Why the Sharing Economy Is About Desperation, Not Trust

An anonymous reader writes "Wired recently ran a cover story about the sharing economy — shorthand for the rise of peer-to-peer rental services like Lyft and Airbnb — which they call a cultural and economic breakthrough. They say it has ushered in a 'new era of Internet-enabled intimacy.' An article at New York Magazine has another theory: that it arose because of the weakness in the real economy. Quoting: 'A huge precondition for the sharing economy has been a depressed labor market, in which lots of people are trying to fill holes in their income by monetizing their stuff and their labor in creative ways. In many cases, people join the sharing economy because they've recently lost a full-time job and are piecing together income from several part-time gigs to replace it. In a few cases, it's because the pricing structure of the sharing economy made their old jobs less profitable. (Like full-time taxi drivers who have switched to Lyft or Uber.) In almost every case, what compels people to open up their homes and cars to complete strangers is money, not trust.'"

Comments

tl;dr

[Anonymous Coward]

tl;dr Marx was right that an over-production would leave the majority in poverty, and the only economically sustainable solution is sharing. It's not "desperation", but an inevitable and rational necessity.

Re:tl;dr

[Beck_Neard]

Marx talked of productivity increases, but what Marx didn't live to see was how dramatically productivity would actually increase over the twentieth century, to the point where so many paid workers would simply be laid off. About the wealth gap, he turned out to be more right than he could have ever foreseen.

Re:tl;dr

[Opportunist]

The problem is not over-production, it is that for some odd reason we see production as the goal of economy. Problem is, the goal is not production, it's selling.

The goal is cheaper, cheaper, CHEAPER! We have to produce cheaper. Cheaper than the competitor, and even if there is no competitor, we have to produce cheaper. Not to sell it cheaper, as the market theory would demand, but to increase the profit margin. But hell, even if we WERE selling it cheaper, it would not make a difference. Because whether you sell something for 100 or 50 does not matter if the prospective buyer has NOTHING.

And that's the problem of our economy today. We're not lacking production. Far from it. There is by no means a shortage of anything. Anything but money on the consumer side, that is. We cannot SELL. Because there simply is nobody to BUY. Not that people wouldn't want our crap, if this whole sharing "culture" shows us anything then that there is a damn lot of want. But to turn want into need, money is needed.

The reason for the economic growth from after WW2 to the 80s was simply that people earned pretty well. Even and especially "unskilled" labor was relatively well paid and people could afford to spend. People even continued to spend after they could not really afford it anymore 'cause their wages didn't keep up with inflation. They borrowed, refinanced, maxed out credit cards... the economy only noticed that things go wrong after that, too, hit the limit.

And now we're in the shit creek we're in, because even if we started to pay people handsomely, it would take years to even notice since they now first of all would have to pay back their debt. You'd have to recover two decades of overspending, most likely with at least two decades of overearning. And it's very, very unlikely that anyone would want to make that "investment" just to get something as unimportant as the economy back on track.

Re:tl;dr

[Anonymous Coward]

What would have bothered Marx about the wealth gap is not it's existence, but the way it's disconnected from productivity of the work force. That, and the present forms of lobbying as a form of political capitalism.

Re:tl;dr

[Kjella]

Oh please, the Industrial Revolution was "the" killer for skilled artisans and craftsmen who were often replaced by unskilled labor operating machinery which incorporated the skill. Being self-employed and providing services directly became much harder, you had to be a worker at a factory because they owned the machinery and reaped the profits. Probably the worst time to be a worker was in the late 1800s and early 1900s when Taylorism was at its peak and it was all about how many seconds operation X took at the assembly line and it was all about dumb replaceable workers you could drag in from the street at subsistence wages.

It never really changed until Ford doubled the worker's wages in 1914 and from there was the golden age of the "skilled" worker, concepts like Kanban/Lean Manufacturing in the 1950s also focused on small cells of skilled workers providing much higher flexibility and lower defect rates than the big, long assembly lines. Then started a new cycle where the skill those workers had were incorporated into robotics, again forcing us to develop a new set of meta-skills because it can crank out parts with near perfect precision 24x7 and it was back to huge production lines. We still needed a lot of monitoring and repair though, because the first robots were rather dumb and did things rather mindlessly. Now those skills are being incorporated into electronics, and we're again looking for new meta skills. It all comes full circle again and again.

