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The NYT’s Strawman Attack on Uber and the Gig Economy

By: Guest Contributor - Apr 13, 2017, 9:02 am
NYT Gig Economy
A gig economy is an environment in which temporary positions are common and organizations contract with independent workers for short-term. engagements. (El Confidencial)

By Jeffrey Tucker

We are only a few years into the emergence of a new form of market freedom.

In our highly regulated, static, and bureaucratized job marketplace, hobbled by a thicket of government rules and impositions, there appeared a beautiful thing. Sometimes called the gig economy, it specializes in using mobile apps and other software to directly connect producers and consumers. These new strategies have turned billions of previously idle physical and human resources into ones active in markets, to the great satisfaction of people, but much to the annoyance of governments and their connected labor unions.

The gig economy has turned billions of previously idle resources into ones active in the markets, to the great satisfaction of people and the great annoyance of governments and unions.

The headline company here is Uber, the global ride-sharing service that only employs 7,000 people but gives power to millions of drivers and passengers, but there are also thousands of others. What a bright spot! Economic opportunities are being made available for millions, and these markets really do represent a hope for the future.

The irony here is that these strategies are devolving capital control back to workers, just as the socialists once imagined it should be – but it is happening through a capitalistic process. You might think that the emergence of such markets would be greeted with universal acclaim. But, of course, nothing this dramatic is greeted with ubiquitous cheers.

The New York Times has issued a major blast against the gig economy, and it has all the features of this genre of writing: find anything in the sector that might be improved, or is improving, and treat it as something government should crush immediately, regardless of the results for people who are actually choosing in favor of this form of market participation.

An editorial as bad as this calls for a good fisking:

There is no utopia at companies like Uber, Lyft, Instacart and Handy, whose workers are often manipulated into working long hours for low wages while continually chasing the next ride or task.

“Utopia” is a pretty high standard against which to compare any existing reality. It’s also pretty presumptuous for any writer to presume people are being “manipulated” because they choose to work hard. Many, just like many newspaper reporters, they desire success.

These companies have discovered they can harness advances in software and behavioral sciences to old-fashioned worker exploitation, according to a growing body of evidence, because employees lack the basic protections of American law.

Imagine an Uber driver sitting at home, binging on Netflix, who suddenly realizes: I could be out making money by driving people around the city, having great conversations, making people happy, and getting drunks home safely. So up he goes out on the town. This is what the Times calls “exploitation.”

Gig economy workers tend to be poorer and are more likely to be minorities than the population at large … Most said the money they earned from online platforms was essential or important to their families.

I have no doubt, but the Times is blaming the solution and calling it the problem. People who need another source of income have one, thanks to the gig economy. Would they be better off or worse off without the opportunity? (I’m embarrassed to have to make such rudimentary points here but such is the current situation.)

Since workers for most gig economy companies are considered independent contractors, not employees, they do not qualify for basic protections like overtime pay and minimum wages. This helped Uber, which started in 2009, quickly grow to 700,000 active drivers in the United States, nearly three times the number of taxi drivers and chauffeurs in the country in 2014.

 

That Uber grew so fast under this model should tell us something. The conventional workplace is not working precisely because of the “basic protections” that are actually horrible burdens that don’t help either workers or business owners. What these regulations do is diminish competition in every sector. The success of the gig economy is proof that the market is crying out to carry a lighter load of law. When you see success, that’s a signal you are doing something right (again, my apologies for typing such obvious things).

Increasingly, workers and government agencies are pushing back.

Put on your decoder ring: the term “workers” here means labor unions, whose only interest is in cartelizing the labor market for their benefit and at the expense of everyone else. As for government agencies, sure, they are ready to beat into submission anything in the market that moves without their permission. This is an old and grim story.

But so far, experience with these companies shows that without the legal protections and ethical norms that once were widely accepted, workers will find the economy of the future an even more inhospitable place.

Hey, listen. If the Times is saying that Uber, Lyft, Instacart, Handy, and the thousands of other gig companies are going to fail in the marketplace and be replaced by something else, that’s fine. Let the market sort out winners and losers. If workers find better options, they will gravitate toward them.

But so far, it looks like all the gravitational pull is in the other direction, toward industries that devolve ownership rights and choices to workers and away from the center and around government barriers.

The market is already speaking, yelling, screaming: let’s try a different way. What the Times is actually agitating for are laws that crush these innovating companies. If they were to succeed, that would be deeply tragic.

Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, This article was originally published on FEE.org. Read the original article.

Can the US Avoid a Trade War with China?

