The sharing economy
The sharing economy refers to the ability to bring services, products and items peer to peer via online platforms or apps designed to do this.
They are akin to cooperatives or credit unions in that there’s a pool of resources and those who contribute to the pool get to use the ones they, in turn, need from time to time.
Let’s take a look at some of the cooler sharing platforms:
- Union Taxi in Denver, CO and PDX Taxi in Portland, OR. These two taxi companies are driver-owned taxi companies; the same can be said of VTC, a Paris based taxi company that was created by ex-Uber drivers who got tired of that company messing with the fare costs.
- Modo is cool; you pay a membership to join and pay $4 an hour to rent any vehicle that belongs to another member of Modo. It’s a real vehicle coop that started with 16 members and 2 cars and has grown to over 16,000 members and over 500 vehicles that include cars, SUVs, vans and sports cars.
- A similar platform, but on the online scheme of things is Stocksy: a royalty-free stock photography shared platform on which the photographers contributing their images are the owners of the whole thing and are entitled to use them in turn. It’s about sharing and benefiting from sharing. Inventive, fair, and extremely high quality.
- Timefounder is based in Barcelona and works on a barter work-sharing system. People with abilities of many different kinds donate their time and expertise to help on others’ projects. They do it with the understanding that, when they need help, others will be able to assist. Cynics will scoff at it, but it’s been up and running very successfully a couple of years already.
Beyond these efforts there are other sharing systems that work on a fee system that, while no longer free, are a good example of sharing what one has in a positive way:
- DogVacay; a nifty network of dog owners that allows you to leave your dog at someone’s home while you’re on vacation. The idea is that your pet will get treated the same way than at home, rather than a dog hotel.
- RelayRides; where you can rent a neighbor’s car by the hour, or the day.
- Liquid: same as RelayRides, but with bicycles.
- TaskRabbit; on this platform, one can hire people to perform tasks, like deliveries, handyman-style repairs, or office work.
- And last but not least, Zaarly is a bit like TaskRabbit but focuses more on people who can craft for others: cooking, carpentry, phone repairs, etc.
Some of you may wonder why I’m not speaking of the obvious sharing economy big names, like Uber or Airbnb.
The reason for it is that Uber and Airbnb are not sharing economy companies. Real sharing economy would mean that a driver on Uber would let you borrow his or her car, or give you a ride for free if they were going the same way. The moment you have something and you rent it out, or provide a service for which you are expecting to be compensated, you’re no longer sharing. You’re just renting or selling, and platforms like Uber and Airbnb provide a link between you and your renter/buyer for a commission.
I am not saying that on the user-end these are not good alternatives. I can see why many people would like to save money by riding Uber, or getting a cheaper, better located place to stay by using Airbnb. But I look at the greater picture and see where these practices affect everyone in the long term. That aspect of these businesses is not so great at all.
I already mentioned in The Gig Economy that Uber drivers are technically contactors that have 0 benefits, have to pay their own taxes, and work however many hours it takes to make ends meet. I explained why this is bad for the worker and for the economy.
What AirBNB does to the economy
Airbnb, and other vacation rental platforms like it also have a negative impact on the economy, and people need to understand why. Let’s compare a real Bed and Breakfast, or a hotel with an Airbnb host. The first two have an actual business licenses, hire employees, and provide advertised services. They pay their employee’s taxes, and they pay additional taxes for being in business. They are part of an official listing of lodging options.
Airbnb hosts do none of these things; they don’t hire a staff, provide employment for people, or pay business taxes; most seem to be avoiding paying taxes at all. Airbnb will only report a host’s earnings if he/she has had more than 200 bookings for the whole year, or earned $20,000 and up. Everything under that is just unreported income that people are making, and over which most people are not paying taxes.
But it doesn’t end there. For every room that an Airbnb host rents out, that’s one hotel/B&B/Inn room that goes vacant. A vacancy for which those businesses are paying taxes, and with which they are keeping their employees employed. Start adding those vacancies up and you will understand how this means that letting people go from hotels is soon to follow.
Your local economy and real estate
There’s more. In cities like San Francisco, where real estate prices are already crazy high, the city is warning that Airbnb is also inflating prices. Many homeowners decide it’s better to use Airbnb to rent out rooms and second properties than in long term leases; plus, individual entrepreneurs are investing in real estate with the sole purpose of using the properties for short term vacation rental platforms.
Something interestingly disruptive like California’s real estate woes is happening with Uber in London. Uber, the service that once hailed as the one that would take cars off the road by getting people to share rides has actually increased London’s already bad traffic problems by adding what is estimated to be between 6% and 10% cars to city streets. Seoul has banned Uber already for the same traffic issue.
These sharing-for-profit businesses cannot last. While beneficial to the user’s wallet, they have medium and long-term repercussions over the economy, and have very negative effects on proper businesses; by taking business away from existing companies that have been providing these services, we’re costing them earnings that they need to keep their employees hired.
The economy at large
We’re also contributing to millions of dollars of undeclared income, so that the government is not getting taxes (aside from the decreased tax revenue from businesses that are losing to these platforms). Common, it doesn’t take a lot to see that if tax revenues are not up to par, we are either all going to get more taxes, or fewer services. Either way, we’re all paying for it.
Some stick up for platforms like Airbnb and Uber by saying that these services are legal, or they wouldn’t be operating. The truth is that the legal systems of most nations simply haven’t caught up to be able to regulate them, and that’s why they work. The moment regulators step up to the plate and start creating the laws that will guide how these types of companies work, earn, hire, and pay taxes, a lot of these companies will disappear. Hopefully the ones that remain will be the ones whose intent was to share, for everyone’s good, and not for the pockets of the few.