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Posts tagged: recession

The problem isn’t technology, it’s exploitative business models

Klint Finley

Former Twitter engineer and Simple co-founder Alex Payne writes in response to yet another rant by venture capitalist Marc Andreesen:

We could go back and forth all day on what exactly defines technological change – I certainly have before. But what labor wants is self-determination, not a slowing of technological change. Taxi drivers protesting Uber aren’t saying that they want apps out of their cabs. They want leverage to negotiate wages and working conditions so they aren’t barely scraping by. The pushback is on exploitative business models, not technology.

“Let markets work”, you say, “so that capital and labor can rapidly reallocate to create new fields and jobs.” Well, we’re three decades into an era of systemic deregulation and financialization. The result? Global recession, lingering structural unemployment, and an accumulation of capital at the top of the economic pyramid. In this climate, capital has indeed “rapidly reallocated” … into hard-to-tax, hard-to-regulate asset classes like fine art. Small business loans are still crunched and austerity reigns while tens of billions in corporate profits sit in off-shore tax shelters.

The “severe macroeconomic down cycle, the credit crisis, deleveraging, and the liquidity trap” that you mention in passing? We “let markets work”, and that’s what we got in return. It’s been a failed experiment for everyone but the 1%. Dismissing “the crisis of inequality” as just a “pessimistic economic theory” has not been, historically, a move that’s gone well for aristocracy.

Full Story: Alex Payne: Dear Marc Andreessen

See also:

Marc Andreessen’s Crude and Nuanced Tech Cynicism

Rusty Foster on Andreessen

The Case Against “Sharing”

Klint Finley

Sharing Economy

Full Story: Susie Cagle: The Case Against Sharing

I’ve been calling the “sharing economy” the Urchin Economy, as in street urchin, named for the street kids that are always hanging around in fiction set during the Victorian period, ready to accept a schilling or two to do some chore for a protagonist. They have no job security, no safety net, they’re treated as if they’re utterly disposable. Of course today, there’s always some high-tech middleman looking to take a cut of these transactions.

See also:

The Expendables: How the Temps Who Power Corporate Giants Are Getting Crushed

The Sharing Economy Isn’t

I also tried to explore some of these ideas in my short story “The Faraday Bag“:

A bunch of my friends found work through this app where young guys–and it was always guys––could have people come over and clean their dishes, do their laundry, that sort of thing. I did that a couple times. Then a guy complained that he wanted “an American” to do his chores for him. I told him I was born in the U.S. and that my family had lived here for two generations. He gave me a one-star review, and I haven’t been able to find work through the app since.

The Alt-Labor Movement: Low-wage workers fight to make bad jobs better

Klint Finley

Nicole Aschoff on the “Alt-Labor” movement, such as the Walmart and fast food strikes:

University of Colorado-Denver management professor Wayne Cascio has shown, through a comparison of Walmart/Sam’s Club and Costco, that low wages are not necessary for high profits and productivity. Costco employees average roughly $35, 000 per year ($17 per hour), while Sam’s Club workers average roughly $21, 000 per year ($10 per hour) and Walmart workers earn an average of less than $9 an hour. Costco also provides it workers predictable, full-time work and health benefits. However, contrary to popular assumptions, Costco actually scores higher in relative financial and operating performance than Walmart. Its stores are more profitable and more productive, and its customers and employees are happier.

Costco is not exceptional. Zeynep Ton, of MIT’s Sloan School of Management, has studied retail operations for a decade and argues that “the presumed trade-off between investment in employees and low prices can be broken.” “High-road” employers like Trader Joe’s, Wegmans, and the Container Store have all found ways to make high profits and provide decent jobs. Catherine Ruetschlin’s research shows that a modest wage increase—bumping up the average annual salary of Walmart or Target workers to $25,000—would barely make a dent in big retailers’ bottom line, costing them the equivalent of about 1% of total sales. Even if a company like Walmart passed on half the cost of the increase to customers, the average customer would pay roughly $17 more per year, or about 15 cents per shopping visit. And, considering most low-wage workers spend nearly their entire paycheck on necessities, the industry would see a boost in sales ($4 billion to $5 billion more per year) to its own workers. Fast-food companies are highly profitable. McDonald’s alone saw profits more than double between 2007 and 2011. They could easily send some of these profits downstream to franchise owners and workers.

So why do most big retailers and fast-food chains insist on a bad-jobs or “low road” model? There are a few reasons. MIT’s Ton argues that labor costs are a large, controllable expense, and retailers generally view them as a “cost-driver” rather than a “sales-driver.” Store-level managers are pressured by higher-ups to control labor costs as a percentage of weekly or monthly sales. And because store managers have no control over sales (or merchandise mix, store layout, prices, etc.) they respond to pressure from above by cutting employment or forcing workers to work off-the-clock when sales dip. Another factor is financialization—the increasing dominance of finance in the economy. Firms feel a lot of pressure from Wall Street to be a Walmart and not a Costco. As Gerald Davis has argued, the rise of finance and the dominance of “shareholder value” rhetoric have resulted in an emphasis on short-term profits that register in increased share prices and big CEO bonuses.

