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  • How Cognitive Bias Destroyed the Livelihood of California’s Gig Workers

    Posted on by Azrael Comment


    In September, California passed a bill regulating the gig economy. The worker status bill, which goes into effect on January 1, 2020, redefines “employee” to include freelancers. Progressives hailed the new law as providing needed worker protections.

    After the law passed, Veena Dubal, a law professor at the University of California, Hastings, and prominent supporter of the bill tweeted, “I have tears in my eyes and goosebumps on my limbs.”

    As 2020 approaches, it is the gig workers who are crying.

    Vox Media announced “it would end contracts with hundreds of freelance writers and editors in California.” Vox is the same media company that hailed the passage of the bill as “a victory for workers everywhere.”

    One of Vox’s fired employees, Rebecca Lawson, tweeted: “California, you’re breaking my heart (and taking my money),” adding:

    I am heartbroken that the state I love so much has forced a company I love working for to cut formal ties with people who are doing amazing work — and who are able to help themselves and their families with the extra income that a passion project or side hustle can sometimes provide.

    Another freelance writer, Andi Loveall, tweeted:

    Just lost my ability to earn a living because of California Assembly Bill No. 5. My freelance brokerage company says they have to let California authors go. Almost a decade of hard work gone in an instant. I can’t stop crying.

    The consequences for freelancers were hardly unanticipated. The law of unintended consequences prevailed: “actions of people—and especially of government—always have effects that are unanticipated or unintended.”

    Dubal and other supporters of the worker status bill could have read hundreds of articles—including here and here, at FEE—that predicted the dire outcomes for freelancers. As Elizabeth Nolan Brown writing in Reason pointed out:

    Mainstream politicians and pundits love to cite “unintended consequences” when their preferred policies cause harm in the exact ways libertarians said they would. It’s a brilliant way to get credit for trying to Do! Something! about a problem while absolving one’s side of any blame for the negative consequences of that action.

    I doubt if Dubal, who is regarded as an expert on the gig economy and technology, will acknowledge the consequences of her mistake.

    It’s all too easy to dismiss Dubal as stupid; chances are, she is intelligent.

    Keith Stanovich, emeritus professor of applied psychology at the University of Toronto, writes,

    We have an implicit [but wrong] assumption that intelligence and rationality go together—or else why would we be so surprised when smart people do foolish things?

    Stanovich, coined the term dysrationalia “meaning the inability to think and behave rationally despite having adequate intelligence.”

    In his book, The Intelligence Trap, David Robson explores “why smart people,” such as Dubal, “make dumb mistakes.”

    Robson reports on research conducted by professors Norbert Schwarz and Eryn Newman, who study how our emotions influence our decision-making.

    Consider this question: “How many animals of each kind did Moses take on the Ark?”

    Since it was Noah, not Moses, who built an ark, the answer is zero. Robson writes, “Yet even when assessing highly intelligent students at a top university, Schwarz has found that just 12 percent of people register that fact.”

    According to Schwarz’s and Newman’s work,

    truthiness comes from two particular feelings: familiarity (whether we feel that we have heard something like it before) and fluency (how easy a statement is to process).

    Robson explains further:

    The problem is that the [ark] question’s phrasing fits into our basic conceptual understanding of the Bible, meaning we are distracted by the red herring—the quantity of animals—rather than focusing on the name of the person involved. “It’s some old guy who had something to do with the Bible, so the whole gist is OK,” Schwarz told me. The question turns us into a cognitive miser, in other words—and even the smart university students in Schwarz’s study didn’t notice the fallacy.

    Try this thought experiment. Imagine you are a politician, professor, or a concerned citizen interested in workers’ rights. You have a pre-established cognitive bias that government is the best protector of workers. Thus, a statement such as California’s Worker Status bill is needed to protect the rights of freelancers would likely meet with your approval. Given your cognitive biases, the statement has “familiarity” and “fluency.” You’ve cheered a thousand times before for statements that begin with: This bill is needed because… Such statements are easily cognitively processed.

