Cheap Thoughts

It seems like everyone is jumping into the debate over how to classify people who drive for Uber and Lyft or work for Handy and the rest of the sharing economy.  Are they employees, contractors or some new middle ground we as a society are going to have to define?  I don't have any answers or proposals that have not already been tossed around, and I believe that the conversation is an important one for our country to have as technology erodes what employment means to millions of Americans.  This blog post isn't aimed at answering that question, but rather to suggest that we should reframe the debate and not allow it to be so Uber-centric.

When someone starts a conversation about the sharing economy their statement generally begins with some variation of the phrase "with companies like Airbnb and Uber."  It is shortsighted for us to use Uber as the proxy for the rest of the sharing economy because they are the most likely to eliminate their workers altogether.  If you believe that driverless cars will arrive in the not too distant future then it's certainly not a stretch to argue that Uber will be at the forefront of that movement.  Once that happens we won't need to classify their drivers because there won't be any drivers to protect.  The debate needs to be adjusted away from Uber and closer to  companies that don't have as clear a path to automating their workforce.  Instacart is going to have a much tougher times getting robots to go grocery shopping for all of us and Handy will require human skills for the foreseeable future as well.  Let's have the conversation but shift our attention away from Uber to companies that will actually have workers in the long run.

The concept of basic income has been around for quite some time, however it wasn't until the past few years that it has gained some real traction.  Admittedly it is something that is still very new to me, but as I continue to see more people talking and writing about the subject it's clear that the conversation is only going to grow louder.  One of the arguments frequently used by those who support a basic income is that by giving people a safety net they will be free to pursue their true passions and we would witness a renaissance of art, philosophy, literature, etc.  One the surface that sounds like a wonderful society to be a part of but is there any evidence to suggest that is actually how people would spend their time?  

Over the course of the last century, the average time a person in the developed world spends working during the week has decreased from 70 hours to 30 hours.  That's great news!  How has the developed world taken advantage of those new 30 hours?  To be blunt, we haven't, we spend 28 of them watching TV.  If these statistics are accurate they pose a troubling issue for anyone who supports basic income.  What happens if people are receiving that money and adding nothing positive to society?  What happens if there is so much content out there that the average person spends more time consuming it rather than going out and creating it.

Almost any time Jeff Bezos speaks he is able to deconstruct complex economic, business and management issues to their core principles, leaving those paying attention with invaluable nuggets of wisdom.  In a recent blog post, Bill Gurley of Benchmark Capital referenced  one of Bezos' best pieces of advice. The quote is as follows,

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.” 

Invest in things that you know are not going to change in ten years.  I submit that this would be a very useful exercise for politicians to attempt as well.  Like in business, if you know what American's are still going to want 10 years from now you can invest heavily in those areas.  As a qualifier, I would add that the key word in this exercise is "invest," not "spend."

Below in no particular order a brief list of four things that will not change in America over the next 10 years and warrant significant investment. 

American's will want their children to receive and exceptional education.  This one is important for two reasons, 1) A democracy cannot function without a well-educated citizenry 2) As technology continues to eliminate jobs the US is going to need a greater percentage of skilled workers in order to retain its position as the world's strongest and most innovative nation.  This means reevaluating education from the ground up to ensure that all children have access to a world-class education regardless of class, gender, race, etc.  It means making sure that everyone has access to a college education at a reasonable cost and that the nature of education has to evolve with the times.  I would like to see computer science  become compulsory (like learning a new language) and for technology to facilitate a more personalized learning experience for students while making access to high-quality education more readily available.  

American's will still want to feel safe.  A strong national defense is one of the pillars our country was built on, and the government should invest heavily in ensuring that her citizens are protected from all threats, both foreign and domestic.  This means committing a significant amount of time and money to both our traditional armed forces as well as our nation's cyber defenses, which are quickly becoming the premiere battlefield globally.  It will require collaboration between the government and our nation's leading technologists and tech companies to ensure that our continued dominance in the 21st Century.  These parties are going to have to reconcile their differences and come to agreements about what types of policies are in America's best interest.  For the government that means a more transparent and less intrusive domestic surveillance policy and for tech companies and ordinary Americans it means understanding that we all have a reasonable expectation to privacy, not an absolute expectation.  

America will want to attract the world's brightest immigrants.  I think Paul Graham did an outstanding job of explaining why this is so important, but I will summarize here.  Paul argues that because the US only represents about 5% of the world's population it is reasonable to assume that 95% of the world's greatest scientists, engineers and entrepreneurs are born outside the US.  As technology continues to creep into the darkest corners of the world and billions of people come online it is in our best interest to be the place that any young, smart ambitious entrepreneur wants to live.  This is important because 1) Any current technology executive will tell you that there is a severe talent shortage, which is being magnified by an ineffective immigration policy and 2) Because in order for the US to remain a hub for innovation we need to attract as many high-quality thinkers 

American's will want an economy that is growing sustainably. This is one of the trickiest topics to discuss because not only does everyone and their mother have an opinion about  how to achieve sustainable growth, but the nature of work is undergoing a major transformation as software continues to eat the world.  Generally speaking I believe that if you attract the smartest people, create the right incentives and introduce a regulatory framework that makes starting and growing a business as easy as possible you will end up with a positive outcome over the long run.  

