COMMENT | It is odd that former premier Najib Razak has reportedly called Defence Minister Mohamad Sabu a “joker,” who talks about “fish curry” while on board a warship.
Having lost the 14th general election (GE14) badly on May 9 and is now caught in a legal imbroglio over 1MDB and potentially many “mini 1MDBs,” the last thing Najib wants to be doing is to cast the first proverbial stone in a glass house.
Imagine the shards of glass that will come crashing down. In fact, the cracks are already there to see.
The Defence Ministry has been helmed twice by Najib. No one has had that privilege. Not “King Ghaz,” the late Ghazali Shafie, who is known as a foreign policy maestro.
Not even Dr Mahathir Mohamad, the Seventh Prime Minister, who is known to take the bulls by the horns; as he did when he ripped UMNO and PAS apart in GE-14.
A double stint of Najib, therefore, should have allowed the Defence Ministry to stay clear from any unfortunate controversial issues. Yet, neither tenure did, despite a combined service of some 14 years clocked by Najib.
In fact, when one is in the military barracks, there are jokes galore about the ineptness of Najib but potentially Hishammuddin Hussein too, his cousin, who too donned the mantle of Defence Minister.
The Joker of Lahad Datu–Hishamuddin Hussein
Wasn’t the latter who tweeted that the terrorists in Lahad Datu were clad in “slippers” and “sarongs,” and not to be deemed a threat?
Yet precisely a day later the terrorists went on a rampage, resulting in the first armed invasion of Malaysia since the end of Konfrontasi in 1965. Najib and Hisham, for the lack of better word, appeared to have muck things up when they were at the top of the food chain.
If the joke is on Mat Sabu, so far still a well-regarded Defence Minister, Najib has to be mindful of his legacy both as a Defence and Prime Minister. They reek of indolence (the lack of oversight) and insolence insofar as basic supervision is needed.
Indeed, what the ministry faces now is a litany of issues that remain unresolved. Be it the French submarine Scorpene scandal, or the plea of Shaariibuu Setev that the murder case of his daughter, Altantuya, be reinstated (for a thorough reinvestigation), the echoes from the past seem unrelenting.
Cancer of corruption
If one cares to listen, the cancer of corruption has seeped deepest into the marrows of the ministry. A tile at a military hospital, for example, can allegedly come at a quote of RM13,000, according to reliable sources. Drugs and pharmaceuticals that are supplied to the hospital are allegedly 300 percent more expensive than the regular tender.
If the invoices of these items are compared side by side with other genuine tenders, it would expose the scams and more shenanigans that have manifested in cooking the books.
The best services at such hospitals go the military supremos and top guns, and not the rank and file, who bore the scars of their service.
Indeed, contracts and tenders that are non-competitive have given to the same company over and over. For example, when a tender requires eight items to be scrutinized or supplied, those companies with close political connections to the previous regime continue to win the bids time and again, even though they offer nine of 10 exhibits, thus inflating the cost and breaching the terms of the tender.
The legacy of Najib appears to be anything but spotless. Thus Mat Sabu is right that Najib has tried to “hit him below the belt” by choosing to raise the issue outside of the Parliament.
If Najib wants to critique the Defence Ministry, an institution that can be redeemed by Amanah, he better find a stronger excuse than hurling abuse at Sabu.
PHAR KIM BENG is a Harvard/Cambridge Commonwealth Fellow, a former Monbusho scholar at the University of Tokyo and visiting scholar at Waseda University.
The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.
Apart from Khazanah Managing Director Tan Sri Azman Mokhtar, Tan Sri Md Nor, former banker Mohamed Azman Yahya; Datuk Mohammed Azlan Hashim; former central banker Andrew Sheng Len Tao, who previously served as the deputy chief executive of the Hong Kong Monetary Authority; Tan Sri Raja Arshad Raja Uda, former chairman and senior partner at PriceWaterhouseCoopers in Malaysia; Datuk Nazir Razak, chairman of financial group CIMB Holdings and brother of former premier Najib Razak; Datuk Nirmala Menon, a highly respected insurance sector executive; and banker Yeo Kar Peng have tendered their resignations.–July 26, 2018
QUESTION TIME | Can members of the public, instead of just the connected bigwigs, get a slice of the corporate cake, if all or part of Khazanah Nasional Bhd’s realisable value of about RM160 billion at the end of last year is disposed of?
This is about 57 percent of total assets under national unit trust management company Permodalan Nasional Bhd or PNB with RM280 billion of assets managed as at end 2017.
The unequivocal answer is “yes”, a unit trust scheme can be easily devised for Khazanah’s assets and you and I and millions of other Malaysians could become beneficiaries – provided the new Pakatan Harapan government under Dr Mahathir Mohamad shunts Malaysia Inc aside in favour of a partnership with the public. It really can be done and it will earn plenty of credit for Harapan..
When Prime Minister Mahathir accused Khazanah Nasional of deviating from its original objective of helping the bumiputera, what did he mean? Was he confusing this with Permodalan Nasional Bhd which was set up specifically to increase and retain bumiputera participation in the corporate sector?
“But along the way, Khazanah decided it should take all the shares for itself and if they are good shares well why not acquire the shares at the time of listing when the price of shares was very low and so they forget entirely about holding the shares for the bumiputera. They decided that they should be holding the shares forever as a part of the government companies owned by the government,” he said.
But an examination of its corporate profile shows no such objective for Khazanah. Here is its mandate: “Khazanah strives to create sustainable value and cultivate a high-performance culture that helps contribute to Malaysia’s economic competitiveness. Utilising a proactive investment approach, we aim to build true value through management of our core investments, leveraging on our global footprint for new growth, as well as undertaking catalytic investments that strategically boost the country’s economy. We also actively develop human, social and knowledge capital for the country.”
Yes, under the previous government it was to divest some of its stakes in investments gradually, but not necessarily to bumiputera. Increasing the bumiputera stake in the corporate sector fell squarely upon the shoulders of PNB which was set up for that purpose.
Its first chairperson, former Bank Negara Malaysia Governor the late Tun Ismail Ali, Mahathir’s brother-in-law, set up PNB in 1978 and came up with the structure of PNB and its unit trusts to increase and retain bumiputera corporate interests.
Surely Mahathir knows that as he was Prime Minister and chairperson of PNB’s holding company from 1981 up to 2003 during his previous term.
What is Mahathir’s game? And is the seeming pressure that appears to be put on Khazanah and its staff, alleging high salaries etc, an attempt to justify the selling of Khazanah’s investments to others?
Is this fair on Khazanah executives who have done a pretty good job of transforming Khazanah after Abdullah Ahmad Badawi took over as Prime Minister in 2003 from Mahathir and instituted wide-ranging reforms to make it a professional organisation run according to strict rules of governance and accountability?
Few who have followed Khazanah closely over the years will deny the tremendous improvement Khazanah has undergone since 2003 compared to the first 10 years of its existence after its establishment in 1993 during Mahathir’s previous tenure when it had been associated with some questionable investment decisions to bail out crony companies.
Tan Sri Azman Mokhtar and his Board colleagues deserve a lot of credit for remaking and re-imaging Khazanah Nasional Berhad into a model of good corporate governance for Malaysian GLCs.–Din Merican
In fact, Khazanah led the transformation of GLCs (government-linked companies) through various initiatives which included systematic strengthening of board and management, a system of key performance indicators and a series of rules for good corporate governance. If 1MDB had followed the measures instituted, it would not be where it is because its mismanagement and theft would have been discovered and exposed a long time ago.
A revolutionary scheme
Khazanah’s investments include some of the largest companies on the stock market which have a respectable amount of management expertise with them. These are listed companies and salaries must be competitive with others to retain and build a good staff.
Among key companies, four of whom are among the top 10 in terms of market value, are Axiata Group Berhad, CIMB Group Holdings Berhad, Tenaga Nasional Berhad, Telekom Malaysia Berhad, Malaysia Airports Holdings Berhad, IHH Healthcare Berhad and UEM Sunrise Berhad.
If Mahathir wants to sell major stakes in these companies, perhaps to raise funds or perhaps to increase bumiputera participation, or perhaps to sell to favoured people, he must remember two things – there may not be enough bumiputera with the means to acquire these companies and as in the past, unscrupulous investors may sell down their stakes for profits or cut costs so much that businesses become unviable.
