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The problem with a sharing economy

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If you have Filipinos on your social media feeds, you’ve surely come across the uproar following the Philippines’ Land Transportation Franchising and Regulatory Board (LTFRB) mandate to ban Transport Network Companies (TNC, or basically ridesharing services Grab and Uber) unaccredited units.

The order would’ve cut the TNCs’ available units to somewhere around 20 percent, which meant that it would’ve been close to impossible to book a ride had the order not been reconsidered.

The angry middle class netizens decried the LTFRB for looking to take down one of the only two transport modes that are actually working in the country (with the other being P2P buses). The regulatory board, for their part, argued that the TNCs did not act in good faith by continuing to accept partner applications way after reaching their cap.

Of course, as is with most of Philippine bureaucracy, nothing’s ever that simple.

Just Imagine, a blog that provides a glimpse into the future for curious readers, recently published a post about the thriving sharing economy and its growing effects on the overall economy, which gives an insight as to how this recent type of clash between the sharing economy and government regulations may only be the beginning. Below is an excerpt from the post.

Mind the gaps

The sharing economy is a fundamentally viral industry and, as such, it predominantly goes unmitigated and unchecked. The digital economy is evolving so fast it is outpacing the rate at which our policy makers can catch up.

Car-sharing network gurus like Uber and Lyft, for example, are generally not yet adhering to the same taxes and insurance standards that taxis uphold. Accommodation for disabled passengers is generally sporadic; contractual obligations are not articulated; and in some countries it’s debatable whether drivers even make the minimum wage. Those subscribing to these platforms have to weigh up the privilege of making a buck on the side at their convenience versus the cost of being thrown in the cold if anything goes wrong.

The same goes with online hospitality. Startup giant Airbnb has booked over 80 million nights across 191 countries since its 2008 inception. But many of those homes or venues may not be situated or designed to anticipate the challenges of noise, congestion, and waste, and neighbours are occasionally (and understandably) irritated about the additional infringements on their privacy. While hotels are taxed and frequently inspected for health and safety, Airbnb hosts are not yet facing such inspections.

Some city residents are now crying out for stronger regulation while, at the same time, many of their neighbours are greeting their Ubers with open arms. Cities such as Seattle, who were already feeling the housing crunch before online hospitality entered the scene, now have to compete with the new breed of Airbnb entrepreneur who buys up accommodation for short-term rental purposes only. The San Francisco property market has sky rocketed, thanks to the influx of vacation rentals overtaking the city’s scarce housing inventory.

All of it begs the question, is the sharing economy actually benefiting the economy at large?

*Read the entire post titled “If making a buck meant not caring, would you still do it?” at www.justimagine.aurecongroup.com.

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