On flexible economy

I read Professor Robert Reich’s How the New Flexible Economy is Making Workers’ Lives Hell and jotted down some notes.

Summary

To summarize the contents of the above article, it goes like this:

1. A system that 1) analyzes weather, traffic conditions, etc., 2) predicts in real time how many customers will come to restaurants/hotels/stores, etc., and 3) instead of keeping employees on standby at all times, hires exactly as many hourly workers as needed just-in-time is called the flexible economy.
2. From the employer’s standpoint this is good because it reduces costs, but from the employee’s standpoint it is little different from hell because stable income is not guaranteed. (For example, getting a text on the way to work suddenly saying, “Please don’t come in today.”)
3. It should be guaranteed by federal law that employees can work regularly and predictably. If that cannot be done, then at the very least a stronger safety net is needed.

These days there are many similar discussions around the theme of optimization or automation. I mostly agree about the problems this phenomenon raises, but I find it hard to agree with the analysis of the causes or the solutions.

Optimization is not the problem

The argument that optimization causes problems, so we should stop optimization, is mistaken. Optimization itself is not the problem. For example, let us assume that the benefits of the flexible economy are enjoyed not by employers but by employees.

• You wake up in the morning and do not want to go to work. Your bank balance is fairly comfortable, and it does not seem like you will have any major expenses for a while, so wouldn’t it be nice if you could freely call your company one hour before work and say, “Starting today, I’m taking fifteen days of unpaid leave”?
• You have to go work part-time at a café 30 minutes away by subway. You leave home and are walking to the subway station, and just then a neighborhood café is urgently looking for a part-timer. On top of that, the hourly wage is higher. Wouldn’t it be nice if you could call the café where you had been working and say, “From now on I’ll be working somewhere else,” and then work at the café right in front of your house?

The very fact that something becomes flexible is a good thing. The problem is whether that power or information is concentrated in a small number of employers or distributed among a large number of employees. It is also a question of whether the additional value created through optimization is pocketed by a small number of employers or returned evenly to a large number of employees as well.

Let us imagine a world in which every job changes to the flexible-economy model, and anyone can easily know when, where, and what jobs appear and disappear. If you need money, you choose what you judge to be the most appropriate among the currently available jobs and work only as much as you need. Moreover, because the additional value produced by optimization is distributed evenly, the hourly wage is also much higher than before.

If you can do the work you want, at the time you want, in the place you want, and only as much as you want, would that not make possible a more humane life?

Automation is not the problem either

Although the above article does not mention it, I think the same way about arguments that say jobs disappear because of automation, so we should not automate. If work disappears, is that not a good thing? The problem is not that work disappears, but that income disappears along with the work. The reason income disappears is that the gains produced through automation are not distributed evenly, and the company takes all of them.

The article says that 1) federal law should guarantee that employees can work regularly and predictably, and if that is not possible, then 2) at the very least a stronger safety net is needed. I think 1) is only a poor stopgap, and that we should aim for 2). If the increase in gains or the reduction in waste obtained through optimization or automation were used to build a safety net, everyone would be able to live a more humane life than they do now.

How exactly to build the safety net, whether an automation tax should be introduced, whether basic income should be implemented, and so on are questions of concrete methods of implementation, so let us set them aside for now. For reference, I believe that human beings should not labor for income, but should work in order to accomplish something they themselves consider valuable, and in that sense I support a basic income system. (See also: Job losses due to automation)

Irregular income is not the problem either

If you look closely, there are many strange points in analyses of the problems that arise because income is not fixed.

From the employee’s standpoint, if one can freely choose in both directions—to work more when one wants to increase income, and to reduce income when one wants to work less—then of course it is better for income not to be fixed. The problem is not the fact itself that income is not fixed. The problem is that it is mostly the employer, not the employee, who decides whether income will increase or decrease, and moreover that it is hardly ever decided in the direction of increasing.

This too is ultimately only a question of who has the power.

Moreover, the prescription that because expenditures are fixed, income must also be fixed has the direction completely backward. The correct direction is not to fix income, but to make expenditures not fixed either. Would a society in which fixed expenses are minimized and various ways are provided to adjust spending flexibly not be better for living a more humane life than a society in which both expenditures and income are fixed?

All of this discussion only works on the assumption that there is a thick safety net. And what provides that thick safety net? The value obtained through automation and optimization.

Conclusion

I agree that optimization and automation are causing many social problems. But optimization or automation themselves are not the root of the problem. The problem is that, as has almost always been the case, the power deriving from new technologies such as optimization and automation is grasped and wielded by a small minority.

Rather than arguing that we should not optimize or automate, we need to think about how power can be distributed. We need to think about distributive justice.