takingpitches

Growth versus austerity.  The war between the two ideas as a solution to our economic morass has defined the last few years in the US and Europe, and, in particular, with heightened urgency this year, as we approach the US presidential election and as the EU faces its “do or die” moment.

Austerity had growth on the mat, but currently, in Europe at least, the growth philosophy is back on its feet.  Like yin and yang, the seeming contradictions are actually complementary and part of an integrated ecosystem — both are necessary.

We need to spend wisely, but that’s not enough.  People need to make money as well.  If people don’t have money to spend, the economy cannot hum, and it eventually stills to silence, sometimes after destructively going in the opposite direction.  And with that, the larger society also starts to wither.

The fact that it has taken three years for this realization to happen (and only in a subset of Europe) shows the depressing state of our macro-policy thinking.

Macro-commentary aside, I also mention this because there are implications on the micro, entrepreneurial level.  You should make things better on both the customer (austerity, i.e., better prices) and supplier side (growth, i.e., a better living).

The better ideas disrupting talent markets will not only make things better for customers, but will also make things better for the supplier-side of the marketplace (but perhaps worse for the entire marketplace), treating suppliers with dignity and allowing them to make a better living than without the marketplace.  Grinding the supply side to penury is not inspiring, nor potentially sustainable.

For that reason, even though I think the customer side (50%-75% higher rates) is potentially a limitation, I admire Uber for the reported better livings that Uber drivers are earning.  As this article describes:

For its customers, Uber is a pleasant splurge, but for its drivers the service is a godsend, a ticket to a whole new standard of living…One San Francisco chauffeur estimates that the work he gets through Uber nets him more than $45 per hour, on average. Another says that his total earnings are now roughly $2,100 a week, with $920 of that coming from the service. Since the cars are already paid for and the drivers want to work, Uber is like found money for everyone: the drivers, the owners, and of course Uber itself, which takes 20 percent off the top of every ride.

The golden ticket lies in the idea that can give customers a better deal, along with the suppliers. These are markets where lower prices, more quality, and better livings can co-exist.

But isn’t this a contradiction?

Not where the existing talent is so entrenched that it’s providing service at a lower quality, but higher cost.  In other words, the existing supply is phoning it in, so that by empowering neglected talent, one can get better quality work for the customer, lower prices, as well as improving the lives of the supplier who participate.

As an example of such a market, think about high-end law. A partner at an elite firm can ride the firm’s reputation to bill well over $1000 an hour, while a more motivated younger lawyer, trained and doing the work for years, can in this shrinking market fall through the cracks such that she is earning $25/hour reviewing documents.  If you can empower this person to provide the service for $200 an hour, the customer could get a much better product at a much lower price, while the younger lawyer can make a much better living, both monetarily and in terms of job satisfaction.

That’s the yin and yang of growth and austerity.