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Silicon Valley entrepreneurs versus Amazon tribes: who will turn out to be the most resilient, 50 years from now ?

By Pierre Massat
on March 5, 2015

There has been a lot of attention in the press for the so called “Uber model “  lately. “Workers on tap”, as the Economist put it, succinctly. A brave new era in which many employees will be replaced by self-employed individuals (or “independent contractors”), and where the most successful businesses will be the ones that design the most elegant and efficient  way of brokering and tailoring these individual workers to the demand.

There are a few obvious and immediate advantages to this model.  It is more flexible for consumers than what taxis and public transport can typically offer (as one of our colleagues, an Uber fan, loves to say). It is also cheaper. And it looks like an easy way to make money if one needs to make ends meet. Airbnb seems to have the same appeal to many people.

There is a catch, though. As Robert Reich pointed out in a recent article, General Motors is worth 60 billion dollars and employs 200 000 people, while Uber is worth 40 billion and has only 850 employees. The rest of the people working for Uber (around 160 000 drivers) are “independent contractors”.  Which means that the majority of the people working for Uber don’t get the social protection other workers – in formal employment – get. Plus Uber doesn’t pay the tax rates they should.  But then again, not paying much taxes is big business’  favorite sport these days, as LuxLeaks, Swissleaks etc. can testify. Nevertheless,  Uber is, due to its business model, one of the clear champions in this sport. It’s definitely not “Uber taxed”.

There seems to be a general trend these days towards less and less labor regulation, a race to the bottom.  The informal economy is now also becoming bigger in the North, it seems. In our part of the world, the push is coming from governments and EU technocrats alike (see the cuts in the minimum wage in Greece and Portugal as imposed by the Troika) as well as from big corporations with their innovative (and often downright illegal) ways of employing workers.  Uber is certainly not the only company out there threatening former welfare state labor laws. The rest of the tech giants are also characterized by an astronomical value in Wall Street with very few employees – as compared to the old manufacturing giants. Perhaps it will prove again a bubble, like the dotcom bubble a decade ago. But even in that scenario, chances are there will be survivors.  Giants. And they might be lean and mean – see Amazon for example as a case in point, one of the survivors last time.

Recently, I read a book written by someone from Silicon Valley,  “Who owns our future ?” by Jaron Lanier. The core idea of the book was that the “new” economy is fundamentally flawed in the sense that a big chunk of the created value is not accounted for. For instance, Google sells information to companies about its users’ tastes, but the information used by Google is provided by the users for free. Facebook isn’t much different. Mind you, Internet surfers don’t just provide this info for free, many seem hell-bent on providing all this info to these tech molochs.

This is precisely what the tech giants are really good at: capturing a much greater share of the created value than traditional businesses. And they’ve put a lot of effort into it. Look at the sophisticated tax evasion schemes that Apple and others have devised, they’re certainly  “smart”. Look at some of those “champions” ’ plans to create floating cities off the US territorial waters to bypass labor and immigration laws. Look at the stock of cash Apple is piling up without even considering to invest it. As mentioned,  “traditional” corporations have also gotten their act together in terms of escaping taxes in recent years (see the recent accusations targeted at McDonald’s), and let’s not forget “the villain from Ryanair” or other innovators with disruptive business models of a decade ago, but the fact that the industry with the fastest growth nowadays redistributes a comparatively smaller share of the value to society is nevertheless striking.

On paper the tremendous amount of money these companies are making is good for economic growth, our society’s fetish. But in reality they’re a menace to society, in the long run, because they don’t play the redistribution game.  In short, Zuckerberg et al are the adult version of “Dennis the Menace”.   Every dollar they don’t pay in taxes, whether it’s due to their disruptive & no doubt smart business model, or to ingenious “tax optimization”, is a dollar that won’t go to social protection, education, or health in the end. So by the time their plans will have succeeded, a big share of the workforce might consist of “independent contractors”, doing the jobs that computers and robots can’t do, with very little protection offered by a state that went bankrupt. If this really happens, who will be left to buy their fancy gadgets ?  …  If you know the answer, let us know.

Just wait until a smart geek coming straight from Harvard finds a loophole in the laws to let 5-year-old kids work  (no doubt it will have a more politically correct label – like “Children becoming entrepreneurs”), and we will have discovered time-travel (back to the 19th century or even earlier).  Spock will be proud of us.

What’s disappointing about all this is that it’s hardly new. Throughout history, some people have proved to be very good at making many others work for free (or close to it) and at stacking up outrageous wealth; at exploiting many for the well-being of a few. The tech giants have been doing this with software and lobbying lately, while their predecessors had to use weapons and watchdogs. Nowadays, as many have observed, information and power are getting closer and closer to each other.

