Uber general counsel threatens California: pass a law that makes drivers into employees and we'll spend $60m on a ballot initiative to overturn it

AB5 is about to pass the California legislature: it forces companies like Lyft and Uber to comply with the longstanding Dynamex decision and treat their employees as employees.

Uber and Lyft hate this. It’s an existential threat to them (that is, it serves to hasten their inevitable collapse) and in California, when you hate a law, you get to propose a ballot initiative to overturn it. This doesn’t always lead to bad outcomes — the threat of a ballot initiative (funded by a wealthy activist) was the major factor in the passage of the state’s excellent privacy legislation.

But ballot initiatives are funny beasts: they are nominally democratic (in that the people get to vote on them) but because they are incredibly expensive to run, they become a way for plutocrats to democracy-launder their pet projects, turning cash infusions into policy while maintaining that really, the will of the people is being done. So the plan to institute rent controls gets defeated by the largest-ever political spend in ballot initiative history, and the plan to reinstate progressive property taxes is likely to hit similar headwinds.

Enter Uber’s general counsel, Tony West, who has demanded that Governor Gavin Newsom (D) modify the bill so that Uber can go on with business-as-usual, treating its drivers as contractors. West has put Newsom on notice that: “Uber and Lyft together have already transferred $60 million into a campaign committee account, and we are open to investing more to put us in the strongest position possible to run a winning campaign.”

Matt Stoller calls this a money veto, and he’s not wrong. But it’s also — alas — not unusual. Ballot measures are not, in and of themselves, antidemocratic, but under conditions of out-of-control inequality (for which California is a poster child), the ability of monied interests to overrule the legislature through scare campaigns for ballot initiatives that serve their interests (or achieve their ideological goals, including ones I agree with, like meaningful privacy protections) shows how even democratic institutions are perverted by inequality.