🔮 ⚡ Battery wars, China's labor unrest, the future of platforms and work, bluffocracy, Indian food and hypocognition ++ #179

Hi,

I’m still on holiday! EV readers Nicolas Colin and Laetitia Vitaud have kindly agreed to give you an Exponential View this week.

I got to know Nicolas and Laetitia through their analysis of the future of work. Laetitia wrote one of my favourite pieces of the last couple of years, an analysis of why Taylorism can’t apply to cleaning. Nicolas is well-known for his work exploring what a new worker safety net should look like in the entrepreneurial age.

Please enjoy their Exponential View,
Azeem

About Laetitia and Nicolas

Hello!

We are very happy Azeem asked us to do this week’s Exponential View. Married for 11 years, living in London and parents of two children, we enjoy every opportunity to write together.

Nicolas is co-founder and director of The Family, a pan-European investment firm supporting early-stage entrepreneurs, now with a portfolio of 150+ startups. He is focused on launching global conversations about new institutions in the digital world. He has just published Hedge: A Greater Safety Net for the Entrepreneurial Age, his first book in English (after two others in French). @Nicolas_Colin

Laetitia is a writer and speaker about the future of work and consumption. After 10 years of teaching US studies in France, she switched to HR and now explores how management, work space, and social protection are impacted by the unbundling of jobs and empowerment of freelancers. Her publications are in English and French (Medium, Malt, Welcome to the Jungle, LSE Business Review). @Vitolae

We hope you enjoy our Exponential View this Sunday!
Laetitia Vitaud and Nicolas Colin

Dept of the near future

👂 The future is ear: personal voice assistants like Amazon’s Alexa and Apple’s Siri have quickly emerged as the biggest interface revolution since Apple popularised the touchscreen. Some believe it could actually be the ‘next big thing’.

🔋 There’s a big global battery war raging between the US, China, South Korea and Japan, and its impact may change the world economy, as we all depend on the lithium-ion battery far more than we know. It seems South Korea could already be winning that war.

⚕️ Veterans of Israel’s tech industry are flocking to health-related startups as investments in the sector jumped more than 50 percent in the last two years. See also: despite the AI hype, there has been only one peer-reviewed study of a prospective trial involving computer vision interpreting medical imagery.

🕸️ There are two ways of using software: one is to improve the old corporations’ existing business model; the other is to deploy networks and harness their power to impose new, network-based business models. The winning way is (obviously) the latter, says Floodgate’s Mike Maples.

🔨 Entrepreneurs might be key to upgrading our failing public services, argues the Royal Society of Arts. Their mindset, tools, and methods make it possible to implement radical change. Alas, they face high barriers when trying to maneuver within the realm of government.

🇨🇳 As the trade war with the US is raging, there’s growing labour unrest in China. A new generation of activists is leading the battle forwards. Government and the police do not like it.

Dept of platforms and worker empowerment

The rise of platforms stirs controversies. Critics say they are an anomaly and platform workers are in fact salaried workers in disguise. People don’t even agree on the size of the phenomenon, as shown by the debate around data released by the US Department of Labor (“The gig economy is bigger than US government data makes it look”). Have platforms been blown out of proportion by Silicon Valley hype?

We believe that the rise of platform work should be welcomed. It is irresistibly convenient for both workers and consumers. The latter gain seamless access to services that were not previously available. As for workers, they get access to new customers and can complement their revenues. As platforms create new markets or expand and transform existing ones, they often make the pie bigger.

For the workforce, however, the bigger pie can have ambivalent consequences. Some lament the new, more amateurish competition that they say causes prices to go down. Others believe that platforms provoke a commoditisation of work which makes it harder for them to differentiate themselves and make a living.

Platform work is fundamentally different from salaried work

In the Fordist era, salaried work was a “bundle”, with many benefits attached. By contrast, self-employed workers, some of whom use platforms regularly, often lack the empowerment, social protection, and decent wages that once became the lot of workers in Fordist manufacturing industries.

The future of platform work depends on our collective capacity to secure a new bundle for self-employed workers. If we succeed, platform work will indeed rise and become more of a norm in the labour market. If we fail, its promises will never be fulfilled, and we will pay the price in the form of less work and less economic development.

Some tech companies have been trying to offer more of a bundle (insurance and other benefits) to the workers using their platforms. But they have been prevented from going too far in that direction by the risk of having these workers reclassified as employees. They wish to be competitive in the labour market with a more attractive bundle. But converting to traditional employment doesn’t meet the needs of either these companies or most of the self-employed workers who use their platforms.

