The problem with a sharing economy
This glimpse of the future was crafted by: John Mcguire and Jody Boshoff
For many of us, the concept of ‘sharing is caring’ was introduced more as an ominous warning than a sweet adage in the home (especially when we happened to be holding the last cookie). But all motives aside, the message seemed to have got through to this generation; with an annual infusion of $15 billion into the global market, the sharing economy seems to be a case in point that spreading the love literally pays off.
These days, just about everything can earn you a quick buck if you’re smart about it. That’s what Judy learned when renting out an empty boardroom on pivotdesk to Craig who needed the space. Of course, Craig has been saving money and making friends through couchsurfing.com, whilst renting out his own apartment on Airbnb. Craig’s guests are currently spending the day exploring the city by bicycle, thanks to Liquid’s peer-to-peer bike share programme. And with dog lover, Bridget, on the job, the couple can rest assured that their beloved Baxter is in good hands with DogVacay while they’re away.
Down the road, a single mom is using the money she made from selling those dusty fabulous heels on Postmark to rent Kim’s ladder that she found on Snapgoods. And tomorrow Kim will heed Craig’s request on TaskRabbit and take an Uber to the other side of town to prepare the apartment for the next round of Airbnb users. Six degrees of separation just became four in this new economy of collaborative consumption.
In one way, it’s simply fabulous; the sharing economy cracks open fresh value on those underused assets around the house. Although, in another way, is the concept risky and our intrepid entrepreneurs have just not realised this yet?
The prolific pop-ups of sharing platforms are generally touted as ingenious, but do we have to acknowledge that we’re realistically still in the honeymoon stage. This process has to see the whole cycle scoped through – from macroeconomy to public policy – if we are to grasp its long term impact on society. It’s a robust debate that economists, policymakers, Craig – even Baxter – need to weigh in on.
Helping the planet
Our future cities are faced with a dizzying dilemma. According to a 2014 UN report, two-thirds of the world population will be urbanised by 2050. Considering that another 2.5 billion people will have joined the human race by then, we have a serious case of imbalanced supply and demand on our hands. Naturally, any opportunity we have now to minimise our planetary wear and tear is welcomed. That’s where the sharing economy can offer a brilliant alternative.
A study conducted by the Cleantech Group found that the fewer resources spent on travellers using home-sharing companies has resulted in 66 per cent less CO2 emission than hotel-based travel (including hotels that have earned five-star efficiency ratings). Home sharing has all kinds of other spin-off benefits, ranging from less food waste to higher recycling rates to significant savings in water. Car sharing also contributes to lightening the carbon load: according to a UC Berkeley shared-use vehicle survey, every one car made widely available for sharing takes at least 10 off cities’ congested freeways.
Each innovation seems to have us breathing a little easier, loosening the grip on our cities’ necks and helping us to speak a new language of inventive opportunism.
Mind the gaps
But there’s a flip side to the coin. The sharing economy is a fundamentally viral industry and, as such, it predominantly goes unmitigated and unchecked. The digital economy is evolving so fast it is outpacing the rate at which our policy makers can catch up.
Car-sharing network gurus like Uber and Lyft, for example, are generally not yet adhering to the same taxes and insurance standards that taxis uphold. Accommodation for disabled passengers is generally sporadic; contractual obligations are not articulated; and in some countries it’s debatable whether drivers even make the minimum wage. Those subscribing to these platforms have to weigh up the privilege of making a buck on the side at their convenience versus the cost of being thrown in the cold if anything goes wrong.
The same goes with online hospitality. Startup giant Airbnb has booked over 80 million nights across 191 countries since its 2008 inception. But many of those homes or venues may not be situated or designed to anticipate the challenges of noise, congestion, and waste, and neighbours are occasionally (and understandably) irritated about the additional infringements on their privacy. While hotels are taxed and frequently inspected for health and safety, Airbnb hosts are not yet facing such inspections.
Some city residents are now crying out for stronger regulation while, at the same time, many of their neighbours are greeting their ubers with open arms. Cities such as Seattle, who were already feeling the housing crunch before online hospitality entered the scene, now have to compete with the new breed of Airbnb entrepreneur who buys up accommodation for short-term rental purposes only. The San Francisco property market has sky rocketed, thanks to the influx of vacation rentals overtaking the city’s scarce housing inventory.
The big picture
All of it begs the question, is the sharing economy actually benefiting the economy at large?
Many would say it is, as even Granny can now find her inner entrepreneur and make her pension stretch. Yes, intrepid entrepreneurs are availing themselves of the new sources of revenue they can leverage out of their existing unused assets, but the warning to existing traditional businesses is that they are tapping into a customer who is dissatisfied and disgruntled with the current business models. And therein lies the wake-up call to those awake enough to heed it.
Shareable founder, Neal Gorenflo, would argue that these unregulated ventures are having a disturbing impact on the future socio-economic fabric and flow of our neighbourhoods and cities. He refers to Uber and Airbnb as ‘Death Star platforms’ that will eventually outstrip all facets of traditional competition.
Whatever side of the fence you’re on, you can’t deny the fact that Pandora’s lid is wide open and off its hinges. Consumers now want choice. They are tired of faulty and antiquated services that call the shots and cripple creative mobility by clinging to the past. They seek the personal independence and disintermediation that mega start-ups like Uber and Airbnb defend. ‘Death Stars’ they may be, but ingenious opportunists who simply saw the gap and took it, they are as well.
