Thursday, August 21, 2014

Mr. Plouffe Rides the New 'Sharing Economy'

David Plouffe, a former senior advisor to President Obama, is joining Uber, the ride-sharing service, as head of the company's public policy shop. Not surprisingly Plouffe's hiring by Uber has made headlines because it is seen as validating the future of a key upstart in the expanding sharing economy - and as a recognition that Uber will confront many public policy challenges in the years ahead as entrenched taxicab interests and various regulatory authorities fight its market entry.

In today's Wall Street Journal editorial, "Plouffe for Free Markets," Mr. Plouffe is quoted as saying: ""Uber has the chance to be a once in a decade if not a once in a generation company. Of course, that poses a threat to some, and I've watched as the taxi industry cartel has tried to stand in the way of technology and big change. Ultimately, that approach is unwinnable."

Mr. Plouffe is right that incumbent competitors will seek to use laws and regulations either to keep new entrants out of the market, or barring that, to handicap their market participation. This is not to say that there are not legitimate health and safety concerns that might apply to Uber as well as the incumbents.

In a recently released Perspectives from FSF Scholars entitled, "The Sharing Economy: A Positive Shared Vision for the Future," FSF Research Associate Michael Horney and I discussed the rise of the "sharing economy" and the economic and societal benefits created by leading edge companies like Uber and Airbnb, which enables the sharing of rooms much like Uber enables the sharing of promises. While acknowledging that companies like Uber and Airbnb properly may be subject to some narrowly tailored generally applicable health and safety regulations, we emphasized:  

"These new business models, which utilize online applications, are delivering innovation, economic growth, and consumer satisfaction. Nevertheless, some governments see them as disruptions to existing marketplaces and want to take preventive action against them. In order for the new sharing economy business models to succeed in enhancing overall consumer welfare and our nation’s economy, a market-oriented and deregulatory perspective must become a shared vision."

Hopefully, Mr. Plouffe, who presumably knows a lot about government regulation from his service in the Obama Administration as a political advisor, will be able to help articulate the need for "a market-oriented and deregulatory perspective" so companies like Airbnb, Uber, and their sharing economy competitors (of which there are an increasing number) will not be shackled by unnecessary regulation.

Before Mr. Plouffe begins work in early September, perhaps he may want to read our "sharing economy" paper