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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.'"
In many countries in the world it's quite common for people to share stuff like taxi services and rooms and has been for decades. In many of these places the crime rate is far higher than in the United States. The huge contrast between the amount of distrust people seem to have for each other in America and the actual rate of crime (which is quite low and has been decreasing for decades) is pretty astounding.
A fool and his hard drive are soon parted.
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.
A fool and his hard drive are soon parted.
...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.
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.
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
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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.