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The caring, sharing economy

Wednesday, November 2, 2016 0:13
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Whoever coined the phrase “the sharing economy” is a genius. The basic concept is that people “share” their resources, and earn a few quid in the process. Something which might otherwise be unused or under-used, such as a spare room, is put to work for a profit. 

Of course, there is nothing really new about this, but technology has made it all an awful lot easier. It was perfectly possible to rent one’s spare room out before the advent of Airbnb, but Airbnb brings together hosts and guests smoothly. This potentially increases the number of hosts and guests. Lower barriers increase trade.

George Osborne was a big supporter of the sharing economy. For example, he increased the “rent a room” threshold significantly, taking a chunk of room-let earnings out of tax. The UK has also so-far resisted the kind of nonsense being imposed in Berlin, where property owners are dictated to by the state as to what they can and can’t do with their own property.

Airbnb has been accused of pushing up rents in London and other cities, by shifting the balance between short-term holiday lets for tourists and long-term rentals for permanent residents. Maybe, but the main problem in London and other places is an overall shortage of housing. I suspect that supply and demand have increased in the sharing economy, so the impact on prices is more difficult to calculate anyway. And in the new export-oriented era, surely we should celebrate making our country a more attractive destination for visitors?

In Paris, where they take a very different view on what people are allowed to do with their money, an entire industry of buy-to-Airbnb has cropped up – precisely because the authorities have tried to stifle a more regular buy-to-let industry. So once again, a well-intended rule has pushed people “underground”.

Ultimately, the sharing economy is just “the economy”: the system by which resources are allocated, hopefully as efficiently as possible. 


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