Re:tl;dr

[Applehu Akbar]

And Smith was right in that there is no such thing as "overproduction." Produce more of a valued good, and the market reacts by lowering the price, opening up more uses for the good. It's a story not just as old as human trade, but as old as life in Earth. When early plants feasted on the carbon dioxide that filled our atmosphere and produced oxygen, a "market" came into being for species that could consume oxygen.

Re:tl;dr

[ShanghaiBill]

Over-production has just been globalized - to China.

There are over a billion people living on a dollar a day. Claiming that we have "over production" at the global level is absurd.

Re:tl;dr

[Karmashock]

over production?

Over production of what? I swear, people say things without actually engaging their brains. They just repeat things like walking tape recorders or human/parrot hybrids.

The economic downturn was largely a result of corruption in our banking and political system that lead to the rapid issuing of credit for things people couldn't really afford especially to people that really shouldn't be in the market. This lead to a price inflation which caused people that normally wouldn't have a hard time affording things to go into greater debt simply to keep up. And when the whole thing collapsed, the value of all the homes went down but the debt stayed right where it was... this caused a contraction of spending... etc etc etc.

Nothing what so ever to do with over production unless you mean an over production of morons and corrupt assholes.

Marx doubtless said a lot of things that made sense... but economics is more complicated then any one man and the scope of human history is not going to be summed up by das capital.

Re:tl;dr

[Opportunist]

Right now, the big scare is that we're running into a deflation. No, really. DEflation. Not INflation. Now, considering how bad inflation is (allegedly), deflation must be good, right? Wrong! It's even more feared than inflation.

Inflation only means that your money gets less valuable. That can be remedied: Simply stop printing money and jack up interest rates. Of course, that's easier said than done, but at least you can in theory do something against it. Deflation is not so easily cured.

The core problem is that inflation can actually be beneficial for an economy, since it tempts to consumption. If your money is worth less tomorrow than it is today, you better spend it now rather than later. With inflation, people free money into tangible goods, even if they're perishable and not lasting, because even as perishables they're more lasting than money. Deflation causes the opposite. The longer you hold money, the better for you since tomorrow it's going to buy more than it does today.

I don't think it needs too much of an explanation why this is poison to any economy.

Now, there are quite a few possible causes for deflation, and a few regulatory instruments that can cure it. In our case, though, there would not be such an instrument. If we really reach the deflation level, we're fucked for good. Game over.

One possible reason for Deflation is a shortage of money, plain and simple. If there's a shortage of something, it gets more valuable. The easy solution to this is running the printing press. Now, we've tried that and it only made matters worse, because now we have some kind of inflation without eliminating the looming deflation. Mostly because there was no shortage of money.

Another reason is that the goods available are simply not attractive and people rather hold onto their money than buying what's offered. The cynic in me would say that's dead on, but no. That was the case in the former east bloc occasionally (which actually had a rather curious mix of insane shortages and buttloads of crap nobody wanted), and their money experienced an odd "official" deflation with a rampart "black market" inflation. Not really the case here now either, people would buy.

The reason for this deflation is actually a shortage of money, but a shortage of money per person. Money is available, but it is pooled. Which is great for investment, but very bad for consumption.

And we really have NO shortage of investment money. People would love to invest. If you needed any proof of this, the issue of Greek bonds that sold like hotcakes (despite Greece's credit history and its near bankruptcy) just because of the guarantees the EU gave for them is an indicator. They offered just over 5% interest and were fiercely contested. There is plenty of investment money sitting around, desperately looking for an investment opportunity.

What is missing, and what makes this looming deflation so dangerous, is the lack of consumption money. Deflation is always an indicator of low money velocity. Now, the reason is this time not that people cling to their money and that they don't want to spend it, the reason is simply that they have NO money to spend. Worse, they are in debt. And just like savings, debt also increases with deflation, which would make the whole shit even worse since climbing out of the hole gets more and more difficult.

What makes this situation so very dangerous is that governments cannot really remedy it. There is very, very little a government could do to regulate it. Their main regulation instruments for inflation, i.e. money printing press and interest rate, fizzle in such an environment. Running the printing press still requires some means to distribute that money, and there is very little you could do that makes that money end up in the hands of people who could spend it and thus cure the demand side problem. People would not, could not, spend it. They have a debt to take care of. That money you print would instantly be guzzled away in those debt holes people are in a

Re:tl;dr

[orasio]

The only economically sustainable solution is to have a labor force that matches labor requirements. What Marx didn't foresee was the tremendous medical advances the world has seen in the past 100 years, allowing unsustainable population growth while the need to unskilled labor declines. No amount of sharing, unionization, or wealth transfer will help when there are billions of people with no demand for their labor.

