We used to have “welfare capitalism.” Now we have nothing.
By Tim Redmond
JANUARY 30, 2014 – There’s lots of talk about regulating the sharing economy – zoning rules for Airbnb, regulations for Uber – all of which need to be part of the political agenda.
But there’s another element of this that’s much bigger and more troubling, and it’s largely lurking in the background. I will leave it to Catherine Rampell at the Washington Post, who gets the point pretty clearly:
It’s true that, in many ways, sharing-economy jobs can offer more autonomy than traditional employer-employee relationships. But there’s a dark side to these work arrangements that gets considerably less press: the shifting of risk off corporate balance sheets and onto the shoulders of individual Americans, who may not even realize what kinds of liabilities they’re taking on.
She’s got a great historical analysis. In the Industrial Age, when traditional family-based safety nets fell apart, some countries created government-based replacements – the European welfare states.
In the US,
For reasons driven partly by ideology and partly by historical accident, these new safety nets were largely administered through employers (for example, health insurance). Some historians call this “welfare capitalism.”
But as the economy restructured toward neo-liberalism, that changed:
Then, beginning around the 1970s, this form of corporate-based risk-sharing began to unravel. Exactly why is debatable; globalization, the decline of unions, regulatory changes, new technology and financial markets all likely played a role. The result, though, is that programs such as defined-benefit pensions began to disappear. Just-in-time scheduling, outsourcing and other arms-length relationships between firms and workers blossomed. In some ways, these developments were very good for economic growth, but they also introduced much more instability into the lives of middle-class workers.
Now we have the ultimate instability: Uber is worth billions in part because it has very few employees doing the bulk of its work. Instead, freelancers with no benefits from the company do the driving.
And the US has no European-style safety net.
A few get very rich. Many get screwed. Welcome to the new sharing economy.
