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.
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.