"As mechanisms to establish private trust become more efficient, government plays a smaller role," Says David Brooks. By George, He Gets the Sharing Economy.


In December 2013, a delegation from the sharing-economy advocacy group, Peers, delivered a pro-Airbnb petition to NY State Senator Liz Krueger (D) |||(Credit: David Medeiros)

David Brooks, he of New York Times establishment thinking fame, takes a moment today to marvel at the success of the sharing economy as people and companies build networks of trust and commerce using modern tools.

I'm one of those people who thought Airbnb would never work. I thought people would never rent out space in their homes to near strangers. But I was clearly wrong. Eleven million travelers have stayed in Airbnb destinations, according to data shared by the company. Roughly 550,000 homes are now being shared by hosts. Airbnb is more popular in Europe than it is even in the United States. Paris is the largest destination city.

And Airbnb is only a piece of the peer-to-peer economy. People are renting out their cars to people they don't know, dropping off their pets with people they don't know, renting power tools to people they don't know.

He noodles a bit about the effects of middle-class stagnation, and the innovative power set in motion now that "millions of people have finished college with a hunger for travel and local contact, but without much money."

Eventually, even though he doesn't use the term, he comes back to spontaneous order, with people using the tools available to them within the culture in which they live to create new structures and connections.

And the big thing I underestimated was the transformation of social trust. In primitive economies, people traded mostly with members of their village and community. Trust was face to face. Then, in the mass economy we've been used to, people bought from large and stable corporate brands, whose behavior was made more reliable by government regulation.

But now there is a new trust calculus, powered by both social and economic forces. …

Companies like Airbnb establish trust through ratings mechanisms. Their clients are already adept at evaluating each other on the basis of each other's Facebook pages. People in the Airbnb economy don't have the option of trusting each other on the basis of institutional affiliations, so they do it on the basis of online signaling and peer evaluations. Online ratings follow you everywhere, so people have an incentive to act in ways that will buff their online reputation.

Well, yes. People make new and interesting connections as the world around them evolves. These connections aren't centrally planned or enforced from above—they evolve to meet people's needs (and fade away if they don't).

Brooks notes that many of the new sharing economy companies are making their peace with city governments and other local authorities. But, so far, this has largely involved a hands-off policy by officials who don't know what to make of the development.

most city governments don't seem inclined to demand tight regulations and oversight. Centralized agencies don't know what to make of decentralized trust networks. …

As mechanisms to establish private trust become more efficient, government plays a smaller role.

Fancy that. Actually, Scottish philosopher Adam Ferguson did fancy that, in 1767.

Men, in general, are sufficiently disposed to occupy themselves in forming projects and schemes: But he who would scheme and project for others, will find an opponent in every person who is disposed to scheme for himself. Like the winds that come we know not whence, and blow whithersoever they list, the forms of society are derived from an obscure and distant origin; they arise, long before the date of philosophy, from the instincts, not from the speculations of men. The crowd of mankind, are directed in their establishments and measures, by the circumstances in which they are placed; and seldom are turned from their way, to follow the plan of any single projector.

Last month, Jim Epstein suggested that the "sharing economy" gave liberals cover to do what people have always done: organize their affairs without the dead hand of the state.