There is another way to do it – spread the wealth around. PNB and Ismail Ali showed the way a long time ago – unit trusts. Put good investments into a unit trust and sell the units to the general public. Give them a better deal than current unit trusts which have exorbitant entry and exit fees and a high management fee to boot.
With some RM160 billion under its management, just a 0.25 percent management fee and with no other charges, Khazanah can get RM400 million a year which should be more than enough to cover staff operating costs. The government gets RM160 billion or thereabouts if all investments are put into the unit trust, and the public gets to invest its excess funds in quality assets at zero entry and exit costs and a low management fee.
But it has to be prepared to pay market costs for subsequent sale and purchases as with any other unit trust, which is fair. You could even allow EPF withdrawals for purchases.
To keep it within reach for as many people as possible, cap the maximum amount of investments by anyone Malaysian at RM50,000, same as for PNB units. This could mean an investor base of probably at least 3.2 million people (160 billion divided by 50,000) and perhaps much more than that as many people can’t afford to invest RM50,000 in one go.
You can set bumiputera allocation at 30 percent at least and allocate other parts of it to other disadvantaged communities. You can issue the units in stages.
Khazanah’s track record has been pretty good and mimics quite closely the main index tracking of the Kuala Lumpur stock market. Its value, adjusted to accurately reflect performance, increased annually by 9.3 percent on a compounded basis between 2004 and 2016 which is very much in line with the FBM KLCI index growth of 9.4 percent over the same period.
This also means that despite divesting the shares, the government will still have control over the companies through the unit trusts, and ensure that both their social as well as profitability roles are fulfilled. It actually is the road to greater corporate social responsibility.
There you have it, a simple but revolutionary scheme, easily implemented, and shall we say, the most inclusive deal that anyone can come up with.
Over to you Harapan, and if you want a catchy name for this, here are two:
Government-People Partnership (GPP) or Public People Partnership (PPP).
Take your pick.
This is the fifth in a series of six articles on Malaysia post GE14. The next and final part: What Harapan should prioritise going forward.
When an Outstanding Banker like Nazir Razak decides to leave before his term of office ends, there’s bound to be speculation. In this particular case, the man who is at the center of this Star newspaper report happens to be the younger brother of former Malaysian Prime Minister Najib Razak.
“In six years, we have expanded from two branches to 12 branches as well as 14 off-site self-service terminals. We presently have over $450 million in assets, making us the 13th largest commercial bank in Cambodia. We intend to be in Cambodia for the long term and we feel it is important to grow sustainably and to invest in developing our local talent pool. Regionally, CIMB Group is ASEAN’s fifth-largest universal bank. Over the past decade, the group has been one of the fastest-growing banks in the region”. Bun Yin, CEO of CIMB Bank, Cambodia
A Cambodian friend of mine who heads CIMB Bank operations (pic above) in Cambodia alerted me of this possibility a couple of days ago. My response was that he should not listen to rumours. Chairman Nazir is well known in the Kingdom where CIMB Bank operates a very successful and profitable network of bank branches.
I am not privy to what is happening in the Malaysian corporate scene post May 9 GE-14. I have been away from the country since 2014. But I hope that the impending departure of Chairman Nazir has nothing to do with politics. Ideally, I would like him to either remain with the CIMB Group, or be given some key appointment elsewhere so that his talent, professional competence, reputation for integrity, and wide experience can be used for the benefit of the New Malaysia.–Din Merican
CIMB Group chairperson Nazir Razak will leave the banking group when his term ends next March, reported The Star today.
The youngest brother of former Prime Minister Najib Razak has informed the CIMB Board of Directors that he will not seek re-election as chairperson, a post he has held since 2014.
He has also served as CIMB chief executive officer (CEO) for 15 years. “He (Nazir) has told the board that he will leave and not seek re-election. The board is already searching for a successor,” said the source.
Malaysiakini has contacted Nazir for his response. Speculation has been rife that Nazir could leave earlier than March. The source however said thus far, there has been no indication of him being “told to go”. “He has not been called in by the Council of Eminent Persons (CEP) or anyone else,” the source was reported as saying.
The CEP is headed by former Finance Minister Daim Zainuddin, and was set up to advise the new Pakatan Harapan government on how to achieve its economic promises in 100 days as per its election manifesto.
CEP is also looking into the performance of government-linked companies (GLCs) and reviewing the appointments of key executives. Several CEO at GLCs as well as government-linked investment companies (GLICs) have already vacated their positions following the change in government.
Nazir is prepared to go earlier than the expiry of his term if he is told to do so, according to another source.
Taxpayers expect at least a semblance of practicality, pragmatism and realism when their hard-earned money is expended. People are willing to pay RM1 for peace of mind when they travel, but certainly not for fat cats to pay themselves high salaries. –R. Nadeswaran aka Citizen Nades
COMMENT | The Malaysian Aviation Commission (Mavcom) has been making headlines for all the wrong reasons. Just after the elections, AirAsia boss Tony Fernandes made a serious charge against the commission, questioning its integrity.
Fernandes claimed that the airline was pressured to cancel an additional 120 flights during the 14th General Election period. Mavcom said it viewed the claim seriously and lodged a police report against Fernandes over the allegation.
“The Commission has never issued such a directive to any airline, including AirAsia, to reduce or cancel any flight where regulatory requirements have been met,” it said.
Mavcom also said that it had commenced an investigation into the claim. “We will keep members of the public informed,” said a spokesman in a statement on May 14. A police report was also lodged.
How does Mavcom justify paying this retired General RM85,000 per month? He must be a management genius. The Directors must be held accountable for this irresponsible decision. Unconscionable .–Din Merican
Today, more than two weeks later, we have not been informed of the outcome of the investigation. Instead, we are told that the salary of Mavcom’s Executive Chairperson General (Rtd) Abdullah Ahmad is a whopping RM85,000 – more than four times the salary of the Prime Minister.
Entrepreneur Tan Sri Tony Fernandes–A Victim of Politics. It is time we recognise his contributions to the Malaysian Economy and for building AirAsia into an award winning global brand, in stead of demonizing him. I am glad that Prime Minister Tun Dr. Mahathir Mohamad and former MITI Minister Tan Sri Rafidah Aziz have come to his defense.–Din Merican
It is also pertinent to ask when the results of the probe will be made public. It is not rocket science. Fernandes says he has the evidence to prove it. Has Mavcom requested for it – or is it too embarrassed that the cat will now be let out of the bag?
More importantly, is this kind of salary for the Mavcom executive chairperson justified? Who approved the salary? How did the board, in this instance the other commissioners, approve this? How did they conclude on the salary scale?
What is the basis for such a humongous salary? Other commissioners have to answer to the taxpayers on how they arrived at their executive chairperson’s salary. Do they actually need an executive chairperson? Why not ask the CEO to report to the board?
The Board Members are:
Secretary-General of the Transport Ministry Saripuddin Hj Kasim;
former Director-General of the Economic Planning Unit, Nik Azman Nik Abdul Majid;
Lawyer and Suhakam Commissioner Mah Weng Kwai;
former Housing and Local Government Minister Chor Chee Heung,
former Transport Ministry Secretary-General Long See Wool,
retired civil servant Fauziah binti Yaacob,
Deputy Chairperson of the Penang Regional Development Authority (Perda) Shaik Hussein Mydin, and
Nungsari Ahmad Radhi, Managing Director of Prokhas Sdn Bhd, a Ministry of Finance Inc. company.
At this juncture, it is pertinent to explain how a traveler’s RM1 is spent. According to its latest available Annual Report on its website, from March 1 to Dec 31, 2016, Mavcom incurred staff costs of RM8.7 million.
Big task ahead
It further paid RM570,000 in Directors’ Fees. Mavcom had 11 board meetings during a 10-month period. Calculated loosely, each of the eight directors earned RM5,100 for attending each of the 11 meetings. The accounts also show that RM770,000 was spent on travel and accommodation.
Minister of Transport Anthony Loke–Fix the MAVCOM nonsense
Mavcom is not the only one that pays its directors lavishly. The Human Resource Development Fund (HRDF) pays each of its 18 directors RM2,000 per month and a one-off tuxedo allowance of RM3,000. (The Malaysian Anti-Corruption Commission pays members of it advisory panel RM300 each for attending monthly meetings.)
