Turnbull and the dangers of Uber model for the economy
Everyone agrees it was a strange moment. The great and the good gathered at Melbourne University to see the prime minister appearing with University of Melbourne vice-chancellor Glyn Davis to talk about “innovation”, Malcolm Turnbull’s new buzzword and cause. It was all smiles until Davis essayed that Australian business wasn’t actually that good at using academic research.
At which point, Malcolm went him.
For about a minute, as Davis laughed with increasing embarrassment, the PM assailed him for his lack of optimism, for being defeatist, for “running against the vibe”, and gave the strong impression that he thought him a vague pointy-head. “You’ve got to be as optimistic as your students, otherwise they’ll lose faith in you,” Turnbull told the VC. It wouldn’t even rate a three on the Abbott scale, but it was a real buttock-clencher.
It was also the first sign of frustration on Turnbull’s part. To date he has done no wrong, succeeding brilliantly by persuading whole tranches of middle-of-the-road Liberal voters, as well as not a few Labor and Greens, that they could now simply, safely switch off from politics. With activity largely confined to empty talk and policy calibration – “Let’s shift GST”, “We stand with France” – many were desperate to do so. Indeed, much of the anger directed towards Abbott was on the basis that he gave people no choice but to pay attention to politics, to find out what latest piece of brilliance that didn’t represent them they needed to know about. There are a lot of people who won’t admit it but, for many, the coming of Malcolm has been a great relief.
So the commitment to “innovation” – in an atmosphere of optimism he scolded Davis for not subscribing to – is part of the new regime, and is welcome after a prime minister who having abolished the ministry of science appeared interested in dissolving science itself.
Turnbull’s return to such themes is welcome, but it’s also a local example of a mild panic that has taken over many of the commanding heights of Western economies, due to the sluggish nature of the “recovery” after the 2008 crash and the looming downturn in global resources. The supposition is that after the economic boom created by the first wave of digital technology, from the web to the iPhone, a new boom will be delivered by a second wave – the “total networking” possibilities of new services piloted and symbolised by the now ubiquitous Uber app. Uber – a service co-ordinating drivers in private cars to operate as per a taxi service – has become the lodestar of this new movement, predictably characterised as a “liberation”, with the “Uber of” everything eagerly sought. It’s an “agile” and “disruptive” business model – the sort of Silicon Valley language with which Turnbull is much enamoured.
But while as an innovation in communication and co-ordination the model is indeed an advance for all, on an individual and social level it represents the expansion of piecework and casualisation into fields otherwise providing full-time employment. Its largely uncritical celebration is currently derived from its class character. The Uber revolution relies on having overcome the extra costs imposed on low-skilled service-based businesses by co-ordinating casual labour, and thus removing the economic and social advantages of maintaining a stable workforce. And it’s a model that can spread in all directions. There is something deeply disconcerting about seeing someone call an Uber in a busy media office, and everyone talk about how great it is – like the old image of the horses who drew the knackers’ carts, bearing dead workhorses to the glue works.
The idea that Uberisation and “total networking” apps – called “sharing economies” by people who want us to forget that the billions Uber is valued at are being shared among its handful of owners and investors – represent some sort of deliverance for sluggish economies is a triumph of faith over evidence, in part based on the “boom” created by earlier digital technologies. But such new technologies had relatively little effect on the long-term trajectory of Western economies, which has been a long-term decline in growth rates, from the 1970s onwards, to a point of de facto stagnation. The tech revolution was paid for with lowered taxes and personal debt. The latter came due in 2008. Evidence of the former is the crumbling of infrastructure and public services, and the rise in non-consumer costs such as housing and education.
If the first wave of digital tech delivered a false sense of a growing economy, the second, while dressed up as “liberation”, is set to challenge our expectations of workforce stability and work/life balance.
The “disrupters” such as Turnbull want innovation, so long as it doesn’t alter the basic framework of capitalism; at that level, they would be happy to return to the swinging 1850s. In this they will be disappointed, for the paradoxical effect of such technologies is to slowly but relentlessly reduce employment and demand in the economies they purport to transform. Their champions tell us that Uberisation and the new wave of automation will simply see new jobs created in new industries, as has occurred in the past. That would be reassuring, if it had indeed been the case.
In fact, the recent transfer, from industry and manufacturing to services and culture/knowledge industries, has vastly reduced the proportion of work in society. In the 1960s, about 85 per cent of households were headed by a single breadwinner, the average school-leaving age was 15, 6 per cent of people went on to tertiary education, and the gap between retirement age and life-expectancy was two years. Now part-time workers are 33 per cent of the workforce, tertiary education rates are 30 per cent, retirement lasts two decades or more, and 20 per cent of households have no waged income.
Extended education, longer retirement and the creation of a permanent benefits class have hidden the great shift. With Uberisation and automation that will rise to the point where it can no longer be ignored. Whole areas of work are disappearing. In supermarkets, it’s the disappearing “checkout chick”. Fast food is about to be similarly revolutionised. This will come to bear in sector after sector. New sectors will not replace that employment, because they now come pre-automated. Innovation and disruption are creating “meta-automation”, the automated creation of automated processes.
Such transformation of our lives might be great, if we had a plan in place, or on the table, to manage such a wrenching transition. But we don’t – just a simple faith in the market, and a blindness to the way in which basic economic relations are being altered.
This new technological revolution will only be a liberation if we have mass institutional transformation along with it – income supplementation or guaranteed minimum income; lifelong learning accounts to allow people to retrain across their worklife; new patent forms that encourage collective research and development without “silo-ing” it in corporations; and taxes on financial transactions, retail turnover and sales, rather than on profits that can be hidden in overseas tax havens.
Those are the sorts of proposals that would foster true innovation, and they could come from either side of politics, since they are neither strictly left nor right. Turnbull, a bourgeois of the old school, is unlikely to be the man to do it. His intemperance with Davis was, in part, an irritation for the desire of a university to be something more and other than a feeder for business. Meanwhile, with the upbeat language of creative and “agility”, he is missing the dangers of Uberisation without properly innovative institutional changes to go with it. Turnbull wants to be a 21st-century leader, but the way 21st-century business is being left to develop, the future won’t be so bright as to require shades.
And Labor? The ALP don’t know how to deal with this, because they shy away from any sort of policy that might involve a “new deal” or “big offer” to people, out of fear it may make them a “big target” for the government come an election. But for a progressive party representing several social classes with divergent interests, there’s no other way forward. You have to get behind the potential of such technology while proposing the institutional form that will make sure the “liberation” isn’t that of capital from having to pay wages. Without that “big offer”, Labor will remain hopelessly contradicted between a neo-protectionist full employment model – as in the era when imported machinery had to be disassembled and reassembled on the docks by Australian workers before being allowed in – and a neoliberal innovation model, which is moving forwards as steadily as anything driven by Bill Shorten these days. There are policies aplenty from people such as Andrew Leigh, but as yet no bold moves from the party centre.
If “innovation” is not to become a manner by which job stability is destroyed and society atomised, powers and political parties will have to start thinking along these lines. People want politics to go away, and Prime Minister Malcolm Turnbull has become the agent of that. But we are in a process of mass change, currently only partly visible, and beyond even the most alarming of sideshows, terror and refugees. And politics – plain old-fashioned politics of who gets what where when how – is about to return with a vengeance. Strange moments.
This article was first published in the print edition of The Saturday Paper on Nov 21, 2015 as "Towards the Uber wrench". Subscribe here.