In 1984 the first commercially available, hand-held (brick-sized) cellular mobile phone was introduced. In 1990 Motorola created the first “Bag Phone,” which became a staple of every businessman’s car floor boards. In 1992 text messaging was developed, thankfully hastening the beginning of the end of voicemail. In 1997 the first smart phone was introduced, but it lacked a speaker or a microphone, thus requiring a headset that didn’t quite catch on. In 1999 the first BlackBerry device hit store shelves, providing a QWERTY keyboard that drew raves from email-obsessed Wall Streeters and Hill staffers. In 2007, the Apple iPhone was sold, creating the first touch screen phone with all the functionality of a computer. And in 2008 the App Store opened, creating a virtual economy that has left a trail of creative destruction in its wake.
Apps have gone on to become the foundation of a new “sharing” economy, so named because it allows people to monetize their sharing of time and talent. It has spawned companies with names like Uber, Lyft, AirBNB, TaskRabbit, Instacart and DogVacay, which allow users to hail a ride, find a place to stay, get someone to mow their yard, have groceries delivered, or have your dog walked, all from the comfort of their couch.
In just the past thirty years we’ve gone from getting tangled up in the coiled cord of our landline phone to roaming around with a device the size of a wallet and with all the functionality of a computer. Innovation travels fast. Its origins, its endpoint, and the myriad detours it takes along the way are impossible to predict. And the impact it will have on the economy is, when things go well, disruptive.
While conservatives (despite their name) simply like to buckle up and enjoy the ride, content to let entrepreneurs, and the free market that guides them, lead us into an exciting future, progressives (despite their name) do their best to carefully plan, manage and regulate the economy in a vain attempt to protect workers and consumers.
But progressives’ dreams of big government ushering in some sort of fairly shared prosperity never works. Instead, it leaves us stuck in an economic rut with a glut of middlemen and a shortage of services, both of which drive up costs and neither of which is conducive to quality. To see how liberal regulators have fared look no further than the taxi industry, which has developed into a monopolistic cartel that forces people to stick out their hand in the hopes of landing in a shabby cab with exorbitant fares, which cab companies justify based on the enormous sums of money they pay regulators in exchange for the right to a medallion, which gives them the right to exist.
It’s a twisted game in which government regulators form a cozy monetary relationship with the business they are supposed to regulate and inevitably forget that they were created to help consumers. For progressives, this status quo is easy and comfortable, offering an easily definable role and a compliant partner.
Innovation and the sharing economy are the exact thing that regulators fear: Something new and uncertain, and worst of all, something that threatens their existence. Whereas Democrats are attempting to throttle these new businesses in order to protect government’s role in the direction of the economy, Republicans are actually being proactive, looking for ways to encourage growth, even if it means disruption. This week the Subcommittee on Commerce, Manufacturing and Trade hosted a panel to explore if and how Congress should regulate the sharing economy.
“We should be highly skeptical of interventions that snatch away new conveniences and measurable benefits for consumers,” subcommittee chair Rep. Michael Burgess said in opening remarks. “Sharing platforms are inherently good at providing reputation feedback loops.”
That’s not the only thing they are good at. Witnesses at the committee, which included an Uber driver and an economist for a sharing economy startup, listed some of the many positive things this new innovative wave has brought. It’s eliminated the search costs for finding a skilled professional, it’s reduced the price of services by eliminating a middle man, it’s fostered a greater sense of community, it expanded choices to previously unserved areas or populations, and its offered additional options for many workers.
Alex Chriss, the Vice President or QuickBooks Self-Employed, which offers personal finance software for workers taking part in the sharing economy, offered testimony into reasons they’ve seen why people join this workforce. Chriss says they often see people who want to be their own boss, who see sharing platforms as a stepping-stone to starting their own business, who want part-time work but can’t work regular hours, or people who just want a little extra spending money.
“We believe that the sharing economy represents the new face of entrepreneurship, where ambitious, hard-working people have the freedom and flexibility to set their own schedules and work toward their own goals,” Chris testified.
These are exciting new opportunities that should be embraced, or at least carefully reviewed, before being squashed under the weight of government bureaucracy.
“As we look at any disruptor, we really need to ask is regulation needed or is someone just scared of a change to the status quo,” Rep. Burgess said.
The question now is whether progressives are ready to answer that questions.