Among libertarian circles in the United States, there is a stalwart love for the concept of the gig economy model. The late politician Harry Browne openly advocated that employers should sack their workers and rehire everyone as independent contractors, while Gary Johnson was arguing for the Uberization of everything just a few years back. Their logic holds that getting outside government restrictions allows individuals to earn more, and companies to spend less. It sounds almost like a win-win scenario across the board.
Of course things are far more complicated in the applied economic sphere. As much as 1099’s and “zero hours contracts” are streamlined to begin with, the State has not cooperated with matters going forward. Contractors are thus left having to put aside money throughout the year in anticipation of a tax charge that would otherwise be taken out from the regular employee paycheck. The result is people (especially the more youthful) getting shafted when they forget or fail to accumulate enough in savings to meet the annual tax bill. In theory the model is more efficient, but also dangerous to the average person’s financial picture.
Being off the hook for standard deductions can also increase the chances of having to purchase health insurance directly as a consumer, without any employer subsidies. Again, the model sounds great, though participants need to be careful about the type they buy. Cheaper health insurance plans and health sharing programs can elect for special rules to delimit their liability for conditions otherwise insured by federal mandate. An example of the shortcoming centers on the story of a diagnosed cancer tumor being deemed a preexisting condition, allowing the Medi-Share plan to deny financial support for medical services. The patient managed to successfully appeal, but at the cost of stress from a five-figure treatment bill.
High personal costs are often accompanied by unimpressive pay for gig workers. Although a top-performing delivery or rideshare driver can theoretically bring in over $1,000 per week, this is liable to demand long hours and no off days due to the nature of the market. Of course none of the money totals are guaranteed like a regular worker’s paycheck, so the pressure level can be astronomically higher, leading to mental health issues. Tie everything to the need to maintain one’s own car, and the picture becomes solidly grimmer.
The other issue with gig mania is the propensity for the leading firms to suppress individual freedoms. While Uber and Lyft have long been heralded as a way for the market to beat back the corrupt taxi union cartels and their big government supporters, they also permit a few silicone nerds to control service access. Uber itself recently admitted to banning 1,250 riders from the app for not observing corona mask restrictions. That’s over a thousand people who can no longer use the taxi service because their name and info has been blacklisted, and doesn’t include the political figures banned from their cars as well. A traditional cab would allow you to pay in cash, hence even those marked for derision would have the option to ride.
So yes, decentralization has granted us enhanced freedoms, but in a twisted, cynical way. No longer must we tangle with the machinations of payroll; instead, one can simply stress and struggle to conserve money before STILL filing taxes amidst those April flowers. Hours are flexible, but so is the ability to even make a living. The greasy, unkempt medallion taxis have been replaced by loyal contract vehicles, but watch what you think, or they’ll pass on by.
Ahh, the taste of liberty!
One thought on “Is Economic Decentralization Actually Good?”
I know this is unrelated to your post. But I commented a while back on your blog on the World Economic Forum. I think there’s something extremely sinister going on.
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