Are we ready for the sharing economy?



Dr. Florangel Rosario Braid Dr. Florangel Rosario Braid

We are at the cusp of the sharing economy. It  is here,  as shown by the wide  public response to Grab (and Uber), Airbnb, and online platforms – Google, Facebook, You Tube, E-bay, Amazon, Olx, Lazada, Zalora, and several others.

Thus, the need for more forums such as that convened  by the  University of Ssanto Tomas Economics Society on the topic “From Natural Resources to Digital Commons: the Formulation of New Tragedies” where I was invited  panel speaker. I dealt with why we need to understand the implications of the trend, barriers to entry and exit, positive and negative consequences, policies, and alternatives.

One can not cover all the above in a plenary session, but it served the purpose of alerting and encouraging researchers and policy makers to reflect on  these concerns and take follow-up action.

The sharing economy, known as collaborative or access economy, is based on the idea that people do not always need to go to big producers to fulfill their needs. They can depend on each other where one benefits from reciprocal arrangements. It encourages a new kind of entrepreneurship based on exchange, and allows underutilized resources such as homes (Airbnb), vehicles (Uber, Grab), to be used more effectively as well as bring people together. It brings additional income to underpaid workers, and, through recycling, reduces environmental destruction. It benefits  businesses through part-time workers who are available at lower costs, empowers people to use their skills, and stimulates the economy.

It will be remembered that the concept of “sharing” or “commons” started several decades ago when Garrett Hardin, in 1968, described the situation in the olden days when individuals, acting solely on self-interest, depleted the common resources – pasture lands. These were the “tangible” or “traditional commons”  Today, we have the “digital commons” – the air, the Internet, and Wikipedia which are global and “intangible”. These digital resources differ from the natural resources in that they are reproducible and unevenly distributed. Availability is dependent on access to technological hardware, software, and digital literacies. Those without these opportunities and competencies are then deprived of access.

Overhead costs are lower and ownership enabled more accessibility to employment opportunities. Access is easier and less time consuming. Likewise, access to capital is possible with use of “crowd funding” platforms.  Online platforms enable efficient matching of owners and consumers, peer-to-peer exchange that generate trust.

The tragedies of the digital commons differ from those of the traditional grazing pasture lands.  Platforms like Uber and Airbnb managed to concentrate capital and power and acquired a near-monopoly status.  The other tragic consequences  include the “black income” problem – tax evasion, poor compliance with quality standards, insurance obligations as well as protection of employee safety and health. Uber and Airbnb had been questioned about controversial consumption schemes such as their taking a large chunk of customers from traditional companies, and a question often asked about them is whether they are registered taxi drivers or independent contractors.

The sharing economy is also  accused of extracting profit by running around the cost of doing business, as it  offers as well a new kind of capitalism. Wikipedia faces the threat of rising as a global “for profit” economy where most benefits accrue to the members of its governance structure and little to millions of content builders.

Authorities feel challenged and confused over how to interpret old laws in the context of the new businesses, and whether they have to formulate new regulations.  Which is what they have to do right now. And one of its immediate tasks is to lower barriers to entry for start-up companies. The situation today is that traditional businesses (taxi companies, hotels, etc), are threatened by the fact that common people have become suppliers of products and services.

But since  the sharing economy may be more than a passing fad as it had managed to balance “supply and demand” concerns, government and regulatory agencies must now act quickly through new regulations or by providing and supporting alternative structures. One is that entering enterprises be organized as cooperatives, foundations, or loose, informal networks.  The intent here is to spread the advantages of the sharing economy to benefit common people.

If we agree with Time Magazine which had recently described the “sharing economy” as one of the 10 best ideas of our times, then let’s do something more, beyond just watching it expand, become another monopoly, or eventually, self-destruct.

My e-mail, [email protected]