There’s a new resource for understanding the state of play between politics and dramatic developments in the service sector: the pleasantly slim volume by the Manhattan Institute’s Jared Meyer, Uber-Positive: Why Americans Love the Sharing Economy. Meyer discusses the changes that companies like Uber have brought to American consumers, debunks common complaints, and lays out a future in which sharing economy companies will bring even greater benefits to consumers and workers – as long as they’re not regulated out of existence.
The explosive growth of ride-sharing, home-sharing, and meal-sharing apps certainly confirms the subtitle of the book. Consumer (and investor) enthusiasm for sharing economy services is undeniable. As Meyer acknowledges, however, not everyone is feeling the love. Politicians, regulators, and market incumbents have all been hostile to these new entrants, and to Uber in particular. It’s not difficult to understand, though, and the insights of public choice theory can certainly tell us why government officials, elected and not, would prefer greater control to consumer freedom. The hostility of entrenched taxi drivers is even more obvious.
But there is discontent to be found beyond the usual suspects. Uber’s surge pricing (or Prime Time pricing in the case of Lyft) is the least popular feature of the company’s service, yet it is the one that economists praise most often for generating greater efficiency. There’s a real threat here that even the people who like the convenience of Uber and have no incentive to support the old cab cartel will decide they should be able to have it all, whether they pay for it or not. “It’s difficult, if not impossible, to find a millennial who wants an outright ban on Uber and Airbnb,” writes Meyer. That’s probably true, but it’s not difficult to imagine those same young consumers saying “Uber is great – we just need to get the city to make surge pricing illegal and it’ll be perfect!” Countering that line of thought is a key challenge for policy advocates.
Uber-Positive does an excellent job of laying out the advantages of these new services, from fewer drunk drivers on the roads to the liberation of dead capital. Because of these widely-recognized advantages, we’ve passed the point at which a wholesale rejection of sharing economy principles is likely in the U.S., despite setbacks experienced in cities like Austin. The way is still open, however, for a more quotidian era of piecemeal regulation in which the advantages of this new way of doing business are incrementally eroded.
Fans of free markets need to redouble their efforts not just to highlight the advantages of flexible work schedules, but to defend the counterintuitive advantages of $362 rides home from Halloween parties. We may lament the fact that people who don’t understand economics have as much influence on politics as those who do, but it’s part of our job to correct it, too.