Orwell Got It Wrong

Two ways of using quant have been, to my mind, wrong: financial engineering because it's been the source of collapse since the beginning of the Nation, and psychoquant which uses data to manipulate the rest of us to the advantage of the few. Well, Noam Scheiber goes long in today's NYT with a detailed expose` of how Uber does it. It should give you the willies. May be not. What the story doesn't tell you: Uber, despite these very expensive efforts to manipulate its "contractors", is massively underwater.

Uber exists in a kind of legal and ethical purgatory, however. Because its drivers are independent contractors, they lack most of the protections associated with employment. By mastering their workers' mental circuitry, Uber and the like may be taking the economy back toward a pre-New Deal era when businesses had enormous power over workers and few checks on their ability to exploit it.
[my emphasis]

The point, of course, is to re-institute the indentured servitude (or, in the extreme, slave) model of the 19th century. For those who think that immigration in the century was the result of National magnanimity, well no. Various folks, generally on a racial basis, were imported to deal with specific projects. Asians building railroads likely the best known. As explained many times previously, as capital substitutes for labor, the less there is for the capitalist to gain from squeezing the workforce. And it matters not whether they're "employees" or "sub-contractors".

The destruction of employment will, in all likelihood, have some predictable effects. Healthcare will devolve to the pre-New Deal model where it's just another consumer spend, and quality will devolve to that level. The reason healthcare evolved so rapidly in the post WWII period was just because of all that moolah injected into the system. Most of the basic tech that was implemented was known before the War. There just wasn't much money coming from the 1% to finance progress. In other words, money can't buy you love or better health. It takes a bit more than a few village people to fund R&D in healthcare.

Retirement funding, similarly. And, by the same mechanism: divide and conquer. The Right prefers the verbiage of "freedom to choose", but, of course, the only way to fend off the powerful few is if the many merge together.

The Editors, most likely, buried the lede to the last graph:

"You have all these players entering into this space, and the assumption is they'll do it through vast armies of underemployed people looking for extra hours, and we can control every nuance about what they do but not have to pay them," said David Weil, the top wage-and-hour official under President Barack Obama.

When you stop to consider the enormous cost advantages, Mr. Weil said, "it says to me this is an area that will grow fast."

Take the time to read the whole piece. It will curl your hair, if you're among those who've not been paying attention to this quant space.