“Sharing economy” under assault from politicians

Image: Originally form the Economist
Image: Originally form the Economist

The effort to kill innovative new businesses which help people to deploy latent capital (cars, kitchens, bed rooms, etc.) is not about “employee” versus “independent contractor” status. Really it’s about cronyism and taxes. The cab companies, the hoteliers, the restaurants, all long cozy with politicians don’t like the new competition. Which is understandable. But in a market these old legacy companies, and legacy business models would have to adapt. In a crony economy, such as we have now, these companies run to their buddies in City Hall or Washington DC. In the process commerce slows, jobs are destroyed, innovation mothballed, service for consumers drops while prices rise.

The legacy companies and their cronies however consolidate their power and City Hall knows it’s getting its piece of the pie.

(From CNBC)

“The on-demand economy is under threat as regulators and politicians continue to pressure the tech start-ups to convert workers to full-time employees—or offer more benefits,” said Jeremiah Owyang, founder at San Francisco-based Crowd Companies, which analyzes the sharing economy, noting that start-ups like Shyp and Instacart have made moves in recent months to convert some independent contractors to employee status. “This conversion to employee hasn’t always gone well for (the) start-up. It can raise costs of business, and shuttered start-ups like Zirtual and Homejoy have cited that these pressures break the very business model.”

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