The Growing Threat to the Service Industry

Why has Uber caused such a storm of global hatred?

Everywhere the ride-booking service pops up, vitriol quickly follows.

Protesting Parisian taxi drivers blocked highways and airport entrances with burning tires. Germany has banned the service. South Korea hit the company’s CEO with criminal charges. In Eugene, Oregon; Anchorage, Alaska; San Antonio; Toronto; Taiwan … and many other places, Uber is under attack or has been outlawed.

Consumers — in effect, the free market — certainly don’t seem put out. They’re signing up for the service in droves because it’s simply a better mousetrap.

Governments and vested interests, however, are pitching a fit. They realize the future is overtaking their ossified thinking.

But as with every sweeping change, those who are impacted the worst do not want to go gentle into the good night. So they rage…

Alas, this is a fight they are destined to lose. And you will feel the ramifications in your own life.

It seems that every day brings with it another fight against Uber. In numerous instances, lawmakers are legislating against the taxi-replacement company. They’re doing so to protect vocal taxi drivers who are demonstrating violently against Uber because they feel threatened that the app-based service is simply better and more efficient … and because government realizes that it risks losing control over parts of public policy.

It shows the economic ignorance of the power base. Politicians are trying to legislate winners instead of allowing the free market to determine the best business model. That never works out well for an economy because it lards the system with unnecessary rules and roadblocks that always have unintended consequences.

If nothing else, the Uber affair points to many more fights like this that are coming to a rash of industries … which means a rash of anti-technology legislation is headed our way.

I frequently write about the rise of the machines and the great rip now occurring in our economy because of that. That rip is likely to cause tremendous and violent social backlash, and will force government to act — against the betterment of the economy and against the free market itself.

Tens of millions of Americans have already lost jobs to technology in fields ranging from tax-preparer to airport ticket agent to toll-booth attendant. But the wave of job losses so far is minor compared to what’s coming.

Soon McDonald’s (MCD) and Burger King (BKW) will have no need for anyone to run a burger kiosk other than a 20-something with mad technology skills; everything from order entry to burger preparation and delivery will be automated (and faster and without the asinine errors that plague this low-education industry today).

Hotels will no longer need check-in clerks at the front desk. Starbucks (SBUX) won’t need baristas. Nursing homes won’t need nurses, or at least not so many nurses. Self-driving cars will do away with taxi (and Uber) drivers completely.

And if you think a few aggrieved taxi drivers blocking some roadways in Paris are a problem for lawmakers, just wait until vast swaths of the service industry are losing jobs in massive numbers to technology that increases productivity and profits.

Outrage is going to flow across the American economy … and lawmakers are going to react by banning technology applications in various instances. The bans won’t last, of course. Technology will win out, because technology companies have the cash to ultimately buy/sway lawmakers.

Nevertheless, it promises to be an ugly transition to a more robotic future…

Protection Against the Coming Financial Upheaval

That robotic future, as efficient as it promises to be for us, and as profitable as it promises to be for investors, is going to cause historic amounts of job displacement.

Historically, technology has helped create jobs that managed the technical advances. But this go-round, that’s not the case. Technology is managing technology, and getting to the point where it’s sentient enough to manage itself and its surroundings with little human intervention.

Displaced workers — particularly young, under-educated workers from the services sector — are going to be agitators in our not-too-distant future. See the Arab Spring for the latest proof. Agitation doesn’t go over well with politicians. It threatens their power. So, they’d just as soon quell the agitators with give-away programs that buy their silence.

But where does an egregiously indebted nation come up with vast sums of cash to keep masses of idled workers appeased?

It taxes its citizens and businesses … likely imposing “technology adjustment taxes” on the very companies that displace workers with machines. And, of course, the government will continue to use the power of the printing press to create the dollars it needs to spend on sharply larger welfare programs.

So when you hear about the next fight over Uber, think about the much bigger social and economic fights in our future — about the very storm heading toward the American free market. And invest accordingly … which means own gold and silver as an insurance policy against the destruction of paper currencies that necessarily must happen.

Until next time, stay Sovereign…
Image for global financial crisis
Jeff D. Opdyke
Editor, Profit Seeker

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