“Bullshit jobs” easy come, easy go

As Australia builds its powerful new “bullshit jobs” economy, it’s useful to contemplate some of the downsides, via FTAlphaville:

Any student of emerging markets will tell you that financing a current account deficit with imported capital always seems like a good idea. That is, until investors panic and want their money back.

But what if businesses themselves were as nimble as capital? Able to shift in and out their chosen markets with the deftness and lightness of a bond trader.

Well speculate no more.

From an article in Quartz, published Monday:

Online food-delivery start-up Deliveroo will exit Germany this week, the company told customers and workers by email today.

An email sent to customers said the London-based company “will no longer be delivering in Germany” from Aug. 16. It didn’t provide a specific reason for the exit. Deliveroo operates in more than 200 cities across 12 countries and a company spokesperson said it would refocus investments in other markets in Europe and Asia.

Deliveroo has about 1,100 self-employed delivery workers or “riders” in Germany and delivers from over 2,000 restaurants. The company said it isn’t ruling out a return to Germany in the future.

Deliveroo’s sudden Ausfahrt offers a glimpse of what the new no-asset economy might mean for labour markets and the wider economy.

Put it this way. If Alphaville LLC, a theoretical manufacturer of a useless widget, had a German plant with over a 1,000 employees, a decision to close said plant would come with a wave of painful costs. There’d be expensive pensions, leases and redundancy packages to pay off, alongside writedowns of investments in capital infrastructure.

Deliveroo will probably not suffer the same problems. It has few real assets — only 4.3 per cent of its total assets were made up of property, plant and equipment at 2017’s end — and relatively few employees, thanks to the “self-employed” status of its army of “riders”. Like a trader wanting to cut their losses, Deliveroo can seemingly leave a market and reassess the opportunity when conditions improve, without incurring significant costs.

How its Germany counterparties fare is another matter. The riders, to Deliveroo’s credit, are being paid off for 24 days of work, although we do note its relative to how active they’ve been in the past 12 weeks. So bad luck if you’ve been on holiday, or writing a PhD thesis.

Its partner restaurants may also suffer a decline in revenues, assuming that the excess demand for local foodstuffs, like Alphaville favourite Flammkuchen, is not soaked up by rival Takeaway.com.

Hot capital has been a problem for many growing economies, so local regulators have developed a variety of tools — such as capital controls — to make sure “the electronic herd” doesn’t stampede out of an economy, damaging asset prices and the local currency.

On that basis, perhaps it won’t be long until these capital-light businesses find themselves, at times of market stress, forced to stay in local economies by regulators. Full employment secured.

Let them go. They add literally nothing. And it is the only way to remind the wider polity that enslaved migrants and “bullshit jobs” go hand in hand. As the dole queues rise and immigration falls, we can begin the adjustment to a more competitive economy and the real jobs that it creates for Australians, with higher living standards over time.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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