Archive for July, 2015

Uber shows the pervasiveness of sharing

July 7, 2015

There is nothing very remarkable about sharing. Even with rides it goes on in many ways. I use my car as a taxi-like service when I give friends a ride to the airport. No money changes hands but I hope the favour may be returned. The alternative is to call a licensed taxi service or now to use Uber. On vacation I may rent a car, boat or bike. These belong to someone who shares their use with others. Truck rentals are another form of sharing. Any time the word rental is used, it relates to some form of sharing.

 

In other venues we share space in places like restaurants, hotels, theatres, car washes, garages, and in rental clothing outlets. In a capital intensive society the ownership of capital provides both the opportunities and incentives for sharing and creating ways to be financially rewarded. Making intensive use of capital or finding ways for it to be used and paid for is a natural inclination for its owners.

 

The complaint by taxi owners and drivers is that they provide a service under conditions which are less favourable than those of Uber. Rules can be changed but from society’s viewpoint Uber is making more efficient use of capital resources. Cars parked or used to carry one person, say to work and back, means that it is under utilised for a large part of the day. Much of city street space is often used as a parking lot for idle capital.

 

So far the sharing examples relate to physical capital. Many items that carry a patent or copyright, such as the text of a book, a piece of music, picture or formula are bits of intangible capital which can be used over and over again without wearing out like a car or piece of machinery. Society shares aspects of this type of capital and has set up complicated means for owners to be rewarded from the sharing which takes place. Thus owners of this intangible capital can claim rewards from those who use it. The users will often try to avoid making payment, and avoidance is now aided by the ease of distribution over the Internet.

 

An outstanding feature of modern societies is that they contain large amounts of tangible and intangible capital, much of which is used less intensively than it could be. Homeowners, often for reasons of convenience, own their own set of indoor and outdoor appliances which are used less intensively than if they were shared. A wealthy society is often characterized by people owning assets and a lack of sharing. When hard times occur, as with gasoline rationing during wartime, then people resort to sharing and planning rides to make greater use of a planned trip.

 

While Uber for ride sharing and rentals in homes for room sharing are obvious examples of this practice, every economic activity can be examined for its sharing potential and to explore why it does or does not occur. Sharing is as useful a concept as scarcity in explaining the basis for how economic activity is organized and managed. Developments in information technology have expanded the sharing potential for certain types of activity, often for the greater benefit of consumers, but at times for producers who can organize activities to create additional streams of income or exposure to potential buyers.