In 2016, I was invited to Uber’s headquarters (then in San Francisco) to talk about the failings of the digital economy and what could be done about it. Silicon Valley firms are the only corporations I know that ask for private talks for free. They don’t even cover cab fare. Like Google and Facebook, Uber figures that the chance to address their developers and executives offers intellectuals the rare privilege of influencing the digital future or, maybe more crassly, getting their books mentioned on the company blog.
For authors of business how-to books, it makes perfect sense. Who wouldn’t want to brag that Google is taking their business advice? For me, it was a little different. Throwing Rocks at the Google Bus was about the inequity embedded in the digital economy: how the growth of digital startups was draining the real economy and making it harder for people to participate in creating value, make any money, or keep up with rising rents.
Silicon Valley firms are the only corporations I know that ask for private talks for free.
I took the gig. I figured it was my chance to let my audience know, in no uncertain terms, that Uber was among the worst offenders, destroying the existing taxi market not through creative destruction but via destructive destruction. They were using the power of their capital to undercut everyone, extract everything, and establish a scorched-earth monopoly. I went on quite a tirade.
To my surprise, the audience seemed to share my concerns. They’re not idiots, and the negative effects of their operations were visible everywhere they looked. Then an employee piped up with a surprising question: “What about UBI?”
Wait a minute, I thought. That’s my line.
Up until that moment, I had been an ardent supporter of universal basic income (UBI), that is, government cash payments to people whose employment would no longer be required in a digital economy. Contrary to expectations, UBI doesn’t make people lazy. Study after study shows that the added security actually enables people to take greater risks, become more entrepreneurial, or dedicate more time and energy to improving their communities.
So what’s not to like?
Shouldn’t we applaud the developers at Uber — as well as other prominent Silicon Valley titans like Facebook co-founder Chris Hughes, bond investor Bill Gross, and Y Combinator’s Sam Altman — for coming to their senses and proposing we provide money for the masses to spend? Maybe not. Because to them, UBI is really just a way for them to keep doing business as usual.
When it’s looked at the way a software developer would, it’s clear that UBI is really little more than a patch to a program that’s fundamentally flawed.
The real purpose of digital capitalism is to extract value from the economy and deliver it to those at the top. If consumers find a way to retain some of that value for themselves, the thinking goes, you’re doing something wrong or “leaving money on the table.”
Uber’s business plan, like that of so many other digital unicorns, is based on extracting all the value from the markets it enters.
Back in the 1500s, residents of various colonized islands developed a good business making rope and selling it to visiting ships owned by the Dutch East India Company. Sensing an opportunity, the executives of what was then the most powerful corporation the world had ever seen obtained a charter from the king to be the exclusive manufacturer of rope on the islands. Then they hired the displaced workers to do the job they’d done before. The company still spent money on rope — paying wages now instead of purchasing the rope outright — but it also controlled the trade, the means of production, and the market itself.
Walmart perfected the softer version of this model in the 20th century. Move into a town, undercut the local merchants by selling items below cost, and put everyone else out of business. Then, as sole retailer and sole employer, set the prices and wages you want. So what if your workers have to go on welfare and food stamps.
Now, digital companies are accomplishing the same thing, only faster and more completely. Instead of merely rewriting the law like colonial corporations did or utilizing the power of capital like retail conglomerates do, digital companies are using code. Amazon’s control over the retail market and increasingly the production of the goods it sells, has created an automated wealth-extraction platform that the slave drivers who ran the Dutch East India Company couldn’t have even imagined.