I know we’re supposed to think that’s
cool to drive an Uber from your Airbnb to the assignment you found on TaskRabbit. Isn’t the sharing economy really the ‘desperate
economy?’ The ‘sharing economy,’ in a nutshell,
is any platform that uses the internet to connect dispersed networks of individuals. That’s a platform like Uber, Lyft, Airbnb
that allows individuals – that is, people who are looking for a place to stay or a ride
– to connect with people who have spare bedrooms or a willingness to give people rides. There’s a battle brewing on your next vacation. On one side, big hotels – room prices skyrocketing. The challenger? Companies like Airbnb that offer short-term
rentals typically at a fraction of the price are booming. The startup companies, like Postmates and
Instacart, they aim to deliver anything from seafood to shoes. Her customers find her through TaskRabbit,
an online service that matches customers with taskers. You have something like a triangular relationship,
where you have an intermediary that is a platform – an Uber or a Lyft or a TaskRabbit. You have the worker and you have the customer,
and it’s the job of the intermediary to marry the worker to the customer. You talk about the ‘sharing economy,’
and not everybody agrees that that’s the best term for it. The ‘sharing economy’ implies a sort of
communalism that is not necessarily the case. I’m not a big fan of the phrase ‘sharing
economy,’ because it seems to imply, like, a barter system. The thing I think that’s missing from calling
it the ‘sharing economy’ is it implies that everybody is kind of sharing in the benefits
of this new economy, and that’s not necessarily true. So the phrase that I’ve been using is the
‘online gig economy.’ ‘Gig’ sort of captures from the worker’s
perspective what’s happening in that part of the economy. I use the term ‘peer-to-peer economy,’
because the ‘peer-to-peer economy’ explains that individuals are using networks and platforms
to connect with each other. What we are calling the ‘sharing economy’
today might be thought of as a kind of hyper-capitalism. Economic historians prefer the name ‘experience
economy.’ The ‘experience economy,’ the ‘sharing
economy,’ the ‘collaborative consumptive economy’ – whatever you want to call it
– it’s here to stay. There’s no doubt the sharing economy is
disrupting traditional businesses. The impact on hotel room revenue could actually
be anywhere between 8% to 10%. The taxi strike created traffic jams, and
expressways were shut down by burning tires. At the heart of the dispute is Uber. Taxi drivers say it’s putting them out of
business. You have to have a certain amount of that
creative destruction in order to get the next great innovative technology that moves us
forward, and the sharing economy is doing that right now. It’s just doing it faster than any other
technology or sector that we’ve ever known before. Travel agents really don’t exist. Kayak, Travelocity… We’ve basically disrupted an entire industry
with an algorithm. Resources that have long been thought of as
personal resources – a personal car, somebody’s home or apartment – those resources are
now being added into the economy. They bring private parties together without
anybody really setting those prices in most of these markets. It’s just the price that will bring together
a willing buyer and a willing seller. And what we have is people competing with
each other to drive those transaction costs down across the economic spectrum and deliver
higher quality goods and services to more people at cheaper prices. The whole sharing economy isn’t just Uber,
Lyft, and Airbnb – that’s what’s on everybody’s lips – but there are a lot
of other smaller players, many of whom we haven’t heard of in the general public yet
or that are coming about right now, that are really exciting. Entrepreneurial agility: changing to a changing
environment. That’s going to be the currency of the 21st
century as you continue to move on, when disruption is going to be bubbling up all around you. Not everybody is going to be the next Uber
or Airbnb, but it’s the fact that we had that sort of vibrant, dynamic sort of marketplace,
creative destruction and then new economy birth, that’s so exciting about the sharing
economy. Uber says it’s just a technology company,
putting passengers and drivers together. The company says its drivers are independent
contractors. 87% of Uber drivers say they work for Uber
to “be my own boss and set my own schedule.” For the most part, I have the control. They are really just a tool that I’m using
to kind of process these transactions. The whole peer-to-peer thing is amazing, and
the fact that I have a choice in when I want to work and who I want to pick up is huge
for me. I think that actually creates better work
quality and more pride in work, because you as an individual involved in this economy
are responsible for your own outcomes. If you love to do what you do, you’re going
to be more productive, you’re going to be more… you’re going to be a better employee,
you’re going to be more creative. As a society, we need to make some larger
decisions about whether or not we want to make sure that people are protected and that
jobs are secure, which means not changing very much or not changing quickly, or to allow
rapid change to unfold in the hope and aspiration that we’ll end up with a better society,
but accepting that that process can be stressful, if not harmful, to certain people along the
way. You don’t get all the benefits, for instance,
that you would get if you were working at a retail store full time, such as medical
benefits and retirement plan and things like that. Particularly if you’re a worker who has
fewer skills than others do in our economy, you’re competing with a gigantic mass of people
who are equally lesser skilled, and that has the effect of driving down wages. The ridesharing app has been in conflict with
existing taxi fleets and regulators around the world. These low-cost, unregulated competitors will
hasten the race to the bottom. Whether Airbnb is breaking the law or just
breaking the mold, the competitions means, for now, consumers are winning. The really amazing thing about the sharing
economy when you get right down to it is we can have distinct parties across the globe
interacting with people in exciting new ways without any sort of government intervention. The law was not designed to deal with companies
that are only facilitating this kind of work. There needs to be some sort of regulatory
catchup in terms of novel regulations that acknowledge the fact that these innovative
companies exist and will continue to exist, but at the same time they have significant
responsibilities to the communities in which they operate. So the question is should the ‘sharing’
or ‘access economy’ be regulated the same way as the regular economy? We’re not doing a great job of regulating
the regular economy, if we want to call it that, in a sense that we have allowed ordinary,
everyday, innocent, harmless economic transactions to be encrusted by layer upon layer of regulation,
many of them completely indefensible. Taxi regulations don’t make sense in a highly
technologically driven society that we have. Employers are endlessly creative in finding
ways to innovate around and with regulations. At the end of the day, whether or not they
have a good product or a good service is going to be what determines whether or not they
succeed. The reason that hotels cost more than Airbnb
– at least one reason why – is that they’re regulated. They have fire escapes. They have safety protocols. They have sanitation inspections. And that just doesn’t occur in the Airbnb
world. I think the government has to decide whether
it’s going to treat companies like Uber or Lyft just like companies, or whether it’s
going to treat them as a partially regulated or completely regulated industry, and I think
that question is going to become more and more urgent as the precursors to the sharing
economy become less and less relevant. Some people would try to regulate this economy
before we understand it well enough to know exactly how to regulate it, because they want
to be safe and not sorry, but what are we really afraid of? People’s main question is “Isn’t that
dangerous?” so I kind of explain it to them like, “It’s dangerous everywhere you go. When you get on the train, when you go to
work, when you get on the airplane, you’re next to strangers. Strangers are everywhere, you know what I
mean?” As for regulation, says Nick Grossman, they
are self-regulated by the customers who publicly rate them. The major innovation is this idea of generating
trust and safety. If you’re a bad actor, we’ll know. If you’re a great actor, people will know
that, too. If you think you’ve been mistreated or harmed
or abused in any way, you can give instantaneous feedback to the platform to say something
didn’t go right here. There’s always a tradeoff between making
things safer and making them affordable, and there’s always a tradeoff between government
regulation and freedom of choice, and that’s something as a society we need to reevaluate
now that we have new tools to have new choices. Innovators and entrepreneurs should be able
to go forth and experiment with new technologies without sort of heavy-handed, top-down, preemptive
controls, and the sharing economy has sort of rejuvenated this permissionless innovation
idea and expanded it now to all sorts of sectors that we previously thought were going to be
regulated forever, but now we’re seeing that there’s hope for a more innovative
future because of this new model. There’s many good things about the sharing
economy in terms of eliminating, in some areas, bias, increasing economic opportunity for
depressed communities, and giving access to people like the disabled. We have to ask ourselves the question “When
innovation occurs in the economy, often without any government involvement at all (as is true
in the case here), does the innovation serve our social purposes?” It’s not enough to innovate and even to
make money off the innovation; we have to ask ourselves “What does it mean for our
economy?” It’s not just economics. It’s freedom. It’s liberty. It’s people being able to find each other
and coordinate their affairs. Not just the economy, but the world is better
off when we have those kinds of interactions happening. That’s wealth, that’s prosperity, and
it makes everybody’s life better.

