Labor in the twenty-first century

I’m in America so in honour of my hosts I’ll skip the ‘u’ in labour for this post. Yesterday was Labor Day here which — because I had the day off — got me thinking about what work and labor mean today.

The nature of work and the way it’s organised are two of the biggest issues we face in the twenty-first century. Both are hugely intertwined with technology because very few jobs have been untouched by the information age and we’re now really starting to see changes in the way that work is organised, particularly because of the ubiquity of mobile phones.

This throws up some big questions about the negative impacts we’re seeing like conditions for workers in the gig economy, the debate about automation and the inequality created by tech companies themselves.

The gig economy companies know that they’re in the front line of the upcoming wave of regulation of tech companies that will almost certainly come. If that’s done well (big ‘if’ there) and we avoid monopolistic behaviour amongst the platforms I think things could improve.

Gavin Kelly has done a great corrective job on media hyperbole on how many jobs will disappear because of automation. It’s a risk of course but I agree with Gavin that it won’t happen as dramatically as some reports have said. There’s a big opportunity for automation to create better jobs if it’s done well.

Inequality is a much more difficult issue with no simple answer. I was struck by this graph which is an example of correlation rather than causation but striking nonetheless.

Fred Wilson has written about Union 2.0 and that’s an area I’m really interested in. At the moment though I’m not convinced that existing large unions are where the change is going to come from. They seem to feel they have a lot to lose and are unwilling to take big risks with new services. Ideally new unions should provide services for workers that have network effects.

I’m still to be convinced that UBI is an answer to rising inequality. I get the appeal of it but, as soon as you get into the detail, unintended consequences abound. I think the experiments in Oakland, Finland and Canada are great but I’m not sure they’ll give answers that are particularly transferrable.

At BGV we’ve been searching for and funding startups in ‘workertech’ for almost a year now and have found all kinds of interesting ideas. It’s been really great working with the Resolution Trust who care so much about the issue and have access to amazing data, particularly on the economics of modern work. It’s made me an optimist that things will change for the better as I’ve met so many people who want to make a difference in this arena but there’s still so much more to be done.

Technology and inequality

A few years ago I wrote a blog post called ‘How to stop geeks becoming the next bankers’. At the time I was worried about technology exacerbating the job losses created by the 2008 financial crisis. I wrote “We need technology to solve the difficult problems we face… technology should be creating new and better institutions rather than just gradually eroding old ones and leaving a vacuum in their place.” But the motivation behind the post was my belief that technology has real potential to make the world a better place and I didn’t want to see it highjacked by people who just wanted to get rich off the industry.

So posts like Paul Graham’s at the weekend make me pretty angry. Whether he meant it quite like that or not, sticking up for inequality is at best a bad PR decision for him personally and at worst going to strengthen the backlash against the tech sector and Silicon Valley. In my darker moments I think we’re completely failing at stopping tech becoming as toxic as banking.

Arguing that inequality doesn’t matter is just daft. I’m all in favour of people getting rewarded for creating great companies but to argue that the point of creating companies is to get richer than other people is completely misguided. Making enough money to be considered ‘rich’ should be a side effect of creating something that improves peoples’ lives. And I don’t think anybody is arguing to eradicate inequality — it just shouldn’t continue to be so extreme. Society is a lesser place for every obscenely rich billionaire who does nothing with their wealth other than tickle their own ego.

I don’t believe that extreme inequality is inevitable — it has happened because of the rules and norms we’ve chosen and we need to get serious about changing them. Tim Harford, writing about some of the controversies around the ‘gig economy’, says that the relationship between state and the technology industry needs to be completely rethought:

“ … here is a far more radical approach: we should end the policy of trying to offload the welfare state to corporations. It is a policy that hides the costs of these benefits, and ensures that they are unevenly distributed. Instead we should take a hard look at that list of goodies: healthcare, pensions, income for people who are not working. Then we should decide what the state should provide and how generously… Call it libertarianism with a safety net.”

That safety net of course will come at a (taxation) price — something that a lot of people and companies in Silicon Valley resist. Listening to people at the more Ayn Rand end of the spectrum you get the feeling they would love Silicon Valley to float off into the Pacific away from the United States and all its pesky taxes and poor people. Or maybe the only plausible endgame is that the rich jump on the rockets they’ve built for themselves and leave behind the detritus of planet Earth.

Although it annoyed me, I’m glad that Paul Graham’s post has got a debate going. He partly rolls back his own argument at the end of the post, admitting that he’s really just made a semantic argument, suggesting, “Let’s attack poverty, and if necessary damage wealth in the process. That’s much more likely to work than attacking wealth in the hope that you will thereby fix poverty.” I think he underestimates how closely poverty and inequality are linked.

Mark Suster posted the best response from an investor I’ve seen. He ends his post, “I believe in income inequality in so much as it’s an obvious consequence of capitalism. I have no problem when success is rewarded with riches. But I don’t celebrate income inequality. It pains me.”

I would add that it’s something that pains me and that I want to change. The technology industry has created huge wealth and with that comes responsibility. I hope in the future it can create wealth as well as large amounts of social value — and hopefully do that with the benefits distributed more equally.