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August 14, 2013

Beware snake oil salesmen

In the last edition of Local People Leading, we highlighted the emergence of a new initiative from the Jimmy Reid Foundation – The Common Weal – which aims to develop a new vision for Scotland based on the principles of mutuality and reciprocity.  The Scottish Community Alliance thinks the proposal has real merit. But the ‘sharing economy’ has already become a new buzz phrase – usually a sign for snake oil salesman to appear. Karen Suchek from Newstart has spotted a few already.


Karen Suchek, NewStart, 29.07.13

Wherever you read the words ‘sharing economy’ you can guarantee they’ll be soon followed by the words Airbnb, TaskRabbit, Sorted, taskPandas, Lyft and a whole host of ever-increasing copycats.

All of these organisations use technology to connect those who have assets to those who want to use them. But it’s not only new technology that links them: they all promote themselves as embracing a set of values that favours access over ownership, anti-consumerism in the post-financial-crash world of austerity and rising poverty, and as vanguards of an economic revolution.

What I don’t understand is how any of these companies can be described as ‘sharing’: they all exchange services for money. Airbnb enables people to rent out rooms in their homes. TaskRabbit (USA), taskPandas (UK) and Sorted (UK) connect people who want odd jobs or errands done to people who will do them for a fee. Uber and Lyft work like a local taxi service but with community drivers.

These companies use smartphone apps to connect buyers and sellers of services. The only services the company provide is an online venue to bring both parties together and a fee transaction service on the PayPal model. All of the companies take a commission; Airbnb is savvy enough to take a fee from both guest and host. I don’t understand how this is sharing; it’s renting and cash for labour. Just old fashioned capitalism run by tech savvy entrepreneurs.

Aside from these companies being high tech and dressed up in ethical language, the other common denominator is that they provide ways to cheat the system. With TaskRabbit/Panda and Sorted you sign up to receive notifications of tasks on your smartphone and then bid in the hope you’ll get picked for the job. Obviously the cheaper you rent yourself out the more likely you’ll be to get picked. Very tempting in these cash-strapped times, but I have to wonder who in reality would go to the trouble of paying income tax on work like this. The same has to be asked of Airbnb hosts.

All of the sites make it clear that tax reporting is the responsibility of the service provider and all state they will release your personal information if legally required. With transactions being digitally recorded the taxman and the DWP might find them a very useful source of information.

What’s so sharing about this? Paying tax is participating in a sharing economy, dodging it is not.

Massive unemployment is fuelling a market whereby people are encouraged to undermine each other with cheaper bids for one-off jobs. In harsh times people are prepared to work without protection and for less than the minimum wage. The companies absolve themselves of all legal responsibility towards those providing and receiving the services, including health and safety and workers’ rights. The New Start April 2009 special on unemployment predicted an increase of illegal workers as unemployment rises. Is the ‘sharing economy’ nothing more than the high tech organisation of the black market to enable the wealthy to exploit the poor?

Forbes magazine calls the sharing economy a disruptive economic force in the USA and estimates the value flowing through it will reach $5bn this year. It’s not saying it’s a bad thing, just that it is disrupting major markets who cannot afford to ignore the phenomenon. One thing for certain is that these companies are making money. Airbnb was valued at $2.5bn earlier this year and the partners are likely to become the sharing economy’s first billionaires. Pretty serious stuff underneath that fluffy community marketplace mask it wears.

Any ‘sharing economy’ model where money changes hands can’t really contribute to regeneration: someone is always getting rich at the expense of the poor; employment rights are being dispensed with; local taxation is losing out; the health and safety of consumers is ignored. There are concerns that the massive success of Airbnb is contributing to gentrification and evidence that some hosts are avoiding tax and violating tenant laws in rent controlled homes.

There is a real sharing economy out there: Time banks are the most obvious way to share skills. Freecycle has been connecting those with goods to spare to those with no money for years; it’s low tech, but simple and effective. Couchsurfing has been doing what Airbnb does for nearly a decade and it’s always been free. For everything else there’s Craigslist, so low tech it’s positively ugly but also a repository of everything for which the human heart might yearn (no matter how disturbing).

Another great example of the real sharing economy is Peerby – it’s all about connecting people within their neighbourhoods. If you want to borrow something Peerby will ask the 100 closest lenders to you. If the item can’t be found they’ll extend the search, but keep it within cycling distance. No money changes hands (though they don’t object to muffins); it’s all built on trust. You’re unlikely to rip off someone if you might bump into them down the pub – conversely you’re quite likely to chat to someone you borrowed something from if you bump into them down the pub. Peerby is a strong advocate of community cohesion and environmental sustainability and the forward-thinking Dutch are happy to grant-fund it.

Resilient neighbourhoods are built on community cohesion, so only the real sharing economy can contribute to regeneration.Bring on the ‘real’ sharing economy