The future of work: There’s an app for that
economist.com
economist.com
This makes perfect economic sense. You're a business, if things go poorly you scale down cost-free, if they go better, scale up at slightly higher cost than fixed, but the flex is more than worth it. After all, with this you protect margins in all scenarios. Perfect no? In this sense, it mirrors cloud compute instances. Lower capital investment, granular scalability (in this case of human resource rather than compute resource).
Except that it reminds me of an old adage of finance: you cannot eliminate risk - you can only transfer it. This is a classic example of risk transferral: from capital to labour. It makes tons of sense for a business. It makes much less sense for the employees, who, atomised commodities, have no bargaining power. This is, by extension, a bad idea for society, if you accept that groupings of individuals, including those defined by today's "corporations" exist precisely to reduce risk for each individual. That is the implicit exchange between employee and employer. I will provide you with the opportunity to profit from my labour; you will provide me with security. This breaks that contract.
To those who will argue that it is good for aggregate growth, I say, trickle down is not happening. Eliminate the trickle down argument and you're left with a bad proposition.//
How do you protect the workers who little control and no guarantees? A (much) higher minimum wage, an hourly retainer (like prostitutes receive), or Basic Income.
It is frightening to think that homeless people can have jobs that are simply so low-paid that they cannot afford to live anywhere.
Interesting, but I can't say I agree. Some jobs are compensated in risky, performance-based ways already (e.g. sales). And conversely, if everyone prefers job security, freelancing websites could attract better-quality workers by becoming more like employers.
There are a number of other theories for why firms exist, but the classic explanation is that it reduces transaction costs if you can bug Jill down the hall for 10 minutes of her time instead of hiring an outside contractor. http://en.wikipedia.org/wiki/Theory_of_the_firm
That being said, the people with disposable income don't typically live down the street from the people with more time than money. The U.S. may not have diverse enough zip codes to support this model beyond a modest scale. That is, is the transaction cost too high if the guy helping you move that fridge has to commute 1.5 hours and spend another 15 minutes finding your house?
The economics of this only works because that guy isn't paid for that time. Like the way air hostesses are only paid once the wheels leave the ground.
The pilots as well (usually all except the most senior. source: several flight instructors). The clock doesn't start until the door closes.
To make it concrete, if I buy a house, and there's a chance that it'll fall down this year and I'll loose the 100k , then after a year is up, if it's fallen down the sum of whatever portfolio it's been distributed in is still down 100k.
E.g. if you buy a huge number of San Francisco you are now very exposed to large earthquakes, or the house price in SF falling due to a tech bubble
I contend that diversification makes for great maths, but often poor risk management.
http://www.economist.com/news/leaders/21637393-rise-demand-e...
Maybe it's a bit different, but I think there are significant issues with these models related to the risks to IP and also work cohesiveness.
It is a good way to go after trade/unskilled labour.