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a16z Podcast | An Economics Take on the Sharing Economy
19 segments available
Love the term or hate it, the concept and reality of the "sharing economy" (or "gig economy" and so on) is here to stay. And in fact, argues NYU Stern professor and researcher Arun Sundararajan, it may even reduce the income distribution gap between the haves and have-nots in a way that previous shifts -- like the Industrial Revolution and traditional 20th century institutions -- never did. How? Because it's a new model for (crowd-based) capitalism -- one where we're increasing the segment of the population that owns the means of production. Or... have we just shifted value from traditional institutions to the platforms instead? Well, let's see what the data tells us. In this episode of the a16z Podcast, Sundararajan (who is also affiliated with NYU's Center for Urban Science+Progress and at NYU's Center for Data Science) shares the latest findings, economics research, and more from his new book on The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. We cover the challenges of capturing this shift in GDP (as well as the challenges of GDP and measuring tech progress in general); the challenges of creating a new funding model for the "social safety net of the 21st century workforce"; the challenges of "data darwinism", reputation, and ratings; and finally, how and just who should regulate the sharing economy?
Segments Timeline
Welcome to the Sharing Economy
In this segment, the host introduces Arun Sundararajan, a professor at NYU's Stern School of Business and an expert on the sharing economy. They discuss the term 'sharing economy' and its various interpretations, including the gig economy. Sundararajan's new book, 'The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism,' sets the stage for a deeper exploration of this evolving economic model.
"hi everyone welcome to the asic Cinzia podcast I'm sonal and I'm here today with the rune cinder origin who's a professor at NYU's Stern School of Business and he's a longtime expert on the so-called ..."
The Evolution of the Sharing Economy
Arun Sundararajan reflects on the early discussions surrounding the sharing economy, including an op-ed he wrote years ago. He highlights the growing recognition of the term and its implications for government regulation. This segment emphasizes the significance of the sharing economy in contemporary economic discourse and its potential impact on traditional institutions.
"so no well it's funny everyone cuz I do recall we wrote an op-ed about 40 over 4 years ago in Wired and I think it was one of the very early op eds we didn't coin the term by any means but I did do a ..."
Understanding Crowd-Based Capitalism
Sundararajan explains the concept of crowd-based capitalism, which represents a shift from traditional employment models to a system where individuals leverage their resources and skills in a more decentralized manner. He discusses how this model retains capitalist principles while introducing elements of sharing, emphasizing the commercial nature of these interactions.
"been around for a while and I think we do talk about it a lot but you're writing one of the early definitive books on the topic I actually would love to deep dive on some of the things that people don..."
Challenges of Measuring Economic Impact
The conversation shifts to the challenges of capturing the economic impact of the sharing economy within traditional GDP measures. Sundararajan outlines three key issues: the unmeasured value created by technological progress, the lack of insight into income distribution, and the failure to account for quality of life improvements. This segment highlights the disconnect between GDP and the realities of modern economic activity.
"heart is capitalist one of the themes that came up on a recent podcast we did with the US Secretary of Commerce penny Pritzker was that the Department of Commerce is looking into figuring out how to a..."
The Disconnect Between GDP and Progress
Sundararajan argues that the rise of crowd-based capitalism could catalyze a paradigm shift in how we measure economic progress. He discusses the growing gap between traditional GDP metrics and the values that reflect true economic advancement, such as access to resources and quality of life. This segment emphasizes the need for a new framework to evaluate economic success in the context of the sharing economy.
"that's one problem a second problem has to do with distribution GDP is a total measure meaning it's adding up all of the dollars and it's not giving us a sense for how equally or unequally they're dis..."
Economic Effects of the Sharing Economy
In this segment, Sundararajan categorizes the economic impacts of the sharing economy into four key areas. He discusses how increased efficiency and variety lead to greater consumption and productivity, ultimately driving economic growth. This analysis underscores the positive implications of crowd-based capitalism for the economy.
"big disconnect between what we're measuring which is GDP and what we value as things that really point to progress and so as this gap starts to grow I think much like there's a gap between the observa..."
Democratization of Opportunity
Sundararajan explores how the sharing economy democratizes access to resources and opportunities, allowing individuals to engage in economic activities previously limited to the wealthy. He highlights the shift from traditional labor roles to small business ownership, increasing the number of people who own the means of production. This segment emphasizes the transformative potential of the sharing economy in promoting equality and access.
"inclusive right well let's spend a few minutes talking about the economic effects of the sharing economy because you know for better or worse you you are an economist by training you've done a lot of ..."
Economies of Scale in a New Era
In this segment, Sundararajan addresses the potential loss of traditional economies of scale as production shifts to smaller, decentralized operations. He argues that while some economies of scale may diminish, new efficiencies can emerge in the sharing economy, fostering innovation and competition among small business owners.
"misusing you because you're allowed to talk about it anyway but yeah everybody quotes from it nobody's actually read the whole thing from start to finish anyway the core of piketty's argument about in..."
