Is the Sharing Economy Exploitative?

Is the Sharing Economy Exploitative?

08/24/2018Per Bylund

There's a whole lot of buzz about the sharing economy. Many seem to think it is something new, with some calling for a 'new economics' to explain it while others deride the 'gig economy' as a higher level of exploitation, inequality, and poverty. Neither is a good analysis.

First things first: the sharing economy was facilitated by advances in technology alongside consumer preferences changing from goods to services and thus from ownership to lease. These are not separate processes, but mutually constituting changes where each increases the other.

The advances in technology that brought about the sharing economy are those that allow for cheaper, faster, and more accurate communication, verification of factual claims, decentralized corroborated trust/reputation etc. They overall lower transaction costs by making information both available and trustable. The terrifying idea of 'getting into a car with a stranger' is no longer a problem if that stranger's reputation can be tracked, is publicly available, and is backed up by the experiences of many others doing the same thing (as with Uber, Lyft).

The availability of such information also means we don't need to rely only on first-hand (or second-hand through family and friends) trusted experience, but can, as it were, rely on the experience of unknown others - third-hand trust. This changes our behavior because the cost of making a mistake is much lower: getting into the car of a shady Uber driver is on average much less of a risk than doing the same as a hitchhiker or even taking a regular taxi. This change of behavior in response to 'outsourced' trust means the technology can progress further.

The sharing economy, as the term implies, also means we can 'share' (make available) productive resources in much more effective ways. In a sense, it undermines the materialist view of value creation by dissolving the difference between 'personal' property and private ownership of the means of production: your personal car can now be both your personal property and your source of income - and you, as the owner, decide when and how. It doesn't change the economic categories, but releases the economic analysis from the material goods.

This is all well and proper, since the economy is about the creation and distribution of *value* and not of material things. As value is subjective, so is the distinction between consumer good and production good. Everything can be both, and what is what depends on how you use it.

In other words, the effect of the sharing economy on the study of economics may (and likely is) the liberation of economic analysis from materialist biases. Economics becomes the subjectivist social science it was always meant to be. So in terms of economic theory, the sharing economy can help make the study of economics what it should be and always should have been: the study of the creation and distribution of [subjective] value and the unplanned social orders that emerge in the prosperity-creating process.

But what about exploitation?

I find the argument that the 'gig economy' makes people accept lower wages highly fascinating. Suddenly it is a problem to these critics, mainly on the left, that 'workers' own their own capital.

When personal property becomes capital, a source of income, then the obvious implication is a decentralization of capital ownership.

I'm not saying companies like Uber are in any sense perfect. They could certainly go further, by e.g. implementing free pricing between drivers and riders. Why not allow drivers to set their required minimum to provide a ride? Why not allow riders to set their max to get a ride? (This may actually be the next step in the sharing economy - an open-marketization of fares and fees.) The common argument that drivers (which is usually the example used) don't make a 'living wage' is also a bias that remains from the materialist and industrialist view of economy. It assumes that a job is all about the salary, and that what matters is the monetary outcome of it. But many of those who choose to drive for a ride-share company do so because it is a *flexible* type of work, which is itself a value.

Sure, it may not be as high-paying as 'full-time' employment, but any choice includes a trade-off of value: to many, flexible work hours make up for the lower pay; for others, it doesn't - so they instead seek traditional employment. The solution to the low wages in the sharing economy is not regulation, but more competition - and proper market wages. In fact, the reason ride-sharing companies can pay low wages (which, judging from my discussions with many a driver, exceed those earned by taxi drivers!) is the regulations already in place: primarily the barriers to entry in ride-sharing and elsewhere that keep overall wages down by providing employers with artificial influence (power). The expected outcome of the low-transaction cost economy should be the ultimate gig economy, where all or most hierarchies (such as firms) dissolve into market relations - and where those who (choose to) work earn a market wage. What stands in the way for this development is not employers or even capital owners, but those artificial restrictions that produce their privilege.

It is a sad irony, really, that those restrictions - regulations - that are intended to protect workers from employers (in the industrial age) is what stands in the way for worker liberation in the new era.

