MEGAN MCARDLE: The Gig Economy Is Piecework. But This Isn’t Dickens.

I confess, I’m not clear on what the problem is. Manual labor in the Victorian era was not primarily awful because it involved short-term contracts; it was awful because the jobs were grim, the pay was low, and injured workers frequently ended up destitute. Getting paid $25 an hour for doing something much more pleasant than scrubbing floors with caustic chemicals does not tug at my heartstrings in the same way.

I also find it hard to worry that Uber, or Amazon Flex, is going to develop dangerous dominance in the market for people driving stuff around in their cars. “People driving stuff around in their cars (including passengers)” is a market with very low barriers to entry, which is why taxi firms have invested so much in lobbying for laws, and powerful regulators, to protect them from competition. Network effects can, of course, create barriers to entry — but in a business where the only requirement is a personal vehicle and a skill that almost every American adult possesses, those effects are unlikely to be enough to allow any company to abuse either customers or workers for very long.

Network effects are most powerful where switching costs are very high. If I’ve paid $300 for a VCR, and a bunch more for VHS tapes, I’m unlikely to be interested in converting to your Betamax format. If I’ve paid several thousand for a PC and assorted software, and stored a lot of work in formats specialized to those programs, it’s going to be tough to convince me to go over to an entirely new system. By contrast, what’s the switching cost for an Uber user? I might sprain my thumb trying to open a new app? Even the switching costs for drivers are relatively minimal. Which means that no firm in this business is going to be able to enjoy substantial monopoly rents, because if they do, some bright entrepreneur with a modicum of capital at their disposal is going to dive in and compete them away.

The real concern, I think, is that these jobs will become substitutes for better jobs: more stable, better paid. This is obviously going to concern left-wing commentators, many of whom have already expressed worry that the “gig economy” is bad for American workers.

That may be. But that rests on the hidden, and so far unproven, assumption that the gig economy is in fact displacing workers by driving down the value of the work they do, rather than creating new economic activity that simply wouldn’t exist if it weren’t for these apps — and possibly in the process providing work for workers displaced from other industries, for reasons that have nothing to do with Uber or Instacart.

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