Tag Archives: sharing economy

The Sharing Economy: Crowd-based Capitalism

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My alarm goes off, it’s 9:00 am and I have work in 30 minutes. If I spend 10 minutes getting ready, I’ll be left with 20 minutes to transit but that’s relying on a notoriously inconsistent public transit system so I guess Uber is my only option now.

The amount of times I’ve been put in this situation is quite appalling, to be honest, but the truth is that in my situation the convenience by far outweighed the costs. Let’s take a step back for a second. I just ordered a random person on the street, in his own personal vehicle, to drive me to work, all in under a minute using a mobile app on my phone. I really paid to get into this strangers car? Whats going on here?

Well, let me tell you it’s that magical sharing economy.

The Sharing Economy is basically an economic model in which individuals make money from underused assets. A prime example of this being car sharing (95% of a cars lifetime goes unused, why not maximize the time spent with the asset?)

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This socio-economic system has changed the way people interact, do business and use their resources. While on the other hand many also say that its dented traditional businesses and have made them

The Pros

Use, Reuse, and Re-purpose

There are many people in the world who own more than just one car, property and gadget (Heck, even a pair of expensive shoes) that are not used commonly. The sharing economy allows private owners to offer their possessions to others for a fee, and this really is shown in practically every market. From the most popular ride-sharing service (Uber) to being able to rent luxury sneakers (LSWOP) there really is no idea of the limits people will go to produce income with their additional assets.

Less Unemployed

Although many have quit their day jobs because the benefit of working their own hours (and being their own boss) showed to be more valuable than a secured income, many have also found employment through these services. More online / at home jobs and more platforms to sell (Etsy, Amazon, eBay) have allowed these workers to have sources of income that they may be able to live off of.

New Business’

This economic structure has a grey area when it comes to government regulation and that serves as an incentive for business to enter. (can, however, make more competitive markets) The hotel industry is heavily regulated by businesses; they need accessible fire escapes, they need to have disability accommodations need to meet health and safety regulations ETC. Airbnb has nothing like that and it really does allow the alternative to be cheaper at times because of it.

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The same goes in the taxi industry.  To be a taxi driver in NYC, you need to have a medallion. And what if I told you these medallions once sold for over 1 million dollars? (The most recent selling posts had them for around 200k) for While some drivers actually own their medallions, others are owned by different taxi companies. People actually have to take out HUGE loans to be allowed to supply A SERVICE.

This is one of the strongest reasons why the sharing economy is so successful and relevant. Through its nature (deregulation) its gotten rid of one of the primary barriers to entry, along with general start-up costs.

The Cons

Loss in government revenue

A set back in this economy that many critics say are the potential losses in tax revenue for the government. Many people who do business over the internet (such as writing, coding, artwork, commission based services) provide their services internationally. This results in not everyone paying taxes on their earnings online.

Frauds and Scams

The amount of news articles my parents have shown me about people posting fake Airbnbs to take money from unsuspecting vacationers is depressing. The nature of an online business means it’s going to be hard to regulate. Don’t even get me started on how difficult it is to track people and prevent them from using a service. (IP changes, proxies, ETC.)

There’s no chance in hell the business would spend time and money to check each and every single listing to insure that they’re all nonfraudulent. (They have more than 4 million listings on their website! that’s more than the top five hotel brands combined.)

Its just a new form of capitalism

Critics and analysts say that “Sharing Economy” is not a good name for what it implies but rather “Access Economy” because it provides a path for people to access services and products they need and its the capitalists and players who benefit the most, not the individual who actually offers their services through these websites.

The Verdict

Personally, the sharing economy seems analogous to the Californian Gold Rush. It was the people supplying the tools not the people searching for gold who made money. In this case, its venture capitalists and engineers providing the tools.

Thankfully I’m able to say I’m not searching for gold at this time! I feel more like the town that benefited from all the business that came in and helped to bring the economy up in the area. There is a wide variety of services available to me at the click of a button, and honestly, that’s what I love. I can order food to my doorstep, or get a ride to school all in the same app. Personally the benefits outweigh the cons!

 

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