In my previous essays I wrote about the sharing economy, focusing on regulations and taxes. In this essay I will cover resources (human and other). The new sharing economy is exemplified by companies such as Uber and Airbnb that organize transactions between individuals. In the case of Uber, people can sell rides in their own cars—without (as of this writing) all the usual costs and regulations of operating a cab. In the case of Airbnb, people can rent out property and (as of this writing) generally avoid the usual regulations associated with running a hotel.
For the people providing goods and services, the new sharing economy is supposed to make it easier to earn money. In general, the new sharing economy involves three parties. The first is the person who provides the actual good (apartment, for example) or service (a ride to the airport, for example). The second is the person who uses the service and the third is the company that provides the organizing service. While this is an old model (people have long offered services and goods via things like newspaper ads), technology changed the scale of this once informal economy. It has also served to blur the traditional roles. Those who provide the goods and services are, it is often argued, not employees of the organizing services and those using the goods and services are not exactly customers of the services. There are some advantages and some disadvantages to this.
In the case of those providing the services and goods, one obvious advantages is that they can make money. While they could do this without the organizing service, the service is supposed to make this easier and provides other advantages.
One of the advantages of not actually being an employee of the organizing services is that the provider has a degree of autonomy usually absent in the traditional employee-employer relationship. The provider can (within the constraints of economic need) work as little as desired and is free to stop at will. This autonomy appeals to some people—especially those looking for a more traditional job while making money to pay the bills. In some ways, the situation is somewhat like being a temp worker.
Of course, there are many disadvantages to being a provider. One is that there are typically no benefits and no job security. Also, the risks and costs all fall heavily on the provider. For example, if someone crashes into the company truck Sally is driving, then the company handles the matter. But, if Sally is driving for Uber and her car is hit, this is most likely going to work exactly as it would if Sally was just driving to Starbucks for a latte—that is, it is on her.
Another point of concern is that the organizer might be in the position to set rates or impose other limits—much like a traditional boss can. For example, Uber can set what drivers are paid.
But this is nothing new—people who do freelance work or are self-employed in the usual sense face all these problems. After all, being a worker in America always puts one at a disadvantage and being what amounts to a temp or freelancer can be even less optimal in terms of security and pay.
There are many advantages to the companies. One is that their workers are usually not considered employees. Another is that the worker, for the most part, also provide the essential resources like vehicles and property. While the companies do incur costs, they are able to avoid (or significantly reducing) the usual costs of running a business. For example, a hotel needs to have hotel employees and an actual hotel. Airbnb does not—the providers provide the services and buildings. As another example, a service that organizes drivers does not need to buy cars, maintain them or insure them—thus resulting in considerable savings relative to a company that must hire drivers as employees and buy vehicles.
In essence, the new sharing economy splits management from what would traditionally be the resources (human or otherwise) of a company. The organizer takes on the role of management while avoiding the need to have traditional human resources (beyond the administrative aspects of the business) and the need to have the material resources (beyond those needed for the administrative aspects).
Some companies do operate in something of a hybrid mode—having workers as well as material resources owned by the company while also having a sharing aspect to the business. This is a variation of the old model of a company hiring temp workers, freelancers and contractors.
This model can, apparently, be profitable—in large part due to matters of scale. After all, getting a slice of thousands of sales can result in a profit. Also, many of these companies benefit from tech inflation—the almost magical overvaluation of companies with business models based on the right sort of tech. That said, Uber famously operated at a loss for years and some suspect that the sharing economy is built to enrich the very few rather than for creating sustainable businesses. Which, to be fair and balanced, is often how the traditional economy operates.
Given the apparent success of companies like Uber and Airbnb, I predicted years ago that there would be a sharing bubble. But we have seemed to have gotten enshitification. While noting that there are some limits on what sort of sharing companies can exist (or example, airlines and heavy manufacturing are not really fit for the sharing economy) I speculated that additional advances in economy might see new areas for the sharing economy. For example, if 3D printers become truly viable, light and specialized manufacturing might become part of the sharing economy. While this might still occur, the new bubble is the AI bubble. But we might see the residue of the AI bubble worked into the sharing economy.
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