    If you need “intellectual” firepower for your bias, Dubal and other experts are ready to assist. In her essay, “Regulating the Gig Economy is Good for Workers and Democracy,” Dubal presents elaborate arguments:

    Poverty is not a suspect classification under our Constitution, but it is an affront to life and dignity and to democracy more broadly. With the evisceration of the U.S. welfare state and the judiciary’s deference to political outcomes in the area of “economics and social welfare,” employment is the primary legal and political means to address economic inequality. In turn, employment is—for better or for worse—key to our democracy. It provides access to the tools for basic sustenance in modern America: the minimum wage, health insurance, safety net protections, and even the right to organize and collectively bargain. Our capacity to participate in life and partake in politics, depends, in no small part, on our employee status. In the words of political theorist Judith Shklar, “We are citizens if we ‘earn.’” To this observation, I might add that we are citizens if we earn enough.

    If you are a true believer like Dubal—concerned about an “alarming trend” of “the use of app-based technology to proliferate work outside the regulatory framework of ‘employment’”—perhaps like Dubal you shed tears of joy that politicians passed a bill you believed would save democracy and solve the problem of inequality. Huzzah! If heaven is reached by having good intentions, surely your ticket has been punched.

    Reading carefully, though, we see that the interests of the gig workers were buried under Dubal’s many other concerns. Perhaps gig workers such as Rebecca Lawson and Andi Loveall mean nothing to those who want to expand the role of government. Perhaps Dubal told herself she was helping the gig workers, while her ideology sought to expand the role of the government at the expense of gig workers.

    Being smart is no protection against foolish ideas. We can expect to hear more elaborate arguments from smart people, justifying the worker status bill mistake. As Robson observes:

    Intelligent and educated people are less likely to learn from their mistakes, for instance, or take advice from others. And when they do err, they are better able to build elaborate arguments to justify their reasoning, meaning that they become more and more dogmatic in their views.

    In other words, dysrationalia needs to be defended. When we think we are smart, Robson explains, we “rationalize and perpetuate our mistakes, without recognizing the flaws in our own thinking.” The result is “building ‘logic-tight compartments’ around our beliefs without considering all the available evidence.”

    Robson offers an antidote to dysrationalia:

    Besides cognitive reflection, other important characteristics that can protect us from the intelligence trap include intellectual humility, actively open-minded thinking, curiosity, refined emotional awareness, and a growth mind-set. Together, they keep our minds on track and prevent our thinking from veering off a proverbial cliff.

    Dysrationalia is not limited to progressives, nor is it limited to politics. We ignore the intelligence trap at our own peril.

    In his 1710 essay, “Political Lying,” Jonathan Swift wrote,

    Falsehood flies and the truth comes limping after it, so that when men come to be undeceived, it is too late; the jest is over, and the tale hath had its effect.

    Swift gives as an example “a physician, who hath found out an infallible medicine, after the patient is dead.”

    California’s gig economy is suffering from the consequences of dysrationalia. The “medicine” in this case is a repeal of a law that is already putting many out of work. No elaborate arguments are needed. Before the gig economy in California is dead, what is needed is a large dose of humility to admit a mistake.


    Barry Brownstein

    Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. He is the author of The Inner-Work of Leadership. To receive Barry’s essays subscribe at Mindset Shifts.

    This article was originally published on FEE.org. Read the original article.


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  • California’s War on Gig Work Falls Hardest on Women

    Posted on by Azrael Comment


    This year, California’s progressives decided to wage war on the nightmare of being your own boss. A new state law aimed at limiting the gig economy has already cost hundreds of people their jobs—and had a seriously harmful impact on women’s earnings and long-term happiness.

    Assembly Bill 5 curbs the ability of companies like Uber and Lyft to classify their workers as independent contractors. The law, which codifies the California Supreme Court’s Dynamex decision into law, means companies in the $1 trillion gig economy would have to hire freelancers as employees and give them benefits, including healthcare coverage. Governor Gavin Newsom signed the bill into law on September 18. It takes effect on January 1.

    The companies say that kind of change threatens their business model and could mean bankruptcy. It also means their newly designated employees can be unionized, a boon for organized labor. Teamsters organizers have already begun laying the groundwork.