Don't let ideology blind you. People don't need jobs.
People need food, shelter, medical care, and several other things. Jobs is one of the ways you can get those.
If there _are_ enough resources for everybody, probably we can come up with way to distribute them effectively, even one that doesn't need busywork. It's not an easy problem, but seems solvable.

Re:tl;dr

[drinkypoo]

There is plenty of investment money sitting around, desperately looking for an investment opportunity.

Almost. It's pathetically waiting for an investment opportunity, instead of creating one. Granted, creating one is made ridiculously difficult in this country.

What makes this situation so very dangerous is that governments cannot really remedy it.

Sure they can. They can unfuck taxation such that it comes from the pockets of those with money, and then they can spend the money on public works, raising employment and actually improving infrastructure, making it easier to make money. Done and done. Problem is, they're not going to do either of those things unless forced, let alone both.

Re:tl;dr

[DrLang21]

Deflation is relatively easy to deal with, but it would be political suicide to do so. The Fed keeps printing money and giving to to banks to lend out as debt. This only puts a lot of money in the pockets of the super rich who don't spend it. If you want to held deflation, take that money and give it directly to everyone.

Money, in the hands of people who will actually spend it, is the cure. We have seen examples in the past where the government just gives out an extra $200 to everyone filing a tax return. I got that money and spent it. So did a lot of people, and it was credited for creating noticable relief in the economy. Give me $40,000 to forgive all my school debts and I'll have an extra $500 a month to do something with. Sure I'll save some of it, but not all of it. I am sure the vast majority of other people would do the same. Hell I might even be able to save enough for a down payment on a house.

Re:tl;dr

[Rich0]

Jobs are just as much of a requirement as food and shelter.

The job is what keeps a person from devolving into a total animal. More intelligent notions of human need actually account for stuff beyond where your next meal is coming from.

I don't think anybody is advocating that people should just sit and watch TV all day. Maybe if you gave them disposable income they'd find hobbies, or take up art or whatever. Organize community programs to give people things to do.

You don't need to chain somebody to a cash register for $7/hr under the threat of starvation to keep their mind nimble.

Re:tl;dr

[melchoir55]

I don't agree that there are no tools a government could employ here. A government could create a tax bracket of 70% (or some other arbitratily high number) and make the bracket begin at a number high enough that only those pooling money would be effected(including corps). The government could then spend that money on public infrastructure, employing people in the process. Think power plants, government rollout of highspeed fiber, high speed trains, or hell if you get enough money how about a space elevator?

A government, such as the US govt, could prevent companies by sending all their money oversees by penalizing companies which don't base themselves in the US. A govt could institute a tax on assets upon death. A government could institute tax brackets which target your existing wealth as well as income. A government could redefine corporations in such a way that it is no longer possible for the insane abuses they perpetrate to continue.

I am not saying any of this is easy. However, we aren't trying any of it, and all of it has the potential to help (if not solve) the problem. I also fully realize why we aren't trying any of it: All of it affects the wealthy, and the USA is an oligarchy.

Wait you mean

[Anonymous Coward]

Do you mean to say people do things for money? And even that cheaper comparable services supplant more expensive ones, oh crap it's almost like capitalism! Better break out the beatin sticks, can't have none of that.

Trust vs Desperation...

[bayankaran]

True, its about desperation, not necessarily an extra layer of 'internet trust'.
The US is unique in developed economies - luxuries are cheap...big screen TV, a car and so on. But necessities are expensive...healthcare, decent education, and to an extent housing.

"Necessity is the mother of invention"

[monkease]

...but I don't think that the only necessities are economic (...as both dyed-thru Marxists and Neocons seem to? I get that this is not you). While it's true the trigger for my involvement with "sharing"--from free-as-in-beer file-sharing to using Airbnb to potlucks to etc. etc.--may sometimes be economic, "because I can't afford to otherwise" doesn't actually make it in the top three of my reasons, now very much engaged with "sharing," for continuing in it.

The New Intimacy is new not because humans are different, but because more are more available than ever before. #internet

Economic "realists" are the children who built the world variously self-destructing.

I agree.

[Anonymous Coward]

Things are going to have to get very bad for change though. The forces for the status quo are way too strong and powerful.

Even I, a peon getting screwed over by the system, is a bit scared of it - eliminate democracy? Whoah!

Anyway, when things change too radically, extrememly bad things happen - like Hitler, Stalin, Castro, ...