HRDF’s funds come from employers who have to contribute one percent of their monthly payroll. The money is supposed to be used for the training of their respective staff but in the past, HRDF was involved in dubious diploma courses from the UK.
It also spent RM25,000 on an advertisement congratulating its then Minister Richard Riot on being conferred a ‘Datuk’ title!
Taxpayers expect at least a semblance of practicality, pragmatism and realism when their hard-earned money is expended. People are willing to pay RM1 for peace of mind when they travel, but certainly not for fat cats to pay themselves high salaries.
Similarly, employers expect their one percent levy to be used for training their own staff and not for directors to benefit at their expense.
There’s a big task ahead for the new ministers to the review unrealistic salaries, allowances and perks to organisations under their purview. Mavcom and HRDF are just two examples.
There are scores of other agencies and a review will help save the government millions of dollars. Let not history repeat itself. It was the negligence of the board that led to colossal losses in the Port Klang Authority and the Port Klang Free Zone scandals.
Also, the government-appointed directors of the National Feedlot Corporation board were oblivious to the fact that monies meant for cattle farming were used to buy luxury condos.
R NADESWARAN has been campaigning for good governance for oer 30 years and expects the new government to emphasise on its cornerstones – transparency and accountability. Comments: firstname.lastname@example.org
Recent polling confirms what street protests and online activism in recent years have already been indicating: the public’s trust in government and private institutions is dismally low. To change that, political, business, and civil-society leaders need to demonstrate honest, principled leadership that puts the public interest first.
DAVOS – As is often the case, informal conversations at the World Economic Forum’s just-completed annual meeting in Davos, Switzerland, inevitably alluded to the Edelman Trust Barometer, an annual poll of public confidence in business, media, government, and nongovernmental organizations. After all, Davos participants are leaders in these fields, and the results of the most recent poll are chastening.
In 2017, 71% of respondents globally considered government officials not credible or only somewhat credible, and 63% of respondents had the same dismal view of CEOs. This should not come as a surprise. Across dozens of countries, people have been airing their grievances against the status quo through social media, protests, consumer choice, and the ballot box
Societies and economies pay a high price when citizens do not have faith in public- and private-sector leaders. Distrust leads to political polarization, widespread anxiety about the future, and uncertainty in domestic affairs and international relations. And these symptoms then reinforce the loss of trust, creating a vicious circle.
Clearly, citizens should be able to expect more from their leaders. To that end, as the deans of the Harvard Kennedy School and the Harvard Business School, respectively, we strive to impart the values of effective leadership to our students. We teach them that leadership is not about opportunism or winning at any cost. It is about advancing the common good and making a difference in the world.
The most effective business leaders care about more than quarterly profits or beating the competition, just as the most effective government leaders care about more than winning the next election or grabbing headlines. In any domain, an effective leader looks out for everyone he or she serves, and adheres to a set of core values.
If people in positions of power aspire to this vision of principled leadership – at work and in their own lives – trust in businesses, governments, and civic institutions can be restored around the world. But they will also need to consider the root causes of the problem.
Sir Winston S. Churchill– A Towering Briton
First and foremost, people simply do not trust their leaders always to speak honestly. To change that, the effective leader must show that he or she values truth and evidence above all else. By valuing truth, one forces oneself to make decisions based on sound reasons rather than self-interest. When tempted by self-interest, aspiring leaders should emulate figures known for their honesty and truth-telling, such as Warren Buffett or Winston Churchill.
Beyond honesty, effective leadership also requires respect for individuals, regardless of their demographic background or past experiences. People understandably become disillusioned when their government or the business community doesn’t seem to value them, especially when such treatments stems from their gender, race, religion, sexual identity, or national origin. To prevent that from happening, public- and private-sector leaders should focus on building diverse and inclusive organizations, as Tim Cook has done since becoming the CEO of Apple.
Apple’s Tim Cook–An Outstanding Leader
Moreover, respecting people means listening to their viewpoints and not talking past them, even when you disagree. Thus, an effective leader is one who promotes free speech, engages in civil discourse, and remains open to compromise. Even when a decision doesn’t go someone’s way, that person will want – and deserves – to be heard.
The challenge for leaders, then, is to find ways to work with people who hold different opinions without abandoning their own core principles. One model for this style of leadership is Robert Zimmer, the President of The University of Chicago, who advocates for free and open speech even when the ideas being espoused are unpopular or distasteful. As Zimmer wrote in the University of Chicago Magazine in 2016, “Universities cannot be viewed as a sanctuary for comfort but rather as a crucible for confronting ideas.”
Michael Bloomberg–A truly outstanding and compassionate Leader
Lastly, effective leadership means delivering excellent and responsive service to one’s customers or constituents, as Michael Bloomberg did as the Mayor of New York. When people do not feel that their leaders are working in their interest or addressing genuine needs, they lose confidence. To restore it, government officials must build and defend robust civic institutions and political processes that serve the public interest; and businesses must ensure that they are working effectively for all of their stakeholders.
Accordingly, public- and private-sector leaders should look for ways to help those who feel frustrated and left behind economically or socially. One good model is Year Up, a fast-growing nonprofit organization founded by Harvard Business School graduate Gerald Chertavian in 2000. Year Up helps disadvantaged urban youth acquire the skills they will need for higher education and professional careers. Another good model is Girls Who Code, which Harvard Kennedy School graduate Reshma Saujani founded in 2012 to address the tech sector’s gender gap.
The success of these programs shows that when leaders focus on creating opportunities for people who have not been treated fairly, they can build more cohesive societies and equip more people to contribute productively to the economy. Looking ahead, governments, businesses, and civil-society organizations must put values-driven leadership at the heart of their missions.
“Sharing” boosters herald the virtues of autonomy and flexibility; skeptics warn about the rise of a new precariat.
Not long ago, I moved apartments, and beneath the weight of work and lethargy a number of small, nagging tasks remained undone. Some art work had to be hung from wall moldings, using wire. In the bedroom, a round mirror needed mounting beside the door. Just about anything that called for careful measuring or stud-hammering I had failed to get around to—which was why my office walls were bare, no pots yet dangled from the dangly-pot thing in the kitchen, and my bedside shelf was still a doorstop. There are surely reasons that some of us resist being wholly settled, but when the ballast of incompletion grew too much for me I logged on to TaskRabbit to finish what I had failed to start.
On its Web site, I described the tasks I needed done, and clicked ahead. A list of fourteen TaskRabbits appeared, each with a description of skills and a photograph. Many of them wore ties. I examined one called Seth F., who had done almost a thousand tasks. He wore no tie, but he had a ninety-nine-per-cent approval rating. “I’m a smart guy with tools. What more can you want?” he’d written in his profile. He was listed as an Elite Tasker, and charged fifty-five dollars an hour. I booked him for a Wednesday afternoon.
TaskRabbit, which was founded in 2008, is one of several companies that, in the past few years, have collectively helped create a novel form of business. The model goes by many names—the sharing economy; the gig economy; the on-demand, peer, or platform economy—but the companies share certain premises. They typically have ratings-based marketplaces and in-app payment systems. They give workers the chance to earn money on their own schedules, rather than through professional accession. And they find toeholds in sclerotic industries. Beyond TaskRabbit, service platforms include Thumbtack, for professional projects; Postmates, for delivery; Handy, for housework; Dogvacay, for pets; and countless others. Home-sharing services, such as Airbnb and its upmarket cousin onefinestay, supplant hotels and agencies. Ride-hailing apps—Uber, Lyft, Juno—replace taxis. Some on-demand workers are part-timers seeking survival work, akin to the comedian who waits tables on the side. For growing numbers, though, gigging is not only a living but a life. Many observers see it as something more: the future of American work.
Seth F.—the “F” stood for Flicker— showed up at my apartment that Wednesday bearing a big backpack full of tools. He was in his mid-forties, with a broad mouth, brown hair, and ears that stuck out like a terrier’s beneath a charcoal stocking cap. I poured him coffee and showed him around.
“I have molding hooks and wire,” I said, gesturing with unfelt confidence at some coils of translucent cord. “I was thinking they could maybe hang . . .” It struck me that I lacked a vocabulary to address even the basics of the job; I swirled my hands around the middle of the wall, as if blindfolded and turned loose in a strange room.
Seth F. seemed to gather that he was dealing with a fool. He offered a decision tree pruned to its stump. “Do you want them at eye level?” he asked.