    But the law contains a provision that limits freelance writers to submitting 35 articles per outlet each year. (The bill’s author admits the number is “arbitrary.”)

    Media outlets that rely on independent content producers are scrambling to comply with the law before it takes effect in a few days—and one of them, Vox, announced it will engage in a round of mass firings.

    The bill’s author, Democratic Assemblywoman Lorena Gonzalez, said her goal is to “preserve good jobs,” but only those that pay “a livable, sustainable wage job.” Vox apparently did not fall into that category.

    The hundreds of workers Vox laid off have the opportunity to apply for the new, full-time jobs the company just announced—20 of them.

    Freelancers who love what they do can keep writing, explained John Ness, executive director of the Vox-owned website SB Nation, but they “need to understand they will not be paid for future contributions.”

    Thanks to government intervention, hundreds or thousands of authors will lose their most viable source of income.

    Freelance authors blame the law, not their employers, for turning their lives upside down. CNBC reports:

    A writer named Rebecca Lawson, who covered the NBA’s Dallas Mavericks from San Diego, wrote a post on Monday titled, “California’s terrible AB5 came for me today, and I’m devastated.” Lawson, who was editor-in-chief of the blog Mavs Moneyball, said she would be forced to step down as of March 31.

    “SB Nation has chosen to do the easiest thing they can to comply with California law — not work with California-based independent contractors, or any contractors elsewhere writing for California-based teams,” Lawson wrote. “I don’t blame them at all.”

    The Hollywood Reporter shares the story of Arianna Jeret:

    [Jeret], who contributes to relationship websites YourTango.com and The Good Men Project, says freelance writing has helped support her two children and handle their different school schedules. Her current gigs — covering mental health, lifestyle and entertainment — allow her to work from home, from the office and even from her children’s various appointments. “There were just all of these benefits for my ability to still be an active parent in my kids’ lives and also support us financially that I just couldn’t find anywhere in a steady job with anybody,” she says.

    Similarly, author Kassy Dillon tweeted:

     

    Not all those opposed to the new law are women, by any stretch of the imagination. Aaron Pruner, whose clients include The Washington Post, said, “Working with a baby at home is easier to do when I have my own schedule to work from, as opposed to a 9 to 5.”

    But women bear the brunt of the government-imposed limit. Two-thirds of U.S. freelancers across industries are female, according to PayPal’s “U.S. Freelancer Insights Report.”

    Curiously, the bill carved out vast exemptions. The San Francisco Chronicle revealed that lawmakers exempted a series of higher-paying professions including

    doctors, psychologists, dentists, podiatrists, insurance agents, stock brokers, lawyers, accountants, engineers, veterinarians, direct sellers, real estate agents, hairstylists and barbers, aestheticians, commercial fishermen, marketing professionals, travel agents, graphic designers, grant writers, fine artists, enrolled agents, payment processing agents, repossession agents and human resources administrators.

    But the politicians made no provision for freelance writers, despite months of heavy lobbying.

    Freelance work empowers women to choose how they spend their time. Female workers have repeatedly told pollsters from across the globe—as far as Australia and Denmark—that their top workplace desire is the flexibility to create greater work-life balance. Some 40 percent of women say they would take a lower salary in exchange for more control over their schedule.

    Freelancing lets women choose the hours they work and gives them control over their schedule. They may opt out of working altogether when someone gets ill, only to work night-and-day at other times, based on their needs and wishes. But the right to unionize Uber drivers has denied them that goal.

    Employment is about more than a paycheck. Surveys show unemployment has a longer, more harmful impact on members of both sexes than any other adverse life effect, including divorce and widowhood. “For unemployment, there is a negative shock both in the short and long-run,” reports Our World in Data.

    Unemployment also affects the human person in ways too profound to be measured by an earnings statement, poll, or survey. “Unemployment almost always wounds its victim’s dignity and threatens the equilibrium of his life,” says the Catechism of the Catholic Church. “Besides the harm done to him personally, it entails many risks for his family.” Pope Francis has been outspoken about the dangers of idleness. “There is no peace without employment,” he said on the sixtieth anniversary of the Treaty of Rome.

