Thursday, July 28, 2016

The Parasite Economy

Here is an article from an entrepreneur (and inheritor of a family business) describing the far-ranging noxious effects of what he calls the parasite economy.  He defines the parasite economy as that subset of businesses in any field that systematically underpay their workers and rely on public aid to make up the difference between their low wages and a living wage.  The author shows how in many sectors there are some businesses that operate in the honest economy, paying enough for their workers to live on and thus further stimulating the economy through the purchasing power of those workers, and then there are other businesses that pay barely enough for workers to afford rent and unhealthy food.  These latter not only don't offer the larger economy the benefit of workers' expanded purchasing power, but they in fact suck resources from their competitors, who are paying taxes to subsidize the low-wage enterprises.  His recommendation is that only through aggressive laws protecting working rights, first and foremost a $15/hr minimum wage, will all businesses A) act responsibly with regard to wages, and B) be put on the same footing, so that honest businesses paying a living wage aren't obliged to compete with unscrupulous ones that bilk their workers and receive subsidies from the rest of us.

This is the same author (Nick Hanauer) I cited a while back urging his fellow plutocrats to realize the folly of trying to keep the masses underpaid and disenfranchized.  He really seems to understand in a deep and nuanced way the issues he discusses.

On a similar note, here is an opinion piece from  my hometown newspaper discussing the larger implications of Uber and Lyft's business models, which the first author would class under the parasite economy model of precarious "gig" employment.

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