“Eye level sounds great,” I said.
Seth F. had worked for TaskRabbit for three years, he told me as he climbed onto my kitchen stool—“like twenty-one years in normal job time.” In college, he had sold a screenplay to Columbia Pictures, and the film, though never made, launched his career. He wrote movies for nine years, and was well paid and sought after, but none of his credited work made it to the big screen, so he took a job as a senior editor at Genre, a now defunct gay magazine, where he covered the entertainment industry. He liked magazine work, but was not a true believer. “I’m one of those people, I think, who has to change jobs frequently,” he told me. He got a master’s degree in education, and taught fourth grade at Spence and at Brooklyn Friends. Fourteen years in, a health condition flared up, leaving his calendar checkered with days when it was hard to work. He’d aways found peculiar joy in putting together IKEA furniture, so he hired himself out as an assembly wiz: easy labor that paid the bills while he got better. He landed on TaskRabbit.
“There are so many clients, I rarely get bored,” he told me. He was feeding cord through the molding hooks to level my pictures. At first, he said, hourly rates at TaskRabbit were set through bidding, but taskers now set their own rates, with the company claiming thirty per cent. A constellation of data points—how quickly he answers messages, how many jobs he declines—affect his ranking when users search the site. He took as many jobs as he could, generating about eighty paid hours each month. “The hardest part is not knowing what your next paycheck is from,” he told me.
Seth F. worked quickly. Within an hour, he had hung six frames from the molding over my couches. Sometimes, he confessed, his jobs seem silly: he was once booked to screw in a light bulb. Other work is harder, and strange. Seth F. has been hired to assemble five jigsaw puzzles for a movie set, to write articles for a newspaper in Alaska, and to compose a best-man speech to be delivered by the brother of the groom, whom he had never met. (“The whole thing was about, ‘In the future, we’re going to get to know each other better,’ ” he explained.) Casper, the mattress company, booked him to put sheets on beds; Oscar, the health-insurance startup, had him decorate its offices for Christmas.
As we talked, his tone warmed. I realized that he probably visited strangers several times a day, meting out bits of himself, then moving on, often forever, and I considered what an odd path through professional experience that must be. He told me that he approached the work with gratitude but little hope.
“These are jobs that don’t lead to anything,” he said, without looking up from his work. “It doesn’t feel”—he weighed the word—“sustainable to me.”
The gig economy is a growing trend for companies to mainly employ independent contractors and freelancers instead of using full-time employees.It provides both the company and the people who work for them complete flexibility to work as and when they want, and only pay people for the jobs they do.
The American workplace is both a seat of national identity and a site of chronic upheaval and shame. The industry that drove America’s rise in the nineteenth century was often inhumane. The twentieth-century corrective—a corporate workplace of rules, hierarchies, collective bargaining, triplicate forms—brought its own unfairnesses. Gigging reflects the endlessly personalizable values of our own era, but its social effects, untried by time, remain uncertain.
Support for the new work model has come together swiftly, though, in surprising quarters. On the second day of the most recent Democratic National Convention, in July, members of a four-person panel suggested that gigging life was not only sustainable but the embodiment of today’s progressive values. “It’s all about democratizing capitalism,” Chris Lehane, a strategist in the Clinton Administration and now Airbnb’s head of global policy and public affairs, said during the proceedings, in Philadelphia. David Plouffe, who had managed Barack Obama’s 2008 campaign before he joined Uber, explained, “Politically, you’re seeing a large contingent of the Obama coalition demanding the sharing economy.” Instead of being pawns in the games of industry, the panelists thought, working Americans could thrive by hiring out skills as they wanted, and putting money in the pockets of peers who had done the same. The power to control one’s working life would return, grassroots style, to the people.
The basis for such confidence was largely demographic. Though statistics about gigging work are few, and general at best, a Pew study last year found that seventy-two per cent of American adults had used one of eleven sharing or on-demand services, and that a third of people under forty-five had used four or more. “To ‘speak millennial,’ you ought to be talking about the sharing economy, because it is core and central to their economic future,” Lehane declared, and many of his political kin have agreed. No other commercial field has lately drawn as deeply from the Democratic brain trust. Yet what does democratized capitalism actually promise a politically unsettled generation? Who are its beneficiaries? At a moment when the nation’s electoral future seems tied to the fate of its jobs, much more than next month’s paycheck depends on the answers.
One Thursday evening in February, Caitlin Connors texted me and said to meet her at a bar in Williamsburg called Donna. The place was large and crowded; I found her in the middle of a big group, in a corner bathed in light the color of Darjeeling. Connors is small and outgoing, with a brown Jackie O. bob that looks windswept even indoors. She had come to New York five years earlier, from Colorado, “to learn about the Internet,” she said, and she worked in marketing awhile. Agency life had not been her thing—“a lot of crazy bitches”—so she started her own branding firm, the Fox Theory, which does marketing for entrepreneurs, artists, authors, and a sleight-of-hand magician. She led me to the bar to sit. She wore a black floral blouse and skinny navy pants. “I think we’re just coming into the next wave of human civilization,” she told me, and drained her cocktail with a straw. “Humans can operate on a person-to-person basis, sharing ideas and sharing business without intermediaries.”
When Connors first came to New York, she lived with several roommates in a huge, run-down place in Chelsea she dubbed the Fox Den. When her sister came to stay with her, they moved to a newer building, the Fox Den 2.0, and that was where she discovered Airbnb. She started to rent out an extra room, and the income made them “less pinched.” When she moved again, with another roommate (she has had thirty-six roommates in total), they searched for an optimally Airbnb-able place. They ended up in Williamsburg, a neighborhood that seemed “trendy” to tourists. The Fox Den 3.0, as the new digs were christened, was a three-bedroom duplex by the Bedford Avenue subway station. It had sleek new appliances and a lovely yard; through an ingenious configuration of beds and couches, it could sleep up to twelve people.
Connors tried to rent it out one week a month. Some swapping was often required. If she and her roommate were in town during a rental, they decamped to make room for the guests. Sometimes they used an acquaintance’s pad in Manhattan, also on Airbnb. Sometimes Connors stayed at the home of an old friend. “It’s the time we have to hang out and chill and catch up,” she said. “He loves it. I love it.” The financial upsides were considerable. By Airbnb-ing out their apartment one week a month, Connors and her roommate could clear their four-thousand-dollar rent. Sometimes they were gone for longer. One golden month, Airbnb-ing brought in five figures. “That’s more than most people, smart people, make in their job,” Connors observed.
For Connors, though, the real benefit of Airbnb was that it allowed her to travel, which she still loves to do. She spent part of November in Mexico, and part of December in Jordan. She saw the Fox Den as a tool for living a worldly life without committing to a worldly career. (“Otherwise, you’d have to be another level of rich to make this work.”) She spent all of January in Cuba, which gave her a new business concept.
“In Cuba—random little town—half the town wanted me to start their Airbnb accounts for them,” she said. Connors found a population that desperately needed help with the marketing of personal brands. Now she got out her iPhone and started swiping rapidly through photos, many of which centered on azure shorelines and shirtless men. “Cuba is preserved like a time capsule,” she said. She stopped at a street scene. “Everyone drives old cars.” She swiped. “These are their farms. They plow their fields with oxen.” On her next trip, she planned to help Cuban artists market themselves as American millennials do: “I want to help the Cubans learn to make money off of their art.”
A friend of hers, Prescott Perez-Fox, passed by us, on his way out. Connors snagged him. “I don’t know what you do anymore!” she said.
Perez-Fox fished some business cards from his pocket. “I’m a graphic designer and brand strategist, and I also run a podcast, and a podcast meet-up. You should come to our meet-up,” he said, handing her a card. The card said, “NEW YORK CITY PODCAST MEETUP.” “That’s the group,” he said. “My show is on the back side.” The back of the card said, “THE BUSY CREATOR PODCAST.” “It’s about workflow and creative productivity and culture and habits for creative pros.”
“Why have I not been”—Connors blinked hard—“learning from you more often?”
“Girl, get after it!” Perez-Fox exclaimed. In addition to hosting his own podcast, he had been a guest on nine other podcasts, including “Freelance Transformation” and “Life in the Woods: Hope for Independent Creatives.” “I’m finishing a project tomorrow,” he told her. “Then I’ll be more free.”