Empowerment Through Entrepreneurship
Sundararajan counters criticisms of the sharing economy by emphasizing the empowerment of individuals as small business owners rather than mere labor providers. He presents data showing that a significant portion of value creation in the sharing economy benefits those below the median income, highlighting the potential for reduced inequality.
"some negatives and this has to do with some gains and some losses of economies of scale for those of us who aren't economists an economy of scale is when as you increase the amount of something that y..."
Rethinking the Social Safety Net
Sundararajan discusses the challenges of adapting the social safety net to accommodate the gig economy. He argues for a new funding model that involves partnerships between individuals, government, and third-party institutions, drawing parallels to historical shifts in employment and benefits structures.
"individual alongside each tech billionaire that the sharing economy creates it also creates millions of small entrepreneurs and this distinguishes the sharing economy from some of the technological ad..."
Creating a New Safety Net for Gig Workers
In this concluding segment, Sundararajan outlines the need for innovative funding models to support gig workers in the 21st century. He expresses optimism about developing solutions that can provide stability and security for individuals in a rapidly changing workforce landscape, emphasizing the role of companies in this transition.
"here's why it's a challenge today it's because over the 20th century we made great strides in constructing a social safety net for the full time employee and it made sense to do that because that was ..."
Navigating the New Future of Work
Sundararajan outlines the benefits and challenges of the evolving workforce landscape, where work is increasingly organized through marketplaces. He contrasts this with past trends like offshoring and automation, emphasizing the importance of adapting to new firm-market hybrids. This segment highlights the need for a social safety net that reflects these changes and addresses the implications for workers in this new economy.
"will be far more efficient than each company individually stabilizing income and paying for vacation for their full-time employees I always make the argument on this podcast as well that the third par..."
Decentralizing Platform Ownership
This segment delves into the concept of decentralized ownership models for platforms, such as platform cooperatives. Sundararajan discusses the potential for shared ownership among workers and the excitement surrounding these new models. He acknowledges the challenges posed by traditional shareholder corporations while expressing cautious optimism about the future of cooperative platforms in the gig economy.
"of work I don't think we'd contest that the question for me is if we accept as a given that this might be the future of work and that it changes the nature of the firm the topic I love talking about t..."
The Impact of Ratings in the Gig Economy
Sundararajan addresses the critical role of ratings and reputation in the sharing economy. He warns of the biases that can affect ratings and the potential consequences for workers' access to opportunities. This segment emphasizes the need for careful design of algorithms to mitigate bias and ensure fair access in a system where reputation can dictate future work prospects.
"I'm cautiously optimistic about their potential in certain spheres to me the shareholder cooperation is still a good model that's what plenty of life in it the challenge that gives me the most concern..."
Algorithmic Solutions to Bias
In this concluding segment, Sundararajan discusses potential solutions to the biases inherent in reputation systems. He contrasts the limitations of human judgment with the possibilities offered by algorithms, suggesting that they can be programmed to detect and correct biases. This segment highlights the importance of ensuring that platforms are held accountable for fair practices in their rating systems.
"lot of ways it's no different than what happens in real life institutions where you have a probably a far far worse system you're so subject and a lot of companies to the whims of one person's review ..."
Evolving Regulation in the Sharing Economy
The conversation shifts to the evolution of regulation in the sharing economy, with Sundararajan noting that while regulation is increasing, it is often being managed by non-governmental entities like platforms. He discusses how platforms like Uber and Lyft are now responsible for enforcing regulations that were traditionally handled by government bodies.
"then to come full circle to where we started not on this podcast but four years ago with the regulation side of things where what have you seen change in that four year period in terms of where the go..."
Data-Driven Regulatory Solutions
Sundararajan proposes a new model for regulation where data holders, such as platforms, take on regulatory responsibilities. He suggests that instead of the government collecting data, platforms should manage compliance and reporting, leveraging their data to enhance regulatory effectiveness and align incentives.
"of like maybe setting some of the regulations providing advice on them and then some other party in society which happens to be the transportation network company is actually and forcing the regulatio..."
Aligning Incentives for Better Regulation
In this segment, Sundararajan discusses the importance of aligning incentives between platforms and regulatory goals. He argues that by delegating regulatory responsibilities to data-holding entities, we can create more effective solutions for issues like discrimination and safety, ultimately benefiting all stakeholders involved.
"that's really interesting because data is such a key key part of this there's a lot of excitement and there has been for the last decade about open data which is sort of an idea of going in the opposi..."
The Future of Sharing Economy Regulation
Sundararajan concludes by reflecting on the future of regulation in the sharing economy, suggesting that it will involve multiple stakeholders rather than traditional government oversight. He emphasizes the need for a collaborative approach to regulation that adapts to the evolving landscape of work and technology.
"is the greatest when instead of saying give me your data we say here's the responsibility you do the regulation or the incense incentives are more aligned because everyone benefits yeah and if the inc..."