Governmental regulation of new technologies and the attempted suppression of new competition to favour incumbent operators will make us all poorer. The booming sharing economy is bringing choice to consumers, new income streams to individuals, and incredible competition to over regulated incumbents.
New technologies – through the sharing economy - have linked consumers with suppliers in a simple, quick and vastly cheaper fashion. Instead of running call centres to link waiting customers with available taxis, an app now connects you with drivers directly and cuts out the operator. This reduces costs to us all. Payment is handled automatically and securely. Consumers now have choice with regards to operators. Competition brings the prices down for consumers, effectively making us richer as we can consume the same amount of services for a lower cost.
Now travellers have the option of short term rentals at reduced prices through AirBnB. This allows travellers to stay longer by saving money on expensive hotels. You can get a whole private residence at a third of the cost of one hotel room. A backpacking couple can enjoy more of the great experiences on offer on holidays by renting one private room cheaper than two bunks in a hostel dorm.
Why is the sharing economy attracting so many willing suppliers and consumers? They don’t offer holiday pay, long service leave, overtime or any other number of extra benefits. It’s simple. They offer freedom. You aren’t beholden to anyone but yourself. Hard work is directly rewarded. You have all the flexibility you need. You can take holidays or a half day at your leisure. You see more of the value of the product of your labour.
Competition between suppliers in any industry provides better goods at lower prices, bringing affordable access to the whole of society. By reducing competition – from outright bans on operations in extreme cases, to excessively priced and limited licences - government is forcing you to consume worse products at higher prices, leaving you poorer and less satisfied with your product.
It is undeniably difficult for incumbent businesses to compete. They are burdened by excessive government regulation. Uber and AirBnB are offering something not available currently. The freedom to sell your services when you please and only when you please. Child home sick from school? Stay home with them. Parents visiting for a weekend? You can keep your spare room free. The ultimate freedom of deploying your capital and labour – your car, house or time - as you please, without coercion, is too attractive to resist.
The solution to this problem for incumbents – e.g. Black Cabs in London not wanting to lose their market share - is not for government to strangle more new industries to the same level they are held to. The sharing economy must not be overregulated. To allow Black Cabs to compete on the same level as Uber, not force Uber into the same arcane rules they are held to. Allow individuals to vote with their feet and their wallets. The overregulation of the sharing economy and new industries will take away what makes it popular, force the price of these goods and services up, and reduce the standard of living for all of us.
By allowing the government to restrict the sharing economy at the call of established over regulated industries, we are choosing to make ourselves less wealthy and less satisfied. Seems like a simple choice to me.