Uber: A Microscosm of the Old, and New America

I have been hearing a lot of about how America needs to bring back those manufacturing jobs….the ones we lost to 3rd world countries. Manufacturing was our domain up until the 70’s, at least. Much of it is going, going, gone.

This recent Presidential election campaign was partly framed by the need to keep manufacturing jobs in the United States. It was framed by Donald Trump and Bernie Sanders, at least. This was seen by some as one of the central ways to revive the economy and protect the American worker.

Somehow, it doesn’t seem so simple as that. Sure, keeping manufacturing jobs from going overseas is a helpful idea. It’s a good goal for the short term…but I think there is a much greater threat to American jobs, one that will only get progressively more disastrous, and with consequences much more daunting.

Six years ago, a company called Uber hit the market by allowing you to hail a car with your smartphone.. Uber currently operates in 58 countries and is valued at over 50 billion. It did an amazing job at filling a tremendous demand. People are hiring drivers in ways they never imagined before. It’s a genius concept and one that has many ancillary benefits besides just making the founders and private shareholders (not publicly traded as of yet) rich. For starters, it is a great way for people who might be confronted with driving intoxicated to easily and relatively cheaply get a ride home. It's way more affordable than Taxis and the customer service is better. Secondly, it provides a tremendous and incredibly flexible way for people to enter the Uber workforce as a driver.

Uber is employing over 300,000 drivers as of the most recent count. There have been approximately 3 billion Uber trips taken since the company’s inception in 2010…and those numbers are growing exponentially.

So, at first glance we can say that this company has done a lot to stimulate job creation as well as to fill a big need in the marketplace. That is quintessentially American. That’s a golden display of Capitalism. A man or woman can very easily become a driver for Uber and work only when it suits them. It’s as if Uber drivers are self employed.

Now, at approximately the same time as Uber Founders Travis Kalanick and Garret Camp were developing their great American idea, there have been other entrepreneurs, including Tesla founder Elon Musk, who have been developing (and bringing to market) self driving cars and trucks.

Imagine the implications. Step forward a year or two and imagine that self driving cars are completely integrated into the U.S. car market. Uber will own it’s entire fleet of cars…they no longer need the cars provided by the Uber drivers…AND, they no longer need Uber drivers. Presently Uber drivers keep approximately 70% of the money you pay through your Uber app---Uber keeps the 30%. But, not for long…when Uber starts acquiring driverless cars (they already have) they will not need the “middle man or woman”. Uber will do what every other company is trying feverishly to do. They are eliminating their workforce (and cutting costs) by utilizing automation. Technology is allowing them to tell those 300,000 drivers that they will no longer be needed. Can you blame them? For the “greater good” you can’t imagine that Uber will feel any burden to keep employing people they don’t need just to be nice. "Nice guys finish last", remember?

All of that money will flow to the top…to a few people. That plays into the Bernie Sanders argument that the top 1% are getting a higher and higher percentage of the American pie. It’s irrefutable and someone tell me how this “cat” will ever get back in the “bag”.

Technological advancement is all downhill from here…..innovation will come exponentially quicker than ever before..once you crack a few codes things will happen at the blink of an eye…robots will be in our future….people will be unnecessary for a huge percentage of jobs. Certainly you have noticed how automation is used on the telephone. Try calling a bank and see how long it takes before you get an actual human. Our world will be full of “Siri’s”. It will be a technology driven society such that the rich will have more wealth than we can presently imagine. Except and until the rest of America collapses and becomes unable to afford to take part in the American economy.

This dynamic is happening or being considered in virtually every company in America, the large and the small. I remember when I would visit Houston every year at Thanksgiving with my young kids to see their grandparents. We would stay at the Hilton Hotel and park in the parking garage. They had an attendant who worked inside the parking garage in a tiny box who we saw year after year who took your ticket and charged you for the use of the parking structure. His name was Carl and one year we went to the Gap in town and bought him a sweater and wrapped it up and my kids gave it to him for Christmas. In 2009 he told us that he probably wouldn’t be there the next time we came because they were automating the ticket gate. Carl was an older black gentleman who was unlikely to have any larger skills. This was quite possibly the end of the line for Carl.

Yesterday it was Carl…tomorrow it is all Uber drivers… that is just the tip of that iceberg.

"Software substitution, whether it's for drivers or waiters or nurses … it's progressing. ... Technology over time will reduce demand for jobs, particularly at the lower end of skill set. ... 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model." - Bill Gates

Let’s just look at retail. A larger and larger percentage of consumers now shop exclusively online. This is putting a big dent in the profit of retail stores and it cuts demand for labor. Just imagine how much this puts more money in the hands of the CEO’s and less in the hands of a college student looking for a summer job or the mother trying to feed her three kids by working a 40 hour week at Banana Republic.

“Picking yourself up by your bootstraps” is going to be harder and harder to do….even for the highly educated.

Warren Buffet said this in an interview on CNN in November 2016:

“the market system gets more specialized as we go along….now we are in an economy where specialized talents bring incredible sums…and where if you don’t fit well into the market system you are really left behind.”

An individual is going to look after his own private portfolio or the portfolio of the company he is running. We can’t expect private citizens to care about how income is distributed in this country. People just don’t have sufficient levels of empathy to care adequately about the welfare of people they don’t know or love. For whatever reason, genetics or the culture we live in……there is infinitely more personal greed in our hard drives than charity…it’s not even close. Therefore, who will artificially interfere with the free market capitalist system in this country to correct for the amazing influence of technology? The obvious answer is the Government but, the government is not a very popular institution at this moment in our political climate.

This country is producing a disproportionate number of excessively wealthy people and not nearly enough people who can live a decent life for their family working a 40 hour work week.

We have way too much poverty ....especially for being the richest and self proclaimed "greatest" country in the world. Studies have shown recently that it is more difficult to get out of poverty in this country than in other developed country in this world.

What does the future hold for the average worker in this country in the next 20 or 30 or 40 years?

If I was granted just one wish for humanity…just one…one that I think would do the greatest good for the greatest number of people…it would be to greatly reduce man’s insatiable desire for sex and power …and commensurately decrease man’s comfort in being indifferent to the pain of others.

Food for Thought....