Connors said that she was in New York at least through next week, probably, and then she was going back to Cuba. “Want to come down?” she asked.
“Ah,” Perez-Fox said. “A little bit hasty.”
One of the best things about Cuba, Connors explained when Perez-Fox had darted out into the night, was that she greeted each day there without anxiety. “Not waking up stressed every day, doing something super-rewarding, and having time to write and make art and all that stuff—that’s what I want,” she told me. Soon after we went our separate ways, she left town, to fly south.
In 1970, Charles A. Reich, a law professor who’d experienced a countercultural conversion after hanging with young people out West, published “The Greening of America,” a cotton-candy cone that wound together wispy revelations from the sixties. Casting an eye across modern history, he traced a turn from a world view that he called Consciousness I (the outlook of local farmers, self-directed workers, and small-business people, reaching a crisis in the exploitations of the Gilded Age) to what he called Consciousness II (the outlook of a society of systems, hierarchies, corporations, and gray flannel suits). He thought that Consciousness II was giving way to Consciousness III, the outlook of a rising generation whose virtues included direct action, community power, and self-definition. “For most Americans, work is mindless, exhausting, boring, servile, and hateful, something to be endured while ‘life’ is confined to ‘time off,’ ” Reich wrote. “Consciousness III people simply do not imagine a career along the old vertical lines.” His accessible theory of the baffling sixties carried the imprimatur of William Shawn’s New Yorker, which published an excerpt of the book that stretched over nearly seventy pages. “The Greening of America” spent months on the Times best-seller list.
Exponents of the futuristic tech economy frequently adopt this fifty-year-old perspective. Like Reich, they eschew the hedgehog grind of the forty-hour week; they seek a freer way to work. This productivity-minded spirit of defiance holds appeal for many children of the Consciousness III generation: the so-called millennials.
“People are now, more than ever before, aware of the careers that they’re not pursuing,” says Kathryn Minshew, the C.E.O. of the Muse, a job-search and career-advice site, and a co-author of “The New Rules of Work.” Minshew co-founded the Muse in her mid-twenties, after working at the consulting firm McKinsey and yearning for a job that felt more distinctive. She didn’t know what that was, and her peers seemed similarly stuck. Jennifer Fonstad, a venture capitalist whose firm, Aspect Ventures, backed Minshew’s company, told me that “the future of work” is now a promising investment field.
Many dreamy young people, like Caitlin Connors, see unrealized opportunity wherever they go. Some, in their careers, end up as what might be called hedgers. These are programmers also known as d.j.s, sculptors who excel as corporate consultants; they are Instagram-backed fashion mavens, with a TV pilot on the middle burner. They are doing it for the money, and the love, and, like the overladen students they probably once were, because they are accustomed to a counterpoint of self. The hedged career is a kind of gigging career—custom-assembled, financially diffuse, defiant of organizational constraint—and its modishness is why part-time Lyft driving or weekend TaskRabbit-ing has found easy cultural acceptance. But hedging is a luxury, available to those who have too many appealing options in life. It gestures toward the awkward question of whom, in the long run, the revolution-minded spirit of the nineteen-sixties really let off the leash.
As Caitlin Connors’s apartment became more popular, she faced unforeseen challenges. Cleaning had to be done rapidly, in between stays. Questions from guests required prompt responses, even when she was abroad, and had no Internet access. When Airbnb logistics started to approach “a full-time job,” she hired a management company, called Happy Host, to handle bookings, cleanings, and related chores. Happy Host normally charges twenty-five per cent of earnings, but Connors found the cost worthwhile. “I’m, like, They do everything for you?” she said. “Sign me the fuck up!”
One day, I went to visit Happy Host’s founder, Blake Hinckley, at his loft apartment on Broadway, a block from the Strand bookstore. The elevator opened into the living room, which was sparsely but stylishly furnished with caramel-colored leather couches and bright, extroverted art work. Hinckley, who is twenty-nine, had a blond cascade of hair, round glasses, and a short, raffish beard. He had studied English and economics at Middlebury College, and worked for the Boston Consulting Group, doing efficiency assessments for big companies. While travelling three hundred days a year, he was also renting an apartment, in Boston. He did the math and found that, if he’d put the place on Airbnb, he could have made tens of thousands of dollars. Around that time, consulting in New York, he met his girlfriend. “The idea of being staffed in Cleveland and doing another ‘delayering’—B.C.G.’s polite euphemism for layoffs—just seemed catastrophic,” he said. Love, freedom, and a dream of fleeing corporate America won out.
Hinckley and three roommates have Airbnb-ed their apartment (“Glam Greenwich Village 4BR Loft”). As part of its service, Happy Host arranges professional photography, and the loft, a former hat factory with Eamesian kitchen stools and a fig tree by the window, stood ready for an appraising gaze. In addition to taking photos, Happy Host writes text for Airbnb listings, screens reservation requests, coördinates check-ins, greets guests, answers e-mails, and supplies soaps, towels, and wine. Hinckley’s people remain on call for emergencies, which can arise under improbable conditions. The company once had a client who, in the space-saving fashion of New Yorkers, used the drawer under her oven as a storage area for documents and mail. She nearly lost the kitchen to a fire when a Bavarian guest attempted to bake.
The afternoon was waning, and the “unrivaled natural light” in the apartment’s “West facing windows” had turned tawny. Twin arrays of seven large, gonglike bells, each mounted on a facing wall, shot off a pong. “The gamelatron!” Hinckley explained. “My roommate was at sea, and saw a gamelatron, and had a religious experience.”
Hinckley told me that creative, affluent professionals are the company’s typical customers. “Startup founders, consultants, people in private equity have been really drawn to this, because they’re so busy, they don’t have time to respond to a guest inquiry within the hour, or the inclination to wake up at one in the morning because the guest has had a couple of cocktails and is having trouble opening the door,” he said. “Also, intellectually, the concept of pricing really resonates.” If a property is constantly booked, its prices are too low; frequent fallow periods mean the rate is high. Long stays are favored, because cleaning and coördinating make turnovers costly. Happy Host sets future rates using a proprietary algorithm.
When deciding whether to work with a host, Hinckley assesses the apartment’s appearance (enlisting a designer if necessary), amenities, and location. Opening a laptop, he asked for my Zip Code and entered it into AirDNA, a third-party subscription database that gathers Airbnb market information nationwide.
“Forty-seven rentals in your neighborhood,” he said, peering at the laptop screen. “Seventy-one per cent are occupied at any time. Your median person is making 31K there on a 22.8K two-bedroom cost.” He frowned: weak margin. “The neighborhoods we like are the ones that are really high on this trend line.” He clicked to a new data set. “SoHo, Greenwich Village. There, you have people making over fifty-five thousand dollars on their apartment, if it’s a full-time rental.” He looked at me and opened up his eyes wide. “Which is wild.”
In promotional material, Airbnb refers to itself as “an economic lifeline for the middle class.”A company-sponsored analysis released in December overlaid maps of Airbnb listings and traditional hotels on maps of neighborhoods where a majority of residents were ethnic minorities. In seven cities, including New York, the percentage of Airbnb listings that fall in minority neighborhoods exceeds the percentage of hotel rooms that do. (Another study, of user photos in seventy-two majority-black neighborhoods, suggested that most Airbnb hosts there were white, complicating the picture.) Seniors were found to earn, on average, nearly six thousand dollars a year from Airbnb listings. “Ultimately, what we’re doing is driving wealth down to the people,” Chris Lehane, the strategist at Airbnb, says.
It is, of course, driving wealth down unevenly. A study conducted by the New York Attorney General in 2014 found that nearly half of all money made by Airbnb hosts in the state was coming from three Manhattan neighborhoods: the Village-SoHo corridor, the Lower East Side, and Chelsea. It is undeniably good to be earning fifty-five hundred dollars a year by Airbnb-ing your home in deep Queens—so good, it may not bother you to learn that your banker cousin earns ten times that from his swank West Village pad, or that he hires Happy Host to make his lucrative Airbnb property even more lucrative. But now imagine that the guy who lives two doors down from you gets ideas. His finances aren’t as tight as yours, and he decides to reinvest part of his Airbnb income in new furniture and a greeting service. His ratings go up. Perhaps he nudges up his prices in response, or maybe he keeps them low, to get a high volume of patronage. Now your listing is no longer competitive in your neighborhood. How long before the market leaves you behind?
