Lawmakers in Congress and regulators with the Federal Trade Commission, a government regulatory agency with the stated mission of “[preventing] business practices that are anticompetitive or deceptive or unfair to consumers,” are discussing how to craft regulations governing businesses in the growing “sharing economy,” such as Airbnb and Uber.
Federal Trade Commission (FTC) Chairwoman Edith Ramirez and U.S. Sen. Mark Warner (D-VA) discussed the issue during a December 9 panel hosted by the Brookings Institution on “Modernizing Labor Laws in the Online Gig Economy.”
Applying a Light Touch
At the discussion, Ramirez advised taking a wait-and-see approach in regulating the new business model, which directly connects consumers and service providers who are owner-operators of their services, as opposed to employees of a company.
Christopher Koopman, a research fellow at the Mercatus Center at George Mason University, says this is the right approach.
“Typically, regulators at every level say, ‘We need to do something. If we are not doing anything, we are not doing our job,'” Koopman said. “I think that is not the correct approach to take to this issue.”
Responding to Changes
Koopman says federal regulators are waiting to see how the sharing economy changes things for workers.
“In some ways, the sharing economy is a response, as opposed to a driving force, behind the growth in the independent workforce,” Koopman said. “And the FTC, to this point, has not come out one way or another on the issue. They basically stepped back and said, ‘We are going to let this play out to see where problems arise, if problems arise.'”
‘Quick to Innovate’
Mark Thornton, a senior fellow at the Ludwig von Mises Institute, says even a light-touch approach is too heavy-handed.
“The FTC has no role in the sharing economy,” Thornton said. “The lack of government regulation is what keeps consumers on their toes and keeps the companies quick to innovate and improve. Government regulation gives consumers the incentive to not be ‘on guard’ and gives the companies monopoly power and opens opportunities for a black market.”
Thornton says regulation is often a cure that’s worse than the disease.
“Government ‘regulation’ sounds like a good thing, but what it really means is monopoly power, inefficiency, indifferent and low-quality service, high prices, and stymied innovation,” said Thornton.
Better for Consumers
Thornton says consumers are the real beneficiaries of the growth in the sharing economy.
“The sharing … economy is a tremendous development for consumers and labor,” Thornton said. “Consumers get better products and services, such as cab rides and lodging, and they get lower prices compared to the government-regulated industries, such as taxis. Labor and owners benefit because they generate much-needed cash flow from their underutilized capital, like cars and condos.”
Tony Corvo ([email protected]) writes from Beavercreek, Ohio.