Why New York's Sharing Economy Is A Win For Job Creation And Innovation

from the innovation-works-by-making-things-more-efficient dept

Each year, CEA (the Consumer Electronics Association) inducts a new group of inventors, engineers, business leaders, retailers and journalists to our Consumer Electronics Hall of Fame. And it's not lost on us that we celebrate innovation and disruption tonight in New York City, where New York State Attorney General Eric Schneiderman has fired the most recent shots against creative disruption and the sharing economy in his ongoing attack against Airbnb.

The term "sharing economy" refers to platforms that make it easy for anyone to become an entrepreneur by offering up an unused resource for sale or rent, be it an empty bedroom, a parked car or a skill. While still a fledgling industry, the sharing economy will have a substantial impact on our nation's overall economic success -- enhancing competition and consumer choice, lowering barriers to entrepreneurship and boosting consumption overall -- but that depends on regulatory atmospheres at the federal and local levels that promote, rather than stifle, innovation and entrepreneurship.

More Choices, Greater Efficiency

The sharing economy includes new platforms for existing providers of different goods and services (like transportation, lodging or cleaning) that let consumers compare prices and features before they buy. For example, some people may choose not to purchase a vehicle because they find their needs are met through ridesharing, while others who might decide to buy a new car using their supplementary income from ridesharing. There are also platforms for selling unique items (Etsy) or offering specific, freelance labor services (oDesk, TaskRabbit) – production and exchange opportunities not previously available to consumers.

Lowering Barriers to Entry

Suppliers in the sharing economy –- sometimes referred to as "micropreneurs" -- have backgrounds as varied as the goods and services available. Peer-to-peer businesses allow for flexibility in hours and payment for skills or basic services that may not constitute full-time employment. More, these jobs eventually may act as "on ramps" to full-time, sole proprietorships or other entrepreneurial activities.

Growing the Pie

The peer-to-peer businesses enabled by these new platforms can draw on underused human capital: People supplement their full-time jobs with extra work as Airbnb hosts or Lyft drivers, for example, or professional providers can find additional work via platforms like Uber and Kitchit. Technological change that generates more output from the same capital, or that facilitates a more efficient use of labor, increases productivity. This kind of productivity-enhancing, technological change typically contributes to long-term economic growth -- a "bigger pie" -- that can often boost other industries as well.

The 2014 Consumer Electronics Hall of Fame induction celebrates the promotion of technology, the delivery of consumer products in new, exciting and profitable ways, and the importance of ensuring that innovation and entrepreneurship can thrive. But when this innovation threatens legacy businesses such as broadcasters, hotels, or taxis, these entrenched industries use their heft to influence regulation and enforcement to block competition. CEA stands with Airbnb and the countless other disruptive innovators that fuel the sharing economy and, in turn, drive our greater economic growth.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing more than 2,000 consumer electronics companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro.
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Filed Under: innovation, job creation, sharing economy
Companies: airbnb, cea, lyft, new york, odesk, taskrabbit, uber


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  • identicon
    scote, 10 Nov 2014 @ 4:15pm

    Most of the "sharing economy" isn't.

    reply to this | link to this | view in chronology ]

    • identicon
      Scote, 10 Nov 2014 @ 4:30pm

      Re: Most of the "sharing economy" isn't.

      Doh! See below for the post I meant to post. It is way too easy to post accidentally...or that's my story and I'm sticking too it. :-0

      reply to this | link to this | view in chronology ]

  • identicon
    Scote, 10 Nov 2014 @ 4:29pm

    Most of the "sharing economy" isn't.

    "The term "sharing economy" refers to platforms that make it easy for anyone to become an entrepreneur by offering up an unused resource for sale or rent, be it an empty bedroom, a parked car or a skill."


    Most of the so-called sharing economy isn't that at all. Casual carpooling in the Bay Area is an example of the sharing economy. Solo drivers give free rides in the direction they were already going to to commuters. The driver gets to drive in the carpool lane, saving time and toll money, commuter gets a free ride, and the roads get less traffic because of carpooling.

    Uber isn't the sharing economy. Uber is part town car service (which isn't and never was "sharing") and part regular cars as taxis service. Uber added "do it on the internet" and "ignore many/most laws" to it and tech bubble blowers wax ecstatic. Meanwhile, the "regular cars need to have commercial insurance, so they are no longer just something you happen to have lying around unused, nor is driving around and picking up people in places you wouldn't have otherwise driven to or from for money "sharing" - it's a job, burning through gas and wear and tear and extra fees and insurance on your car, kind of like being a pizza delivery boy, only we don't call that the "sharing economy" we call it a bad job where the employer gets the benefit of the employee's car below the actual cost of operation.

    Uber isn't the sharing economy. Nor is the multi-billion dollar AirBnB a sharing company. It is a straight up corporation, with many properties being rented solely for profit.

    None of this is new. People with cars have been hiring out cars since cars were invented. People with spare rooms have been renting them out since there have been rooms. Let's stop pretending that calling ordinary web mediated entrepreneurship "the sharing economy" - it's not only unnecessary it is often downright misleading and dishonest.

    reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 10 Nov 2014 @ 5:15pm

      Re: Most of the "sharing economy" isn't.