I put a version of this question to Lehane on the phone one morning. In the White House, he was known as a “master of disaster” for his strategic crisis management. As Al Gore’s press secretary, in 2000, he led the double-black-diamond effort of making the Vice-President seem loose and easygoing on the campaign trail. He told me that even an arms race to the top of the market would benefit overlooked neighborhoods. “It has a ripple effect on the local economy,” he explained.
A competitive Airbnb host who hires a cleaner and a decorator in Queens creates work for locals. Guests—some of whom, Lehane insisted, prefer to be in remote neighborhoods—might patronize businesses in the area. “What we do represents a different model of capitalism,” he told me. After hanging up, he sent a six-hundred-word e-mail of elaboration, and another after that.
He pointed out that, traditionally, affluent people have accrued further wealth passively—from real estate, investments, inheritances, and the like. Those with less charmed lives have had to resort to work in exchange for money. Airbnb makes passive earning available to anyone with a spare room.
In a competitive market, though, advantaged people still end up leveraging their advantages: that is why Happy Host exists. Today, every major Airbnb city (among them London, Paris, Los Angeles, San Francisco, Chicago, and New Orleans) has multiple Happy Host equivalents to help meet rising market expectations. A two-year-old New York competitor, MetroButler, has twenty-two contractors and two cleaners, and last year bought the clientele of another competitor, Proprly. MetroButler’s co-founder Brandon McKenzie had been using Airbnb to pay down law-school debts when he realized that short-term rentals could support an entire service industry. “We’re sort of in the business of pickaxes during the Gold Rush,” he said.
Others harbor similar ambitions. “Our goal is to become a mega-behemoth,” said Amiad Soto, who, with his twin brother, co-founded Guesty, a Tel Aviv-based company that helps hosts manage bookings (or arranges for a remote operator to do so under their names). Guesty has seventy-five employees, and Soto spends much of his time hiring more. For physical work, most such companies rely on other apps—Handy, Postmates—or hire part-time workers themselves. Sharing is not only challenging an existing model; it is generating its own labor force.
One drizzly spring afternoon, I met a MetroButler worker named Bobby Allan while he prepared an apartment for guests. Allan is a conservatory-trained actor and singer in his mid-twenties. He came to MetroButler last summer, from a gig at Proprly; he also works as a cater-waiter and as a hype man at children’s parties. At MetroButler, he is a part-time contractor, without benefits, but he doesn’t mind: gig work makes it possible to take time off for more exciting endeavors (for instance, an appearance in Syfy’s “The Internet Ruined My Life”). MetroButler pays him fifty dollars for each two-hour cleaning—sixty if he greets the guests, too. “You meet so many crazy people,” he told me. The place he was cleaning, a small garden apartment with a child’s room at the back, was a regular for him. He had put fresh company linens on the queen-size bed, and had left hotel-size shampoo and conditioner bottles, with the MetroButler logo, on the nightstand. He discovered that the bulb in the desk lamp had burned out, so he made a note to buy a replacement.
In the child’s room, Allan dressed the twin bed in crisp white sheets, pulled the duvet cover over the duvet with impressive speed, and rolled a bath towel and a hand towel into little logs, to be arranged in the center of the bed. His first tax return as an independent worker had been a shock, he said. But the work had been instructive in many other ways, too. He consulted his phone. Every task was annotated on a photo of the space in an app that let MetroButler watch his progress in real time; he checked off each detail and took a photo of the room when he was done. He hummed the finale to “The Firebird” while he swept the floor.
Normally, every efficiency has a winner and a loser. A service like Uber benefits the rider, who’s saving on the taxi fare she might otherwise pay, but makes drivers’ earnings less stable. Airbnb has made travel more affordable for people who wince at the bill of a decent hotel, yet it also means that tourism spending doesn’t make its way directly to the usual armies of full-time employees: housekeepers, bellhops, cooks.
To advocates such as Lehane, that labor-market swap is good. Instead of scrubbing bathrooms at the Hilton, you can earn directly, how and when you want. Such thinking, though, presumes that gigging people and the old working and service classes are the same, and this does not appear to be the case. A few years ago, Juliet B. Schor, a sociology professor at Boston College, interviewed forty-three mostly young people who were earning money from Airbnb, Turo (like Airbnb for car rentals), and TaskRabbit. She found that they were disproportionately white-collar and highly educated, like Seth F. A second, expanded study showed that those who relied on gigging to make a living were less satisfied than those who had other jobs and benefits and gigged for pocket money: another sign that the system was not helping those who most needed the work.
Instead of simply driving wealth down, it seemed, the gigging model was helping divert traditional service-worker earnings into more privileged pockets—causing what Schor calls a “crowding out” of people dependent on such work. That distillation-coil effect, drawing wealth slowly upward, is largely invisible. On the ground, the atmosphere grows so steamy with transaction that it often seems to rain much needed cash.
“Airbnb enabled me to go back to school and become a full-time student and work as a part-time photographer.”
“Airbnb is necessary while my cousin is out of town to work.”
“I am here as an individual, not representing some radical, self-serving organization. I am speaking to my own experience.”
The streets near New York’s City Hall were ear-stinging and windy on the morning of a big Airbnb hearing, but attendees clogged the doorway, and the air inside was thick with sour human concern. A new law had made it illegal for many New Yorkers to advertise short-term rentals. The law ostensibly targeted unregulated hoteliers, who snatch up multiple apartments and Airbnb them year-round, but it served the broader interests of major hotel trade groups, such as the American Hotel and Lodging Association and the Hotel and Motel Trades Council, which lobbied against Airbnb. At the hearing, hosts protested the rule’s breadth: why not limit each member’s listings, rather than banning them all?
Christian Klossner, the Executive Director of the Mayor’s Office of Special Enforcement, sat behind a desk microphone, wearing a patient expression as speakers gave testimony. Suzette Sundae, a musician wearing a fifties-style swing dress and a white cardigan over her tattoos, said that she ran a vintage-clothing store in Park Slope. When the store’s traffic fell off, she had Airbnb-ed her home. “It saved me from having to declare bankruptcy, and it allowed me to close my store without owing a dime,” she said. An East New York resident named Heather-Sky McField recalled having to travel to Baltimore each week to care for her mother, who had breast cancer. She had been unable to evict her tenants, who’d stopped paying rent. “Had it not been for Airbnb, I would have been foreclosed by now,” she told Klossner.
Given such testimony, it was easy to see how the sharing economy became a liberal beacon—and easy to see the attendant paradoxes. A century ago, liberalism was a systems-building philosophy. Its revelation was that society, left alone, tended toward entropy and extremes, not because people were inherently awful but because they thought locally. You wanted a decent life for your family and the families that you knew. You did not—could not—make every personal choice with an eye to the fates of people in some unknown factory. But, even if individuals couldn’t deal with the big picture, early-twentieth-century liberals saw, a larger entity such as government could. This way of thinking brought us the New Deal and “Ask not what your country can do for you.” Its ultimate rejection brought us customized life paths, heroic entrepreneurship, and maybe even Instagram performance. We are now back to the politics of the particular.
For gigging companies, that shift means a constant struggle against a legacy of systemic control, with legal squabbles like the one in New York. Regulation is government’s usual tool for blunting adverse consequences, but most sharing platforms gain their competitive edge by skirting its requirements. Uber and Lyft avoid taxi rules that fix rates and cap the supply on the road. Handy saves on overtime and benefits by categorizing workers as contractors. Some gigging advocates suggest that this less regulated environment is fair, because traditional industry gets advantages elsewhere. (President Trump, it has been pointed out, could not have built his company without hundreds of millions of dollars in tax subsidies.)
Still, since their inception, and increasingly during the past year, gigging companies have become the targets of a journalistic genre that used to be called muckraking: admirable and assiduous investigative work that digs up hypocrisies, deceptions, and malpractices in an effort to cast doubt on a broader project. Some companies, such as Uber, seem to invite this kind of attention with layered wrongdoing and years of secrecy. But they also invite it by their high-minded positioning. Like traditional companies, gigging companies maintain regiments of highly paid lawyers and lobbyists. What sets them apart is a second lobbying effort, turned toward the public.
