Sharing Economy

"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.

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  1. Why won’t anyone think of the jerbs being taken from poor hotel workers? Imagine, letting tourists stay in individual homes where sanitation and safety is problematic? And think of all the sales and hotel taxes taken from the State and given to those wealthy enough to flit around the globe pursuing their pleasures and not the needs of the poor and women who can’t afford to buy condoms?

  2. But he who would scheme and project for others, will find an opponent in every person who is disposed to scheme for himself.

    The one with the bureaucracy behind him usually wins.

    1. David Brooks talks about smaller gov’t and it takes FOE 20 min. to respond… I was beginning to worry that hell had frozen over and many of the Reason forumites were stuck.

  3. I’m one of those people who thought Airbnb would never work.

    Well, I hope he won’t let this one minor setback dissuade him from spouting endlessly about other things that he is sure just can’t be done without gubmint holding our hand the entire way.

    1. And anyway, if it didn’t work, the consumers, rather than Brooks, should have made that decision.

    2. Don’t worry, Brooks possesses no capacity for self reflection. He’ll be back to “GOVERNMENT HAS TO DO SOMETHING!” tomorrow.

  4. I thought people would never rent out space in their homes to near strangers. But I was clearly wrong.

    Odds that he applies his newfound knowledge to other things he thinks?

    Yeah, me too.

  5. As soon as the media manage to come up with The AirBnB MURDERER! Brooks will be howling for government intervention.

  6. That Ferguson quote is great, Im stealing that.

  7. Yep. Governments come about mainly because of two things:

    1. A small subset of the population wants to control everything and will say whatever it takes to achieve that end.

    2. A much larger subset of the population is terrified of any information gap.

    “Who knows what that power plant is pumping into the air. It could be unsafe. Someone should do something about it.”

    But we are living through the information age. Information gaps are getting fewer and farther between. The very reason for government (fear of the unknown) is dissapearing. By all rights government should be shrinking and I think it will over the next few generations as people begin to realize just what power information tech holds.

    1. This would explain the increasing desperation in the gov’s attempts to increase their power over the last few years.

  8. Excellent -some guy-. The state (govt) itself is violent. Folks make the excuse that anarchy would be chaos, when they ignore the very chaos that is around them.

    Believing in the state is similar to when a victim of a kidnapping gets the Stockholm syndrome and sides with their captors, forgetting that the captors will use more violence if necessary in order to accomplish their goal, and will even use them as a pawn, or keep them a slave.

    The spontaneous order that has taken place with airbnb, etc. is free of government, force and coercion. This is libertarian anarchy in practice. Individuals are making decisions, and making efficient use of their property, assets, and time. Folks are engaging in voluntary agreements with one another, and individuals in the market are regulating through a ratings system. Does one think folks would go to a place where they are robbed, or assaulted?……..Well, maybe they would, but their decision doesn’t effect the liberty of others. When that individual subjects others to theft, and violence through the state, they then force others to work for the benefit of others against their will, and they therefore become slaves.

  9. These decisions and actions would occur in all areas of the market. Even in the private production of security and defense. Who would pay for someone to wear a blue costume, give them a badge, gun and have them abuse their liberty? That individual in the costume would be foolish, as they would face consequences immediately for violating ones liberty, not get put behind a desk or exonerated and given medals. The excuse that socialism magically works for certain areas of the market is nonsensical and would be antithetical to liberty..

  10. Am I the only one that finds the phrase “sharing economy” distasteful? I suppose it has its purpose (sorta like “organic salt”) but I don’t like the way that it seems to artificially draw a distinction between these internet-driven exchanges and just a plain old, free market. Comments?

    1. It’s leftwing business owners trying to send the correct social signals to other leftwingers.

      They’re still in the business of making money for themselves, but they’re trying to sound politically correct.

    2. It’s not completely baseless. A big chunk of the concept is that it reuses existing infrastructure: Your appartment (AirBnB), your car (Lyft), etc, instead of requiring dedicated resources.

      Plus, it’s a ton of progressives using it, so calling it the “consumer-capital services economy” wouldn’t go over well.

      1. Ahhhh. Thanks for that first paragraph. That makes sense. My blood pressure thanks you as well.

  11. This is the strategy I’ve been using lately with liberal friends of mine when I try to describe “spontaneous order”. It can be a difficult concept to get across to someone who knows little of classic liberal and libertarian philosophy.

    You know the drill. You’re arguing about govt economic Policy X. You’ll say “let the market figure it out” and they don’t get it because I’m not coming up with some grand, society-shaping “Plan”. They’ll typically make some sarcastic crack about how laughable my belief in the “ooooh..the magical market” is when obviously the govt should implement coercive Policy X to “solve” the problem.

    But then a lot these are the same people who are “Elite” Yelp users writing eloquent reviews about that laundry service down the street they love. A lot of them live in the city and use these sharing economy services like Uber. They understand it much better when you put it in those terms. I rate the driver, he rates me as the passenger, we all do it together…that’s spontaneous order.

    They can sense the taxi industry has “captured” the regulations that they try to push on Uber to force them out of business. I’ll rhetorically ask “where’s the Uber of healthcare services” and answer that innovation is near impossible due to the insane amount of regulations in those industries.

    Ok, so they’re not instantly converted to free-market solutions for healthcare, but at least I get some acknowledgement that I’m not stupid or evil. Hey, it’s a start.

    1. Thanks! I really needed that!

  12. Where’s BigMike to decry these offshore kkkorporashuns taken away jerbs from wholesome AMERICUN taxi cartels?

  13. dropping off their pets with people they don’t know

    No. Fucking. Way.

  14. If I can use this to cover my free market activities, Fuck Yeah I’m going to use it.

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