      None of this is new. People with cars have been hiring out cars since cars were invented. People with spare rooms have been renting them out since there have been rooms. Let's stop pretending that calling ordinary web mediated entrepreneurship "the sharing economy" - it's not only unnecessary it is often downright misleading and dishonest.

      I disagree. While you can argue that there were analogous situations in the past, the technology has made it much easier to take part, meaning that for many it has opened up new ways to do things that they never would have done under those previous ways of doing it -- and that means that many people who would NEVER rent out a room now do so, or who would never drive people around for an evening will now do so, just because they can.

      I have friends who rent out spare rooms because it's a thing they can do. I have another friend who drives for Lyft when he's bored/got nothing else to do because it's interesting and fun (even though he's got a job and isn't in need of money or anything).

      These things are opening up new possibilities. Shrugging it off by saying "these are just tech companies" misses the point by a wide, wide margin.

      reply to this | link to this | view in chronology ]

      • identicon
        Scote, 10 Nov 2014 @ 5:34pm

        Re: Re: Most of the "sharing economy" isn't.

        "While you can argue that there were analogous situations in the past, the technology has made it much easier to take part, meaning that for many it has opened up new ways to do things that they never would have done under those previous ways of doing it."


        I agree that Uber, AirBnB, and others have created highly successful execution of old ideas, and that doing something well can be a game changer, but that doesn't magically turn ordinary jobs mediated through the web and mobile apps "sharing" any more than you are "sharing" your car when you use it to deliver Domino's pizzas. So I'm not disagreeing with the fact that these tech companies are creating an economic impact, nor that they are enabling a, perhaps, more democratized way of entrepreneurship. What I object to, primarily, is the nonsense of calling many of these start ups part of the "sharing" economy. You need a term that isn't fundamentally misleading for most of these companies. Using an app to find a person who will pay gas money and a bit more to ride in a direction you are already going? That's "sharing". Driving around town picking up people who hail you via an app? That's being a taxi or town car driver. There's already a name for those things.

        I'd say you need to be careful to be consistent when it comes to "do it on the internet" start ups based on your stance against "do it on the internet/computer" patents. It's still the same thing, just made more efficient execution. And as you frequently point out **execution** is key, so I recognize the success of Uber's execution and leveraging of the web and mobile devices. But they are still a taxi and town car service, just as Amazon is a primarily a retailer, even though they "do it on the internet."

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 11 Nov 2014 @ 6:19am

          Re: Re: Re: Most of the "sharing economy" isn't.

          The internet ride-sharing thing is likely just a temporary situation. Perhaps not unlike the professional bicyclists in NYC 30 years ago who discovered that they could make a great deal of money (as well as train at the same time) by delivering small packages across town, doing it much faster and cheaper than cars (which anyway spent most of their time stuck in traffic). But soon established businesses got into the act, and started hiring people at minimum wage to deliver on bicycle (something previously unimaginable, due to the extreme danger). The professional cyclists who started it all were forced out.

          Why won't the same thing happen with internet ride-sharing? It probably will eventually, as companies start exploiting the minimum-wage market, and once again, turning something that was once performed by risk-taking self-employed** enthusiasts into an exploitative wage-slave business.

          ** meaning truly self-employed, as the typical Joe's Pizza delivery driver employee is "technically" a self-employed independent contractor, getting Joe's Pizza off the hook for everything from minimum wage to overtime laws, as well as saving on vehicle and insurance costs, and the all-important liability.

          reply to this | link to this | view in chronology ]

  • icon
    DNY (profile), 11 Nov 2014 @ 6:06am

    What's in a name?

    Plainly some posters don't like defining the phrase "sharing economy" to mean "platforms that make it easy for anyone to become an entrepreneur by offering up an unused resource for sale or rent".

    Would "microentreprenurial economy" make them happier? It's more accurate, but long and cumbersome. There are precious few examples of actual economic activity in the form of actual sharing, yes there are car/truck owning collectives, the carpooling example -- though is that sharing if the extra rider chips in for gas? -- and neighbors still borrow tools from each other rather than hitting the rental yard, but none of this actual sharing makes a big enough splash in the economic pond to merit a grand phrase like "sharing economy".

    The phenomenon of "platforms that make it easy for anyone to become an entrepreneur by offering up an unused resource for sale or rent" is sufficiently new (arguably eBay was the first, though it wasn't easy enough for me: I waited for Amazon Marketplace, which is easy, to be up and running before setting up an online bookstore) that it will take a while for a name to be fixed. Maybe it will be "sharing economy", with pith and brevity winning out over lack of accuracy, maybe someone with cultural, societal and academic clout will read this post and really like "microentrepreneurial economy", start using it, and it will stick, accuracy winning out over length, maybe someone with better wit than either I or Mr. Shapiro will come up with a coinage the combines pith and accuracy and that's what we'll all be calling the phenomenon three years hence.

    Whatever you call it, it's a plainly a very good thing: Shumpeter's "creative destruction" operating in a mode that fairly directly brings benefits to lots people, rather than just the few with the disruptive idea or their initial investors.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 11 Nov 2014 @ 2:46pm

    You left out:
    Exploiting the Workers

    reply to this | link to this | view in chronology ]


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