The further to the left or the right you move, the more your lens on life distorts.

Wednesday, October 07, 2015

Gig Economy

For the past seven years, Barack Obama and his supporters among the Democrats have presided over an economy that is so dismal and disfunctional that it sets negative historical records on a quarterly basis. Whether it jobs creation, the debt, or the labor participation rate, we continually think we've reached the bottom, but can't seem to find it.

Sure, Barack Obama inherited an economy crippled by the crash of 2008, and he deserved some leeway in addressing problems generated by that crash. But his seven year approach—a huge, but meaningless "stimulus" that created very few jobs, a string of tax increases (both direct and indirect) that acted as disincentives for investment, a healthcare program that put undue stress on small businesses, and a regulatory regime that suffocated many small companies,—acted as net negatives for the economy.

There is, however, one ray of hope—the so-called "gig economy." The UK Guardian describes it this way:
Today’s digitally enabled gig economy was preceded by marketplaces such as ELance and oDesk, through which computer programmers and designers could make a living competing for short-term work assignments. But the gig economy isn’t just creating a new digital channel for freelance work. It is spawning a host of new economic activity. More than a million “makers” sell jewellery, clothing and accessories through the online marketplace Etsy. The short-term accommodation platforms Airbnb, Love Home Swap and onefinestay collectively have close to a million “hosts”.

This explosion of small-scale entrepreneurship might make one wonder whether we are returning to the economy of the 18th century, described by the economist Adam Smith in his book An Inquiry Into the Nature and Causes of the Wealth of Nations. The economy Smith described was a genuine market economy of individuals engaging in commerce with one another.
From the perspective of Big Intrusive Government (BIG), the notion of a gig economy is anethema. After all, it's the wild west—young people accepting gig opportunities that provide value to others—on-the-fly.  After all, nice staid hourly or salaried employees, as opposed to contract workers and individual entrapreneurs, are easy to control, easy to track, easy to tax, and easy to manipulate. Independent contractors, not so much.

Nicholas Ballasy discusses one conservative view of the gig economy by quoting Congressman Jason Chaffetz on the subject. Ballesy reports:
Rep. Jason Chaffetz (R-Utah), chairman of the House Committee on Oversight and Government Reform, expressed concern that the federal government might try to intervene in the “gig economy” and over-regulate companies such as Uber.

“One of the reasons I think this economy is flowing and this sector is flowing is because government hasn’t been involved. It has been the Wild Wild West. It has been tapping into that entrepreneurial spirit,” he said at a POLITICO discussion called “Generation Next: The Future of Work.”

“It’s been tapping into young people’s idealism that says you can make money. You can be an entrepreneur and you can do something without having to wear a tie. You can do it in your bathroom, if you would like, and you can do it at your own pace and your own creativity,” he added.

Chaffetz said he is “deeply concerned” the federal government is going to interfere and attempt to suddenly “save people from themselves.”

“I’m worried about that. I like the Wild West. I like the idea that entrepreneurs can thrive,” he said. “I worry that the government will come in and over-regulate it and create more barriers and slow people down.”

He also said there is a “generational” problem in Congress that could ultimately hurt the state of the gig economy, which is based on independent contract work.
The "Wild West" of a gig economy is BIG's worst nightmare. After all, what happens to crony capitalism? You know, the ability of BIG politicians and bureaucrats to reward their corporate friends and punish their corporate enemies? What happens to 'too big to fail?' What happens to withholding taxes from wage earners, who historically, never seem to protest just how much money is taken out of the paycheck? In fact, what happens to paychecks?

The gig economy rewards initiative and skill. It leads to unequal outcomes based on unequal abilities, enthusiasm, and risk-taking. In general, that's not something that the Left wants to see. But then again, almost every urban hipster really, really loves Uber and Etsy.

In my view, it's time to step back and allow the gig economy to flourish. In Chaffetz's language, BIG needs a "regulatory time out" in which it simply gets out of the way. We'll see if that happens.