Uber & Capital Abundance

Tim Roache the General Secretary of the GMB writes about the GMB success in the courts in having Uber’s business model criminalised. The courts state that Uber’s drivers must be treated as employees and not as self-employed contractors.

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The GMB and the UK are not the first jurisdiction to go to court.  I looked at this last year, and made a storify, in which I stated,

Uber is a franchise it borrows, for free, the capital involved in the vehicle ownership and places standards on its operators and measures their performance. (It has operational control) and its de-facto model is to dump cost everywhere, but primarily on its operators. It’s second key tactic is the casualisation of its work force. It also ignores the public regulations set up which they call a restraint of trade, and many others call a public minimum standards and while I oppose the growing thoughtless habit of performing a criminal records bureau search as part of a growing number of hiring processes, you can be sure that Uber are not doing this, nor demanding … route skills….

It is the most egregious of the new so-called sharing economy mega web sites, and they should be made to obey the law and pay their taxes, including employer’s national insurance.

I look forward to the HMRC presenting Uber with a 7 year back dated National Insurance bill.

The court victory is not just about employee rights such as holiday, sick pay and employee protection. They should also be made to conform to our monopoly laws and companies acts.

Uber’s practice of making their drivers buy their cars is a clever development of 20th century capitalism; the financial ties it creates reminds me of the Halewood shop stewards in the 1970’s who told their members not to take company mortgages because it increased their dependence on their employers and made striking more costly. We should also note that Uber recently reduced the journey rates after many drivers had bought suitable and approved cars; this is the equivalent of unilaterally increasing the interest rates, something that would have been much harder to do if Uber recognised Unions for the collective bargaining purposes. It is also illegal to reduce the wages paid to employees without negotiation.

In previus times, businesses would have had to raise capital via share issues; the cars would belong to taxi firm and the drivers would be staff. Capitalism is meant to reward and efficiently allocate scarce capital and risk taking. The Uber model does not reward the capital providers, note that they buy their computer time from the cloud providers and takes little risk. They are a shell company and by avoiding the need to raise capital for the vehicles and IT, they avoid making dividend payments and profit distribution for their true capital providers.  It is a neo-classical expropriation. All the profit goes to the software operators!

Uber are not unique in finding ways to avoid paying the full opportunity cost for their capital. Sunsail, the yacht holiday company fund, at least some of, their yachts through non-share subscription i.e. loans.  (It might be interesting to see if Sunsail and Uber’s funding arrangements allow them to boost their Return on Assets and EBITDAR metrics.) Somehow I find Sunsail’s arrangement more acceptable since the lender’s end up with the asset; it’s a way to get a nearly new yacht if that’s what you want. I have used Sunsail before, but it seems to have moved beyond the hobbyist founders and is now part of TUI, one of the multi-national monopoly holiday companies. This has been accompanied by a massive price hike; they are now too expensive for me.

In conversations about self-employment, much is made of the liberty of self-direction and the release of creativity. This is in part a reference to the hierarchy of needs, which peaks at self actualisation but recognises the need for esteem at work. Much is made of the advantage of self-actualisation but this doesn’t always happen.

heirarchyofneeds

Casualisation via self employment does not necessarily lead to the ability of workers to achieve more of the hierarchy of needs. This is for two reasons, in some cases, all that’s available is hated by the individual worker; at least one of my taxi drivers at #lab16 in Liverpool would have given a lot to change career. The second reason is that the process turns people from being good at something, to have to be good at something else; from being a plumber into being a salesperson, accountant, credit controller, web site designers, search engine optimisers or compliance officer. This latter syndrome is one reason there’s so many skilled worker outsourcie their sales and accounting functions to service providers such as insurance companies or other conglomerates. Sometimes they stay in control, more often they do not. Even when the office service companies start as small, everyone finds that owning the relationship and the conversation with the customer is the key to repeatable revenue, and as the conglomerates grow, it becomes harder and harder for consumers to find individuals to perform repeating work.  Sunsail is another example where corporate M&A has led to the dehumanising of the labour and the service. These semi-independent collectives are often bought by larger joint stock companies. If you don’t believe me, try getting an electrician or plumber.

Uber rewards the software owner, and the salesman, not the worker, or even the capitalist. In London there are alternatives, there are multiple app based hailing platforms, last time I wanted one, I walked past three cabs advertising them and to my knowledge “Dial-a-cab” is a drivers co-op.

In a world of capital abundance, shareholder fiduciary duty has no justification, Uber is one example of why we need to look at consumer or worker co-ops again. The criminalisation of Uber’s business model is an act of justice.

ooOOOoo

Image Credit: Featured Image, David Holt, from flickr “London anti-Uber taxi protest June 11 2014” CC 2014 BY

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