
The “Sharing Economy” Is the Problem - gruez
http://www.geo.coop/story/sharing-economy-problem
======
gfodor
AirBnB is a wildy different beast than Uber and Homejoy. AirBnB is increasing
market efficiency around distribution of resources (sleeping space) that
normally would go un- or mis- used and is just about as textbook as you can
get of capitalism resulting in better resource allocation. (Issues around
lodging regulation and displacement aside, which are real and beyond the scope
of this article.)

Uber and Homejoy, while also having aspects of efficiency increases, also are
tightly coupled with labor, which has always acted as a counterbalance to
unfettered capitalism due to the human element involved and the need for
people to make a living. However, the authors of this article miss the bigger
picture here. The dynamic playing out with these companies is act one of a
larger play, where the final act is the complete removal of human labor from
the process. The logistics infrastructure being built here is the end being
sought, not the profit margin on the labor being sold nor the network of
"entrepreneurs." With the logistics in place and the data needed to properly
run these services at scale, switching out humans for robots as is cost
effective will be a natural transition.

All the more reason we as a society need to come up with a better solution to
"unskilled people need to eat" beyond blaming the greed of silicon valley
companies.

~~~
nawitus
>All the more reason we as a society need to come up with a better solution to
"unskilled people need to eat" beyond blaming the greed of silicon valley
companies.

The solution is basic income. That doesn't seem realistic in the United
States, though.

~~~
ekianjo
> The solution is basic income.

Yeah, basic income coming from where? Oh wait, the machines doing all the
work, right. Let's talk again when we reach singularity. If ever.

~~~
dragonwriter
> Yeah, basic income coming from where?

Coming from taxing capital income like other income, rather than giving it
preferential tax treatment that favors the already rich.

~~~
yummyfajitas
Capital income does not receive preferential tax treatment. The combined taxes
on income + corporate tax + capital gains greatly exceed the tax rate on labor
income.

Scott Sumner explaining how all capital income taxes are additive w.r.t labor
income tax:
[http://www.themoneyillusion.com/?p=28842](http://www.themoneyillusion.com/?p=28842)

Also just do the arithmetic; 1-(1-corporate income tax)(1-cap gains tax)
>income tax for pretty much any bracket.

~~~
dragonwriter
> Capital income does not receive preferential tax treatment.

Yes, it does.

> The combined taxes on income + corporate tax + capital gains greatly exceed
> the tax rate on labor income.

It makes no sense to combine those things, especially since not all capital
holdings which recieve the benefit of favorable capital taxation are
investment in entities that are even theoretically subject to corporate income
taxes.

> Scott Sumner explaining how all capital income taxes are additive w.r.t
> labor income tax

He certainly _asserts_ that income tax "doubles [sic] taxes the money saved,
once as wages, and again as capital income." But this is a ludicrous
assertion, since the part taxed as labor income is not taxed as capital
income.

> Also just do the arithmetic; 1-(1-corporate income tax)(1-cap gains tax)
> >income tax for pretty much any bracket.

Even for the things where that might be relevant, that's probably only true if
you look at the _nominal_ corporate income tax rate rather than the
_effective_ corporate income tax rate.

~~~
yummyfajitas
_It makes no sense to combine those things, especially since not all capital
holdings which recieve the benefit of favorable capital taxation are
investment in entities that are even theoretically subject to corporate income
taxes._

Could you do some arithmetic? I'm not really sure what you are talking about.

 _But this is a ludicrous assertion, since the part taxed as labor income is
not taxed as capital income._

This is simple arithmetic. Suppose I'm paid $100, taxed $20 on labor income.
Then I invest the remaining $80, cash out at $90 and pay $2.50 in cap gains.
I've then paid another 2.8% (adjusted for NPV).