At either end of the debate, the message is consistent and clear: business, beware. Those who fail to listen and to see what their customers actually need, disregarding the invitation to innovate, may very well be ‘ubered’ some day. In a sweeping digital paradigm that stops for no one, there will only be winners and losers. And businesses that believe they are immune to disruption are probably already on the way to being disrupted. They just haven’t got the memo yet.
The debate is rich and all too early to draw solid line conclusions. Contrary to criticism, the growth of the sharing economy is probably not going to be a case of capitalistic ‘checkmate’ where Uber and their cronies take all. More likely, there’s room for different players on the board. But traditional business will urgently need to catch up if they want to stay in the game. Should they stand around and wait for regulations to evolve and tighten the reigns, they will probably be too late.
(Aurecon’s award-winning blog, Just Imagine provides a glimpse into the future for curious readers, exploring ideas that are probable, possible and for the imagination. This post originally appeared on Aurecon’s Just Imagine blog. Get access to the latest blog posts as soon as they are published by subscribing to the blog.)
What do you think about the sharing economy? Would you prefer to save money at the outset or have these businesses pay taxes that may see the cost of services increase?
Labor’s version of equality is punish talentThe Australian12:00AM July 26, 2017SaveShare on FacebookShare on TwitterShare on emailShare more...200GARY JOHNS
Brisbane
I had the great pleasure of attending a 60th birthday and a wedding in the past week, at which numerous young adults made speeches. They celebrated family, love and loyalty, and, yes, exuded success.
They were superb. Australia, your future is in good hands. These young adults will continue our great good fortune, despite the worst efforts of cringe-worthy government decisions.
And cringe-worthy government decisions are all around. Tony Abbott’s cringe was to impose a temporary levy on the top marginal income tax rate. This measure, to address the deficit, gave licence to those who think that government — that is, other people — have a right to your money. Abbott gave licence to class envy.
This error, on the part of a Liberal leader, was so inexcusable as to be politically fatal. To this point, Malcolm Turnbull has made no such error. Mind you, his bank tax came close because, among other things, it gave licence to the execrable South Australian Labor government to do the same.
As to the alternative government, Shorten Labor is moving unerringly left. More cringe-worthy government decisions await.
Bill Shorten is running on inequality. For this, read class envy. The only way to satiate class envy is to tax those who have and give it to those who have not.
The consequences, however, are that talent is punished and bad decisions and behaviour are rewarded. And remember, the talented can leave Australia, others cannot. Shorten runs the risk of telling talented young Australians that it is not worth getting ahead in Australia.
Egalitarianism in Australia must be the “have a go” version, not the “screw the rich and talented” version.
My old colleague Graham Richardson supports the Shorten agenda on inequality and contrasts the circumstances of the wealthy man and the single mother living out of a car as proof of inequality. To which we are entitled to inquire: what is the relationship between the two? So far as we know, absolutely none.
Unless the rich man was in a relationship with the poor single mother, he is no more responsible for the mother than any other citizen. He will, however, by dint of our highly progressive taxation system, have already contributed to her parenting payment, should she be in receipt of one, helped pay to chase support from the absent male partner, if he has failed to do so, and helped pay for numerous other forms of government assistance.
So, why do we throw in these illustrations inferring that the rich cause poverty? They do not.
While family is the first call for help, in Australia the rich pay the bulk of taxes, the poor receive the bulk of taxes, and charity picks up the rest: it has been so for decades.
This scenario was the subject of a thoughtful speech last week by Human Services Minister Alan Tudge, in which he remarked that “the formula that worked in the past of continual increases in welfare and further services will not provide the step-change improvement needed to address modern impoverishment”.
Modern impoverishment, as he calls it, is attributed to “family breakdown, worklessness, drug and alcohol addictions, education failure, and indebtedness and lack of financial capability”.
If the rich man did not cause the single mother’s plight, who did? Best not go there … it gets very personal and very judgmental. Better to think about what to do to prevent her plight.
Poverty is intergenerational. It runs in families, and relatively few at that. Indeed, the minister has to tell the full story about the families who collectively cost the taxpayer dearly. They require serious and prolonged intervention.
We can intervene to help, we should intervene to help, but at the right time and in the right way. And for goodness’ sake, let’s not be squeamish. The taxpayer is not responsible for bad choices and bad behaviour. The taxpayer is entitled to say so.
To intervene or not to intervene is not the great schism between left and right any more — both sides are at it. The purpose and effectiveness of the intervention is what counts. Labor’s inequality gambit blames the rich: it makes no pretence of understanding the cause of poverty. And Liberals have lost their ability to inspire the aspiring classes.
The young and gifted become the rich of tomorrow. Praise them, don’t tax them more, and don’t blame them for others’ misfortune. I want to witness more great speeches.
Gary Johns is author of No Contraception, No Dole.
The sharing economy is misnamed . It is the ability of capitalism to continually renew and shake up entrench monopolies or quasi monopolies like taxi industry which relies on poor drivers with no rights .Indtead you have people particularly young mothers running their own business and setting their own hours .
Good on the young uns for embracing Entrenprenuership
instead of the old Socialism of Corbyn Shorten .