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18 thoughts on “The Rise of the Sharing Economy”

  1. How can we have an economy that shares without using cell phones and computers that also is a benefit to local governments. Do you plan to do away with local government? They do serve a purpose. They are needed.

  2. Sharing? The owners of the platforms… are they sharing the Massive Billions of Dollars that are generated and garner for their owners? The billions of dollars that the owners are worth, are they sharing? There is no community and sharing going on, not everyone is really capturing the massive value

  3. Nothing wrong with sharing/pooling resources, people have done this among themselves without money, then "Sharing economy" can be exploitative to their volunteers, or workers and the present system. Many workers have to work several jobs in this economy to make enough to survive.
    Not relying on your tax money, money from government- funded charity organization and money donation from people is the real sustainable movement: unlike some of these models under "sharing economy" that rent something in exchange for your money is just another profitable form of capitalism in disguise. Do some research on who they took from to start their company before your support.

  4. "It's here to stay" – this sounds like a marketing person using bad Jedi mind tricks, not a professor. How can he possibly know it is here to stay.

  5. It should be called the “robbing economy” because there is the host that feeds off the other parties and flouts all laws and regulations to unfairly compete with pre-existing businesses of the same kind, while not paying the dues which come with establishing a business for social and economical net security! It is just another hard version of naked greedy capitalism which runs off pooled capital and oppressive bargaining power taking advantage of desperate labor force. Thanks to our ailing economy where displaced citizen workers will eventually be willing to use the privacy of their homes for profane activities to earn a living. Oh, was not that kind of desperation the one drove the prostitution business historically where most prostitutes where mothers surviving spouses without assets or family estate to take care of raising up the little ones left behind? Yes we have a problem that our governments chose to ignore and do anything about, so their is an opportunity for predators to exploit the problem to their advantage. Thanks again to our modern civilization, which going down the drain for catering to the mighty and wealthy at the expense of the broken wing!

  6. This is not about whether taxicab or hotel industry regulations making or not making sense; it is about the alternative being a predatory that is exploiting the defective regulations and the desperate labor market affected by the dull regulations. Uber for instance did not solve the taxicab companies greed; it only took advantage of the rubble of the destruction and used it as a foundation for yet another much more vicious business model where workers became not employees and not independent contractors; they have become neither with zero benefits typically given to them one way or the other!

  7. Yes, they are trying to change the laws quickly before people understand its dangerous implications. They have succeeded in many states and cities by declaring their workers independent contractors without employment benefits as a matter of law when the classification is mainly a matter of fact that needs court and agencies adjudication! Sadly, our politicians have evolved reckless, corrupt or indifferent to our public welfare and future.

  8. The problem is that the "sharing economy" is basicaly the renting economy, and so it's basically nothing new.
    The real sharing is for example buying a lawn mower with your neighbour, and use it in mutual consent.

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