This App-Based Economy May Kill You

On the Problem of Risk Externalization

Just two weeks ago, Zak Stone’s account of how he lost his father in Airbnb became viral. Today, I learned that a friend of a friend almost lost a leg in a horrible app-based motorbike-taxi accident in Indonesia.

These aren’t just one-off freak cases. These have happened before. And, as usage of these services rise, there is bound to be more and more accidents. It’s mathematics.

The problem is how companies deal with it — or, more specifically, how we, as consumers, can push companies to anticipate and deal with things like these in a better manner.

In capitalist business practices, there is a thing called “cost externalization”: Some costs, say, the welfare of your workers and the health of your environment, are not to be accounted for in your final product. This is done to keep prices as low as possible in order to compete with other businesses, who are also externalizing their costs.

The workers get sick? Let their family pay for it. The environment gets polluted? Let the community deal with it. Don’t apologize. This is how things work. And yes, as disturbing as this sounds, this is perfectly legal.

But the rise of the new app-based economy has brought with it another twist to this approach, this time in the name of efficiency. It’s called “risk externalization”.

A lot of musicians nowadays are expected to work their asses off creating albums of their own, with their own money, with music videos and independent gigs to boot, before they get management deals that will land them actual paid gigs and advertising revenues.

Even idol academies work this way, taking public transport to 3AM photoshoots, hoping to get famous one day. A friend of mine broke her back this way and was forced to get out of the academy because she couldn’t dance anymore — maybe for the rest of her life. No monetary reimbursement.

I pitched a comic book to LINE Webtoons and they told me that I haven’t gotten enough fans for it. “Keep working,” they told me. They won’t pay me, but one day, maybe some years down the road, if I work hard enough and get enough fans, maybe they will. Isn’t that good news?

You see, the problem is structural. Accident rates in music and comics aren’t really that high, but other industries aren’t so fortunate. Still remember the 2008 meltdown of the global economy? Of course you do. You were paying to bail out the players who externalized their side of the risks.

What’s that? They weren’t app-based? Oh, but they were. You just didn’t have the apps in your phone. High-frequency trading and the derivatives market require supercomputers, you know. You may not have the apps, but when they go bad, you’re the ones who pay.

It’s getting worse now, because more and more of our economy is being informatized. Need a place to stay? There’s Airbnb. Need transport of people and goods? There’s Uber and GrabTaxi and Go-Jek and what have you.

There are much to be celebrated from these technologies, to be sure. But despite the ratings system and basic safeguards, accidents happen. And when they do happen, no amount of thumbs down is going to remedy that.

Of course, a naive solution would be to ensure that there are regular safety checks for every crowdsourced unit (rooms, cars, motorbikes, etc), trainings and psychological tests for their owners, and standard protocols of handling accidents and reimbursing them.

But why do all those if they would make the companies less efficient? Why not write a user agreement saying that all the risks have to be undertaken by the user? It’s not like they have a choice. And they never read those things, anyway.

It doesn’t help that the philosophy governing these startups is the following:

But its general approach to safety is consistent with Silicon Valley’s “build it first, mend it later” philosophy. When an early product produces negative outcomes and bad press, apologize. Then, fix it; make it better. (Source)

As of right now, Go-Jek does not seem to have this kind of protocol in place, as they seem to continue to display unbelievably dismal performance in terms of customer service to the victim.

And they don’t have to. Their user agreement has the following clauses:

Short translation: We won’t be held liable for any accidents. The drivers aren’t our employees and do not represent us. But, you know, we care about you so we’ll be kind and give you some money. Maybe?

As important as serving justice may be (what this consists of is a topic for another discussion), we should not forget that these are structural problems. Risk externalizing is a real thing, and it is still the default practice of most app-based services today.

Throughout the 20th century, in the name of economic growth, we have allowed cost externalizing practices to grow rampant and destroy the welfare of workers and environmental sustainability. We are still working to remedy its detrimental effects today.

The 21st century should not be a century in which we pile on risk externalization on top of that. It should not be one in which we try to remedy old problems with new ones, like what we seem to be doing now.

I am not anti-technology. I love technology and strongly believe that it can make for a much more convenient future.

I just hate it when all these fancy obsessions on “efficiency” and “rapid prototyping,” all these romanticization of not being afraid to fail, is making us disregard the very basic need of human safety. Of those we claim to serve.

So, startups, please: You should be afraid to fail. You should be very afraid. Especially if your failure may kill other people.

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