Taxes on capital income always come after labor income, except for certain
special tax deferred investment vehicles which treat capital income as equal
to labor income.

~~~
dragonwriter
> Could you do some arithmetic?

Its not a matter of arithmetic. Its a matter of understanding that the kind of
arithmetic you suggest doesn't make sense, because an asset doesn't have to be
subject to corporate income tax on the process by which it increases in value
for the proceeds derived from it to be subject to favorable capital gains
taxes rather than normal income taxes. E.g., among other things, real estate
investments.

> This is simple arithmetic.

The issue isn't with arithmetic, its about the justification for ascribing
menaing to the arithmetic you are choosing to do.

> Suppose I'm paid $100, taxed $20 on labor income. Then I invest the
> remaining $80, cash out at $90 and pay $2.50 in cap gains. I've then paid
> another 2.8% (adjusted for NPV).

And, so? You paid taxes at the rate applicable to labor on the $100 of labor
income, and taxes at the rate applicable to capital on the $10 of capital
income. This isn't "double taxation" \-- the portion of the income on which
you pay taxes at the rate applicable to labor income isn't taxed as capital
income, and vice versa.

> Taxes on capital income always come after labor income

First, so what? "After" is irrelevant to the discussion, its still separate
taxes on separate buckets of income. Chronological sequence isn't relevant to
the discussion of Summers claims that there is a double taxation that comes
from a combination of labor income taxes and capital income taxes.

Second, in any case, as well as being irrelevant, that's untrue in the general
case. While capital assets may be purchased with after-tax labor income so
that there is a sense in which the capital-income-generating event and
associated taxes follow after a labor-income-generating event and associated
taxes, capital assets may be created or generated by events other than
purchases from the proceeds of labor income, in which case the capital income,
and associated taxes, are not _after_ some kind of even loosely-connected
labor income and associated taxes.

~~~
yummyfajitas
_And, so?_

And so if I consume immediately, I get $80 worth of consumption for every $100
I earn, whereas if I invest I consume only $77.2 of consumption for every $100
I earn. That's the core of Sumner's argument.

Do you have any argument beyond playing with definitions and arbitrary
divisions of wealth as to why a person who invests should consume only $77.2
while a person who consumes immediately should consume $80.0?

~~~
dragonwriter
> And so if I consume immediately, I get $80 worth of consumption for every
> $100 I earn, whereas if I invest I consume only $77.2 of consumption for
> every $100 I earn. That's the core of Sumner's argument.

With the numbers you gave, the first number was correct ($80 of consumption on
$100 in pre-tax labor income), but with investment the actual number is $88.75
on $110 of pre-tax labor and capital income, or $80.68 per $100 of income.

~~~
grinnbearit
No, yummyfajitas' numbers are right, given a 25% tax rate on capital gains and
a 2.8% discount rate

consuming immediately gives you 80% of income

assuming you invested all of it, 80$ and made back 10$ which was then taxed at
25%, you're left with 87.5$ out of 110$ in total income.

consuming after a year gives you 87.5/110 = 79.5% of income, 1 year in the
future. After discounting at 2.8%, you're left with only 77.38% of income.

In that case, you'd rather splurge than invest.

------
rayiner
> Another complaint is more subtle, but more frightening: that these
> technologies are exacerbating inequality and driving us towards a "servant"
> economy, where large pools of poorly paid and economically insecure workers
> will spend their lives providing all manner of petty services for the well-
> heeled elite.

This is my biggest fear. When my family lived in Bangladesh, we had a cook,
maids, and a full time nanny for me even though my mom didn't work. My dad
once sent the nanny out with some money to buy a pack of cigarettes, and he
came home empty handed because he couldn't bear to pay a whole day's wage for
a pack of cigarettes (my dad went through two packs a day at the time). The
value of human labor is just incredibly low over there (or at least was 25
years ago).

That kind of society is a travesty. You don't want that here. Maybe it won't
come to pass. I hope it doesn't. But matter how gung-ho you are about the
sharing economy or how much faith you have in the market, you should at least
fear that potential outcome.

~~~
gohrt
Did your servants get comfortable room+board and some time off, besides their
wages? If so, that's not quite the same as "incredibly low" as in a slum-
residing factory worker. It is insecure, though, but, say, if there are
cultural or legal norms around lifelong employment of staff, that would
provide security.

~~~
argumentum
"Did your servants get comfortable room+board and some time off, besides their
wages .. _cultural or legal norms around lifelong employment of staff_ "

Sounds uncomfortably close to slavery.

------
WalterBright
The article dismisses what corporate Uber provides with:

"what exactly are the capitalists at Uber contributing to the company? [...]
The capital owners maintain the phone app, but app technology isn’t the major
cost, and it’s getting cheaper and easier by the day"

If true, it should be straightforward for other companies and cooperatives to
form and compete with Uber. And that's capitalism at its finest.

~~~
hackuser
> If true, it should be straightforward for other companies and cooperatives
> to form and compete with Uber. And that's capitalism at its finest.

They'll lack an essential capability that comes with economic scale and
connections, raw political power:

[https://news.ycombinator.com/item?id=9771551](https://news.ycombinator.com/item?id=9771551)

~~~
prostoalex
Taxi companies already have all the raw political power they need.

Hiring software engineers to churn out software apps and maintain highly
available servers should be the easy part then.

~~~
hackuser
> Taxi companies already have all the raw political power they need.

I think if you read the link in my prior post, then I think you might agree
that the taxi companies are out of their league facing Uber, their $40
billion, and their massive lobbying effort.

Anyway, I don't think the conversation was about taxis in particular, but
about any Uber-like startups.

