AMC Key Issues: Economic Freedom

“What’s mine is yours” is a principle that, when exercised voluntarily, most recognize as foundational in strengthening relationships between neighbors and within communities.

Yet oddly enough, when it comes to empowering the relationship between workers and consumers, the virtue of sharing becomes decidedly less obvious – and, in fact, even grounds for suspicion – to some.

A look at how state and local governments across the nation have responded to the rise of “sharing economy” services illustrates an ill-considered hostility and skepticism that risks stifling such innovations.

Despite the overwhelming popularity of the likes of Uber and Airbnb, municipalities have greeted these life-enhancing services with bouquets of taxes and regulations. Often pressured by the lobbying efforts of tenured industries, lawmakers respond to change by covering it with red tape.

Take the case of Turo, a car-rental service that allows users to rent out one another’s personal automobiles. (Think Airbnb but for transportation.)

The most active among Turo’s antagonists? Enterprise Rent-a-Car, the largest traditional car rental company, which has sent gobs of lobbying dollars into circulation in an effort to influence policymaking against Turo.

Indeed, among the most vehement opposition to the sharing economy has come from market incumbents made uneasy by the prospect of heightened competition from newcomers. As Skylabs co-founder Adam Trisk acknowledged in Inc. Magazine in 2016, the “return to self-sufficiency and communal exchanges” delivered by the sharing economy “threatens many of today’s established industries.” And “[f]or those at the helm of traditional organizations,” Trisk declared, “this is war.”

But what Trisk observes as “war” is what most would simply recognize as what economists call “creative destruction” – that disruptive churn in which new improvements upon the delivery of valued services replace formerly unrivaled business models. It is precisely this manifestation of market competition that grows the economy and expands consumer choice.

Policymakers’ push to trap both new business models and old under the same tax and regulatory regimes is counterproductive. Far from “leveling the playing field,” such policies simply preserve privileges for incumbent companies and discourage risk-taking by innovative startups.

Tax and regulatory policy should be designed to invite new competitors, not protect established ones. Allowing the market to function absent heavy-handed intervention produces enriching experiences for consumers. And free societies should reward, not punish, entrepreneurs eager to improve the delivery of valued services – and our lives.