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Tuesday, May 27, 2014

'Don't Buy the 'Sharing Economy' Hype'

Dean Baker:

Don't buy the 'sharing economy' hype: Airbnb and Uber are facilitating rip-offs: The "sharing economy" – typified by companies like Airbnb or Uber, both of which now have market capitalizations in the billions – is the latest fashion craze among business writers. But in their exuberance over the next big thing, many boosters have overlooked the reality that this new business model is largely based on evading regulations and breaking the law. ...

This downside of the sharing needs to be taken seriously, but that doesn't mean the current tax and regulatory structure is perfect. Many existing regulations should be changed, as they were originally designed to serve narrow interests and/or have outlived their usefulness. But it doesn't make sense to essentially exempt entire classes of business from safety regulations or taxes just because they provide their services over the Internet.

Going forward, we need to ensure that the regulatory structure allows for real innovation, but doesn't make scam-facilitators into billionaires. For example, rooms rented under Airbnb should be subject to the same taxes as hotels and motels pay. Uber drivers and cars should have to meet the same standards and carry the same level of insurance as commercial taxi fleets.

If these services are still viable when operating on a level playing field they will be providing real value to the economy. As it stands, they are hugely rewarding a small number of people for finding a creative way to cheat the system.

Agree about the level playing field, but perhaps it will serve as a catalyst for changing regulations that "were originally designed to serve narrow interests and/or have outlived their usefulness"?

    Posted by on Tuesday, May 27, 2014 at 09:50 AM in Economics, Regulation | Permalink  Comments (92)

          


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