Go to liberal news site Salon.com, and you’ll find a category page for Uber, the taxi- cartel-disrupting rideshare service. The headlines are all negative: You’re not fooling us, Uber! 8 reasons why the “sharing economy” is all about corporate greed, Uber presses the class-warfare button, The sharing economy gets greedy, among others. You’d think a service which lowers prices for consumers and helps solve taxicabs’ well-established racism problem would be lauded by liberals. Instead, it’s condemned.
Companies like Uber and Airbnb make up the so-called “sharing economy.” With them, regular people make a little money from sharing their apartment or car with a guest. Sharing services save consumers money, reduce energy consumption, and generally reduce hassle. It’s decentralized, non-hierarchical, sustainable, and community-focused. A boon to the left, you’d think.
They’re kind of the epitome of elevating the little guy. “I have the right to contract with my fellow citizens,” Chris told Fast Company, “without getting anyone’s bloody permission.” After Chase Bank foreclosed on his house, he needed to make $7,500 monthly payments. His bank may have gotten a bailout, but he was going under. That’s when his daughter pointed him to Airbnb. “I’ve had it rented almost continually [for two years straights] for 6,000 bucks a month, got out of foreclosure, and–thank God–now I get to live in my home again.”
While Airbnb saves homes, Uber may save lives. The city of Austin banned Uber from operating normally during its South By Southwest (SXSW) festival this year. But after a drunk driver plowed through a street barrier, injuring 20 and killing four, there’s a petition going around to reevaluate ridesharing options.
So what’s not to love? Some of the objections from the left are just silly, profits-r-scawy nonsense. “Creators and investors in the new apps are aiming to make millions,” Andrew Leonard warns. Anger around demand pricing, or “price gouging,” betrays a pretty fundamental misunderstanding of markets. Sure, taxi cartels force uniform rates. They also will leave you stranded for hours when demand surges.
Other issues are legit. Who pays when an Uber driver between jobs kills a young child? Tax avoidance may be an issue, though it’s hardly constrained to sharing services. And then of course, “What happens to the worker when the taxi monopolies are finally crushed?”
But here are the real issues liberals have with the explosive growth of the sharing economy. First, it demonstrates, in no uncertain terms, that whatever benefits central planning offers, people want things, and the market provides them.
Even more threatening than that, however, is how the rise of the sharing economy reveals the really ugly truth about regulation.
Let’s look at Airbnb. The average cost of a hotel stay in NYC ranges from $316.62 in
Uptown/Midtown East Manhattan to $280.08 in Times Square to $257.44 in Lower Manhattan. These prices are absurd. Airbnb offers accommodations for much less money, and is being pursued by New York and Los Angeles governments for their trouble. The cities alleged the company is running illegal hotels. Why are illegal hotels a problem? It’s not an issue of consumer safety. The only two reasons NYC could muster are that illegal hotels are “a danger to affordable housing” and are “putting neighbors at risk.”
This is, frankly, ridiculous. Affordable housing is certainly an issue in cities like New York and, less so, Los Angeles. But rent control, zoning laws, and sweetheart developer deals all play a much bigger role in the lack of affordable housing than people renting out their rooms. Airbnb is a drop in the bucket. As for neighbors, the vast majority of neighbors never know about the rentals, and those who are bothered can speak to their landlords to solve any problems which arise.
Here’s the real issue, put succinctly in Salon:
Taxes, regulations, insurance — what entrepreneur wouldn’t jump at the chance to escape their heavy load? The most important lesson here is this: The next time you hear about a sharing-economy startup that is going to “disrupt” an industry sector, turn on your translator. What they’re really saying is that sharing-economy businesses will extract profits from their given sector, because their competitors can’t match their prices. By “sharing,” they have successfully made an end run around the existing costs of doing business.
In other words, companies like Airbnb and Uber are demonstrating in real time what we already know about regulation. First, regulations don’t work to achieve their stated aims, because they are written by and for incumbent businesses with the actual goal of killing the competition. Second, industry disrupting, consumer benefitting innovation requires they be circumnavigated.
When you try to foist information on someone which, if true, requires a total rethinking of their worldview, they generally tend to get angry. That’s exactly what we’re seeing with the sharing economy. Liberals don’t want to grapple with the reality that, on the ground, regulations do the exact opposite of everything they’re supposed to. They hurt consumers. They raise prices. They hurt the environment. They stifle the innovation necessary to accomplish the goals we all share.
These services have their issues, to be sure. But ultimately, they’re wonderful additions to the landscape. They help people save money, reduce their carbon footprint, and save time and energy. Surely these are liberal goals as well. What the sharing economy reveals is that these goals are diametrically opposed to regulation. The market provides, the state inhibits. Voluntary, peer-to-peer exchanges make everyone ultimately far better off. Centralized, coercive rules calcify industries and prevent innovation.
Try as they might, liberals won’t be able to do away with the sharing economy. What would be ideal is if they could take the information it reveals and use it to reevaluate their unthinking, knee-jerk deference to what they perceive, wrongly, as state power over industry, and recognize it for what it is: industry and state power over consumers.
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