By: Guest Contributor - Apr 13, 2017, 8:45 am
us_china_trade

By Dan Ikenson Amid increasing tensions between Washington and Beijing over economic and security matters, Chinese President Xi Jinping was in Florida last week for meetings with President Trump.  Although economic frictions between the world’s two largest economies are nothing new, the safeguards that have helped prevent those frictions from sparking an explosion and plunging the relationship into the protectionist abyss may no longer be reliable. As I noted in this recent Cato Free Trade Bulletin: Never have the U.S. and Chinese economies been more interdependent than they are today. Never has the value of the bilateral trade and investment relationship been greater. Never has the precarious state of the global economy required comity between the United States and China more than it does now. Yet, with Donald J. Trump ascending to power on a platform of nationalism and protectionism, never have the stars been so perfectly aligned for the relationship to descend into a devastating trade war. What are those safeguards and why might they no longer be reliable? First, U.S. multinational business interests that used to favor treading lightly with China, and provided a policy counterweight to U.S. import-competing industries advocating protectionism, have grown disillusioned by the persistence of policies that continue to impede their success in Chinese markets. Many think a more aggressive posture from Washington, even if that makes matters worse for them in the short run, is overdue. Second, the pro-China-trade lobbies in Washington have grown sheepish in their advocacy on account of an economic study that went viral last year, ascribing massive U.S. jobs losses to trade with China, and because many fear political retribution from challenging Trump’s assumptions.  Full-throated support for the relationship has become conditional support. Third, now more than ever before, U.S. policymakers, media, and the public are less inclined to look at the bilateral economic relationship in isolation from the strategic and geopolitical aspects of the relationship.  Segregating the issues in the past allowed us to focus on the win-win elements of trade, where there was broad enough agreement that mutual benefits could be derived, without being distracted by the issues where the United States and China are less likely to agree.  Today, our economic frictions are viewed through the prism of our geopolitical differences – and that makes trade disputes more difficult to manage. googletag.cmd.push(function() { googletag.display('div-gpt-ad-1459522593195-0'); }); Fourth, probably more so than at any time since 1989, there is political “appetite” for a trade war. By that, I mean that both Trump and Xi could extract some domestic political capital from the initiation of trade hostilities. Trump’s base and plenty of business and other interest groups believe China has it coming and—after all—as Trump suggests, China has much more to lose from a trade war given its $350 billion trade surplus with the United States. Meanwhile, Xi’s difficulties righting the Chinese economy, which has been suffering its slowest growth in 25 years, threaten him and the party with a crisis of legitimacy.  Being able to blame domestic economic woes on protectionist or otherwise aggressive foreign policies would enable Xi to tap into a vast reservoir of Chinese nationalism, and would reduce the burdens of reform that confront him today.  But make no mistake: a trade war between the United States and China would have profoundly adverse consequences in both countries and—depending on its course—could devastate the global economy. So there’s that. Read More: Fidel Castro: The Homophobic Dictator and His Forced Labor Camps Read More: Three Myths that Distort US Debate on Immigration Fifth, there are a number of legitimate gripes about Chinese AND U.S. trade policies that can no longer go unresolved. Beijing and Washington have been tightening the vices on one another’s companies in a number of different ways, and in some cases violating established rules.  The focus of Trump’s criticism of China has been its currency policy, which has been a non-issue for nearly a decade.  As is often the case, the politics lags the economics, but Chinese suppression of the value of its currency is simply irrelevant (as an economic matter).  In fact, over the past two years, China has burned through $1 trillion of foreign reserves, purchasing Chinese renminbi on currency markets to prevent its value from depreciating further. Among the list of potentially legitimate gripes made about Chinese policies are: Massive subsidization of industries Relatively high tariffs on goods imports and barriers to the provision of services by foreigners Widespread restrictions on foreign investment in a multitude of Chinese industries Forced transfer of technology imposed on foreign companies seeking to establish presence in China Indigenous innovation policies that grant preferences to companies that develop and register intellectual property in China Insufficient enforcement of intellectual property rights Barriers to digital trade, including web filtering and blocking, and restrictions on data flows and cloud computing The continued prominence of state-owned enterprises, which don’t face the same market constraints that private companies face Discriminatory application of China’s Anti-Monopoly law Scope for discriminatory application of China’s new Cybersecurity Law and National Security Law Among the list of potentially legitimate gripes made about U.S. policies are: Continued discriminatory, non-market economy treatment of Chinese companies in U.S. antidumping cases Discriminatory application of the U.S. countervailing duty law, which punishes Chinese exporters (and U.S. importers) twice for the same alleged infraction Opaque and possibly discriminatory procedures at the U.S. Committee on Foreign Investment in the United States (CFIUS), which reviews and can block proposed acquisitions of U.S. companies by foreigners on grounds of threats to national security Proposed expansion of CFIUS’s remit to include an economic security element, a food security element, and to extend covered transactions beyond acquisitions to include green field investments The unofficial, but commercially consequential blacklisting of acquisitions by and products made by certain Chinese information and communication technology companies Many of the complaints about Chinese policies could have been addressed through the Trans-Pacific Partnership had President Trump not withdrawn the United States from that agreement. In fact, the TPP offered the clearest path to compelling favorable changes in China’s economic policies because China would have seen most of its major trade partners join the TPP, and would have had no better alternative than to join itself.  That’s where the leverage (in the form of a carrot, not a stick) to compel China to play by the rules resided.  And, for now at least, that leverage is squandered. So, absent any obvious remaining carrots, some in Washington and around the country are encouraging a more strident tack with China. In last week's Washington Post, Rob Atkinson from the Information Technology and Innovation Foundation, calls for what looks like some form of international sanctions against China.  It seems a sure path to trade war. A better idea, as articulated by my colleagues Simon Lester and Huan Zhu in this new paper, would be to launch bilateral trade negotiations to accomplish resolution of some or all of these issues in a very direct manner.  Simon and Huan argue: If the United States wants to promote the liberalization of Chinese trade and investment policy, it needs to engage with China in a more positive way. To this end, it should sit down with China and negotiate a new economic relationship, one that goes beyond the terms of the WTO. In particular, the United States should initiate formal negotiations on a trade agreement with China. Negotiations of this kind will be a challenge, especially with a president who has been so critical of China. However, negotiations offer the best hope for addressing concerns about China’s economic policies and practices. Of course, like all trade negotiations, this one would be politically difficult.  But considered against the alternatives, a bilateral trade deal is well worth serious consideration. Dan Ikenson is director of Cato’s Herbert A. Stiefel Center for Trade Policy Studies, where he coordinates and conducts research on all manners of international trade and investment policy.This article was originally published on FEE.org. Read the original article.

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