Why the Left Should Fear the Sharing Economy

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Tue, Nov 10 - 9:00 am EDT | 3 years ago by
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Free Radical - Uber

The rise of the sharing economy has been challenging for the left. Not only is the successful practice of capitalism a source of ideological discomfort, but the rise of companies like ride-sharing Uber has fractured the usual leftist political alliance of the lower classes, urban hipsters and protected special interests. Perhaps most importantly, the sharing economy is a mortal threat to the left for the simple reason that it makes nearly everyone their own business.

The left’s distaste for Uber is easy to understand. For one, it threatens to break a government-created taxi cab cartel. Ostensibly for “consumer protection,” the taxi industry has long been heavily regulated. Even if consumers were the original motivation behind the rules, as always happens with regulatory schemes, it was quickly taken over by the parties with the most at stake: cab drivers. They now use regulation to limit supply and keep out competition.

Uber has done an end-run around their carefully crafted wall of regulatory protectionism and cabbies are crying foul. They claim it’s unfair for Uber not to have the same costs imposed on them, conveniently ignoring the greater benefits they have long derived from the system.

Recognizing the threat to their subsidized business model, cab drivers have lashed out across the globe. Many have resorted to violence and intimidation – and, in market-hating France, have even succeeded in effectively banning the upstart competition.

In the U.S. this can be said to be primarily a local politics issue, as that is where taxi regulations are generally set, but since the bulk of the Democratic party base is situated in the big cities where the Uber wars are taking place, it has clear national implications.

Democrats all over the country benefit by exploiting the narrow focus of special interest groups like unions. A FiveThirtyEight article recently explained how they even deliberately schedule local elections at inconvenient times so that turnout will be low. The fewer voters show up to vote for a school board election, as an example, the greater the power of the teachers’ unions whose members have the strongest incentive to make it to the polls. This produces results more likely to serve the interests of particular interest blocs, to which Democrats shamelessly pander, instead of the public at large.

These pockets of special interests are essential to the Democratic party electoral strategy. Therefore, the more such unions and industry cartels are weakened by disruptive technologies, the weaker their political hand becomes.

Leftists have also recoiled at the unrepentant market pricing of Uber, in particular its use of “surge pricing.” When demand is at its highest, either due to rush hour traffic or unexpected events, Uber raises prices to compensate. This is how efficient markets operate, as the higher prices encourage others to offer rides, thereby increasing supply to match the greater demand. But regardless of the logic, leftists hate how such prices feel, the same way they insist on anti-price gouging laws despite the clear harm it does by restricting supply of critical goods precisely when they are most needed.

Airbnb has brought similar challenges to another pillar of big city leftism: housing control. In San Francisco, tight housing rules plague the city, leading to shortages and excessive rents. Yet rather than celebrate a service that provides a relief valve from government-imposed shortages, local politicians and rich leftists disdainful of services for the proletariat pushed a ballot measure to limit short-term rentals. Airbnb narrowly defeated the effort last week, at considerable expense, but it’s unlikely to prove the end of the fight.

Like Uber, key Democratic party special interests stand opposed to Airbnb. Unionized hotels don’t want the competition, and not-in-my-backyard rich San Fran leftists don’t like what it represents culturally. So bad is the housing situation in the city, however, that even many of those that would elsewhere be considered wealthy need to make use of the service for extra income.

Therein lies the sharing economy’s true threat to the left.

Among regular Americans, the benefits brought about by new companies like Uber and Airbnb are obvious. Uber provides a better and cheaper services than the insulated cab cartel, and Airbnb opens up greater choice and opportunity for travelers and homeowners alike.

It’s common sense capitalism. It’s the free market made tangible for those otherwise skeptical of its benefits and reflexively disdainful of its practice. The economic value of putting otherwise unused capital to work is painfully obvious, even to Democratic voters.

For an ideology that has long stoked fear of market processes and demonized participants for political gain, this is an existential threat. It’s a lot harder to ‘otherize’ business when everyone is running one.

Compounding the challenge for the left is that the activities themselves are not in any way novel. The public at large is already familiar with the sort of commerce involved in each case, such as the general idea of paying someone to drive them around, or renting a room for short stretches. What has changed are the barriers to entry in offering these services. And these two industries are only the beginning. Technological advancement is going to further democratize the market and continue tearing down barriers in almost every sector of the economy. The regressive forces of the left will fight desperately to erect new ones through laws and regulations, but it’s a losing battle.

Hillary Clinton and other Democrats have struggled to navigate the issue. She’s tried to appear current in an economic speech by acknowledging what has seduced many of her constituents, noting that “many Americans are making extra money renting out a spare room, designing websites, selling products they design themselves at home or even driving their own car.” But she also included a dog whistle, with what amounts to a promise to special interests to strengthen the protectionist barriers opposing these very same developments, when she claimed that the sharing economy is “raising hard questions about workplace protections and what a good job will look like in the future.”

New York’s socialist Mayor Bill De Blasio was less circumspect when he took to the op-ed pages to declare that “it’s our responsibility to act,” by which he meant regulate Uber all but out of business.

He lost, and was forced to abandon his plans to cap the number of Uber vehicles in the city.

Perhaps best illustrating the growing disconnect between leftwing politicians and their constituents was Kate Upton’s succinct response on Twitter to De Blasio’s efforts:

For a party that has made opposing capitalism not just policy but a signifier of cultural status – an ultimate act of coolness – Upton’s tweet to her 2 million followers wasn’t just a warning shot, it was a full on broadside attack. It signaled that Uber is trendy, and that means that whether they fully realize it or not, the practice of capitalism for everyday Americans is becoming hip and cool. That should scare the hell out of the political left.

Photo by Adam Berry/Getty Images

Brian Garst is an advocate for economic and individual liberty. He works as Director of Policy and Communications at the Center for Freedom & Prosperity, a free market think-tank dedicated to preserving tax competition. His writings have been published in major domestic and international papers, and he is a regular contributor for Cayman Financial Review. He also blogs at BrianGarst.com and you can find him on Twitter @BrianGarst.

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