Is Technology Fostering a Race to the Bottom? NEW YORK - One of the differences between rich and poor countries is that in the latter, people seldom wait for the government to "create jobs." When times are hard, they buy packs of cigarettes and sell them as singles; they find houses to clean through cousins of a cousin; they rent out bedrooms to students; they stock up on cellphone credit and peddle sidewalk calls by the minute. It's called the informal economy, and in much of the world it is bigger than the formal one. But it has been pushed onto the sidelines in the West, the refuge of criminals and the poor, because of labor laws, taxes, health and safety regulations and the like, which emerged to protect workers and consumers from the market's vicissitudes and companies" whims. Say you want to start a home catering business in New York. According to the city government, you'd need, among other things, a food protection certificate, a food service establishment permit, a gas authorization, professionally installed range hoods, a licensed carting company for waste, registration as a sales tax vendor as well as compliance with portable fire extinguisher rules and the unincorporated business tax. Which may be why people often wait for jobs to be "created." But right here in the West, a new informal economy is in the making - a peculiar byproduct of the digital revolution. A new group of technology start-ups is building online platforms to facilitate offline transactions in this new informal economy: renting out your spare bedroom (Airbnb) or Volkswagen (RelayRides); hawking yourself as a handyman (TaskRabbit) or personal chef (Kitchit); selling custom-made furniture (Etsy); or transcribing someone's interview tapes (oDesk). In each case, a transaction that was possible but complicated before is smoothed by the matchmaking skills, quality assurance and rating systems of a known company. It is a lucrative new labor market, and also a way of going back to what the labor market was like before there were anti-discrimination laws, minimum wages and hours ceilings - with all the liberties and efficiencies and perils that implies. "What we're seeing is this throwback to better days of an age-old economy," said Leah Busque, the founder of TaskRabbit, a pioneer in the field, with 4,000 registered errand runners for hire. In an America, and a West, struggling to create old-fashioned jobs, complete with salary and insurance and pension, these services can be seen as an opportunity for do-it-yourself job creation. RelayRides says that you can earn $7,000 a year by letting others drive your car. On oDesk, which specializes in virtual tasks, people peddle their skills as $133-an-hour Web developers, $13-an-hour Danish-to-Swedish translators and $1.67-an-hour icon designers. Meanwhile, over at TaskRabbit, customers seek workers to fetch their groceries, set up their home theaters and, in one case, sew 50 dog booties with Velcro ankle fasteners for a puffy little bichon frisé. Gary Swart, the chief executive of oDesk, described how companies once struggled to find workers beyond their 50-mile, or 80-kilometer, radius, and employees to find work. But in the new world he envisions, anyone with a computer can choose how, when and for whom to work. "They have the freedom and flexibility to work from their den in their pajamas at the rate of their choosing," he said. What some critics argue is that, in a bad economy, these choices are less than meaningful, and that they result in a race to the bottom for people who cannot afford such a race. These critics warn of a metastasizing economy of freelancers, supporting themselves with tasks rather than jobs, competing ferociously so as to lower wages, working long hours, all while paying for their own health care and retirement plans. "Technology is supposed to be the great equalizer," a blogger named Rich Reiben wrote recently. In a recession, unions dissolve and workers compromise. But in this recession, something more devious is at work. Technology has become a one-way street. Suddenly the guy who wants someone to clean his basement has fifty bidders, some of whom are probably not eating very well these days. Then there are the regulatory concerns, for much of this new informal economy operates in a legal no man's land. Is renting out your car for a few bucks an hour more analogous to a neighborly gesture (which isn't regulated) or to a car rental service (which is)? Shelby Clark, the founder of RelayRides, has admitted in the past that his service operates in "a little bit of a legal gray space." Are sites like oDesk responsible if employers pay workers below the minimum wage, or are they just glorified phone directories? Mr. Swart answers, "You're the one doing the hiring. We're merely the ones giving you the platform. What happens if a customer racially discriminates in choosing TaskRabbit workers? "The consumer has the right to make their own choices about whom they hire to do work," said Ms. Busque, the founder. She described the possibility of discrimination in the choices as an "interesting perspective" that she found unlikely, and one that, in effect, is not TaskRabbit's problem. Mr. Swart, of oDesk, acknowledges that "the laws and the protections for workers just haven't kept up with technology and innovation." But he says that freelancers can be better off than the securely salaried and that the market can supply protections of its own. Lately, oDesk has begun to offer health insurance coverage to its contractors, which they can purchase, taking advantage of a bulk company discount. Ms. Busque, of TaskRabbit, said it was pondering a similar scheme. At one point, she compared the new economy she is striving to build with an "age-old" economy in which people "threw a few bucks" to a child, say, to rake their yard. That may not be every adult's dream of work, but it is work nonetheless - and work that may be more prevalent in the coming years than work of the staid and secure kind. Join an online conversation at http://anand.ly; Follow on Twitter.com/anandwrites