Capitalism works fine within the norrow confines of economic activity and with plenty government checks. Nineteenth century USA business history is a great example of Laissez-Faire capitalism and what a disaster it was environmentally, economically, politically and socially. Even the US Right's patron saint, Adam Smith, warned about the dangers Capitalism - something that's been forgotten or ignored.

But as the World becomes ever more populated and natural resources become even more stretchly thinned, something is gonna break.

The Free Markets are thrown around as a pancea for the World's woes, but tell a couple of billion cold, starving, thirsty people that they just need to cough the money and work harder and they too can have what they need. I don't know, I just think Roman Empire and barbarians invading.

But like I said above, unless there is a catastrophy we won't change. The status quo - the economic bullies - have got theirs and they are not going to let it go. Their primitive and shallow desires are dragging us all down. Their desire to leave legacies to their offspring has them getting their bitches in legisaltures to allow for generational accumulation of wealth - aristocracies - and we all know what happens with that: revolution and mass death.

My fellow peons who stick up for the economic bullies will stand behind them - out of aspiration, fear of change or because of human nature to identify with one's abuser (I think that's why so many Right Wingers stand up for the Koch's and other businessmen who harm their economic interests.)

Oh please, Indeed.

[Anonymous Coward]

Then started a new cycle where the skill those workers had were incorporated into robotics, again forcing us to develop a new set of meta-skills because it can crank out parts with near perfect precision 24x7 and it was back to huge production lines.

That plant the laid off its workers only needs a handful of folks to maintain the robots. It's NOT a one to one transition. It's at least a 10 to 1 DOWNSIZING.

Now those skills are being incorporated into electronics, and we're again looking for new meta skills. It all comes full circle again and again.

Everytime the "circle" goes around LESS labor is needed.

Just where are those workers going to go because other industries are not absorbing them - the employment numbers proves it.

Look at today's big comanies - like Amazon. They have about 30,000 employees.

A couple of decades ago, a company that size would have had a million people of ALL skill levels working there. But automation has made things much more efficient. Cheaper for the rest of us, sure. But what to do with all the displaced workers? Retrain? For what?

All the new big companies only need a fraction of employees needed before.

EVERY industry is doing this. There is no indsutry that is increasing their workforce - none. Even medical is becoming more efficient and (ever so slowly) automating on the lower levels. And there's other changes too.

And that is what get's me about the fetish of policy makers who want manufacturing to come back to the US: it'll be done by robots.

In the 19th century, Western society went from on labor intensive economy (Agriculture) to another (Manufacturing). So, there was opportunity for transistion.

But today, new industries are going straight to automation (or off-shoring), old industries are doing the same, and there's a ever decreasing pool of jobs for people - and as a result, wages are declining in real terms.

Just making straight comparisons with the past and today and strugging off social and economic changes that is hurting the average guy is the wrong analysis and the numbers prove it.

Re:Oh please, Indeed.

[Anonymous Coward]

You will, when they turn up at your doorstep screaming for your blood because you're a have.

Re:Oh please, Indeed.

[zippthorne]

It's not zero sum. After the layoff, the 9 other workers are freed to make something else. At the founding of the nation, something like 80% of the workforce worked in agriculture. Over time, mechanization and improved techniques have lead to the present day fraction of something like 2%. The 78% of the workforce didn't starve to death, they went and did other, more interesting things, and now we have airplanes, computers, movies...

Re:Oh please, Indeed.

[Anonymous Coward]

It's not zero sum. After the layoff, the 9 other workers are freed to make something else.

Free? Free to be unemployed, desperately searching for anything that pays any sort of wage at all while half the politicians in the country call them leeches? There is no freedom in a layoff.

Oh and don't forget that year after year fewer people are recoded as being part of the working population. That number was once frighteningly near near 100% (the days of child labor), now it is below 60%. Add in the unemployed numbers and barely half of the population has a way to support themselves. Little does the other half know that they are 'free to make something else'.

Saying that people who are laid off can just go do something else is so out of touch to be morally disgusting and intellectually inept.

Re:Oh please, Indeed.

[Immerman]

So where should all these people displaced by automation work instead? Where's the new labor markets?

The problem is we're in the midst of laying off 90% of the workforce thanks to automation, and we have no new industries for those unskilled laborers to move into. Yes, they've been freed to do other things, but there's no other things for them to do. Most people simply are not suited to becoming a robotics maintenance technician, movie producer, or banker. And even if they were there still wouldn't be enough jobs available. We only need so much manufacturing potential to supply all our desires, and if one person can maintain the robots needed to produce everything wanted by 100 people then you've got 99 people in a hundred that can't be involved in manufacturing. Ditto in fast food production, warehouse workers, barbers, etc, etc,etc. which are all beginning to be automated. Even in movie production CG characters are beginning to become more commonplace, which will eventually put most actors out on the street. And banking, where expert systems can outperform all but the most skilled, and at a far faster pace.