~~~
prostoalex
The type of stuff that Uber lobbies for, though, generally opens up the market
to a variety of participants. I.e. Lyft, Sidecar, Shuddle and Wingz can
quietly ride the coattails of Uber-lobbied regulations.

I haven't seen yet some lobbying effort where Uber would try to lock up the
market for itself (like car dealerships), but maybe I wasn't looking close
enough.

------
jsnk
Are there severe government crackdown on coops or something?

Why is it that coops never grow up to be something like Apple or Google? I
hear about small examples here and there, but they are so rare and
insignificant to privately owned organizations.

Only "successful" massive coops I see are governments. And they all exist with
unparalleled power within that geographic area. I think that's not a
coincidence. In order for coops to become successful, it must be enforced on
its members with massive power, or else, it'll remain very small like an
extended family or something.

~~~
maxerickson
There are some larger employee owned companies:

[http://www.nceo.org/articles/employee-
ownership-100](http://www.nceo.org/articles/employee-ownership-100)

------
nitwit005
Taxi driver feels abused by having to work 7 days a week for taxi service to
make ends meet. Switches to Uber and describes it as "more of the same". Hard
to see how Uber ruined everything if it was apparently already ruined.

------
hackuser
It raises some interesting questions. How much do we need these
intermediaries, such as Uber, AirBnB, etc.? Could those things be done on
something like Craigslist? A FOSS application?

As I pointed out in the thread on Google's RideWidth, instead of (or in
addition to) rideshare companies why can't my municpality license any
individual who applies to pickup people on the street who want a ride, and
charge them. People wanting a ride could use a special hand signal, with their
arm outstretched and thumb pointing up. What do the commercial vendors add or
at least, why freeze out individuals doing the same thing?

(I'm not implying they add nothing, I'm asking what it is and whether it's
worth the extra cost.)

~~~
shredprez
Presumably they add a degree of quality control, something government is
notoriously ill-equipped to provide. That said, allowing any individual with a
car to license themselves and go out in the world to earn their fortune seems
even more a Randian dream than the Uber system.

If nothing else, Uber's disruption of traditional taxi services has started a
conversation. It begs us to rethink how we hire private transportation, how
businesses that facilitate these services operate, and how workers who provide
these services are compensated. That's a good thing.

~~~
hackuser
> Presumably they add a degree of quality control, something government is
> notoriously ill-equipped to provide.

On this point, I'm not sure I agree. My water is clean, my roads are safe, my
airplanes don't crash, robots drive around Mars and fly to Pluto -- the
government seems particularly good at quality control.

------
outside1234
The real issue here is that we have an increasing number of unskilled people
chasing a smaller and smaller number of unskilled jobs. The real devaluing
force here for unskilled labor is the automation of everything.

If the drivers think its bad now, wait until Google and Uber launch driverless
car fleets! Then they will earn $0 a hour, and worse, they will be chasing
even fewer unskilled jobs.

The lesson then is that if you are under 18 and not getting a university
degree, you are doomed to subsidence living -- this is what the market is
telling us -- you need to be an automator and not something that is
automatable.

------
GBond
This article provides some valid points on the negatives of SV style
capitalism. However, I view COOPs are only a partial solution Starting
companies is HARD and risky. You need capital and talented folks to man the
ship.

The B-Corp concept strikes a good balance but the jury is still out on whether
"serving 2 masters" can work.

[https://en.wikipedia.org/wiki/Benefit_corporation](https://en.wikipedia.org/wiki/Benefit_corporation)

------
somebodyother
As someone who has run coops, been a member of coops, and generally been
exposed to real living based on the highest ideals of marxism, it sucks for
bringing about change. The union cab companies mentioned in the article didn't
bring about reliable, phone-hailed, driver-rated system I get to enjoy now,
Uber did. That being said, they do treat workers poorly, at about the accepted
standards of unskilled labor (is Wal-Mart any better?)

I think we'll have longer-term changes that won't necessarily take the shape
of the most recent anti-capitalistic movements people were raised on. Patreon,
for example, is incredibly empowering for niche communities of artists and
otherwise unsustainable but culturally valuable projects.

I don't think we've yet realized all the transformative possibilities a
connected world has for allowing a lives to be flexible to the individual. My
generation missed the boat on a mortgage and a career until retirement. Maybe
we can figure out new norms for the average jane's work and life goals. Ones
that look less like running on a hamster wheel.

------
rconti
Uber doesn't own the capital, the article is correct. But that doesn't mean it
could just as easily be a cooperative of freelance drivers.

What Uber brings to the table is the funding to change (seemingly by any needs
necessary) the regulation that made the taxi industry so crap in the first
place. For better or for worse.

Is the exploitative structure of the taxi industry a result of regulation?
Seems reasonably likely.

They're absolutely right that there's nothing "sharing economy" about Uber in
particular. Nobody really believes that they're hitching a ride with a
friendly person, just because that driver was "headed in that direction
anyway".

AirBNB is more plausibly sharing (if, as the article points out, you think
"sharing" means "getting paid for something"). In theory reducing
underutilized housing units is a great thing.

Of course, it also drives up the value of that very housing (capital), which
can exacerbate the rich/poor divide. Piketty would have a thing or two to say
about this.

------
stillsut
"Why can't hospital visits be like trips to Disney World?" is a questions
that's always stuck with me.

Beyond the efficiency of using a private auto as a livery, the service of Uber
is often cleaner and more courteous than a yellow cab. A step toward Disney
World, for sure.

And that's where "unskilled" labor comes in. You don't need an MBA, you don't
need CS degree to make customers feel welcome and comfortable. Nor can you
automate it (e.g. robot-phone-operators).

So The future is returning man's economic function back to the Host in the
guest-host relationship, and moving away from a cog in a factory.

------
kazinator
Something like Uber would work without the parasitic middlemen, arranged by a
decentralized application that is open source, such that anyone with a Linux
server can easily join as a node.

The drivers would keep all their money, and as a bonus, there would be no
organization there that cities and other litigators could target. At best they
could scour the cloud looking for server nodes to shut down, and send
undercover cops to bust the drivers---a move that would make for very bad PR,
because it would be adding up to harassment of the "little guy" by the state,
bent on enforcing a taxi monopoly.