The fact is that self-employed workers think less in terms of a full-time job or a career. They value their freedom and autonomy above everything else. In many cases, they don’t want to reproduce the characteristics of the traditional employer-employee relationship. They would rather remain free to switch to other platforms and maintain other activities outside the purview of platforms.

In a way, these workers are to traditional work what the proponents of free love are to traditional marriage. They value empowerment over stability. They want the new bundle to bring more, not less, freedom. And so this is the challenge we need to tackle: fostering the rise of platforms while empowering the workers using them.

Social protection and the competitive edge

There has long been a relationship between social protection and competition. That was Henry Ford’s epiphany: hiring and retaining a well-trained and productive workforce would be his company’s key competitive advantage. Higher wages and social benefits became tools to heat up competition in the labour market.

But when it comes to social coverage, competition inevitably goes both ways. Firms can try and attract the best workers by offering better social benefits, as Uber is trying to do with the insurer Axa. But they can also cut these benefits to lower their production cost and offer customers lower prices, which leads to what Michael E. Porter describes as damaging “wars of attrition”.

This is precisely the reason why Fordist corporations once welcomed the enforcement of mandatory social protection at the level of industries and nations. If social benefits were mandatory within their industry, it meant that firms needn’t compete by cutting those benefits from their workers, hurting engagement and productivity in the process.

The reason this trend has been reversed is that there is less and less competition in the labour market. In the US as in the UK, most workers have no choice but to be employed by a few dominant firms. What’s more, with the threat of automation, these firms have more bargaining power over workers, leaving them less interested in offering more benefits or leveling the social playing field. Competition doesn’t translate into more social benefits today. See, for example, how Google’s shadow workforce – contractors – carries the giant on its back, all while not being treated as well as full-time employees.

This is a warning signal when it comes to platforms. Because they are driven by increasing returns to scale, markets tend to get concentrated fast. And if the “winner takes most”, there won’t be a long-term incentive for platforms to compete with better social benefits, nor will there be demands for levelling the playing field with an industry-wide Safety Net.

In other words, the familiar dynamics of social attrition could play out in the world of platforms just as they have been playing out in the ageing Fordist economy. This is why governments must step in and regulate platform work—not by curbing it down, but by supporting its rise while better covering workers.

The wrong categories

Regulating starts with understanding that we have the categories wrong. In the world of platforms, the main divide is not between contractors and employees. As explained by Stratechery’s Ben Thompson, there is another divide between different types of platforms, with some more conducive to supply-side (labour) empowerment than others.

In Thompson’s framework, “aggregators” are focused on providing their customers with a standardised service. In the process, they turn suppliers into interchangeable commodities, depriving them of economic leverage. Actual “platforms”, on the other hand, are mere “tool providers” (Sangeet Paul Choudary’s phrase) that suppliers (workers) can harness for empowerment.

And here is what matters most for self-employed workers: whether or not they can develop strategies to differentiate and earn a greater appreciation for their labour (see the example of cleaning professionals). Depending on the platform’s being an aggregator or a tool provider, they will either be a cheap commodity or be empowered to leverage their skills and make a better living.

Social protection should be conducive to worker empowerment

Platform work and all forms of self-employed work are not yet well understood. To harness the power of platforms and improve the conditions of those using them, we need to change the lenses with which we view work and the economy. If we want to achieve more worker empowerment, we shouldn’t strive to destroy platforms. Instead, we should work at creating a better Safety Net and higher standards so workers can thrive in a faster-growing economy. That’s the subject of Nicolas’s new book, Hedge.

Short morsels to appear smart at dinner parties

A report shows how the gender punishment gap affects women in finance: women are 20% more likely to lose their jobs following misconduct, and 30% less likely to find another job.

🇨🇳 You never know enough about the Chinese economy. Check out this FAQ by Sakunthala Panditharatne.

☀️ Teen summer jobs are steadily declining.

Stripe, the tech company providing a global infrastructure to operate online payments, is launching a publishing arm. (By the way, books are the only form of physical media whose sales are growing.)

Enough with the stiffness. The audience should be allowed to clap whenever they want at classical concerts.

🍛 A short history of what we think of as Indian food.

The bluffocracy, or the malaise in (British) politics.

❓ If you don’t know what hypocognition is, then you’ve just experienced it.

Azeem's end note

This week there are two guest curators to thank – please take a moment to do so.

Matthew Gould, the Director General of Digital and Media at Britain’s Department of Digital, Culture, Media and Sport, is looking for Digital Charter Fellows to explore issues such as digital markets and data ethics. You can apply here.

I’ll be back next week, refreshed and ready for the back half of the year.

Have a great week,
Azeem