Formatted from Twitter. 
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The Atlantic's "Take" on Mainstream and Behavioural Economics

12/14/2018Mark Thornton

The Atlantic's take is that Mainstream economics has many problems, as others have noted. They think that college students should be exposed to some behavioral economics in their economics classes. Their conclusion is thus:

Making behavioral economics compulsory isn’t a cure-all for the ills of the economics discipline, but doing so would go a long way in encouraging students to think about building economic models around actual human beings rather than around the caricature that is Homo economicus. If there’s a deeper lesson to come out of the behavioral revolution, it’s that the vagaries of human behavior make it very difficult to model as a pure science, and economists have a lot to learn from other disciplines, including other social sciences and the humanities. This may mean a dose of humility for economists, but it would enrich both the education that their students receive and their prospects of making positive change in the real world.

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Piketty Urges Higher Taxes in Response to French Tax Revolt

Less than 10 years ago, many European nations suffered fiscal crises because of a combination of excessive spendingpunitive taxes, and crippling debt.

The crises have since abated, largely because of direct and indirect bailouts. But the underlying policy mistakes haven’t been fixed.

Indeed, the burden of government spending has increased in Europe and debt levels today are much higher than they were when the previous crisis began.

Unsurprisingly, these large fiscal burdens have resulted in anemic economic performance, which helps to explain why middle-class French taxpayers launched nationwide protests in response to a big increase in fuel taxes.

The French President, Emmanuel Macron, capitulated.

But some have suggested that Macron’s problem is that he wasn’t sufficiently bold.

I’m not joking. Led by Thomas Piketty, a few dozen European leftists have issued a Manifesto for bigger government.

We, European citizens, from different backgrounds and countries, are today launching this appeal for the in-depth transformation of the European institutions and policies. This Manifesto contains concrete proposals, in particular a project for a Democratization Treaty and a Budget Project… Our proposals are based on the creation of a Budget for democratization which would be debated and voted by a sovereign European Assembly. …This Budget, if the European Assembly so desires, will be financed by four major European taxes, the tangible markers of this European solidarity. These will apply to the profits of major firms, the top incomes (over 200,000 Euros per annum), the highest wealth owners (over 1 million Euros) and the carbon emissions (with a minimum price of 30 Euros per tonne).

Here are the taxes they propose as part of their plan to expand the burden of government spending.


I’m surprised they didn’t include a tax on financial transactions.

And here’s a video (in French, but with English subtitles) explaining their scheme.

To put it mildly, this plan is absurd. It would impose another layer of governmentand another layer of tax on a continent that already is suffocating because the public sector is too large.

I’m not the only one with concerns.

In a column for Bloomberg, Leonid Bershidsky points out why he is underwhelmed by Piketty’s proposal.

The reforms proposed by Piketty and a group of intellectuals and politicians — notably Pablo Iglesias, leader of Spain’s leftist Podemos party — include the creation of a European Assembly. It would have the power to shape a common budget and impose common taxes…Piketty advocates four measures that would collect a total equivalent to 4 percent of Europe’s GDP… What is being proposed is essentially a return to the fiscal policies of the 1970s, which provoked Astrid Lindgren to write her satirical essay “Pomperipossa in Monismania.” In 1976, the children’s author was confronted with a tax bill of 102 percent of her income. …Hit them with new taxes and watch them flee to the U.S. and Asia. They won’t stay like patriotic Lindgren, whose essay helped to topple the Swedish government in 1976. And no amount of government funding…will repair the damage that envy-based taxation can wreak on economies already finding it hard to innovate.

Let’s not forget, by the way, the many thousands of French households who also have suffered 100 percent-plus tax rates.

But let’s not digress.

Writing for CapX, John Ashmore explains why Piketty’s plan will make Europe’s problems even worse.

…a group of politicians, academics and policy wonks spearheaded by…French economist Thomas Piketty…have put their names to a new Manifesto for the Democratisation of Europe. …For the most part, the manifesto reads like a souped up version of the kind of policies we’ve heard time and again from leftwing politicians. …The details of today’s ‘manifesto’ make Labour’s Marxist Shadow Chancellor John McDonnell look like a moderate centrist. Where Labour advocate putting corporation tax back up to 26 per cent, Piketty and co want it hiked to 37 per cent. And while we Brits spent plenty of the Coalition years discussing whether income tax should be 45p or 50p in the pound, the Manifesto goes all guns blazing for a 65 per cent top rate… these measures are projected to raise 800bn euros, equivalent to four times the current EU budget. …that would be a huge transfer of power, not from the rich from the poor, but from taxpayers to politicians.