Full Story: Dollars and Sense: 

Low-wage workers fight to make bad jobs better.

(via Metafilter)

This is encouraging, but the possibility of fast food companies switching to “less-costly, automated alternatives like touch-screen ordering and payment devices” is not an idle threat. I’ve seen something like this setup in the food court at the JFK airport. But as I wrote earlier, cultural issues could stop this from becoming widespread — it’s not clear that customers will settle for robots and touch screens over human beings. But I sure wouldn’t rule it out.

Zero Hours: Precariat Design Fiction

Klint Finley

Tim Maughan uses design fiction to sketch a vision of our precarious future:

Nicki is awake even before her mum calls her from the other side of the door. She’s sat up in bed, crackly FM radio ebbing from tiny supermarket grade speakers, her fingers flicking across her charity shop grade tablet’s touchscreen. She’s close to shutting down two auctions when a third pushes itself across her screen with it’s familiar white and green branded arrogance. Starbucks. Oxford Circus. 4 hour shift from 1415.

She sighs, dismisses it. She’s not even sure why she still keeps that notification running. Starbucks, the holy fucking grail. But she can’t go there, can’t even try, without that elusive Barista badge.

Which is why she’s been betting like mad on this Pret a Manger auction, dropping her hourly down to near pointless levels. It says it’s in back of house food prep, but she’s seen the forum stories, the other z-contractors who always say take any job where they serve coffee, just in case. That’s how I did it, they say, forced my way in, all bright faces and make up and flirting and ‘this coffee machine looks AMAZING how does it work?’ and then pow, Barista badge.

Full Story: Medium: Zero Hours

Bram E. Gieben’s “Search Engine” is sort of a journalist/blogger’s version of this scenario.

See also:

Homeless, Unemployed, and Surviving on Bitcoins

Willing to Work But Too Tired to Hussle

Sociologist Zygmunt Bauman Talks About the Precariat

Sociologist Zygmunt Bauman Talks About the Precariat

Klint Finley

Zygmunt Bauman interviewed on the subject of the “precariat”:

The notion of precariat seems quite general and vague to many people. Who are therefore the precarians?

The “general” and “vague” character of the notion of precariat bothers people accustomed to the division of society into “classes” and, in particular, to the phenomenon of “proletariat” or its idea, which the concept of “precariat” should, in my conviction (but not only mine), replace in the analysis of social divisions. In comparison to its successor, proletariat appears indeed almost as an emblem of the “specific” and “concrete”…

How easy it was, when compared to precariat, to determine its content and limits… But the fluidity of composition is one of the features defining the phenomenon of precarity; one cannot get rid of that fluidity without making the notion of “precariat” analytically useless. […]

What issues do, in your opinion, differentiate precariat most distinctly from proletariat? To what extent can one connect the two notions? And finally: is precariat a social class?

Well, I have serious doubts about that. I would prefer to call precariat a social category. The mere similarity of situation is not enough to transform an aggregate of individuals bearing similar characteristics into a “class” – that is, into an integrated group willing to pursue common interests as well as proceeding to integrate and coordinate actions stemming from that will. If workplaces of the times of “solid modernity” were, irrespective of the kind of products manufactured, also the factories of social solidarity, liquid-modern workplaces are, irrespective of their business objectives, the producers of mutual suspicion and competitiveness.

Full Story: r-evolutions: Far Away from Solid Modernity (PDF)

(via [m])

See Also:

The Precariat – The new dangerous class

Temp Worker Nation: If You Do Get Hired, It Might Not Be for Long

Time Wars

Pentagon Bracing for Public Dissent Over Climate and Energy Shocks

Klint Finley

Nafeez Ahmed writes for the Guardian:

Why have Western security agencies developed such an unprecedented capacity to spy on their own domestic populations? Since the 2008 economic crash, security agencies have increasingly spied on political activists, especially environmental groups, on behalf of corporate interests. This activity is linked to the last decade of US defence planning, which has been increasingly concerned by the risk of civil unrest at home triggered by catastrophic events linked to climate change, energy shocks or economic crisis – or all three.

Full Story: Guardian Earth Insight: Pentagon bracing for public dissent over climate and energy shocks

(via Brainsturbator)

Why So Many Scientists Are Abandoning Their Fields

Klint Finley

Here’s my article for Wired about why so many scientists ended up working in the tech industry:

Tech companies are snapping up scientists with backgrounds in fields like physics, mathematics and bioscience — people we might expect to be busy curing cancer, saving the environment or discovering the origin of the universe. It’s easy to be cynical about this. “The best minds of my generation are thinking about how to make people click ads,” former Facebook data scientist Jeff Hammerbacher told Business Week in 2010. But it’s happening for a reason.