“We’re borrowing very heavily from traditional community-organizing models, and looking at the grass roots in each city,” Emily Castor, Lyft’s leader in the campaign against regulatory constraint, told me a while back, when we spoke in the company’s San Francisco headquarters. “Who are the leaders? Who are people who distinguish themselves as passionate, who want to get more involved? We have a team that includes field organizers who are responsible for different parts of the country.”
If Uber has come to be known as the Wicked Witch of the West, dark-logoed, ubiquitous, and dragging a flaming broom of opportunism, Lyft has sought to be the Glinda, upbeat, pink, and conciliatory, and its organizing outreach has been key to this reputation. Castor’s work was not accosting government but assembling users, building a network of ordinary people who wanted Lyft in their lives.
“They’ll have dinners and other opportunities for people to learn more about what policy activities are happening in their area,” she said. This often means turning out for community-style lobbying—like the hosts at the Airbnb hearing in New York. “We get to know who has a powerful voice that would be helpful if shared with elected officials,” she explained.
Castor is a friendly woman with tidy blond hair who also started out in Democratic politics. After college, she worked in Washington as a legislative aide for the California representative Susan Davis. In 2008, before returning to school to get a degree in public administration, she worked on an unsuccessful congressional campaign. She moved to San Francisco, and in 2011 worked as a municipal finance consultant. It was an exciting time to be in the Bay Area. In the wake of economic collapse, young people with big ideas and an understanding of mobile technology were thinking about how work could be made cheaper, lighter, and more accessible. Castor started renting out her car on Getaround, an early sharing-economy company, and then tried Zimride, Airbnb—any service she could get her hands on. Their premise of sharing moved her. “It was like falling in love,” she told me. “You ask yourself, Is this love? Is this love? And, when you find the thing that’s right, you don’t have to ask.” Early in 2012, she started an event series, Collaborative Chats, devoted to the sharing economy. When Lyft launched, in June, 2012, the founders hired her to be the company’s first “community manager.” She found that she could draw on her political training. “Collective identity is one of those aspects that, in the theory of social movements, is so important,” she told me. “You’re not just ‘taking rides.’ ”
A key architect of that organizing strategy is Marshall Ganz. From the sixties through the early eighties, he worked under Cesar Chavez, leading the organizing efforts of the United Farm Workers. Now, at the Harvard Kennedy School, he teaches what he calls “a story of self, a story of us, a story of now”: the collective-identity movement-building method that Castor invoked. In July, 2007, he led a boot camp to train Obama’s first battalion of organizers for Iowa and South Carolina’s primary contests. He told me that he found the sharing companies’ use of grassroots methods “problematic.”
“There’s a difference between exchange, which is what markets are all about, and discernment of common purpose, which is what politics is about,” he said. Ganz told me that he had been distraught after Obama’s victory in 2008 when the Democratic National Committee seemed to abandon the President’s grassroots network. What he had hoped would be a movement had been cast aside as an electoral tool that had served its purpose.
Castor, who is nearly four decades younger than Ganz, had a different heroic ideal for social change. “When I worked on the Hill,” she recalled, “my chief of staff used to say, ‘A political campaign is a startup that is designed to go out of business.’ ”
Questions have emerged lately about the future of institutional liberalism. A Washington _Post _/ABC News poll last month found that two-thirds of Americans believe the Democratic Party is “out of touch,” more than think the same of the Republican Party or the current President. The gig economy has helped show how a shared political methodology—and a shared language of virtue—can stand in for a unified program; contemporary liberalism sometimes seems a backpack of tools distributed among people who, beyond their current stance of opposition, lack an agreed-upon blueprint. Unsurprisingly, the commonweal projects that used to be the pride of progressivism are unravelling. Leaders have quietly let them go. At one point, I asked Chris Lehane why he had thrown his support behind the sharing model instead of working on traditional policy solutions. He told me that, during the recession, he had suffered a crisis of faith. “The social safety net wasn’t providing the support that it had been,” he said. “I do think we’re in a time period when liberal democracy is sick.”
In “The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream” (2006), Jacob Hacker, a political-science professor at Yale, described a decades-long off-loading of risk from insurance-type structures—governments, corporations—to individuals. Economic insecurity has risen in the course of the past generation, even as American wealth climbed. Hacker attributed this shift to what he called “the personal-responsibility crusade,” which grew out of a post-sixties fixation on moral hazard: the idea that you do riskier things if you’re insulated from the consequences. The conservative version of the crusade is a commonplace: the poor should try harder next time. But, although Hacker doesn’t note it explicitly, there’s a liberal version, too, having to do with doffing corporate structures, eschewing inhibiting social norms, and refusing a career in plastics. Reich called it Consciousness III.
The slow passage from love beads to Lyft through the performative assertion of self may be the least claimed legacy of the baby-boomer revolution—certainly, it’s the least celebrated. Yet the place we find ourselves today is not unique. In “Drift and Mastery,” a young Walter Lippmann, one of the founders of modern progressivism, described the strange circumstances of public discussion in 1914, a similar time. “The little business men cried: We’re the natural men, so let us alone,” he wrote. “And the public cried: We’re the most natural of all, so please do stop interfering with us. Muckraking gave an utterance to the small business men and to the larger public, who dominated reform politics. What did they do? They tried by all the machinery and power they could muster to restore a business world in which each man could again be left to his own will—a world that needed no coöperative intelligence.” Coming off a period of liberalization and free enterprise, Lippmann’s America struggled with growing inequality, a frantic news cycle, a rising awareness of structural injustice, and a cacophonous global society—in other words, with an intensifying sense of fragmentation. His idea, the big idea of progressivism, was that national self-government was a coöperative project of putting the pieces together. “The battle for us, in short, does not lie against crusted prejudice,” he wrote, “but against the chaos of a new freedom.”
Revolution or disruption is easy. Spreading long-term social benefit is hard. If one accepts Lehane’s premise that the safety net is tattered and that gigging platforms are necessary to keep people in cash, the model’s social erosions have to be curbed. How can the gig economy be made sustainable at last?
During the final days of the Obama Administration, I went to see Tom Perez, at that time the Secretary of Labor and now—after a candidacy fraught with inner-party conflict—the chair of the Democratic National Committee. Perez, tieless in a white shirt, greeted me from a couch. Beyond the stresses of leaving the Cabinet, he had just experienced a bad nosebleed and looked drained.
“If you’re looking for the five-point blueprint, I don’t have it,” he said, when I asked about his vision for the gigging labor market. Last year, he pushed the Census Bureau to reinstate the Contingent Worker Supplement to gather data. (The government currently has no information on a gigging sphere as such.) He believed that any long-term labor model should include input from workers, but wasn’t sure what that should look like. “Voice can take a lot of forms,” Perez said. “I’m a big fan of collective bargaining and the labor movement, but I recognize that there are other ways.”
Perez champions what he calls “conscious capitalism”—free-market liberalism, with an eye to workers’ rights—and he insisted to me that profit-seeking and benefits-giving are not at odds. “Shareholders are best served when all stakeholders are well served!” he explained. The mind-set was mainstream during the nineteen-nineties, and still runs strong in the tech community, with its doing-well-by-doing-good ethos. One popular idea is that app markets regulate themselves with online ratings by and of everyone involved in a transaction.
The record here is mixed. Some earners complain about the way rating systems favor the judgment of customers (Seth F. told me that it is hard to challenge a poor rating) and can be leveraged for haggling purposes. (Some Airbnb customers, Blake Hinckley, of Happy Host, said, use trivial problems to seek a refund.) And reputation governance can’t pick up patterns of unjust exclusion. Research on Airbnb found that identical profiles given different ethnic names were treated differently by hosts, and that pricing on equivalent apartments ran lower for black hosts than for everybody else. (A couple of weeks ago, Airbnb agreed to let a regulatory body, in California, test for discrimination; the company itself has instituted an aggressive program to try to curb such behavior.) Still, you cannot regulate somebody’s house or car the way you regulate a hotel or a taxi.