    There is no peace for California’s freelance writers, approximately two-thirds of whom are women. This is yet another example of how economic interventionism destroys jobs, harms women, and leaves hundreds of families unable to support themselves and saddled with long-term psychological burdens.

    This article is reprinted with permission from the Acton Institute.


    Ben Johnson

    Rev. Ben Johnson is a senior editor at the Acton Institute. His work focuses on the principles necessary to create a free and virtuous society in the transatlantic sphere (the U.S., Canada, and Europe).

    This article was originally published on FEE.org. Read the original article.


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  • Why Bernie Sanders’s Universal Job Guarantee Is Fool’s Gold

    Posted on by Azrael Comment


    Presidential candidate Bernie Sanders doubled down when asked about his universal jobs guarantee included in last Tuesday night’s Democratic debates. “Damn right, we will” create jobs for every adult in the workforce, he insisted.

    But Sanders’s promise of jobs for all, however appealing it may sound, aims at the wrong target.

    In what Henry Hazlitt described as “the fetish of full employment” in his 1946 classic Economics in One Lesson, Hazlitt declared that the goal of full employment is fool’s gold.

    Instead of focusing on policies to maximize employment, Hazlitt declared, “We can clarify our thinking if we put our chief emphasis where it belongs—on policies that will maximize production.”

    Why focus on maximizing production rather than jobs?

    Creating jobs is easy. As Hazlitt wrote, “Nothing is easier to achieve than full employment, once it is divorced from the goal of full production and taken as an end in itself.”

    Economist Milton Friedman was once traveling overseas and spotted a construction site in which the workers were using shovels instead of more modern equipment like bulldozers. When his host responded that the goal was to increase the number of jobs in the construction industry, Friedman replied, “Then instead of shovels, why don’t you give them spoons and create even more jobs?”

    The key to a healthy economy, conversely, is increasing production using less and less labor. Trying to exclusively “create jobs” or provide universal job guarantees can lead to perverse incentives like restricting workers’ access to productivity-enhancing capital goods in order to require more workers than necessary to produce goods and services.

    Under a plan like Sanders’s, a project would be considered more successful the more people it employed relative to the value of the product of the work performed. In short, success would be measured by making labor less and less efficient.

    How can it benefit society to demand, say, 200 workers build a bridge that could have been built using 100?

    As Hazlitt wrote,

    The economic goal of any nation, as of any individual, is to get the greatest results with the least effort. The whole economic progress of mankind has consisted in getting more production with the same labor.

    Value creation, not a measure of employment, is the true measure of economic well-being. Imagine if society could enjoy a luxurious standard of living that requires only half of the people to work to provide it.

    Hazlitt asked,

    The real question is not how many millions of jobs there will be in America ten years from now, but how much we produce, and what, in consequence, will be our standard of living?

    Moreover, Hazlitt dismissed concerns that labor-saving capital goods would cause significant unemployment. Indeed, he argued the opposite. “[O]ur real objective is to maximize production. In doing this, full employment—that is, the absence of involuntary idleness – becomes a necessary byproduct,” he wrote.

    Prioritizing employment over productivity puts the cart before the horse. He noted,

    [P]roduction is the end, employment merely the means. We cannot continuously have the fullest production without full employment. But we can very easily have full employment without full production.

    And the labor that is freed up due to productivity gains can be employed in satisfying other needs and wants of consumers, often new or not-yet imagined desires.

    As Steve Jobs said to Business Week in 1998: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

    If labor is tied up using spoons in make-work, government-sponsored “job guarantee” jobs, who will produce the next big thing?

    Government jobs programs will not only tend to reward less efficient labor but will also tend to tie the labor force to current modes of production, allowing less opportunity for life-changing innovations.

    In sum, high levels of employment do not necessarily mean prosperity. As Hazlitt concluded, “Primitive tribes are naked, and wretchedly fed and housed, but they do not suffer from unemployment.”

    Bradley Thomas


    Bradley Thomas

    Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist and writer with nearly 15 years experience researching and writing on political philosophy and economics.

    Follow him on Twitter: ErasetheState @erasestate

    This article was originally published on FEE.org. Read the original article.


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