A 65-percent top tax rate? At the risk of understatement, that’s a recipe for less entrepreneurship and less innovation.

Moreover, based on America’s experience during the Reagan years, it’s safe to say that actual tax receipts would fall far, far short of the projection.

But the higher spending would be real, as would the inevitable increase in red ink. And it’s worth noting that the Manifesto proposes to subsidize the debt of bankrupt welfare states. Very much akin to the eurobond scheme, which I pointed out would be like cosigning a loan for an unemployed alcoholic with a gambling addiction.

P.S. During my recent trip to London, I repeatedly warned people that a real Brexit was the only sensible choice because the European Union at some point will fully morph into a transfer union (i.e., a European budget financed by European taxes). It was nice of Piketty to issue a Manifesto that confirms my concerns. Simply stated, the United Kingdom will be much better off in the long run if it escapes.

P.P.S. Let’s not forget that Piketty’s core argument for class warfare has been thoroughly and repeatedly debunked. Indeed, only 3 percent of economists agree with his theory.

Originally published at International Liberty
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Vox Continues to Sell the "Benefits" of Socialism

12/13/2018James Bovard

Vox is whooping up the wacky notion that “sex was better under socialism.” Tell that to Romanian women forced to undergo monthly gyno exams to outlaw abortions because the government proclaimed in 1985 that “the fetus is the socialist property of the whole society… Those who refuse to have children are deserters.” Women’s reproductive lives were part of centralized economic planning, especially “policies to make better use of the population as a factor of production” by “stimulating an increase in birth rates.”

This policy was endorsed and subsidized by the World Bank, which is currently touting itself as the friend of women.

Read the full article at

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PayPal Censorship Is Not Limited to Online Provocateurs












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Too Much Partisanship in Washington? No, Too Much Bipartisanship!

12/10/2018Ron Paul










Reprinted with permission.



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The Corporate Debt Market: Is It Teetering on the Edge?




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12/07/2018Michel Accad







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Trump is the Rare Honest Politician about US Debt

12/06/2018Tho Bishop






















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We Need Unilateral Free Trade with Post-Brexit Britain

12/06/2018Ryan McMaken

Listen to Ryan McMaken's commentary on the Radio Rothbard podcast.






[W]ith respect to trade, Fortress Europe’s trade policies are increasingly disadvantageous to her. Germany now exports more to China than to any individual European country... [Germany] sees on her Eastern flank ...  a pan-Asian phoenix arising in the form of the Shanghai Cooperation Organisation (SCO), led by Russia and China. And it is growing.





There is an easy way to help with this, of course, and it would be the right thing to do with or without Brexit: The US should immediately adopt a position of unilateral free trade with the United Kingdom.

The US, of course, should adopt unilateral free trade with everyone right now, but failing that, the UK is certainly an acceptable place to start.





Claims that the US would be flooded with "cheap goods made by slave labor" — as some anti-China protectionists like to claim — would be obviously non-sensical. British labor laws are similar to those in North America, and the cost of British labor is similar as well.


Trump's Mishandling of the Brexit Situation


Instead of using Brexit as a means to build a better relationship with the UK, at the expense of the EU's quasi-socialist bureaucrats, Trump has instead attempted to isolate the UK further in order to force UK acquiescence to Trump's economically-illiterate campaign against free trade.

This hurts American consumers and producers while also potentially helping politicians in both China and the EU. As Thomas Wright at Politico notes:

A post-Brexit Britain needs close relations with other major countries, and if the United States is difficult to deal with, [the UK] will find itself increasingly tempted into a closer economic partnership with China, one that will surely have political consequences. Trump’s antagonistic approach also plays into the hands the leftist leader of the opposition, Jeremy Corbyn, a persistent critic of a close U.S.-UK alliance who would likely leap at the chance to weaken the special relationship.

My personal position is that it is not important or in our best interests to engage in foreign policy posturing with China or any other country. Political neutrality and open commerce is always the best position. However, I do know that Trump and his allies think that playing games with China and the EU are important policy goals. But even by their standards, the administration's anti-UK protectionism is counter-productive.




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