California is on the verge of driving out another business
Once upon a time, California was the Golden State, a shining example of how America should be run. Then the Democrats took over. Since then, the state has gone downhill fast.
One of the worst things the state assembly did just last year was to pass legislation that effectively killed the "gig economy" (i.e., people who enjoy freelance work that enables them to control their own time). Now, thanks to that law, the lockdowns, and a problematic judicial decision, California has another hit coming: Uber's pulling out.
California's AB 5 went into effect on January 1. Although ostensibly meant to protect employees, the law was instead a massive gift to unions. This is because the law effectively made it impossible for companies both inside and outside California to employ independent contractors. Suddenly, a whole host of people found themselves unemployable. The newly unemployed included freelance journalists and musicians, independent truckers, and, significantly, drivers for app-based businesses such as Uber, Lyft, and DoorDash.
Initially, Uber, Lyft, and DoorDash vowed to keep doing business in California. What they hadn't counted on, though, was the extra whammy of California's response to the Wuhan virus. The state locked down, then it partially unlocked, and then it locked down again. The state is apparently caught in an infinite loop that sees it futilely battling the virus even as it successfully wipes out the economy.
The last straw was a recent judicial decision saying the drivers for these ride-hailing businesses are employees entitled to the full panoply of benefits under California law. With the California economy in tatters, and a hostile judicial ruling, Uber's CEO has finally had enough and announced that the company is pulling up stakes in the state:
Uber CEO Dara Khosrowshahi appeared on MSNBC today and claimed that if a recent California court ruling reclassifying drivers as full-time employees is not overturned, the company might have to suspend services in that state for several months.
"It's hard to believe we'll be able to switch our model to full-time employment quickly," Khosrowshahi said.
In a recent New York Times op-ed, the chief executive argued that making drivers full-time employees would make things worse for both drivers and riders. Instead, he advocated for other legislative solutions like requiring gig economy companies to create benefits funds for their workers.
If I had to bet money, once it's gone, Uber's not coming back — at least not until California has stepped back from the edge of the Cliff of Insanity. Economically, California has effectively turned itself into a fascist state. And no, that's neither an exaggeration nor a claim that California Dems are all Nazis. It's just a statement of fact.
Remember that Marx and Engels envisioned socialism purely as an economic theory. If they'd had any brains, they would have realized that to control the economy, one must inevitably control the people. But they didn't have brains, or they wouldn't have dreamed up socialism in the first place.
That same brainpower deficit is why the German duo didn't understand that a managed economy inevitably fails. Politicians and bureaucrats lack the wisdom of people with skin in the game and the ability instantly to react to market changes.
Still, socialism struck people as a great idea and, by the beginning of the 20th century, it had broken down into two competing approaches: the first is communism, which has the state own the economy. The second is fascism, which has the state manage the economy. That's what Europe did after WWII, and that's what California has increasingly been doing since the Democrats took over.
Thankfully, fascist states don't have to become megalomaniacal dictatorships that end in a welter of pain and blood. Instead, they can be like Europe, which is a micromanaging nanny-state that chugs along for decades thanks to America's subsidizing its fake(ish) economy during the Cold War. Alternately, it can become a California, which managed to function for several decades thanks to the accumulated wealth of the 20th century plus the new wealth from Silicon Valley.
Sooner or later, though, the money runs out, and both businesses and productive citizens leave. Then you start enticing in cheap labor from countries that don't share your values, and...well, you know how it ends.
Uber's about to walk, and others will inevitably follow. It's a shame, too, because people like me still remember the good years in California.