With the exponential growth in the internet, we have seen similar growth in internet based companies and services. Many of these companies and services exploit the internet’s connectivity to be able to reach people who were previously excluded from a typical business’ day-to-day affairs. These individuals are often willing to offer their “expertise” in return for money, recognition or simply because it is fun (Ipeirotis, 2010). More importantly they are often willing to offer their “expertise” at a much lower price than an expert carrying out the same work.
This has led to the proliferation of business opportunities such as Threadless, Airbnb, iStockPhoto, Über and hundreds more. These businesses engage thousands of people mostly on a casual basis, who are more than happy to make a bit of money on the side. However, for every flower each sharing bee pollinates, it leaves one less for the bees living only from pollinating flowers.
In each of the previous examples, Threadless potentially puts professional T-shirt designers out of a job, Airbnb makes hotel chains seem uneasy about it pampering their guests, iStockPhoto shutters work opportunities for professional photographers and finally Uber is slowly but surely putting taxi drivers out of work.
Admittedly, professionals in the respective industry have the opportunity to jump boat into the new form of sharing economy. It is an option but a very uncertain one. The sharing economy is often based on one-off opportunities for its workers. Sure there is money to be earned but it is typically not a stable wage and one that is not as well paid as the original job done solely as a professional.
This makes the switch for those whose vocation is threatened all the more difficult.
In addition, each of the sharing economy disruptions often employs technologies or business models foreign to practicing professionals in the areas they are disrupting. It often means exploiting the internet to sell larger volumes of products at a lower price. This makes the switch for those whose vocation is threatened all the more difficult.
Jump back to your perspective now. You are a consumer of these services. You now have unprecedented access to photos that were previously too expensive or difficult to find; you can now hire a fully equipped apartment for your family, avoiding a poorly outfitted or ridiculously expensive hotel room; taxis close to you and on demand as well as T-shirts that are cheap, unique and with clever designs. Who’s to complain?
Just like automation before it and other related technological advances, the sharing economy is great at disrupting the job status quo. Although instead of completely removing jobs, it is making them more spread out and accessible now. Just like a disruptive innovation, it opens up new markets or replaces previously expensive services with cheaper and more basic ones. One could almost say it is democratizing access to certain services.
In fact, this disruption of the expert can be seen as the hallmark of our society’s inexorable improvements in living standards. For example, in medieval Europe, guilds controlled the ownership of tools and the supply of materials for numerous industries. This prevented others from gaining access to certain knowledge or carrying out the work of guilds. These services included everything from doctors to bakers and granted the members of such a guild a monopoly.
However, according to certain experts (Ogilvie 2011), the guilds generated no clear positive externalities and it seems that industry only started to flourish after the guilds began fading into irrelevance. Despite the claim that such organizations maintain quality, granting more people the ability to provide services seems to be a good thing. This is actually a central tenet of free-market principles.
The crumbling of the structures which protected previous industries from entry (skill barriers, cost barriers, etc.) has already exposed many professional services to the vagaries of the free market. The services now provided by sharing economy is continuously expanding and entering markets previously thought to be the domain of experts.
The shared economy business model is one of many disruptions which bring services to more people and at the same time opens up job opportunities for less skilled workers (think of the loom, Ford’s production line, computer programs, etc.). Although this time it seems somehow different. We are replacing expert occupations with new jobs that don’t always seem to be as attractive or able to provide employees with the wherewithal to survive.
So what is seen as an advantage for the average consumer has far-reaching implications for those employed in such industries. However, the question is, are these services benefiting the long term good of society, at a short term loss to those employed? If the shared economy is similar to other historical advances for the common good, then maybe we should all start working on ways to innovate our highly skilled jobs out of existence via the crowd?
Answering these questions is not simple. There are always two sides to this discussion and one side is from society’s perspective and the other side is from the individual’s perspective. Here I’m going to look at both and explain how we can get the most out of these shared economic systems. In my eyes, the answer revolves around education.
In my eyes, the answer revolves around education.
Like the guilds that fell before them, the experts whose jobs are eroded away by crowd-based activities are often replaced by easier and cheaper access to services and products for society. Based on this one would think that the rise of things like the sharing economy seem to be intuitively good for society. The question remains what to do about the newly unemployed?
I think that the answer lies in education and retraining. In fact regardless of what one thinks of the shared economy, providing easy access to education never seems to be a bad bet regardless of the reason why. Neither for society nor for the individual. It is well known that education bestows significant benefits on individuals such as,
For our society, there are strong arguments that investments in education lead to a stronger economy. For example, economists infer the aggregate positive economic effects of education based on the income differentials between educated and less educated (Blaug 1969). However, there are more direct correlations between investments in education and a stronger economy when one compares different countries (Freeman and Soete 1997).
However, there’s more than one way to educate a person. One could also argue for skills training on the job, paid for by the employer not the government. However, this seems risky for employers because they pay all the costs but the employee has all the benefits and could easily leave the job to a new employer (if such training doesn’t create loyalty). Hence, logically one would believe that universities need to supply this because employers would have too low incentives to provide it. In addition, a taxi company would hardly be prepared to send its drivers to programming courses to improve their employability.
In the 19th and early 20th century it was schools that provided the education and for most jobs it was sufficient. Because technology has advanced, now it’s the universities that need to fulfill this role. So, if we wish to provide benefits for society with the great advantages of the shared economy and at the same time give individuals a chance to adjust to the new economy, then education is the key.
You should be concerned by the escalating higher education fees.
If you agree with this, then you should be concerned by the escalating higher education fees over the last 20 years. This has made education unaffordable for millions of people. If the government decides not to support this necessary training by somehow reducing education fees, then one can only hope that the appearance of massive-open-online-courses or similar ideas will be able to fill the gap. Based on massive-open-online-courses poor completion rates and limited focus, this solution still seems a way off.
Hence we can surmise that the sharing economy seems to be good for society, we just need to make sure it’s also good for me an you. My opinion is we need to keep people educated and equipped with the right skills for today to make sure the system is sustainable. To achieve that, we need to increase the access and affordability of education. As Alvin Toffler once stated “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.”
Evan Shellshear is a creative applied researcher developing math based tools to solve difficult industrial problems. He has worked in many industries from automotive to medical and has published over a dozen scientific articles in peer reviewed journals. He has also published numerous articles on innovation and related areas. His specialty is on the translation of research tools into commercial products which he has done to create millions of dollars of value for companies such as Volvo Cars, GM, Ford, etc.
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