About February 2015
Mobile computing has enabled a new way to exchange goods and services. But how should governments respond? Regulatory structures now in place were crafted for a set of concerns that may or may not be relevant now, and we increasingly face the prospect of a two-tiered regulatory system.
Yet companies like Uber and AirBnB are poised to do more than just sidestep traditional regulations. They also raise entirely new questions - including concerns about safety, working conditions, and trust. Are new regulations needed just for them? If so, what might they look like?
Joining this month to discuss are Matthew Feeney, a Research Fellow at the Cato Institute; Dean Baker, co-founder of the Center for Economic and Policy Research; Christopher Koopman, a Research Fellow at the Mercatus Center; and Avi Asher-Schapiro, a freelance journalist who has done notable work on the subject.
Matthew Feeney argues that the right response to the rise of the sharing economy is often to deregulate legacy industries. Users and service providers alike have tools at their disposal that ease many of the worries that might otherwise come with sharing one’s car, kitchen, or spare bedroom. Meanwhile policymakers should recognize that older regulatory systems often amounted to favoritism. Taxi monopolies are only the most egregious example among many. A level playing field should be the goal of public policy, provided that this playing field does not impose arbitrarily burdensome regulations.
Dean Baker points out how sharing economy companies have often received special favors, and he suggests what a truly level playing field might look like. While it’s hard to deny that companies like Uber have offered much-needed services, he argues that limiting the number of taxis in a city is still reasonable, that drivers must be guaranteed standard minimum wages, and that accessibility requirements must also be met. Anything less would amount to an implicit subsidy for one industry participant - in other words, exactly the sort of thing that conservatives should recognize as corporate welfare.
Sharing economies do not really exist, says Avi Asher-Schapiro. The glowing term really denotes downward mobility for the middle class. Formerly regulated and stable professional occupations are growing increasingly part-time and menial. Companies like Uber, HomeJoy, and Taskrabbit promote what is ultimately a servile class, one that must wait hand and foot on the desires of the wealthy. This is certainly not what we should want our society to look like. Such companies have succeeded in recent years in large part because many people have been otherwise unemployed. But if we want our economy to serve more than just the wealthy, then we should hope that Uber drivers and the like will exit the “sharing” economy in favor of something better.
Christopher Koopman notes that firms like Uber and Lyft are already writing very comfortable regulations for themselves, rules that lock out competitors and hurt consumers. The results will be higher prices, fewer choices, and poorer service. In the longer term, it may mean that many companies can’t innovate by providing entirely new side businesses or related services - things like moving services, delivering goods on demand, or offering autonomous cars for hire. There is no clear reason why these things mustn’t be on offer, but regulation stands to forbid them before they even exist.
Discussion to follow through the end of the month.
Related at Cato
Podcast: ”Welcome to the Sharing Economy” with Matthew Feeney, Trevor Burrus, and Aaron Ross Powell, December 8, 2014
Policy Analsyis: ”Is Ridesharing Safe?” by Matthew Feeney, January 27, 2015
Policy Forum: ”How Should Ridesharing Be Regulated?” with Matthew Feeney, Marc Scribner, Dean Baker, and Brink Lindsey, February 10, 2015