The Sharing Economy-A Dissent

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I’ve been thinking a lot about the role of the University in creating a humanistic framework for this technological disruption that is affecting all of our lives. Then I came across a column from A.O.Scott this morning.

Universities and colleges, the seedbeds of a cultural ideal consecrated to both excellence and democracy, to citizenship and to knowledge for its own sake, are becoming either hothouses for the new dynastic elite or training centers for the technocratic debt peons of the digital future.

It is that last line that caught me up short: “training centers for the technocratic debt peons of the digital future.” WTF? So I just came back from the Aspen Institute where I participated in a three day round table on digital disruption. Some of the young technocrats were extolling the role of the sharing economy in providing a financial lifeline for the kids who are coming out of college and can’t find a job. Are they the “debt peons of the digital future”? At one point someone said that the average 30 year old might be holding down four or five jobs simultaneously in this brave new world–driving an Uber car while renting their spare room on Air BnB and raising money for their video on Kickstarter while doing odd jobs on Taskrabbit.

And then a friend pointed me to an old blog post called The Locust Economy and it all came into focus.

I was picking the brain of a restauranteur for insight into things like Groupon. He confirmed what we all understand in the abstract: that these deals are terrible for the businesses that offer them; that they draw in nomadic deal hunters from a vast surrounding region who are unlikely to ever return; that most deal-hunters carefully ensure that they spend just the deal amount or slightly more; that a badly designed offer can bankrupt a small business.

He added one little factoid I did not know: offering a Groupon deal is by now so strongly associated with a desperate, dying restaurant that professional food critics tend to write off any restaurant that offers one without even trying it.

Yet, I’ve used (and continue to use) these services and don’t feel entirely terrible about doing so, or truly complicit in the depredations of Groupon. Why? It’s because, like most of the working class, I’ve developed a locust morality.

The writer Venkatesh Rao makes the basic point that the so called sharing economy is designed by the 1% to help the 90% destroy the livelihoods of the 9% who make up the small business middle class. Rao’s piece is fairly complicated but you should definitely read it because he points towards the future of digital peonage that Scott referenced.

In other words, in a locust economy, you cannot just decide to go somewhere and get in your car to drive there. You have to coordinate with other potential users of that shared resource. You have to keep your apartment clean and sharing-ready. You have to do minimum-wage work that you might consider beneath you (though such status concerns don’t bother me, annoying chores do).

In the sharing economy, we may not be eating each other literally, but we’re certainly eating into what Richard Dawkins called the extended phenotype of our neighbors. To the extent that your belongings are a logical expression of your genes and memes sharing them amounts to allowing others to eat them.

So the harsh bottomline of the locust economies, once the Jeffersonian middle class prey base has been bankrupted, is that we locusts turn on each other.

We call it peer production and prosumer economics, but it isn’t Jeffersonian producerism. It is locusts in their cannibalistic phase.

When the harvest is gone, software eating everything translates to prosumers eating each other.

I sent the Locust Economy blog to one of my mentors. This is what he wrote back.

for better or worse – the sharing economy has to lower the GDP and at least currently would speed up the demise of the middleclass and push more onto the long tail of minuscule incomes that in turn accelerates the sharing economy since that is the only way these folks can survive. This all has many unintended consequences and in the long run may not enhance sustainability.

Which brings me back to my original question. If the Universities are “becoming either hothouses for the new dynastic elite or training centers for the technocratic debt peons of the digital future” then we are screwed as a culture. If we are not willing to question some of the suppositions of the technocratic elite before we send our students into the maw of the New Economy, then we have lost our purpose. If the future we are creating for them is a life of five part-time jobs in the sharing economy then we have failed them and we might as well close up shop.

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2 Responses to The Sharing Economy-A Dissent

  1. Fentex says:

    The Uber application (which I understand to be the coordination of paid for rides by anyone near the location of potential customers in place of Taxis and at cheaper costs) is going to be testing regulations in NZ shortly.

    It seems like an archetypical example of the point – the Taxi business dies, everyone is encouraged to be prepared to Taxi. But will that be the result?

    For such things to work the regulations on Taxis must be relaxed, and if so then cannot Taxi companies compete? Such services involve considerable trust, is that not a good to trade on? Trust in safety, trust in reliability?

    Is not the end result, rather than everyone being employed at everything everyone free to compete – the implication being that regulation must relax, taxes must fall, and quality win out? Is this not a question of whether or not the classical liberal concept of free competition works in businesses where capital expenses do not exclude the average person?

  2. dangill says:

    This notion of the sharing economy lowering the GDP is in part attributable to the fact that we don’t efficiently use products today. To greatly oversimplify, if instead of 4 people having cars that get used 25% of the time, we have 1 car that 4 people share at 100% utilization, then we’ve just sold 3 fewer cars. But we’ve also put a bunch of money back in the pockets of 3 consumers (and to some drivers) and to think that other outlets for that spending won’t develop seems implausible at best.

    Further, for products to be at 100% utilization rather than 25% utilization, they need to be better built, more durable, and likely more expensive which would help to mitigate decreased sales. If they aren’t more expensive/more durable, they’ll wear out in faster absolute time (because of 100% utilization rather than 25%) and need to be replaced more frequently which could also in part mitigate decreased sales.

    Lastly, and purely anecdotally, talk to Uber and Lyft drivers. Rather than having a cab that they drive for a predetermined shift, they turn on/off their service at will. I’m constantly hearing things like “Uber changed my life” and “I’m so much happier since I started driving for Lyft” and other flavors of those comments. Acting as a service provider in the sharing economy is often an incremental income where people trade some excess time to make some extra cash. I’m not seeing a trend that portends the end of the middle class…

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