A Philosopher's Blog

The Sharing Economy III; Resources (Human & Other)

Posted in Business, Technology by Michael LaBossiere on July 28, 2014
Olathe Human Resources

Olathe Human Resources (Photo credit: City of Olathe, KS)

In my previous two essays I wrote about the new sharing economy, focusing on regulations and taxes. In this essay I will cover resources (human and other). As noted in the previous two essays, the new sharing economy is exemplified by companies such as Uber and Airbnb that serve to organize transactions between individuals. In the case of Uber, people can serve as drivers for Uber selling rides in their own cars—without (as of this writing) all the usual costs and regulations of operating a cab. In the case of Airbnb, people can rent out property and (as of this writing) generally avoid the usual regulation and taxes associated with running a hotel.

For the people providing the goods and services, the new sharing economy makes it easier for people to make money. In general, the new sharing economy involves three parties. The first is the person who provides the actual good (apartment, for example) or service (a ride to the airport, for example). The second is the person who uses the service and the third is the company that provides the organizing service (often via an app) While this is an old model (people have long offered services and goods via things like newspaper ads), technological advances have changed the scale of this once informal economy. It has also served to blur the traditional roles somewhat. To be specific, those who provide the goods and services are not actually employees of the organizing services and those using the goods and services are not exactly customers of the organizing services. There are some advantages and some disadvantages in regards to these roles.

In the case of those providing the services and goods, one of the obvious advantages is that they can make money. While they could do this without the organizing service, the service obviously makes this easier and provides other advantages.

One of the advantages of not actually being an employee of the organizing services is that the provider has a high degree of autonomy that is usually absent in the traditional employee-employer relationship. The provider can (within the constraints of economic need) work as little as desired and is free to stop at will. This level of autonomy certainly has considerable appeal to some people—especially people who are looking for a more traditional job while making money to pay the bills. In some ways, the situation is somewhat like being a temp.

Of course, there are some disadvantages to being a provider. One is that doing this is rather like being self-employed in that there are typically no benefits and no job security. Also, the risks and costs tend to fall heavily on the provider. For example, if someone crashes into the company truck Sally is driving, then the company handles the matter. But, if Sally is freedriving for Uber and her car is hit, this is most likely going to work exactly as it would if Sally was just driving to Starbucks for a latte—that is, it is on her.

Another point of concern is that the organizer might be in the position to set rates or impose other limits—much like a traditional boss can. For example, Uber can set what drivers are paid on its own

But, this is nothing new—people who do freelance work or are self-employed in the usual sense face all these problems. After all, being the worker is generally not an optimal situation and being what amounts to a temp or freelancer can be even less optimal in terms of security and pay.

There are numerous advantages to the organizing companies. One is that they have people doing the actual work for them (for example, driving people) who are not employees. They also typically have people providing the resources (cars, gas, houses and so on) that are used. While the companies do incur costs in terms of running the organizing functions, they are able to avoid (or significantly reduce) the usual costs of running a business. For example, a hotel needs to have hotel employees (maids, etc.) and an actual hotel. Airbnd does not—the providers provide the services and buildings. As another example, a service that organizes drivers does not need to buy cars, maintain them or insure them—thus resulting in considerable savings.

In essence, the new sharing economy splits management from what would traditionally be the resources (human or otherwise) of a company. The organizer takes on the role of management while avoiding the need to have traditional human resources (beyond the administrative aspects of the business) and the need to have the material resources (beyond those needed for the administrative aspects).

Some companies do operate in something of a hybrid mode—having workers as well as material resources owned by the company while also having a sharing aspect to the business. This is, clearly enough, a variation on the old model of a company hiring temp workers, freelancers and contractors.

This model can, apparently, be very profitable—in large part due to matters of scale. After all, getting a slice of thousands of sales can result in a nice profit. Also, many of these companies benefit from internet inflation—the almost magical overvaluation of companies with business models based on the internet.

Given the apparent success of companies like Uber and Airbnd, it is reasonable to expect other companies to spring into existence to create what might be a new internet bubble—the sharing bubble. Of course, there are some clear limits on what sort of companies can exist—for example, airlines and heavy manufacturing are not really fit for the sharing economy. However, additional advances in economy might see some new realms for the sharing economy. For example, if 3D printers become truly viable, light and specialized manufacturing might become part of the sharing economy.

 

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