It’s not that tech companies need people with PhDs. Many of the best data scientists in the business only have bachelor’s degrees. It turns out that many scientists are moving into tech because opportunities aren’t as prevalent as you might think.

The U.S. produced 100,000 PhDs between 2005 and 2009, while creating only 16,000 new professorships, according to data cited by The Economist. Though we’re used to hearing about PhDs in the humanities ending up as low-paid adjunct professors or baristas, we tend to expect another fate for people who major in fields like bioscience or physics. But even the natural sciences produce more PhDs than professorships. […]

Those that do land jobs are often frustrated. “Scientists spend more time chasing funding than thinking about the science,” Berkolz says. And because funding sources are so risk adverse, the type of research funded tends to be conservative. “Scientists are supposed to be all about falsifiability,” Miller says. “But your job as a professor is to never be wrong. It’s hard to be intellectually experimental when you’re a scientist.”

Full Story: Wired Enterprise: Shouldn’t All Those Internet Scientists Be Curing Cancer?

I think this is also probably why some researchers fabricate experimental data.

Mathematicians Predict the Future With Data From the Past

Klint Finley

cliodynamics-chart-660x474

I wrote for Wired:

In Issac Asimov’s classic science fiction saga Foundation, mathematics professor Hari Seldon predicts the future using what he calls psychohistory. Drawing on mathematical models that describe what happened in the past, he anticipates what will happen next, including the fall of the Galactic Empire.

That may seem like fanciful stuff. But Peter Turchin is turning himself into a real-life Hari Seldon — and he’s not alone.

Turchin — a professor at the University of Connecticut — is the driving force behind a field called “cliodynamics,” where scientists and mathematicians analyze history in the hopes of finding patterns they can then use to predict the future. It’s named after Clio, the Greek muse of history.

These academics have the same goals as other historians — “We start with questions that historians have asked for all of history,” Turchin says. “For example: Why do civilizations collapse?” — but they seek to answer these questions quite differently. They use math rather than mere language, and according to Turchin, the prognosis isn’t that far removed from the empire-crushing predictions laid down by Hari Seldon in the Foundation saga. Unless something changes, he says, we’re due for a wave of widespread violence in about 2020, including riots and terrorism. […]

There are competing theories as well. A group of researchers at the New England Complex Systems Institute — who practice a discipline called econophysics — have built their own model of political violence and concluded that one simple variable is sufficient to predict instability: food prices. In a paper titled “The Food Crises and Political Instability in North Africa and the Middle East,” they explain that although many other grievances may be aired once the violence begins, the cost of food is the primary trigger. They make a similarly grim prediction: large-scale riots over food, beginning around October of this year.

Full Story: Wired Enterprise: Mathematicians Predict the Future With Data From the Past

I’d actually recommend reading journal articles I cite before reading my article:

Dynamics of political instability in the United States, 1780–2010 by Peter Turchin

The Food Crises and Political Instability in North Africa and the Middle East by Marco Lagi, Karla Z. Bertrand and Yaneer Bar-Yam.

Also check out Turchin’s blog.

Subterranean Suburb Uncovered In Kansas City

Klint Finley

KMBC reports:

Kansas City police uncovered an underground suburb used by the homeless on the city’s northeast side.

“This one kind of goes back, and that’s deep,” Kansas City police Officer Jason Cooley said.

KMBC’s Haley Harrison reported that a homeless outreach group said it was unlike anything they’ve ever seen. The subterranean refuge has caves and tunnels.

Full Story: KMBC: KCPD uncovers subterranean suburb on northeast side

(via David Forbes)

As Joshua Ellis notes, this sounds quite a bit like the underground squats in Las Vegas he covered for Las Vegas City Life in 2002.

Poverty On The Rise In Silicon Valley

Klint Finley

sacremento-tent-city

A rising tide does not lift all boats:

The Silicon Valley is adding jobs faster than it has in more than a decade as the tech industry roars back. Stocks are soaring and fortunes are once again on the rise.

But a bleaker record is also being set this year: Food stamp participation just hit a 10-year high, homelessness rose 20 percent in two years, and the average income for Hispanics, who make up one in four Silicon Valley residents, fell to a new low of about $19,000 a year— capping a steady 14 percent drop over the past five years, according to the annual Silicon Valley Index released by Joint Venture Silicon Valley, representing businesses, and the philanthropic Silicon Valley Community Foundation.

Simply put, while the ultra-rich are getting even richer, record numbers of Silicon Valley residents are slipping into poverty.

Full Story: Huffington Post: Silicon Valley Poverty Is Often Ignored By The Tech Hub’s Elite

Meanwhile: Biggest Risk Factor for Depression: Low Income

Photo: a Sacramento tent city, by ThinkingStiff