I was having a discussion with my roommates last night about the minimum wage.  During the course of our conversation I realized I was having a difficult time articulating my argument, as were my roommates.  Everyone involved is college-educated and relatively well informed, but it became very clear that we had taken a stance without a thorough understanding of our position.  I suspect that is the case for most Americans who take policy stances based strictly on part affiliation.  Minimum wage increases are either terrible for business or a moral imperative as a society, with little room for any middle ground.  

I've said it before, but this is where I think writing is so powerful.  It's an excellent medium for developing a point of view and teaching yourself how to form a position on a subject.  I tend to be more reserved when it comes to minimum wage increases, here is why...

• As technology continues to act as a substitute for human labor it will become more cost effective for businesses to automate jobs rather than employer humans.  A simple example would be cashiers at fast food restaurants, grocery stores, etc.  These are occupations that seem very likely candidates for automation.  If we wants companies like Wendy's or Safeway to continue to staff people in these positions we have to make it economically feasible for them to do so, and raising the minimum wage for these low skill jobs actually creates more incentive to automate.  While it might be politically unpopular/impossible I could see a time when we have to abolish the minimum wage in some cases in order to allow humans to compete with computers.
• People earning the minimum wage represent a fairly small percentage of total US workers, somewhere in the neighborhood of 3%.  Of that 3% more than half are between the ages of 16-24.  This suggests that these workers are most likely employed for the first time and have very few marketable skills and are also not the sole breadwinners of their households.  These are also workers who are most likely part-time workers and are currently attending school.  It is the same people who earn minimum wage today who will earn well-above minimum wage down the road as they increase their earning power.     
• One of the most common arguments for increasing the minimum wage is that there are a large percentage of single parents  who earn minimum wage.  In fact, only 4% of minimum-wage workers are single parents working full time.  Furthermore, the average family income of a minimum wage worker is $53,000, well above the poverty line.
• Most studies suggest that when there is an increase in the minimum wage there is also a decrease in low skilled jobs.  

As I'm writing this its clear that someone on either side of the debate could come out with a laundry list of statistics and studies supporting their stance, which I have no interest in doing.  A fundamental question we're all going to have to answer though is how will technology affect employment?  I believe that a significant percentage of low skilled jobs will be automated in the coming decades.  If you accept that premise then the question becomes how do we ensure there are enough jobs to go around?  It's not logical to argue that making human labor more expensive is the smart move when technology tends to drive costs down exponentially over time.  

There are a number of tools and programs that can be used to combat this trend, I just don't believe raising the minimum wage is the right one over the long term.  The debate ultimately needs to be reframed from "what is fair" to "what is practical in the long run if technology will continue to disrupt traditional forms of employment."

One of the most hotly debated policy topics in tech over the past year has revolved around digital privacy.  The central question, we are trying to answer, is, how much privacy are we as Americans entitled to?  I've always been a firm believer that in most debates the prudent or practical course of action is not usually found in any of the extreme positions people lobby for.  I apply that logic to most policy debates because when taking an extreme stance you are suggesting that your position is absolute and your side of the debate has a monopoly on knowledge.  An example would be the tax pledge Gover Norquist has been pushing for several years.  I dislike taxes just as much as the next guy but a politician cannot with a clear conscience commit to NEVER raising taxes while in office because they have no way of knowing what future events might unfold that require higher government revenue (WWIII).  

I don't believe our government should have access to our personal data without our consent, nor do I believe that with all of the people who want to harm our country and her citizens should we be entitled to absolute privacy. It is a delicate balancing act, but one which is vital to the security and prosperity of our country in the modern world.  I see much more downside risk to completely blocking the government out of our digital lives than there is upside potential in knowing that accessing that data is impossible.  The ongoing debate between the US government and the Apple's and Google's of the world is one of the most important of our generation and both sides have to recognize that Google's desire to keep our data private and the government's desire to protect her citizens are equally valid.

One of the lines in the sand for me would be court orders.  If access to your data is court ordered then companies who are hosting it should be compelled to hand it over.  If the encryption protocols don't allow access at that point then we are not only undermining our judicial system but are endangering the lives of those around us.  Terrorists, pedophiles, drug lords, rapists and kidnappers will all have a wall to hide behind if we as a society aren't willing to come to some sort of understanding on this issue.  I would liken it to the police having a warrant to search a person's car because there is compelling evidence that there is a dead body in the trunk, and the auto-manufacturer creating a trunk that is inaccessible to the appropriate authorities.