Mrs. PoP is under the weather and hopped up on decongestants, so today you’ve got me, Mr. PoP. And we’re going to be talking about something danced around a while back when we were discussing AirBnB – the so-called “sharing economy.”
What Is The Sharing Economy?
article in the Economist, the sharing economy is essentially anything that involves a consumer to consumer transaction that is facilitated over the interwebs. So AirBnB is one example where you can rent the room of another person, or rent your own room out. The core issue is that most of us own assets that we don’t actually use for 90% of the time, and with the advent of communication platform we call the internet, we can get buyers and sellers together in ways we never have been able to in the past.
So What Else Is Out There? And Is This Legal?
So what else can you borrow or rent from your fellow man? Try your car! Thats right, with services like RelayRides you can rent your car out. If this sounds strange, consider that I spend about 1.5 hours in my car commuting to and from work every day. If I could rent out the car for the other 22.5 hours and make money from it (assuming we factor in gas and maintenance), why not rent the thing out on Relayrides.com?
Other services like Paperback swap, CD and DVD swap have been around for 5 or 10 years (eons in internet time); other examples like food, tool and even babysitting co-ops have been around for generations.
This doesn’t stop “The Man” from trying to put the kibosh on all of the services.
Here is a great aricle in the NYT that explains the situation with auto insurers, and the laws put restrictions on what it means to “own” different forms of media like CD’s and books are in flux as well (DRM, as the cool kids call it). Keep in mind that large corporations make big money when 5 people buy a car and then use them 20% of the time, instead of sharing one car that gets 100% usage. The same goes for the insurers who would get to insure less vehicles, the record labels who would sell less albums, and the publishing companies who will sell less books.
RelayRides in particular has big issues around insurance as some insurers like Geico are changing their policies to explicitly state they don’t cover accidents involving ride sharing. The media swap sites seem to be ok; possibly because the big media companies are too busy right now to care.
AirBnB appears to suffer from some local tax and law burdens in some cities like NYC, but by and large the personal property rights you have as a part of home ownership appear to outweigh any legislative actions by the local Motel 6 that just lost some business (I assume they’ll still keep the light on…)
Why Could This Be A Big Deal For Frugalistas and ERE Inclined Folk?
One of the first rules of financial independence is keep your cost structure low, and your flexibility high. For many of us, that means not buying much stuff, and making the most of what we have. The sharing economy does both by letting us easily borrow or rent instead of own, and also make money from the assets that we do end up purchasing.
The PoPs are trying out some CD and paperback swap sites to augment the awesome library that we also pay for with our property taxes, and we might try to rent out my car in the future. If we were not surrounded by retirees, we would probably try to start up a tool exchange as well. So can I get rich by sharing stuff with others? I don’t think we’re going to net much on this idea, but as a way of avoiding future purchases it looks promising.
So would anybody else out there consider renting out one of their rooms through AirBnB, or renting a car from RelayRides? How does the sharing economy play a role in your daily life?