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Why Is the ‘Sharing Economy’ Starting So Many Arguments?

Rob Walker
Tech Columnist
Yahoo Tech
June 25, 2014

Why Is the ‘Sharing Economy’ Starting So Many Arguments?

Rob Walker
Tech Columnist
Yahoo Tech
June 25, 2014

Demonstrators surround a private taxi in Paris. (Associated Press)

In London, Paris, and other European cities, widespread taxi strikes against the startup Uber have been gridlocking traffic. In New York, renting out spare living space to short-term visitors via Airbnb has become a heated regulatory issue. In San Francisco, the city attorney has just ordered Monkey Parking, a service built around auctioning off public parking spaces, to knock it off.

The uniting source of all this controversy is a concept that sounds like a friendly idea but that’s sparking some startlingly unfriendly responses: “the sharing economy.”

If you’ve bumped into these controversies, you may be confused about how this “sharing economy” thing can sound so virtuous — it’s sharing! — yet spark such vociferous opposition.

Here, then, is what you need to know about the sharing economy and its discontents.

What is it?
Thanks partly to all the squabbling, most any definition will be nitpicked by somebody. But as broadly as I can, here’s how I’d describe the sharing economy, using Airbnb as an example:

In short, it’s a system that uses technology to link supply and demand in previously impossible ways. For instance, lots of people own extra space — from a spare room to a vacation home that sits unoccupied most of the year. And lots of people need somewhere to stay while traveling — and end up anywhere from a friend’s couch to a hotel.

Suppose there was a service that could match these parties up in a way that benefited both? The traveler gets somewhere to stay that’s better than a couch but cheaper than a hotel. The space-owner makes some cash.

Apply that idea to short-range car travel and you have Uber (and similar outfits such as Lyft), matching someone who needs a ride to the airport with someone who will handle that for a fee.

Now apply that idea to … whatever you can think of. Parking spaces? Parking Panda is on it (and, for now, so is Monkey Parking, but that’s the one San Francisco’s city attorney dislikes). Laundry? Washio is doing that. Odd jobs? TaskRabbit matches those who need them done with those willing to do them. And so on.

What’s so great about it?
Silicon Valley types go gaga over all this because it represents “disruption” — tech-driven change that redefines entire business categories, crushing established players and richly rewarding innovators (and their investors). Thus sharing economy darling Uber is said to be worth $18 billion and Airbnb, $10 billion.

That said, most sharing-economy advocates tend to place their emphasis on social benefits. Author Rachel Botsman’s oft-cited May 2010 TEDxSydney talk on “collaborative consumption” serves as a pithy opening argument for the principal virtues of the sharing economy.

First: It’s efficient. Whether it’s an extra room, a DVD we’ll never watch again, or even spare cash, lots of what we own may have what Botsman termd “latent value to someone else.” She points to bartering platforms, car-sharing services, and peer-to-peer lending mechanisms.

If the Web turned garage sales into eBay, why wouldn’t the same logic work everywhere? “The Internet is removing the middleman,” Botsman argues. And she offers an example that’s been recycled by sharing-economy fans for years: A typical consumer-owned power drill is used for 13 minutes total over the course of its years-long life. What a waste! If only a bunch of us could share that drill. (Or at least one of us who actually owned it could rent it out and make some money.)

This hints at the second great virtue cited by sharing-economy fans: These systems rely on “trust mechanics.” Specifically: “Technology is enabling trust between strangers,” Botsman enthuses, adding that this actually gets us back to our human, wired-to-share roots. You share your car with a stranger; you share your kitchen with new friends; you interact with neighbors like you wouldn’t have before.

Finally, if you’re worried that all this sounds suspiciously utopian, there’s reassurance from Botsman: The sharing economy is “more hip than hippie.”

Well, then, what’s so awful about it?
To taxi drivers and hoteliers, sharing economy companies look quite different — like a collection of poorly regulated, dodgy, lowballing underminers who compete largely by ignoring the rules. To a municipality that relies on hotel taxes to fund basic services, it’s a potential budget-breaker. To a unionized trade, it converts unqualified labor into a rival force made up of economically desperate workers doing an inferior job on the cheap.

Airbnb guest Megan Walsh, a Chicago writer on a summer internship, reads in her room at the Echo Park home of artist Jonathan Entler in Los Angeles. (Damian Dovarganes/Associated Press)

Less selfishly, such critics point out that many sharing-disrupted business categories are regulated for a reason — consumers expect their hotel rooms and cab rides to be safe and vetted. Sharing-based companies claim to handle this through their own systems. But if a ride turns dangerous, or a promised room is a scam, how much recourse does a consumer have?

More broadly, “sharing” sounds, to some critics, like a fig leaf bit of rhetoric that disguises off-putting realities. For starters, the idea of monetizing one’s spare drill or parking space sounds less like “sharing” than “selling.” Thus it encourages us to characterize everything we own (including our spare time) in economic terms.

Second: The sharing economy is not about eliminating the middleman; it’s about Uber, Airbnb, and so on becoming the middleman. The recent parking space kerfuffle in San Francisco is a case in point: “We will not abide businesses that hold hostage on-street public parking spots for their own private profit,” San Francisco’s city attorney said.

Finally: In practice, it’s a system that privileges the privileged. To those who observe that a service like TaskRabbit has been “a godsend to people with more money than time,” such critics reply that on the list of constituencies technology might laudably serve, people with excess money is the least impressive entry. The sharing economy seems most popular with the young and affluent — basically the same people who were thriving before this “disruption” came along.

Sheesh. Is there anything we can agree on?
You’ll have to decide for yourself what you really make of the sharing economy — in theory and in practice. But the good news is that this debate is happening at all.

By and large, our Silicon Valley friends and their ilk prefer to innovatively rampage through the culture and let society scramble to adjust to their ingenious “disruptions.” Indeed, even a recent New Yorker critique of “disruption” theory itself was met with the jeering response that its author lacked the qualifications to express a point of view.

That’s not helpful. Wherever you think true progress comes from, it does not come from telling your intellectual rivals to shut their yaps.

That’s why the sharing-economy debate is good news even for the trend’s most ardent zealots, and why they should engage rather than dismiss. The opponents and skeptics are finding ways to have their say, and they deserve a hearing.

That’s as it should be. If you want to be a disruptor, you should be ready to be disrupted.

A previous version of this article used a work of the artist Susie Cagle without her permission. We have removed the artwork at her request and apologize for the error.

Write to me at rwalkeryn@yahoo.com or find me on Twitter, @notrobwalker. RSS lover? Paste this URL into your reader of choice: https://www.yahoo.com/tech/author/rob-walker/rss.