Books

The unforeseen dangers of Uber and Airbnb

Sharing companies may appear to make everyone a winner. But, as Tom Slee argues, they distort the market and disregard dull but important regulations

5 March 2016

9:00 AM

5 March 2016

9:00 AM

What’s Yours Is Mine: Against the Sharing Economy Tom Slee

OR Books, pp.244, £12

In Silicon Valley, renting out is the new selling —and renting out stuff that belongs to other people can be far more profitable than renting out your own.

Over the past few years, companies like Airbnb and Uber have made a great deal of money by pioneering a business model of connecting consumers, who want to use things — such as apartments and cars with drivers — with other people, who want to provide them. For public relations reasons they promote this model as the ‘sharing economy’. And who could be against ‘sharing’?

But this isn’t the kind of sharing your mother taught you. The term entered the technology vernacular when Napster introduced ‘file-sharing’ — which many lawyers called ‘copyright infringement’, and a US court essentially ruled illegal. Today’s sharing economy involves physical goods, but it still revolves around technology companies that tend to view at least some legal regulations as outmoded, annoying barriers to their business plans.

In What’s Yours Is Mine: Against the Sharing Economy, Tom Slee, an author and blogger who also works in the software business, delivers a smart and searing critique of a business that people are only just beginning to think about in a serious way. While some bloggers still treat the sharing economy as some kind of cause, Slee rightly analyses it as a business model masquerading as a movement.

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What makes his book hit harder than the endless expanses of online commentary is that Slee realises it isn’t just a matter of theory. He points out that Peers, a self-described ‘grassroots organisation that supports the sharing economy movement’, actually ‘functioned in part as a front for Silicon Valley lobbying’. Indeed, sharing economy companies have been so successful at getting Uber users and Airbnb renters to fight taxi and hotel regulations that they’ve essentially outsourced their lobbying as much as they have their business operations. If you’re renting out other people’s stuff, you may as well have them write letters to policy-makers on your behalf while you’re at it.

The case usually made for the sharing economy is that it’s progressive: it comes from San Francisco and it involves sharing! (Slee doesn’t explain the companies’ progressive arguments very effectively, but it’s hard to blame him as the companies themselves don’t either.) To be fair, companies like Airbnb offer an appealingly human-scale version of commerce, where you can rate, and often meet, the person with whom you’re doing business. But these companies also mediate those transactions, and they push for deregulation. The truly (counter?) revolutionary thing about the sharing economy — which Slee understands better than most — is how it extends the free market into areas of our lives where it previously couldn’t go. Not so long ago, one could simply borrow a flat from an acquaintance who was out of town and perhaps leave a bottle of wine to say thanks. Now what was once a favour has become a transaction: every unoccupied apartment has a value that the owner can extract every time he’s away for the weekend.

Slee seems more surprised than he ought to be that

what started as an appeal to community, person-to-person connections, sustainability and sharing has become the playground of billionaires, Wall Street and venture capitalists extending their free-market values ever further into our personal lives.

There have always been complaints that the internet is more commercial than it used to be in some idealised past — but it was built by telecom companies that very much intended to make money from it.

Slee also makes too little of the economic case for the sharing economy. However discomfiting it may be to consider one’s flat as an asset as well as a home (a bridge we may have crossed already anyway) the sharing economy could theoretically benefit everyone by turning empty beds and under-used cars into opportunities. And while this would disproportionately help those who own homes and cars, it would also lower the prices of hotels and taxis for those least able to afford them. The progressive case for the sharing economy may be constructed of fairy dust and moonbeams, but that doesn’t mean these technologies can’t help anyone. That said, conservatives who champion the sharing economy need to reckon with the fact that at least one country has embraced this system for years, to no good effect: many Havana residents give rides and rent out rooms to tourists in order to obtain hard currency.

Slee is at his best when he digs into specifics — many of which show that at least some sharing economy companies have unfair advantages. Uber is reluctant to face regulations that apply to taxis, while Airbnb makes a mockery of zoning laws. It’s easy to make fun of the municipal regulations that apply to transport and hotels. Some of them may indeed be outdated, and all of them are uncool. But it’s also worth remembering that they were enacted for a reason. No one would want to post a fire-escape plan map inside his apartment — and such plans don’t look all that appealing in hotel rooms either. But they’re there because they serve a purpose — and they’re just as useful in an apartment as they are in a hotel. The same goes for hotel taxes, which should apply to anyone who lets out rooms as a business.

As Slee shows, dodging such regulations can give sharing economy companies an edge — but it’s an unfair one. It’s possible, as proponents of this business model claim, that renting a room in an apartment is inherently more appealing than staying in a hotel. But we can’t know for sure until these sharing companies compete on a level playing-field — by paying the same taxes and adhering to the same regulations. Most of us realise that, for better or worse, sharing economy companies are extending the market. But we also have to confront the ways they’re distorting it.

