The Sharing Economy: A Cure for Widening Inequality?

There has been a tremendous amount of chatter and no doubt most readers are somewhat familiar with the term, and the practice of the sharing, or peer-to-peer, or gig, economy. For those that are not or just to verify what we are talking about, The People Who Share website has a pretty good description:

The Sharing Economy is a socio-economic ecosystem built around the sharing of human and physical resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organizations.

Leveraging the Internet to Share

To that I would add this sharing is facilitated and made possible by the Internet and various applications. Increasingly, individuals are reaching out to each other through the Internet where sites and apps connect people seeking services with sellers of those services.

There are task brokers such as TaskRabbit and Fiverr; on-demand delivery services like Postmates and Favor; and grocery-shopping services like Instacart. Among the most well-known services are Airbnb, the short-term-stay broker and of course, the ride-sharing services, Lyft and Uber.

The Sharing Economy: A Shift Away From Ownership is an NPR series – multiple podcasts – that is worth a listen. How the Sharing Economy is Changing the Places We Work is one of the podcasts in the series.

The idea behind these peer-to-peer services is pretty straight forward. Eliminate, or reduce, the middle man by using technology to rent out or share underused personal assets. What could be better than easily connecting people who have an “extra” resource, whether it be a car, an apartment, a car, time or whatever with people who might be lacking those things?

Those who participate as providers are often drawn in by the idea of self-management and stepping outside of the typical hustle and bustle; and the ability to diversify their work life on schedule that works best for them. On the other side of the transaction are those looking to use a resource they do not possess at a reduced cost or because of the convenience.

Dan Gold | Unsplash

I don’t have strong feelings for or against these services and I have yet to form a firm opinion about how much they will transform the economy. Some celebrate the idea that this “new economy” will significantly impact the ownership model that has existed since the beginning of time. Well maybe not since the very beginning, but a long, long time.

Homeless, Assaulted, Broke: Drivers Left Behind | The Guardian

I’m somewhat skeptical, because of course, someone has to own the resource that is being shared. At some point in time someone had to utilize capital to come into possession of the resource. Additionally, someone will have to utilize capital to maintain the resource. A common criticism of these services, particularly Uber, is that they do nothing more than drive down wages and are not all that helpful – financially – to the people they purport to provide greater opportunity.

Final Thoughts

My general feeling at this point is that these types of services do offer conveniences for the recipients and they can provide a little extra money for someone looking for a side hustle as another stream of income – either for someone already in retirement or to supplement a primary income – or for a spouse to help add a little to the household income. However, I have my doubts as to their ability to serve as bulwarks against widening income inequality; and the ability provide an income that would lift someone to the middle class and beyond and serve as a replacement for more traditional (boring?) 9-to-5 jobs and the benefits that might come with them.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.

3 Comments

  1. I’m always amazed/impressed at the ability of the American citizen/worker to continually reinvent themselves and in a broader sense, our economy. Do I think that the “sharing Economy” has a place in today’s work force, absolutely. But, is this the cure for our growing income inequality issue, most likely not.

    Sharing with someone in need is an American tradition, let alone a human characteristic. In most cases, I feel the real issue here is the person receiving the goods or services is only getting a temporary reprieve from the financial duress they’re experiencing. Could it be a lifeline that will eventually lead to a more prosperous life? Puttin on my rose colored glasses, I would like to think so.

    The broader issue here is why do we have such income inequality today?

    • Great to hear from you, my friend. As always, thoughtful observations and to your last question, ” … why do we have such income inequality today?” I would suggest the way in which we practice Capitalism is the culprit. To be clear, I am not taking a broad brush and painting the whole of Capitalism as an economic system. I believe those who are in positions to influence the policies and the mechanics of the system have twisted it in such a way to reap benefits – which only compound over time – which are not proportional to their intellect, input, effort, etc.

      Thomas Piketty provides a detailed explanation/analysis of this compromised system, and the resultant income (and wealth) inequality, in Capital in the Twenty-First Century. I HIGHLY recommend it to anyone really interested in a better understanding of the issue.

      You and I are lucky – I understand that’s a loaded term – to be on the ‘right’ side of the income/wealth gap. My fear is that many (most?) on the other side effectively have no real chance to cross the chasm.

      • I’m familiar with Thomas Piketty, where his theory is that faster economic growth diminishes the importance of wealth in society and vice versa that slower growth will increase it. I’ve always felt in that growing the economy across all sectors where each and everyone has a chance to succeed will dilute the issue of income inequality. The impediment to this starts in DC and the media.

        Many years and administrations ago, I think the majority of Americans agreed that our elected leaders had their voters along with all Americans best interest at heart. Compromise, although at times tough to swallow was king. Unfortunately, today we have elected “leaders” on both sides of the aisle that are more concerned with sticking their fingers in each others eyes once they have majority control. Conversely, those in the minority will do more to obstruct those in the majority rather than work with them. It’s OK, and in fact patriotic to question those in the majority. But just obstructing and labeling it “questioning” is not the intent. Again, these actions are not new but have been taking place for many administrations.

        Now, interject 24 hour media and their ability to inflame. The days of actual “journalism” is getting tougher to find. Most cable television “journalists” today are nothing more than entertainers looking for a captive audience that network CEO’s look to for profits. They’re preach from one side of the political aisle and are paid handsomely to promote their views. Then, take the individual viewer who gets their news from one source, or a series of sources who preach the same narrative, i.e., only one side of an issue. This viewer/voter now has a very narrow view or just one side of that issue. Try to talk to this voter about the other side of this issue and they immediately get a tin ear and go directly to their talking points which were no doubt put there by their favorite “journalist”.

        When we see our Senate and House Majority/Minority leaders stand on the steps of the US Capitol along with the President, show respect for each other and compromise by passing legislation that will benefit all Americans. Pipe dream??? 🙂

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