At a time of dizzying technological change in America and around the globe, U.S. policies toward innovation should be aimed at facilitating and enhancing the positive benefits of the sharing economy. However, some so-called progressive lawmakers seem intent on snuffing out these new opportunities in the name of protecting old, stale, and bygone bureaucracies.
The sharing economy allows individuals, through smartphones and the internet, to monetize their personal assets. Car and homes can be opened up to others in exchange for compensation. For example, Uber and Lyft allow people in need of a ride the option to connect with a driver at a lower cost and more conveniently than city-sponsored taxis. Uber alone has provided more than two billion rides nationwide since its launch in 2009.
Despite – or perhaps because – of this unbridled success, ride-sharing services are viewed with ire by elected officials and bureaucrats in several cities. On May 7, 2016, voters in Austin, Texas, sided with the taxicab industry to defeat a ballot measure that would have allowed Uber and Lyft to use their own background check system for drivers. Instead, the companies would have to abide by the city’s fingerprint background checks and other regulations, which were so onerous that both Uber and Lyft halted service and left the city.
The underlying impression that may have helped defeat the ballot measure is that non-taxi drivers are somehow suspect operators, and ride-sharing companies do not conduct rigorous background checks, and government-sanctioned fingerprint background checks are infallible. That premise is undermined by a 2013 National Employment Law Project report, which found that inaccuracies within the Federal Bureau of Investigation’s (FBI) databases are blocking about 600,000 Americans from “jobs for which they may be perfectly qualified.” The Department of Justice indicated that roughly half of the FBI’s databases are incomplete or inaccurate, largely because the agency fails to input the final outcomes of arrests. Nonetheless, inadequate background check arguments have been used by cities and taxicab cartels from Houston to St. Louis in an effort to upend ride-sharing companies.
After Uber and Lyft left Austin, the city did not revert back to its old twentieth century taxi system. A June 16, 2016 article in The Atlantic profiled how numerous smaller ride-sharing start-ups have quickly thrived in that market. This demonstrates that there is a strong appetite for drivers to offer rides and for passengers to do business with ride-sharing companies.
The Atlantic article quoted University of Texas at Austin Professor Emeritus of Economics Daniel Hamermesh, who said, “Competition in the market helps drivers.” These new start-ups aren’t perfect, but competition, experimentation, and innovation among them is revealing new ideas that could benefit drivers, such as pre-scheduled, fixed-price rides that allow them to plan their rides out during a given day.
Perhaps the most notable opponent of the sharing economy is Democratic presidential nominee Hillary Clinton. In a February 25, 2016 speech, she promised to, “crack down on bosses who exploit employees by misclassifying them as contractors or even steal their wages.” Beyond the complete mischaracterization of how the sharing economy affects workers, Secretary Clinton ignored the tremendous good that has come from this technological renaissance, as well as its overwhelming popularity. A May 19, 2016, Pew study found that “72 percent of American adults have used at least one of 11 different shared and on-demand services. … Around one-third of those ages 18-44 have used four or more of these services, and relatively few in this age range have no exposure at all to these services.”
Defenders of bygone bureaucracies claim that without the benevolent hand of government, Americans would be left “on their own,” abandoned, and bereft of aid or quality services. These assumptions stand on weak ground in the face of free market innovations like Uber, Lyft, and Airbnb. These services prove that Americans are willing, if not eager to share with each other without the compulsion of a government bureaucrat.
Big-government lawmakers underestimate Americans’ propensity to create new and innovative pursuits, particularly those that provide a necessary service to others. It is time for lawmakers across the country to allow the sharing economy to flourish and leave bygone bureaucracies back in the twentieth century.