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Show comments
  • James Edgar

    The watermen of the 16th-18th Century campaigned against the building of bridges as they were unsafe for people on the river (oh yeh, and took away their business) – this blog (https://judoeconomics.wordpress.com/2015/08/06/162/) is excellent on what history tells us about the sharing economy. This book sounds entirely devoid of an understanding (or critique?) of creative destruction and therefore rather pointless.

  • Vimes

    The watermen of the 16th-18th Century campaigned against the building of bridges as they were unsafe for people on the river (oh yeh, and took away their business) – this blog (https://judoeconomics.wordpres… is excellent on what history tells us about the sharing economy. This book sounds entirely devoid of an understanding (or critique?) of creative destruction and therefore rather pointless.

  • Ed  

    “Extending the free market into places in your life where it couldn’t go before”.

    Rot.

    Just blathering by another fool who doesn’t like other people having choices.
     

    • Mr B J Mann

      But where?!

      • Ed  

        Exactly.

        • Mr B J Mann

          Eh?

          WHERE is s/he “Just blathering by another fool who doesn’t like other people having choices.”?

          And how, for that matter?!

    • AnnS

      Your “choices” affect the neighbors who never thought they would be living next to a mini-hotel with strangers clumping in and out. The neighbors thought it was residential area – not a commercial location. Your “choices” means others have to put up with total strangers having keys to access the building where the neighbor’s flat is. Now that is rude and nasty — typical greed of “I make money so everyone else can get stuffed even if I do interfere with their home life and safety and security”

      • Duke_Bouvier

        Obviously if it is condo then they can have rules on that. And that is true for a loan to a ‘friend of a friend’ or on AirBnB

      • Ed  

        I’m free to do what I want with my personal stuff. So are you. We’re both also free to move away. If I ran onto you on the sidewalk and had a conversation like this, I might want to move away.

  • Duke_Bouvier

    Basically, he is whining because the socially privileged like him who “could just borrow a flat from a friend who is out of town” (so has a network of people living in cool places and who also travel) is now discovering that his “friends” like him less than a few extra quid. Poor baby.

  • Duke_Bouvier

    Is he equally angry that his friends from whom he could “just borrow a flat” didn’t display fire escape maps on the bedroom door? Same risk.

    • Mr B J Mann

      One assumption is that actual guests either know the property, or their host ensures that they know where everything is before they go.

      If they don’t want to put up signs, they Airbnbers could always commit to personally greet their guests, give them a big hug, and show them round.

      Or get another friend to do the honours if they are away.

      The signs are a money saving shortcut for businesses so that they don’t have to pay for ten times the staff.

      But if the Airbnbers don’t even want to pay for them out of their business income it tells you how concerned they are about the safety of those who rent fro them.

      Next you’ll be telling me that Uber are campaigning to be allowed to use MOT failures!

      • Duke_Bouvier

        I would imagine that anyone letting a property on AirBnB regularly would get around to typing up a few notes on local amenities. Which is different to a regulatory sledge hammer.

        The fire-escape map regulations make a great deal of sense in larger hotel with similar-looking corridors and multiple exit routes. (I always read the map – do you). They make little sense in a normal residential building.

        Silly comment about Uber and MOTs – no one is allowed to put a car on the road without an MOT. I am really worried though that some Uber drivers won’t have a bale of hay in the boot and might take a leak while forward of the rear wheel.

        • Mr B J Mann

          But how many Airbnb lets are in “normal residential buildings”?

          And, yes, the MOT was hyperbole.

          But I think you’ll find that even the kind of “taxi-cabs” that never had to carry bales of hay have somewhat stricter requirements than an MOT every year or two.

  • henryship

    Slee’s arguments seem very, very poor. Who cares if it’s called ‘the sharing economy’ but is really the ‘small proprietorship economy’? It’s great that more people are able to participate in the market: it’s fun, rewarding and educational. Hotel and taxi rates are absurdly high and the former especially hugely limit many people’s abilities to travel, especially families of limited means. It’s beyond demoralizing to take your family somewhere and only be able to afford a dingy motel. Now, you can stay in a comfortable home.
    There’s some (small) merit in the regulatory point, but not much. Most of the regulations are junk and are precisely what large companies rely on to keep out the little guy. Ok, make a law saying you have to show how people get out in a fire if you must. It won’t end the small proprietorship economy.
    Lastly, this ridiculous point about how it’s ruining visits to friends and family. What a desperate nonsense: no one has to rent out their rooms. The vast majority don’t. Those who do, don’t need to charge their mothers when they visit. The market isn’t being forced on anyone.

    • AnnS

      ANd have the next-door neighbor turn their home into a boarding house/hotel. That is NOT fun for the neighbors who moved there because it was zoned RESIDENTIAL and not commercial. Yes renting out you flat or home to strangers and taking money for it IS commercial..

      • Duke_Bouvier

        There is a difference between incidental use of a property on AirBnB and it being used as a letting agency for a commercial property. It is the kind of distinction that local authority planning departments are very used to dealing with. And which is absolutely nothing to do with the marketing channel used.

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