Peer-to-Peer: The Savior of Humanity and it’s Enemies


I have written before about the great opportunities that the new Peer-to-peer economy has to offer.

Unfortunately, my optimism is not shared by everyone as you can see in one of the latest articles by Dean Baker of  The Guardian “Don’t buy the ‘sharing economy’ hype: Airbnb and Uber are facilitating rip-offs”. In the article Dean argues that the sharing/Peer-to-Peer economy is full of nothing but tax cheats and criminals ducking regulations. He basically is calling for a boycott of the most vibrant and innovative part of our economy.

While people like me see technology allowing for easier trade and communication as a glorious thing, he sees it as a threat to the power structure that he so adores.

Dean writes about Airbnb

Insofar as Airbnb is allowing people to evade taxes and regulations, the company is not a net plus to the economy and society – it is simply facilitating a bunch of rip-offs. Others in the economy will lose by bearing an additional tax burden or being forced to live next to an apartment unit with a never-ending parade of noisy visitors, just to cite two examples.

In this example he seems to be saying that if someone does not pay taxes they cannot be adding to the economy or society. Nothing could be further from the truth. The economy and society are made up of individuals putting together resources and trading with each other to improve their own well being. Once that is done taxes are taken off the top and used in almost universally inefficient ways. Dean is putting the cart before the horse and labeling the parasite as the organism itself. To feel so entitled to other people’s money that you consider people trading voluntarily to be ripping you off gets to the root of his authoritarian mentality.

He then goes on to say that by people renting out their own rooms not under hotel regulations there will be “a never-ending parade of noisy visitors”, a slippery slope argument if I’ve ever heard one. So I wonder at what point does Dean feel that someone must come under hotel regulations or everything erupts into kaos.

If I rent my room out once a year to someone on Airbnb?

If I rent it out to a friend or family member?

Is it OK if I have a bunch of noisy people over that aren’t paying rent?

I would bet that he would say that once money is exchanged you have turned your house into a business and should then be under the hotel restrictions. Of course, jumping through all the necessary hoops would be close to impossible and renting rooms in your own house would be in the same illogical category as prostitution, something you can give away but not sell.

That fact is that the owners themselves have the largest incentive to not rent rooms to unruly tenants and the neighbors would still have the same ability to stop noise whether or not that person is using Airbnb.

He goes on about Uber

The same story may apply with Uber. Uber is currently in disputes with regulators over whether its cars meet the safety and insurance requirements imposed on standard taxis. Also, many cities impose some restrictions on the number of cabs in the hopes of ensuring a minimum level of earnings for drivers, but if Uber and related services (like Lyft) flood the market, they could harm all drivers’ ability to earn even minimum wage.

Cities impose restrictions on the number of new cabs so that the existing cabs will not have to compete. This is called an artificial monopoly and is in no way good for the customer. Uber is definitely in conflict with the local taxi monopoly and they will use the excuse of safety, insurance or minimum wage to try to squash their competition.

This argument ignores the basic economic concept of prices to allocate resources. If the market is flooded with taxis and no one can make any decent money, I think that the drivers can figure out for themselves if they need to find another occupation or not without the government forcing them to do so. Also, a current driver does not have the right to earn money from driving cabs any more than a person who now wants to try their luck at Uber.

The Peer-to-Peer Economy is the Most Innovative Part of the Economy

The Peer-to-peer economy is the name given to the businesses that have come about through information technologies and social media. Airbnb, Uber, Kickstarter, Ebay and Bitcoin are a few examples that have risen out of this field of business.

As far as I can see this is the most exciting part of the economy and one of the only fields where we see innovation at this level. This has to do not only with the technology being new to society but also the government being unable to freeze innovations in place like almost all other markets. As Peter Thiel wrote about in 2011, the innovation in this field has been the one thing saving our economy’s non-existent progress in energy, education, travel and almost every other market.

Almost all of the best and brightest in the millennials and generation X have been involved in the Peer-to-peer market in some way because it is practically the only place that you can be an innovative, out of the box thinker and still make a fortune.

Thank God for The Black Market

The black market made by things like these Peer-to-peer technologies should be rejoiced and not hated. What people refer to as the black market is simply individuals trading with one another without a 3rd parties interference. Have you ever paid someone for work around the house in cash and not reported it? Eaten locally grown food without the governments approval? Rented out a room in your house to friends and family without registering as a hotel? Then you have participated in the Black market.

The governments of the world are making it impossible for entrepreneurs to operate and bring products and services to the people that want and need them. In this type of situation the so called “black” economy (or as I would call it the real economy) is the only thing keeping the food on many peoples tables. One example is Uber which creates 20,000 jobs a month while few businesses are hiring.

My only hope for the human race is that the people like Dean are ignored and the Peer-to-peer economy continues to grow until in becomes uncontrollable. I have little doubt that this will happen and that these technologies will change the world and leave anachronistic authoritarians in their wake.