In this month's newsletter, we look into the Trust Economy and how it is changing capitalism, but maybe the hype is ahead of reality. We know all the sexy names like Uber and Airbnb and others:
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But, reports this week state that Uber X will lower prices and the company will take losses to gain market share and fend off competition. The news gave a lot of people pause. Maybe this isn't an economic cure-all that the hype and multi-billion dollar values suggest. I for one prefer stocks of companies that have pricing power and take market share through sheer demand, not discounting. I do see the trust economy changing the world, but what is the ultimate economic cure-all? I'm not sure.
Heck, it's not even a sure thing that people trust each other enough for the kind of penetration needed for a new paradigm in business.
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Trust People that... |
Great Deal |
Somewhat |
Not Too Much |
No Answer |
|
Access medical records |
50 |
29 |
17 |
4 |
|
Prepare food |
47 |
36 |
14 |
3 |
|
Work in your home |
41 |
37 |
18 |
4 |
|
Share photos, videos and social network |
38 |
30 |
29 |
3 |
|
Swipe your credit or debit card |
30 |
43 |
24 |
3 |
|
Drive while you're driving, walking or biking |
21 |
36 |
39 |
4 |
|
Meet while travelling away from home |
19 |
49 |
29 |
3 |
Maybe the Trust economy won't come to the rescue, after all. The hype may just be overblown.
If so, it wouldn't be the first time. An article in the Atlantic reprints a NY Times editorial from May 2, 1938 titled "Prosperity out of Fantasy" which suggested that where new industries and products like televisions, air-conditioners and flivver airplanes ("Model T of the Air") failed to produce good wages or heavy sales, maybe "Industrial Fantasy" would do the trick.
(Wow, who knew we almost had personal airplanes almost 100 years ago.)
The Disney Magic Touch
Walt Disney's early success had many thinking Industrialize Fantasy would be the answer, after all, Snow White and the Seven Dwarfs needed an army of artist, animators, gagmen and then showered fortune on playhouses.
Moreover, the byproduct of toys was remarkable with Snow White alone garnering 117 licensing deals alone. (And you thought that was a recent phenomenon, too.)
Well, Disney was on to something big, but it wasn't big enough to end the recession which took the Great War that brought women into the work place and forever shifted the paradigm of capitalism in America.
So, is the trust/sharing economy Mickey Mouse in the wrong sense of the phrase? It remains to be seen, but it's really amazing that the more things change, the more they stay the same. The bottom line is that America is built to rebound and will this time as well.
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