2012-10-17

Co.Exist

How Can Government Help Grow The Sharing Economy?

Everyone loves to be able to rent apartments or share cars, but the powers that be are still a little unsure how to treat this new economy. And what the government does next may change the path of how we share.

The sharing economy—that loosely connected jumble of startups working on everything from carsharing to apartment-sharing—is a boon to cities (and other locales) where it’s strong. And yet, government is not always so welcoming; in the past few weeks, ridesharing startups Lyft, Sidecar, and Tickengo revealed that the California Public Utilities Commission (CPUC) served them cease and desist letters because they don’t fall into traditional regulatory frameworks. It’s quickly becoming clear that without some kind of support from government, many sharing economy companies can’t exist.

In an article for The Urbanist, a publication of the San Francisco Planning and Urban Research Association (SPUR), Gabriel Metcalf, executive director of SPUR, laid out a policy agenda for the burgeoning sharing economy. The most important thing, he says, is for governments to stop hindering progress.

"The government needs to allow these companies to exist. There’s a real temptation for incumbent industries to use the power of government to shut down the competition. It’s a game that all kinds of industries play. What is really needed is for government to be independent and create a level playing field where new entrants to the market can compete," says Metcalf. That means organizations like the CPUC should lay off, as much as traditional taxi companies might protest these new upstarts disrupting their industry. Special interest groups will always try to shut down the competition, but government shouldn’t assist them.

That’s not to say that government should let all hell break loose. Many of these services—especially carsharing and ridesharing startups—need some sort of regulation. "Cars are dangerous, there’s a role for government, and people have to pay taxes," says Metcalf. But it doesn’t make sense for government to regulate these companies to the point where they have to shut down. Indeed, sharing startups sometimes augment existing city services—in places where public transportation and cabs are hard to get a hold of, ridesharing is an easy choice, and the government should realize that.

Outside of operating with a light touch, Metcalf believes there are a handful of other ways that government can help the sharing economy. One way: measuring its impact. Metcalf writes:

Hotels have ways of quantifying their economic benefits to the community through hiring; purchasing of furniture, food and cleaning products; procurement contracts; and tourist dollars spent locally. As yet, Airbnb has no consistent method to measure its economic impact, though it has substantial survey evidence indicating that the income of Airbnb guests most often flows to the immediate neighborhood, which is generally outside the traditional tourism districts where visitor dollars concentrate. Survey data also shows that hosts use their Airbnb income to reinvest in their home thus increasing property values in their neighborhood.

Cities would also do well to share best practices. This is, after all, new territory for everyone. Says Metcalf: "I think there’s a lot of goodwill around the sharing economy now, but we’ve spent 100 years building up this apparatus of bureaucracy. Sometimes it goes on autopilot."

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