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Sharing Is Caring

Over the last few years, companies like Uber and Airbnb have exploded onto the national and international economic scenes. Uber was recently valued at $68 billion, and Airbnb at $30 billion. In less than a decade, these two companies have built the “sharing economy” into a multibillion-dollar monolith. Their business models have revolutionized the way that consumers interact with both each other and producers by putting a new spin on an old economic practice: peer-to-peer business. Peer-to-peer business is defined as an economy where transactions take place between individuals without third-party interference.

The sharing economy has harnessed the idea of peer-to-peer business and integrated it with technology. Investopedia describes it as such: “Sharing economies allow individuals and groups to make money from underused assets. In this way, physical assets are shared as services. For example, a car owner may allow someone to rent out her vehicle while she is not using it, or a condo owner may rent out his condo while he’s on vacation.” These two services are the basic summary of the business model that Uber and Airbnb and offer to consumers. Each company allows the people who work for it to make a profit off their assets when they aren’t using them.

However, as the sharing economy continues to grow, it is receiving mixed reactions from state governments. For example, since 2010 in New York, it has been illegal for someone to rent out a whole apartment for less than 30 days, essentially vaporizing Airbnb’s business model of short term rental listings. Just last month, Governor Andrew Cuomo of New York signed Senate Bill S6340A to enforce New York’s 30-day listing rule and fine those in violation of it. On the other side of the country, Governor Doug Ducey of Arizona took the opposite route, signing Senate Bill 1350, which prohibits cities and the state from outlawing short-term rentals. Uber also hasn’t been spared from legal battles and varying legislation across the country.

As New York and Arizona illustrate, the debate over the regulation of the sharing economy is coming to the forefront of legislative battles. But politicians can’t afford to forget that the sharing economy is here to stay; erasing a multibillion-dollar industry is bad politics and bad policy. State legislatures must change their focus from the question of if to the question of how. For this economy to operate at its full potential and benefit as many citizens as possible, state governments should limit the regulations and barriers that they impose on these businesses, allowing the economies to grow and develop naturally.

Perhaps the most persuasive argument is sheer volume. Since its inception, the sharing economy has created easily accessible jobs in great number. The companies allow consumers to interact with and immerse themselves in a city, all while putting the money right into the locals’ pockets. For example, a visitor to Philadelphia can explore the city efficiently via an Uber driven by a local Philadelphian, and then stay overnight at the home of another local Philadelphian through Airbnb.

These new businesses also have created unprecedented flexibility and power for workers. In contrast to traditional full time jobs with set hours and wages, the drivers and landlords in the sharing economy have the freedom to choose how much and when they work. This tailors perfectly to the growing trend of workers of all ages desiring more flexibility in the work place. The schedule can be particularly beneficial to students and parents with small children, as well as those looking to subsidize their income with a second job. For some people these flexible hours can mean the difference between working or not working at all. This must be remembered when considering how to regulate the sharing economy; most sellers in this economy are not wealthy businesspeople, but rather everyday Americans trying to earn a little extra money.

The greatest testament to the importance of the sharing economy is the revenue it generates. This economy is valued at hundreds of billions of dollars and has established itself as a legitimate and permanent part of our society. Many predict the sharing economy to generate $335 billion a year by 2025, putting more money into the pockets of citizens, workers, and government agencies through both increased consumption and the tax revenue that that spending can generate. Consumers are the ones driving the success of the sharing economy, so it’s evident that average people benefit from the accessibility and ease that companies in this economy can provide. Curtailing it is thus curtailing consumers’ ability to spend their money how they choose, and the facts suggest that the sharing economy allows them to do so efficiently.

In fact, special interests and the politicians in their pockets, not working-class Americans, have mostly driven the opposition to the sharing economy. Hotel and taxi businesses, whose profits are sure to suffer as these rival alternatives continue to grow, are the primary culprits. In 2014 alone, the hotel and lodging industry poured $11 million into state elections across the country. The taxi lobby has also challenged ride sharing services across the country. The Sunlight Foundation found that the taxi industry has donated $3,500 to state legislators for every $1 that Uber and ridesharing services have.

It is easy to see why these interests would petition for regulation: their business has suffered. This logic, however, is flawed. The role of the government in the economy is not to pick winners and losers; by favoring the hotel and taxi industries over Airbnb and Uber, for example, the government would be directly telling consumers not to spend their money or employ themselves how best they see fit. For an economy to reach its full potential and give the most back to the people and businesses, it must be given room to grow and evolve. The sharing economy has proven that it is not just a fad — it is the result of our ever-evolving economy responding to producer and consumer preferences and demands.

That isn’t to say that the opposition has not raised some valid points against these new businesses. One of the chief arguments against Airbnb and other short term rental businesses is that they make the affordable housing issue in cities like New York and San Francisco even worse. Many landlords, seeing that they could potentially make more money on short term rentals, either raise the rent or do not rent at all, creating quasi-residential hotels. This drives the supply of affordable housing down while the demand and prices go up, creating a very real and important problem. Airbnb, however, has recognized this problem and is working to address it as they try to grow their business but also protect the interests of those looking for affordable housing.

The new sharing economy is not perfect, just like any other. Nevertheless, by imposing strict regulations or bans on the sharing economy’s ability to grow, the government is hurting the American people. Sharing economies must be able to adapt, and we as a country must adapt along with it. Arguments for stifling regulations are inconsistent with the ideas of progress and innovation. What if the government had tried to regulate and block the growth of the airline industry to protect Amtrak? Time and time again, technological change has advanced faster than the government’s ability to effectively regulate it. Instead of taking this moment to preserve the status quo at the expense of what consumers say they want, state governments can best serve the sharing economy by giving it the freedom to develop safely and freely.

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About the Author

Streator Bates '19 is a US Section Staff Writer for the Brown Political Review.

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