“Someone who’s hosting on Airbnb might say, ‘Well, this is my space. I only want a certain kind of guest in my spare bedroom,’ ” Arun Sundararajan, an N.Y.U. business professor, says. Is that unreasonably discriminatory? In a new book, “The Sharing Economy,” he proposes a halfway measure like Airbnb’s: self-regulation in collaboration with government. Many elected politicians like a long-leash approach, too. In November, 2014, after an Uber employee described tracking a journalist’s movements, Senator Al Franken sent a list of privacy-policy queries to Uber’s C.E.O.; last fall, Franken pressed Uber and Lyft about apparent race-based discrepancies in wait times. “What I’m trying to do is help customers understand what these companies are doing, and encourage these companies to put in place voluntary measures,” Franken told me soon after dispatching the first letter. Some companies have taken preëmptive measures. Laura Copeland, the head of community at Lyft, describes having created an “advisory council” of seven drivers to make sure that the people on the street have a voice in the company.
Other assessments suggest that employees, too, should get their houses in order. “To succeed in the Gig Economy, we need to create a financially flexible life of lower fixed costs, higher savings, and much less debt,” Diane Mulcahy, a senior analyst at the Kauffman Foundation and a lecturer at Babson College, writes in her book “The Gig Economy,” which is part economic argument and part how-to guide. Ideally, gig workers should plan not to retire. (Beyond Airbnb hosting, Mulcahy sees prospects for aging millennials in app-based dog-sitting.) If they must retire, they should prepare. Mulcahy suggests bingeing on benefits when they come. Fill your dance card with doctors while you’re on employee insurance. Go wild with 401(k) matching—it will come in handy.
This ketchup-packet-hoarding approach sounds sensible, given the current lack of systemic support. Yet, as Mulcahy acknowledges, it’s a survival mechanism, not a solution. Turning to deeper reform, she argues for eliminating the current distinction between employees (people who receive a W-2 tax form and benefits such as insurance and sick days) and contract workers (who get a 1099-MISC and no benefits). It’s a “kink” in the labor market, she says, and it invites abuse by efficiency-seeking companies.
Calls for structural change have grown loud lately, in part because the problem goes far beyond gigging apps. The precariat is everywhere. Companies such as Nissan have begun manning factories with temps; even the U.S. Postal Service has turned to them. Academic jobs are increasingly filled with relatively cheap, short-term teaching appointments. Historically, there is usually an uptick in 1099 work during tough economic times, and then W-2s resurge as jobs are added in recovery. But W-2 jobs did not resurge as usual during our recovery from the last recession; instead, the growth has happened in the 1099 column. That shift raises problems because the United States’ benefits structure has traditionally been attached to the corporation rather than to the state: the expectation was that every employed person would have a W-2 job.
“We should design the labor-market regulations around a more flexible model,” Jacob Hacker told me. He favors some form of worker participation, and, like Mulcahy, advocates creating a single category of employment. “I think if you work for someone else, you’re an employee,” he said. “Employees get certain protections. Benefits must be separate from work.”
In a much cited article in Democracy, from 2015, Nick Hanauer, a venture capitalist, and David Rolf, a union president, proposed that workplace benefits be prorated (someone who works a twenty-hour week gets half of the full-time benefits) and portable (insurance or unused vacation days would carry from one job to the next, because employers would pay into a worker’s lifelong benefits account). Other people regard the gig economy as a case for universal basic income: a plan to give every citizen a modest flat annuity from the government, as a replacement for all current welfare and unemployment programs. Alternatively, there’s the proposal made by the economists Seth D. Harris and Alan B. Krueger: the creation of an “independent worker” status that awards some of the structural benefits of W-2 employment (including collective bargaining, discrimination protection, tax withholding, insurance pools) but not others (overtime and the minimum wage).
I put these possibilities to Tom Perez. He told me that he didn’t like the idea of eliminating work categories, or of adding a new one, as Harris and Krueger suggest: you’d lose many of the hard-won benefits included with W-2 employment, he said, either in the compromise to a single category or because current W-2 companies would find ways to slide into the new classification. He wanted to move slowly, to take time. “The heart and soul of the twentieth-century social compact that emerged after the Great Depression was forty years in the making,” he said. “How do we build the twenty-first-century social compact?”
Perez’s new perch, at the D.N.C., has given him a broader platform, and a couple of hours after the House passed the American Health Care Act last week, he championed the old safety net in forceful language. “Scapegoating worker protections is often a lazy cop-out for some who want to change the rules to benefit themselves at the expense of working people,” he told me. “We shouldn’t have to choose between innovation and the most basic employee protections; it’s a false dichotomy.” The entanglement of the sharing economy and Democratic politics has continued—Perez’s press secretary at the Department of Labor now works for Airbnb—but his approach had circumspection. “Any changes you make to policies or regulations have to be very careful and take all potential ripple effects into account and keep the best interest of the worker in mind.”
His own effort to do that led him one day to New York, where he stopped by a company called Hello Alfred. “I just wanted to introduce us a little bit, explaining why we’re here,” Marcela Sapone, the company’s C.E.O. and co-founder, said. “I think the best way to do that is to show you what we do. I heard that you like Coke heavy”—that is, the opposite of Coca-Cola light—“so we went ahead . . . ” She handed him a miniature bottle.
“The perfect size!” Perez exclaimed. He looked delighted and confused.
“At Alfred,” Sapone went on, “we think that help should be built into your life.” Sapone and her co-founder, Jess Beck, had met at Harvard Business School after leaving McKinsey. “We were thinking about how we were going to balance a career, building a family, building a social life in the community—you’d have to be a superhero. So we asked for some help to become that superhero,” Sapone said.
Unlike TaskRabbit, Hello Alfred is based on recurring service. When customers download the app and sign up, they’re assigned a single tasker, called a home manager, who comes once or twice a week, on a schedule. Alfred taskers often have keys and let themselves in; the idea is that, like traditional home help, they get to know their clients’ preferences and quirks. “It’s sort of a weird relationship you build with this person,” Leah Silver, a client who is an elementary-school teacher on the Upper West Side, told me. “They know so much about you.”
The reason for Perez’s visit was an unusual feature of Hello Alfred’s model: although the taskers can work part time, on a schedule they determine, all are full W-2 employees. Perez considered the company to be a model—creative, well-intentioned, and kind toward its employees—and praised it between pulls on his Coke heavy. “I appreciate that you’re understanding the high road is the smart road,” he said. “This is not an act of charity! This is an act of enlightened self-interest.”
He would have been more correct to call it self-interest tamed. Sapone told me later that it’s expensive to carry a staff of W-2 workers on a gigging schedule. The tax burden is greater for Hello Alfred than it would be on a 1099 model, the hourly rate is high, and the required human-resources infrastructure drives up the cost. Attrition is low, but W-2 companies are also vulnerable to various employee lawsuits from which 1099 employers are insulated.
For now, however, companies such as Hello Alfred, going above and beyond market demands out of principle, may be the gig economy’s best hope. And, occasionally, the principles travel. Blake Hinckley has already moved the most senior three of his six Happy Host staff cleaners onto W-2 status. The reason, he told me, is Sapone: they knew each other in Boston, and she convinced him that any honorable company owed its workers employment benefits.
One afternoon, I accompanied a Hello Alfred tasker named Phillip Pineno as he went to service apartments in Kips Bay. A placid guy with tiny silver hoops in his ears and a hipster’s dusky beard, Pineno does tasking four days a week and, like Bobby Allan, works in his remaining time as an actor. In the lobby of a building facing Bellevue South Park, he gathered packages and ascended to a client’s apartment—one of eleven he’d visit that day. A bag of Trader Joe’s Veggie & Flaxseed Tortilla Chips went in a cupboard. A box of cereal was tucked into position on the counter. Pineno used to be a caterer, doing events at Lincoln Center and the Museum of Natural History. The work was fine, he said, but unpredictable, different from Hello Alfred. “You get to feel more like a human,” he told me. He could take time every week to work toward his dream without gambling his future on it. He had found some sense of workplace comfort—of being valued and known.
For many gig workers, as for Seth F., that dream remains elusive. When Seth F. had finished hanging art work in my living room, I led him to the dining room. He took a small electric drill and some screws out of his backpack, and started driving them into the plaster. We were hanging a small print of a Sol LeWitt drawing, squares in squares in squares. He extracted a laser level, and projected it across the wall. “This is my favorite tool,” he told me, with a moving tenderness. He rarely met other taskers, he said; there were no colleagues in his life with whom he could share experiences and struggles. The flexibility was great, if you had something to be flexible for.
“The gig economy is such a lonely economy,” he told me. He left his drill behind after he finished the work, but I was out when he returned the next day to get it. I never saw him again. ♦