist now).

Normally the going rate for a given job would be around where supply=demand. If there are too few potential employees, the jobs that can pay $20/hr will get the workers and the jobs that can only pay $10/hr will go under. If there too few jobs, the going rate will go down, and now jobs that can only afford to pay less will be viable.

The danger I see with trying to achieve social progress by mandating every job be a "good job" is that it is very easy this way to create a situation where supply != demand. If you simply mandate no jobs pay less than $20/hr, the businesses that are only viable at $10/hr will go under. But if supply=demand before, and a bunch of jobs disappear, now you have people that can't get a job at all. So you've created some winners, but only at the expense of the people who are least competitive in the job market. And to use Uber as a specific example, sure they can raise their prices, but fewer people will take Uber and the demand for drivers will still be reduced.

This is a simplification of course. Maybe even if the overall market can't afford to pay more, particular companies can, and unions could achieve better price discrimination for labor. Or raising the minimum wage a moderate amount may only have a minimal effect on demand. But I think the overall model of individual employees and employers with individual prices is pretty solid.

If you follow this model, the best way to achieve progress is probably not to ban low-paying jobs from existing. It would be to create a greater number of jobs (some of which are higher paying) and then the low-paying jobs will be forced to either raise their wages or cease to exist naturally. By doing it that way there won't be a job shortage. I think the government still has a major role to play in this, but it's a more complicated one than just mandating what the market price should be for a transaction to be allowed.

China is probably an example of this sort of development. Before the trade war, factories were already moving out of China (to Vietnam, etc) because the wages there have gone up so much. There are certainly many problems and it is certainly not a developed country yet. But the wage (and overall economic) growth over the past few decades has been almost unimaginable [1].

[1] https://tradingeconomics.com/china/wages

> One side: People should be free to decide what to do with their money and the government should stay out of the way because people understand their lives better and governments can be corrupt.

> Other side: Governments should impose restrictions and fees as society as a whole will be effected by certain actions of individuals and governments have a responsibility to look out for the people's best interest.

I feel like people are always talking past each other. In general what happens is that the policies enacted by Democrats and Republicans are both crap but in different ways, and then both sides argue for their ideal that their party doesn't actually uphold but against the other side's actual results which are in both cases terrible.

So they're both right. Markets are more efficient than governments but we don't want people starving in the streets. The Republicans' policies are terrible in practice and the Democrats' policies are terrible in practice. What now?

I tend to think the answer is a UBI, but the difficulty is in getting it passed. The right-wing objection is obvious; it's the purest incarnation of redistribution of wealth. But we already have such policies and replacing them with an equally-redistributive UBI is probably an easier sell than it is on the left, because it would evaporate their world. Unemployment insurance, disability, social security? Redundant, not required. Minimum wage? Food stamps? Housing subsidies? Same. Progressive income tax? Don't need it, flat tax plus UBI results in negative effective rates for low income people and low effective rates for middle income people.

So "employee benefits"? Bad policy, let's get rid of them all and do a UBI instead. Which is the right policy precisely because it would dismantle a century of accumulated inefficient bureaucracy -- but that very fact makes it hard to enact.

So in the meantime I end up arguing against all of this other stuff, as just more to repeal when we finally get the votes to do it properly, and more institutional inertia that makes it harder to get where we ought to be.

But I sometimes lean on the traditional arguments because, ironically, I'm less tired of those than having the same "does a UBI cause inflation" "not really but if it did that's what we need right now anyway" discussion for the hundredth time.

> But if we look at the actual companies targeted, no, GrubHub, Uber, DoorDash et al are NOT low-margin industries. With worldwide services like this where your costs per-unit are basically only server costs, the margins are extremely high because your costs approach zero as users increase.

The dominant unit cost by far is paying the drivers, which doesn't go down with scale. Then you get a bunch of other stuff like credit card processing fees and customer service that also doesn't scale much if any better with volume either.

The server cost is barely a unit cost at all. That's fixed cost. Though it still needs to be paid from something.

> You don't think employees notice when they are paid less? You don't think customers realize when they pay more? If you really want to make the claim that employees don't notice lower pay and customers don't notice higher prices, that's tantamount to admitting that the free market doesn't work.

They notice how much they're paying and being paid, but they lack the information to know how much they would be paying or being paid in the alternative. So they think they're getting "free" insurance when they're really getting insurance instead of a cost of living increase.

> Yes, obviously investors will pass the cost off to employees and customers, but if they pay an unjustifiably high insurance premium and try to pass that cost off, they open up a business opportunity for a competitor to pay employees better and/or charge customers less by buying cheaper insurance and passing off less of that cost.

You're assuming that the problem is caused by which insurance company the employer chooses and not that it is difficult to accurately detect insurance fraud without using invasive methods, so all the insurance companies charge rates that exceed the value of the insurance and the companies only buy it at that price because it's required by law.

> There are additionally some regulations in place that prevent employers from passing off too much of the cost to employees or customers (i.e. minimum wage or fixed taxi fares).

There are two options here. One is that the money comes from somewhere. The other is that it doesn't, the cost of the service now exceeds its value, and you lose your job.

> The advantage that a big company has is that when they shop around for insurance, they're much more likely to be able to get a good price than an individual because they're a large, valuable customer.

Insurance companies compete aggressively on price for all customers. Historically larger buyers had a slight advantage because they could get a discount to account for the lower per-customer acquisition cost of getting many customers at once, but now that insurance is a thing that you buy from a website after comparing prices on the internet, even that is becoming an increasingly negligible advantage.

Meanwhile if you buy it yourself you get to choose the policy that you want rather than whatever your employer stuck you with.

In practice what happens is the availability of exploitable labor creates incentive for abusive employers (and others in power in the society) to maintain poor conditions among their potential labor pool.

In many (both historical and ongoing) cases the societal abuses this goes with are quite horrific, and the large-scale power imbalances are extreme.

Removing abusive employment relations at a society-wide scale is a strong first step towards helping people out of the kind of desperate situations where such arrangements would seem better than alternatives.

The abstract libertarian fantasy-land where every “consensual” “contract” is mutually beneficial sounds nice if you don’t bother learning the details of specific past and present legal and social systems. In reality these abusive social relations are a nightmare, doing irreparable damage to countless people’s lives.