In a recent blog titled Welcome to the Sharing Economy – Also known as the Collapse of the American Dream” Steven Straus comments on a blog written by Thomas Friedman for the NY Times “extolling the virtues of the sharing economy.” (See “Welcome to the Sharing Economy”)   Based on his view of the sharing economy, it is easy to understand why Mr. Strauss sees it as the end of the American dream. However, that can be viewed as a step forward, not backward.

As an academician, Mr. Strauss sees the rise of the sharing economy in bleak economic terms:   “The 21st century sharing economy isn’t being embraced because people want ‘lightweight (asset-free) living.’ It’s usually embraced for the same reasons it was embraced in the 1920’s and 1930s. For many people, there is not any other choice.”  Strauss compares our current economy with the US economy in the 20’s and 30’s, when income inequality was roughly the same, and concludes that many micro-entrepreneurs are being forced into coming up with creative ways to make a living.

Strauss calls Airbnb an “archetype of the trend” in business and describes it as a service that allows a person with a spare room to rent it “to complete strangers, who in turn get to stay with complete strangers. What a delightful and desirable use of one’s home!” 

Did Strauss bother to finish reading Friedman’s blog? Airbnb guests and hosts can verify each other’s personal information and connect Facebook profiles; afterward, guests and hosts rate each other online.  There is an incentive to deliver a good experience, because if you get a series of bad reviews, you’re done. Friedman gets it right when he says that Airbnb’s real innovation is “trust”. “It created a framework of trust that has made tens of thousands of people comfortable renting rooms in their homes to strangers.”

Strauss criticizes Friedman for calling these people “micro-entrepreneurs”, stating that the term seems, instead, just a “euphemism for being an employee, except with reduced compensation, job security, benefits and protections”.  I don’t know many employees in this economy that are being paid a sustainable wage, have job security, employee benefits or protections. That is part of the old American dream.  The reality is that people who turn their homes into bnb’s are making money without having to leave their home and waste gasoline getting to a job, they have control over how much they work and the type of work they do, and they can hire friends and relatives to help them run their businesses, creating more jobs in the community.  They clearly have more control over their lives than most employees.  In fact, I’m sure many micro-entrepreneurs are also employees who created their bnb or similar gig on the side just to make ends meet.

Friedman attributes part of the growth in popularity of the sharing economy to the new economic reality that everyone doesn’t need to individually own everything. For example, “there are 80 million power drills in America that are used an average of 13 minutes. Does everyone really need to own their own drill?”  How much energy is consumed to make a drill? Sharing certain assets makes sense environmentally and economically. This is part of the new American dream, where people make environmentally and economically responsible choices about how to live.

Strauss seems to blame the sharing economy for the collapse of the American dream.  The truth is, the old dream of the American employee who was paid union wages and worked for a company that cared about it’s employees died on it’s own as a result of globalization and the rise of the corporation. As old dreams collapse, new dreams emerge.  Sharing resources and property is what the new American dream is all about. It’s time for the outmoded American dreams to be set aside to make space for a sharing economy where everyone can lighten up!

January 29, 2014

Bill Ballinger

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1 Comment

  • July 11, 2020 at 2:29 am // Reply

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