~~~
gohrt
Users often want someone to be "accountable", though, in case something goes
wrong.

~~~
seiji
Yes, it's about an umbrella of liability protection even if none exists (uber
customer service is routinely awful). It's about how airbnb is actually
dangerous, but they provide $50k+ of "insurance" if a visitor wrecks your
house, and that allows you to more comfortably walk on the wild side of
illegal subletting.

------
dlss
This article has some fantastic examples of
[https://en.wikipedia.org/wiki/Motivated_reasoning](https://en.wikipedia.org/wiki/Motivated_reasoning)

For example:

 _> under the guise of innovation and progress, companies are stripping away
worker protections, pushing down wages, and flouting government regulations_

Re: wages, when Uber shared this data ([http://www.businessinsider.com/how-
much-money-uber-drivers-r...](http://www.businessinsider.com/how-much-money-
uber-drivers-really-make-2014-7)) it looked like the average driver made more
not less, though the data does come directly from Uber so it should be taken
with a grain of salt.

Re: flouting government protections and worker protections (and ignoring that
these are one and the same), I'd really like to know what specifically the
assumed drawback is...

 _> you don’t become worth $40 billion by sharing and caring. You become worth
$40 billion by ripping off the people who work for you._

This is obviously false -- the sheer number of startups and companies that die
by ripping off (and hence pissing off) their employees and customers is
staggering. In the case of Uber, the main source of complaints is not the
drivers or customers... it's Uber's competition, such as the Taxi coops this
article describes in glowing terms. (#include the french riots)

The only driver complaints I'm aware of basically stem from the interest
misalignment caused by Uber's taking a 20% commission from drivers rather than
X% after estimated driver expenses. This led to the recent price cuts looking
a whole lot better to Uber (who directly profited from the increased usage)
than it did to the drivers (who now have a much lower profit-per-faire)... but
given that driver income is still effectively 2x the minimum wage I still have
a hard time considering this "evil" in any traditional sense.

 _> The efficiency gains of connecting workers to customers via the internet
applications will drive down prices and thus incomes, while the new profits
created will all get sucked up by the small group of Silicon Valley companies
that created the platforms, along with their shareholders._

AND consumers (who collectively are profiting the most here). For example,
eBay did make the founders wealthy, but it's ludicrous to claim they somehow
sucked all the wealth away from everyone else. Business isn't zero sum, and
easy access to cheap used electronics (or access to ubiquitous high quality
low cost rides) is being ignored in this analysis.

Okay, I think that's all I can take. I hope no one takes OP seriously.

~~~
bluedino
Amazon has created some companies but they've also put so many other resellers
out of business. At least catalogs took 50 years to do it.

------
oldmanjay
I'll give the article this, it wears its biases on its sleeve

~~~
api
Everything has biases.