Don’t get me wrong, I’m not technophobic, I’m not the “off-the-grid” type. I actually have a strong interest in computers, I know how to program, and I’m always amazed by the power of computers to do what they’re brilliant at. I also happen to have spent some time in an Ivy League college, and I love science-fiction.  This background gives me an edge to try and understand the profile of the Silicon Valley champions whenever I read something about their lofty declarations in the press or about their investment in fancy tech or social entrepreneurship projects.

I am pretty sure that most of them believe that they are among the smartest people on Earth, and that they are able to solve problems in a much more efficient way than the rest of us (computer science is all about solving problems efficiently, by the way). This, in their opinion, gives them the right to despise the state and the law, and to bypass them whenever they feel it’s relevant. They probably believe that they‘ve found much better ways to make society better off than by paying taxes. (Again, there are quite some right-wing entrepreneurs with the same attitude of superiority towards government, see the Ayn Rand “free market loving” crowd for example, albeit for different reasons. My point is that many of the – presumably more “liberal” – Silicon Valley entrepreneurs aren’t all that different, at least in this respect (looking down on government, deep down, unless if they need to lobby it), even if they look down on the Ayn Rand crowd as well, perhaps. )

Plus  they’ve spent a significant part of their lifetime in front of a computer screen. This may sound trivial, but I can tell you that it takes a lot of time and commitment to become good at programming. This latter point, combined with the fact that they’ve certainly grown up in a relatively well-off environment (Ivy league schools are expensive, in case you didn’t know), means that many of them view and understand the world in a way that would seem pretty strange to most of us.

And here’s the thing with science-fiction. Sometimes the tech giants, especially Google, remind me of teenagers fascinated by the gadgets in sci-fi movies and dying to make them real. The problem is that they seem to be stuck at the surface. Good sci-fi writers only used these gadgets to tell a much deeper story about a possible future. And more often than not, this depicted future was rather gloomy (read Neuromancer and The Minority Report, or watch Terminator). It’s as if the possible implications of technology for society described by sci-fi writers were lost on them. And they have so much money that they can afford to make at least some of the gadgets real, even if some of them are dreadful, like artificial intelligence or robots that can crawl up a wall like a lizard. There are some people sounding the alarm (see Stephen Hawking on artificial intelligence, for example), but by and large they are being ignored.

Silicon Valley’s people’s  profile and love for science-fiction provides many of them with a twisted approach to technology. They want to “make a better world” and “fix what’s broken” (society, the human body, the earth). But their “better world” is likely to feature hoverboards and space elevators, which might be pretty low on the list of needed items for people living in Syria or Guinea right now. So “digital socialism”, in the words of Evgeny Morozov (last week in the Guardian), it is certainly not.  And let’s not get started on the geo-engineering fixes some might have in mind.

Let’s be honest and admit that the world will need more than intelligent apps and Wi-Fi balloons in the sky. And don’t tell me that you seriously believe that the handful of (mostly white, male) billionaires who rule Silicon Valley actually care about the fate of the vast majority of the world’s population.  Because I’m pretty sure they don’t (with the notable exception of Bill Gates and his wife and perhaps a few more). When they talk about “fixing” an essentially broken world, what they really mean is smart cars that drive themselves or flocks of drones that deliver their load faster than slow human truck drivers. When they talk about “augmenting humans”, what they’re really trying to do is engineer their way into immortality. And when they talk about making this planet “a better world”, I doubt that they are really focusing on alleviating the pain of countless people suffering every day from social exclusion, disease, war and starvation, to name just a few of the less desirable options to spend one’s life for billions of people in the world. The global health community might want to keep this in mind, even if there are no doubt some exceptions to this rule; I don’t want to argue that every philantrocapitalist with Silicon Valley roots has distorted plans.

I for one am more and more convinced that every relevant philosophy from now on should start from the following simple fact. The first anatomically modern humans appeared around 200 000 years ago, and we have only slowly discovered science and technology since (e.g. iron was only discovered about 3000 years ago). Yet less than 200 years after the invention of the internal combustion engine, we have already managed to irreversibly  alter the world’s climate and to durably pollute a substantial portion of our planet (thereby pushing many species into extinction).  Now that’s damn “efficient”!

So in my humble opinion, technology is not the answer. And as opposed to what Christophe Nolan tried to tell us in the over-lauded movie “Interstellar”, space isn’t our escape door either if things go really wrong in the coming 50 years. Our planet is not disposable. Accumulation of wealth by a few individuals and the death of social protection are no credible answers either.  It remains to be seen whether we will be able to find new forms of social protection (like a basic income for all?), fit for this age of globalization & robotization. We might, but we also might very well not.

Chances are that the time will come when we will have no choice but to judge human societies on their resilience and their ability to survive, rather than on the number of billionaires in a country or the flatness of their sleek cellphones. Chances are that the (remaining) tribes living in the Amazon jungle will then rank much higher than the rest of us in the “developed” world, including some of the smart geeks at Amazon.com and their buddies in Silicon Valley.

But on the bright side, the latter will at least have sleek gadgets to go down the drain with a virtual – “Uber” –  bang…

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