If 10% of the population can provide for everything wanted by everyone, then our current economic model has a major problem, because everyone else needs a way to acquire the funds to purchase the things. And it the 10% are the only ones making an income from widely desired goods, then they are the only source of income for the rest, and you've got 9 people trying to supply enough bonus luxury goods to each productive member to keep food in their own bellies/ We could increase leisure hours to reduce the problem, but even if the average work week were only ten hours you've still only increased the employment rolls to 40%. The problem doesn't even go away with population reduction. Let the 60% starve to death, and all you've succeeded in doing is reducing demand by 60%, and thus reduced the size of the production lines and need for maintenance technicians, etc. by 60%, and you're right back where you started with 60% unemployment.

Now, take the survival issue away through some sort of social safety net / social dividend and you may foster an explosion in creativity, but there's a reason for the starving artist stereotype - creative work is rarely appreciated in it's own time, and most artists and inventors have always needed to have some other kind of work to pay the bills. If there is no other work, then they need to be given at least enough to survive comfortably to free them to be creative.

Re:Much of what is wrong with our economy

[udippel]

All you need is a law requiring the driver to provide the start and end mileage to the customer and to have them agree verbally to a rate per mile.

Huh!? I wouldn't want to succumb to 'supply and demand' when I am standing in the middle of nowhere, at 23:00, and urgently need to go to some civilized place. Or back home. I don't want to do any haggling with a cab driver, and the next one and the third one, and so forth, until someone offered me a suitable price.
I had to do this when living in Asia, and I was very sick of this.

Re:Sharing is common outside the west

[prefec2]

I know this is crazy, but you could share your apartment with one for free. And hope to get offered the same when visiting some place. This is called altruism and happened very often in the "distant" past.

Growth is not necessity

[Immerman]

Why is an growth necessary? To sustain our current economic models perhaps, but they are themselves a very recent anomaly dating back to somewhere around the beginning of the industrial revolution and the liberation of productivity from the number of laborers available. As you point out, all sustained growth is exponential, and that is unsustainable in a finite environment. And we're already bumping up against the limits of our global ecosystem so it must end relatively soon.

No matter what the economists want to believe, sustainable growth is an oxymoron and we're going to be forced to return to an economic model which presumes the entirety of production remains relatively stable. Individual businesses may still grow, but only at the expense of other businesses (competitors and/or those rendered obsolete) But there's no particular reason they need to grow at all. Even today there are plenty of small businesses that don't subscribe to the "grow or die" philosophy, and have instead simply grown until they reach a comfortable, sustainable size and then remain there indefinitely. And that's absolutely normal. In days gone past a master blacksmith could only grow his business to the limits of his own productivity - he might take on an apprentice or two to help out with the easier stuff, but it was his own skill at the forge that drove business.

Re:Growth is not necessity

[citizenr]

Why is an growth necessary?

Because it is essential to making money out of NOTHING. Growth is the mechanism letting people "work with their money", people that never work, just invest and reap the benefits.
  Of course most of same people that rely on growth will be as pleased with recession. They can speculate with their money as long as there is instability, there is always opportunity to extract money from the working class.

If you work with your hands/brain you dont need growth to sustain your lifestyle, you need stability. They (startup valley types) even call it a Lifestyle Business http://en.wikipedia.org/wiki/L... and treat it like something lesser/to be ashamed of.

Re: Old people can't do physical labor

[peragrin]

You lost me when you said government run programs ate inwffecient compared to private enterprise. While that is true in some cases that isn't always true. Medicare for example is 10 times more efficient dollar for dollar to private insurance. Most private insurance spends 20% ( now it used to be higher) on adminstration. Medicare is 2-3%.

Just remember when the big three auto makers went looking for a bailout they flew to Washington in their corporate jets. If they were truely efficient they wouldn't need a politician to point out the stupidly obvious waste of funds. How inefficient does a private enterprise have to be if a politician notices their failures.

    Once you get to be a big business efficieny goes out the door. Governments are just big business with mediocore oversight However more people can see the books. If you really looked at a large businesses books you wouldn't say that private business is more efficient. The rest of your post rambles on from that misconception.