There Is No "Sharing Economy"

A blog about business and economics.
Dec. 26 2013 10:02 AM

There Is No "Sharing Economy"

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Renting's not sharing.

Photo by Spencer Platt/Getty Images

While I like many of the companies that tend to fall under the banner, I'm finding myself more and more annoyed by the term "sharing economy," which is used as shorthand to categorize a fairly miscellaneous set of firms virtually none of which involve sharing in any meaningful way. Under the circumstances, I was glad to see Rachel Botsman's presentation on how the sharing economy lacks a shared definition in which she attempts to rescue the concept with a more precise typology.

But I don't think it works. This is a dumb term, and it deserves to die.

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It started, as best I can tell, with Zipcar, which predates most of these companies and from the get-go described its product as "car sharing." The main problem with that description is that it wasn't car sharing. Zipcar was not and is not a service that facilitates the formation of automobile co-ops in which multiple households combine to collectively own and share a fleet of vehicles. That would be an interesting idea for a business, but it's not Zipcar's business. The way Zipcar's business works is that a firm owns a fleet of vehicles and then offers them as short-term rentals to its customers. They made up the word "car sharing" because the rental car business was well-established already, and Zipcar wanted to rent cars in a different kind of way, so they needed a way to signal to people that it wasn't a head-to-head competitor with Hertz.

But of course things metastasized. So when cities started creating municipally chartered short-term bicycle rental entities, those were known as "bike sharing." Things really got nasty when Airbnb launched a short-term rental platform for residential housing, because both the housing and hotel sectors are heavily regulated and taxed in different kinds of ways. Wouldn't it be better to just say we're sharing rather than running a hotel? Tom Friedman's latest sharing economy column is about a website that seems to be a platform for selling used clothing.

These are mostly great businesses. The sale of used durable goods has always played a role in the economy, and insofar as the Internet lowers search and transaction costs, its role will grow. For rentals I think the case is even stronger. Traditionally, in order to make renting viable the goods available for rent had to be stockpiled in huge centralized depots that were easily discoverable. Thanks to digital technology, it's now feasible to do what Zipcar does and disperse the cars throughout the city. Since the cars are dispersed, they're more convenient. But none of this is sharing. My neighbor and I share a snow shovel because we share some stairs that need to be shoveled when it snows and we share responsibility for doing the work. If I owned the stairs and charged him a small fee every time he walked in or out of the house, that would be the opposite of sharing.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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