New technologies may potentially turn everyone into capitalists--so long as the too-few-capitalists don't prevent it. I'll be right back.
At present, there's panic on the streets of London--and Paris and Madrid and Houston. There's uncertainty in San Francisco, Cambridge, and New York. All about us, whole industries are being upended by a new group of technology startups like Uber, Lyft, and AirBnB.
For those unfamiliar, services like Uber are essentially democratized taxi services. They allow anyone to use their car as a taxi and anyone else to hail them for a ride. AirBnB applies this principle to the hospitality industry: Anyone can rent a spare room (or camper!) to any traveler and act as a small-scale hotel.
Naturally, entrenched business interests are fighting the development of these new services. The New York Taxi and Limousine Commission at first banned Uber, before ultimately licensing Uber as New York's first sanctioned e-hailing service. Taxi drivers throughout Europe are protesting. San Francisco is cracking down on individuals utilizing services like AirBnB to rent spare rooms in their homes for extra income. Whole industries that have consolidated all competition into a confederacy of unions and commissions are witnessing the democratization of their industries.
In America, there are three kinds of regulation:
1) Regulations by well-meaning politicians to effect socially positive changes;
2) Regulations by politicians to accommodate the demands of fusspots and special interest groups;
3) Regulations essentially written by unions or entrenched business interests to erect strict barrier-to-entry around their industries.
Regulations governing taxi services, hotels, and rentals generally fall under 2) and 3). To understand how such regulations prohibit competition and protect established players to the detriment of consumers, consider this: When Google planned its Google Fiber rollout in Kansas City, they originally intended to offer a bundled telephone service but were unable to because of regulatory hurdles. Google--one of the largest technology companies on Earth--could not offer a telephone service because the regulatory burden was too onerous. If Google could not enter and disrupt a century-old market, what chance has anyone else?
This is an extreme but illustrative example: Our current regulatory regime has created a system of intransigent industries--at best oligopolies, at worst near-cartels--that are immune to the pressures and influences of the free market. But this has started to change. Platforms like iOS and Android, coupled with services like Uber and AirBnB, have democratized information and opportunity. Smartphones are ubiquitous. Wherever you are, you can access a multitude of services; you can compare service providers and select the one that best suits your needs. Individuals can offer their services and others can find them instantaneously, with virtually no barriers. The apps let you advertise, find, pay, and collect--with virtually no startup capital.
Which brings me to my main point, and Mr. Chesterton's point: These services are solving the problem of too much capitalism by making everyone capitalists. Any individual can rent out their car. Any individual can rent out their spare room. What little capital individuals may have, they can--at last!-utilize it and draw an income; they can participate and, most importantly, compete in industries that, until now, were insulated and protected by stifling regulatory regimes.
In today's economy, with so many people unemployed or under-employed, both sides of such transactions realize tremendous benefits: Some individuals can use their cars or homes to draw supplemental incomes (as, in fact, people have been doing for centuries), while others can seek the best values and direct their saved monies elsewhere. This is mutually beneficial and mutually agreeable to both sides of the transaction. One wonders: if everyone is better off, why is there so much resistance?
Which brings me to my main point, and Mr. Chesterton's point: These services are solving the problem of too much capitalism by making everyone capitalists. Any individual can rent out their car. Any individual can rent out their spare room. What little capital individuals may have, they can--at last!-utilize it and draw an income; they can participate and, most importantly, compete in industries that, until now, were insulated and protected by stifling regulatory regimes.
In today's economy, with so many people unemployed or under-employed, both sides of such transactions realize tremendous benefits: Some individuals can use their cars or homes to draw supplemental incomes (as, in fact, people have been doing for centuries), while others can seek the best values and direct their saved monies elsewhere. This is mutually beneficial and mutually agreeable to both sides of the transaction. One wonders: if everyone is better off, why is there so much resistance?
No comments:
Post a Comment