Everyone loses with a sharing economy

Some things in life are free, yet fewer things remain each day. Erosion of altruism, acts of kindness and true sharing has in large part been facilitated by the recent buzz around the “sharing” economy. In a sharing economy, or collaborative consumption, owners rent out goods or time they are not using in a peer-to-peer fashion. A common premise is that when goods and services are shared, the value of those goods may increase, for the business, for individuals, and for the community.The sharing economy allows people to offer rides through a service such as Uber and Lyft. Using AirBnB an unused room can be a source of income. While TaskRabbit makes it possible to offer a pair of helping hands while cleaning. More recently there has been as steady increase in services such as education and consultancy through sites such as udemy and HourlyNerd.

Disruption and (de)regulation

On the surface it seems promising, being hailed as ‘disruptive’ to entrenched businesses such as the taxi service and hotel industry, stirring on innovation. Although the short term advantages for consumers are all too obvious, lower taxi fares and cheaper rooms, the long term impact on society might be less rosy. Here the disruptive nature of these companies goes well beyond just innovating. More often than not these initiatives are successful because they avoid proper regulation protecting both parties as well as legally due taxes. Although AirBnB has been forced to pay tourist taxes in a growing number of cities1, the fact that renting out a room stays largely unregulated still provides an unfair advantage compared to local official businesses but also allows abuse.

Countless AirBnB mishaps can be found on the internet; such as the comedian coming home to an orgy, rooms turning into brothels and houses being trashed234. Due to a lack of screening not only are clients a potential treat to a service provider’s property, service providers are also a potential treat to clients. Uber has gotten a bad rep recently by increasing number of sexual assault cases by drivers56 and accidents7. The freedom and lack of regulations which makes these services competitive can also turn into a hazard for both the service provider as well as their clients.

Social upheaval

More damaging than the direct dangers are the indirect consequences of the sharing economy. Within a sharing economy, every item in your household or every idle minute turns into an opportunity cost. Things sitting on a shelf, or time not spend working equals a loss of additional income. All of the sudden, where people used to share equipment and time, now they find or offer these ‘services’ through an app, paying or providing for what was otherwise a free community service. As the demand for these ‘sharing’ services is rising it leaves me with one question: Where did we lose our personal connection to our next door neighbours to the point where we need to use the internet to borrow a hedge trimmer?

Even if people used to pay for certain services, for example baby sitting, the price of these services was governed by local economics. Services were offered through word of mouth and prices were set relative to the local market. Yet, the networked nature of the sharing economy opens up the whole market to service providers far outside local communities. This creates a race to the bottom in hourly wages due to an ever expanding supply of service providers. Combined with a still rotten economy, people will cut corners everywhere cutting into hourly wages, further weakening the financial position of the middle class and working poor8.

The promise of upward social and economic mobility through the sharing economy is therefore broken from the onset. Even worse, it has the potential to cannibalize current full time jobs. Landing people with a ‘job’ without social protection, benefits or fixed hours and a steady income9.

True sharing and social-economic empowerment

As the sharing economy is making it easy to find ‘shared’ goods and services it makes us ever more distant from the same goods and services we would have otherwise enjoy for free, at the cost of true sharing. The sentiment might be changing with more and more people acknowledging the social and economic implications of the ‘sharing economy’10 with the potential to move from commodity to commons.

Moving commodity to commons has been happening for a long time. However, it wasn’t covered with the verbal fluff or bad habits of ‘the sharing economy’. Before Udemy made everyone a professor11 there was the major push for towards Massive Open Online Courses (MOOC), mainly provided by major universities. Similarly, plenty of online tutorials can be found on YouTube, made by enthousiast and professionals. For example, countless people dedicate their free time mapping the planet. Often beating Google in accuracy and update frequency during disaster relief12. These services, as well as plenty others provided by the open source software community allow people to use, software, data and knowledge free of charge. These true sharing initiatives are not limited to the software world be extend into the physical world by services such as Peerby which facilitates the borrowing of things in your neighbourhood (without charging for it) or Hacker spaces which provide free or low cost access to (specialized) tools.

As always, technology can be used for good as well as for bad. While venture capital clearly benefits from the sharing economy, with Uber being valued at $40 billion13, the final gains for the service providers might erode over time. At the same time, these commercial services eat into the social fabric that makes people borrow stuff from neighbours without a fee. I hope with time a true sharing economy will prevail.

 


  1. Working together to collect tourist taxes – AirBnB  

  2. AirBnB renter claims he returned home to an orgy – NY Post  

  3. Violated traveler lost faith  

  4. Hookers using AirBnB apartments for sex sessions – NY Post  

  5. Uber driver Arrested in Los Angeles rape case – The Daily Beast  

  6. Uber X driver accused of rape  

  7. Uber driver kills pedestrian – ABC news  

  8. The distributive implications of the sharing economy – Forbes  

  9. Corporate America Is Using the Sharing Economy to Turn Us Into Temps – New Republic  

  10. The sentiment on sharing is shifting – TechCrunch  

  11. Here comes professor everybody  

  12. OpenStreetMap Response to Typhoon Haiyan / Yolanda  

  13. Uber valuation comes with uber problems – TechCrunch