4 Things Every American Should Know About Uber.Com, AirBnB.Com, et. al.

Posted: Oct 19, 2014 12:01 AM

Uber.Com. AirBnB.Com. TaskRabbit.Com. What are these websites about, and why are they so controversial?

Let's be clear: these websites, and others like them, are online hubs for what is best described as the emerging "freelance services industries." The service providers you find through these websites are most certainly freelancers, not established corporate business owners or employees of other peoples' companies.

Uber.Com, a San Francisco-based venture that matches people who need a ride from one end of a city to another with people who have cars and are willing to travel, is perhaps the most high profile of these entities.Visit the company's website, download the app, and search for people who are ready right now to shuttle you about. If you want to be a freelance service provider, Uber.Com has a screening process whereby you can register to deliver transportation services.

This very basic " seller-hooks-up-with-buyer" type of transaction is happening at an increasing rate in cities all across the country, all on a freelance non-professional basis and mostly all via online connections. Need someone in your area to run errands or perform household chores? TaskRabbit.Com might help you find a provider who's ready right now. Got an extra room to rent for people visiting your town? AirBnB.Com connects travelers with in-home accommodations. If Uber.Com doesn't have the ride you want, their main competitor Lyft.Com might be helpful.

Be careful to not form an opinion about the freelance services industry too quickly. And don't decide that it is irrelevant and choose to ignore it. Consider these important facts:

1) Freelance service providers are business owners unto themselves, and not employees: The most egregious examples of people misunderstanding this generally happen in San Francisco, Los Angeles, and other large cities where President Barack Obama's economic entitlement policies are still popular. Indeed, protesters have demonstrated against Uber.Com in their home turf of San Francisco demanding that Uber drivers be given membership in a labor union.

But drivers for Uber.Com are independent contractors, not employees, and as such they are NOT "laborers" in the organized labor sense. If you don't like the going rates for Uber rides, then start your own freelance business without Uber.Com's assistance or get out of the industry altogether. But understand that when you're a business owner you can't just simply "protest" or "demonstrate" like the AFL-CIO suggests. Business owners have to be more responsible and mature than that.

2) The freelance services industry is a huge disruption to bigger, more powerful interests: Guess who doesn't like Uber.Com ride sharing services? The established taxi cab industry. And can you imagine who might not like AirBnB.Com providers renting a room in their home? The established hotel and motel industry. And mayors, governors, and elected officials nationwide are disposed to not liking any of this freelance enterprise because they don't know how to tax it and regulate it.

To be fair, many taxi service operators have a legitimate gripe with Uber.Com and Lyft.Com. In most cities across the U.S. (some far worse than others), owning and operating a taxi business requires thousands of dollars in training, licensing, permitting, bonding, insuring, and permitting, just to get government approval to launch the business. And then there are the recurring expenses of permit renewals and vehicle inspections - once again, all paid to the government - just to keep the business going.

This same type of expensive government taxation and regulation applies to just about every other type of service industry one can Envision. And if private individuals are undercutting, say, a hotel owners' revenues by renting out rooms in their houses and apartments, even after the hotel owner has paid all his or her government fees, then yes, the hotel owner should be upset.

Politicians share in the outrage over successful freelancers. Less business at the hotel or the taxi company means, in most cases, less tax revenue for the politicians to spend. If you're intending to become a freelance business operator, beware: there are lots of people who have an interest in your failure.

3) A successful freelance economy requires a society that respects individual rights: There may be few Americans who are willing to deny that they support "individual rights." But when confronted with what "individual rights" entails, many of us begin to hedge.

The rights of individuals to freely sell their services on the open market means competition for established industries -and these established industries often have powerful lobbying capacities than can pressure politicians to pass laws that squelch the freelancers. Do we really respect everybody's individual rights in the U.S., even if the exercise of one's rights means that my immediate financial wellbeing is challenged?

4) Resolving the disparities between established industries and freelance services providers will require less government regulation, not more: In New York City - another region where President Obama's vision of politicians determining economic winners and losers remains quite popular - Mayor Bill DeBlasio has determined that individuals who rent-out a room in their house or apartment are violating city law, and has vowed to run AirBnB.Com out of the city.

On the other hand, in Spokane, Washington - a city where American free enterprise is still generally accepted - the city just crafted new transportation industry regulations that both the taxi cab industry and Uber.Com seem to like. Despite city council members' threats to run Uber.Com out of their city, the voices of freelancers managed to be heard and the result was a compromise that subjects Uber.Com and its service providers to some new, minimal levels of government regulations, while reducing the heavy-handed burdens the city has historically placed upon traditional taxi operators.

Will the USA move to respect and uphold the rights of freelance service providers? Or will we continue to embrace the Obama-styled protections and privileges for large corporations and old-school traditional groups? Americans have an important choice to make - and the economic wellbeing of individuals is weighing in the balance.