Steven Greenhut: State Takes Aim at Uber’s Business Model

It’s easier to create an online platform as a clever workaround to all the restrictions, mandates and rules, despite the opposition of unions that are trying to use government regulations to protect against lower-cost competitors.

“I first heard the term ‘1099 economy’ at this year’s TechCrunch Disrupt conference, where it was uttered not as a pejorative, but as a way to praise the innovative labor practices of Silicon Valley startups,”wrote Kevin Roose, in New York magazine last year. Ironically, Gov. Jerry Brown has been boasting about California’s economic comeback, using Silicon Valley economy as the prime example. Meanwhile, his agency is clamping down (at least in this one case) on one of the business models causing that region to boom.

Critics of these 1099 companies are using the courts and labor boards to “help” workers who certainly were never forced to take these jobs — and might find themselves out of work if this campaign is too successful. Just as Uber illustrates the creativity inherent in free markets, the campaign against it might end up spotlighting the destructive effect of too much regulation. The real question isn’t whether it would be better if workers received all these benefits, but whether we’re really better off if interesting new ideas never get launched — or built.

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