Since the emergence of the sharing economy in mid-2000, the traditional way of doing business was affected. For some, this socio-economic system has changed the way people interact, do business and make use of their resources. On the other hand, critics say that gives a dent to traditional businesses and make them suffer.
What is the Sharing Economy?
This is also referred to as collaborative economy which allows people to share assets, services and time with other people and get incentives, in monetary or in kind. As an economic model, this works by way of offering one’s assets, including cars or homes, which are not being used often, to individuals who are willing to pay in exchange for temporary use. And with technology and the internet, the scope of the sharing economy covers information technology, transportation, communication, housing, agriculture, finance and labor. It is also a considered a hybrid economy that offers different forms of exchange, not necessarily offering financial gain but also social and environmental values. It advocates for waste being used for a purpose.
This phenomenon has its benefits and drawbacks according to the proponents and opponents of a collaborative lifestyle. In this discussion, we will enumerate the two sides of this economic model.
List of Pros of the Sharing Economy
1. It is a form of recycle, reuse and repurpose.
Human beings accumulate possessions such as cars, properties and gadgets which at one point or the other, will be used lesser and lesser. With a sharing economy, private owners can offer their vehicles as a means of transportation to others for a fee. Same goes for an unused room in a home where the home owner can sublet it to other people as an added income. With this type of exchange, unused items and possessions are not put to waste.
2. It lessens the number of unemployed Americans and offers a platform for sellers.
With the proliferation of online jobs and websites like eBay and Amazon Mechanical Turk, people can now work from home writing for websites or offering other services online with more flexibility and can sell used-items online. Supporters posit that this is beneficial for most Americans and work both ways with employers looking to hire the perfect candidate for the job get to post the services they need while workers can offer their services for a fee. As for selling pre-owned items, sellers can gain profit while buyers acquire these items at lower costs.
3. It empowers citizens and makes them more productive.
Advocates for the sharing economy claim that this eco-system facilitates jobs for individuals while giving them the power to give their own terms and have more flexible working hours. Moreover, people of the community are encouraged to be more productive by sharing their time as well as unused items at home. It also strengthens the community as a result of sharing.
4. It also opens new business ideas.
The sharing economy brought about profit and non-profit organizations and businesses offering crowd funding and transportation services, i.e CrowdCompanies.com, Uber and Lyft, among others. With collaboration, people with business ideas but do not have enough money can get funding from other people while individuals with private cars can choose to rent their cars in exchange for payment.
List of Cons of the Sharing Economy
1. It is unfair to people who earn through this system and takes away profit from businesses.
Opponents of the sharing economy point out that people who work under a shared economy are deprived of the benefits accorded to full-time employees such as paid leaves, sick pay and bonuses, not to discount the fact that they are often underpaid. Additionally, companies like Uber reduce the number of people using taxis since it started and affect the profit of taxi drivers and companies offering transportation services.
2. It results to loss in government revenues.
Another setback of the sharing economy critics posit is the potential loss of tax revenues for the government. Since people who do business over the internet offering services like legal writing and Web Development are not regulated. Moreover, this practice also allows individuals from other parts of the world offer services as well. As a result, not all who earn an income pay taxes from their earnings online which should have been added to government’s tax revenues.
3. It can lead to fraud and scams.
By selling and buying products and services online, the buyers and sellers are not totally protected from fraud especially if there is intent to mislead. Online buyers of products are exposed to sellers who offer inferior quality merchandise which can be stressful on the part of the buyers. Also, there are instances wherein freelance workers who have spent hours doing a certain job are defrauded by bogus clients who demand work and then are nowhere to be found once the service is delivered.
4. It is simply a new form of capitalism.
Critics see the sharing economy as not what it says it is since it uses a third party that profits, most of the time. According to them, it should be called an “Access Economy” because what it does is provide a venue for people to access services and products they need and in the end, the capitalists and players are the ones who benefit the most; not the individuals who offer their services and products through these websites.
Any economic system has its pros and cons and this is something people should take in to consideration. The sharing economy has gained momentum through the years and without a doubt, it has been adapted globally. As for its flaws, perhaps, there is still a solution. One thing is clear, though. There is no stopping change and technology will continue to evolve. What the people need to do is to study the pros and cons of the sharing economy and decide where and when to apply it. As they say, “in with the good and out with bad.” In time, things will be better for the people and the economy.
Crystal Lombardo is a contributing editor for Vision Launch. Crystal is a seasoned writer and researcher with over 10 years of experience. She has been an editor of three popular blogs that each have had over 500,000 monthly readers.