We already have tool and other rental places. Heck you can even rent a room of furniture. There are also pawn shops and shonky shops galore. So none of what is described is new.

The main thing Airbnb, uber, and co tackle is excessive government regulation and taxation. You no longer have to pay those extreme occupancy taxes since you aren't a hotel but instead are just some people letting some other nice people live with you. (No you really are a hotel.) And you aren't a cab company. You are just someone sharing a ride, not a cab company. So you don't need to buy a medallion or fill out all the paperwork. (Yep, it's a cab company.)

Essentially the internet lets companies source highly distributed assets which makes it harder for governments to monitor and regulate them. Those transaction costs that are getting reduced are mostly government.

I recently looked at a clothing rental service. I thought it was a great idea, especially since my husband has been talking about downsizing. Great idea, but certainly needs some tweaking.

The first set of clothes that they were going to send me in late spring included a black turtleneck and other such basic items. First of all, the appealing thing about such a service is to have perfectly seasonal clothes. A turtleneck in late spring in Texas?

Also, I can provide the basics: jeans, and black and white clothing. I want trendy, statement pieces that I don’t want to invest in if I’m just going to wear them once or twice and send them back.

That said, I am exciting about entering a sharing economy.

Sharing a kitchen sounds like hell. Bitch, this is MY kitchen don't you go putting the pans in the wrong place and using up my cinnamon!

What I would like to share is a workshop. With woodworking tools I could try out without having to invest in them.

They've got places like that, co-housing I think they call it, where everyone has their own house but then there's a big shared area with a better kitchen, a workshop, and an events room.

The problem with most sharing economy gigs is that the money promised doesn't really account for wear-and-tear on the assets.

For example, a car depreciates with every mile driven. Why? Because the machinery inside deteriorates with use; metal fatigue, etc. Ovens, too.

Millennials, accustomed to having a working car or oven at their disposal, paid for by parents, often do not understand depreciation and the need to recoup the cost of the working asset over the life of the asset.

As a result, they're happy simply getting gas money back from their Uber or Lyft gigs. Meanwhile, their car's fuel pump, transmission, brake pads, and water pump are wearing out.

And it's not just Millennials. In the 1980s, my sister's high school friend was given a mint 1968 Mercury Cougar by her mother. When asked later when she had last changed the oil, the friend replied, "Oil?"

Her mother was not much better, having given her the car out of concern that her daughter was a lousy driver and such a solid car would protect her in a crash. Never mind that many modern cars then had airbags, crumple zones, breakaway steering columns, etc. and the Cougar did not have any of those.
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They've got places like that, co-housing I think they call it, where everyone has their own house but then there's a big shared area with a better kitchen, a workshop, and an events room. ~ NicoleK at June 7, 2018 6:45 AM

I had that in college. It was called the dorm.
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The main thing Airbnb, uber, and co tackle is excessive government regulation and taxation. ~ Ben at June 7, 2018 6:03 AM

This was the main impetus behind AirBnB, Uber, et al.

Government regulation had created artificially high barriers to entry for industries most people could do in their spare time to earn extra cash.

The Internet simply made widespead access to customers easier.

Jen, I almost put this into this post -- about clothing rental. I thought about that -- like a DVF bright orange wrap dress I have. Vintage, gorgeous, but it's short and I hate wearing short dresses.

The woodworking thing is really smart, Nicole.

I love the idea of co-housing but on a scale where you have more personal space than most of those places give you. I have a lot of non-digital books, and I love those, because I like to be able to physically thumb through books in a way you can't digitally. Plus I scribble notes and highlights throughout and I like my hand in the process.

The main thing Airbnb, uber, and co tackle is excessive government regulation and taxation.

That's only going to last so long.

*James Cagney voice* Various government agencies will want a cut of the take, see? Nice business model you have there, be a terrible shame if something happened to it, you dirty rat. */James Cagney voice*

Now, we could have a discussion about tax levels being too high and regulations being too stringent, but providing one business model with what is a defacto subsidy distorts the market.

And you just end up with more cronies showing up wanting their tax break or other sweet heart deal.

Completely agree with Nicole about shared kitchens. These actually exist commercially in states that have restrictive licensure rules for businesses selling food. (California was one until the state liberalized small kitchen food preparation a few years back.) The experience of Soviet mandatory shared kitchens was a thing of horror, and I can’t imagine doing something like that voluntarily.

[people] often do not understand depreciation and the need to recoup the cost of the working asset over the life of the asset

Well, I've said this before, but anyone who can't figure out how to price their goods or services to cover their operating costs and capital expenditures will not be a going concern for very long.

Lets assume this becomes a reality - this is what will happen

1. Some jerk wont clean it properly

2. Some one gets sick, contracts a lifetime illness, or dies

3. Company gets sued

4. Contemporaneously, fear shilling politicians will pass laws to "do something"

5. Regulations become too onerous

6. Compliance and lawsuits become too expensive

7. Company folds

8. Regulations stay on the books

9. Regulators looking to justify their jobs will push for these regulations to be applied to other industries

10. We all pay more for goods

Also, regarding NicoleK's comments above about woodworking: if you're in the LA area (or any reasonably large urban area), there will almost certainly be maker spaces available. These are essentially what you describe: garages with a common set of tools that you rent on a monthly basis (i.e. you pay for admission to a club where people rent tools in a common space). There are also places like Woodcraft and Rockler that offer classes where the store provides a common workspace and the needed tools.

What I would like to share is a workshop. With woodworking tools I could try out without having to invest in them.

Join a club, most will have a set of tools for the shop itself, I joined a lapidary club a few years back, I wound up buying a lot of the stuff that costs less than a couple hundred dollars, but about 75% of the stuff I decided to buy I tried out at the club and from other members first, plus they always have the big stuff and some things you never knew existed

"Various government agencies will want a cut of the take, see?"

Of course. The trick is being quick enough to get in, make your money, and close down when the government shows up. While governments are rapacious in general, they are also slow and inefficient. The internet is a great communication tool. So some people are using it to organize and be quicker than regulators can handle.

On the rental clothes, my sister is part of some clothes of the month club or something like that. She finds something she likes every month or two and sends the rest back. And this may be a sustainable business model. The clothing business is kinda strange. Predicting what will sell and what won't isn't an easy task. So everything has a huge markup attached. Which is why they can still turn a profit even when things are 70-80% off.

Hmm, not sure where to find a woodworking club. Thinking about signing up for a Migros (local hobby school) woodworking course though.

Unbelievable.

Go share your car with just a few people you know.

When it isn't yours you are very simply not responsible for it - and you cannot control who is part of your sharing groups because of anti-discrimination laws.

We all think we have friends and relatives we admire. That's why we want them to leave after staying with us for a couple of days.

A sharing economy is a nice idea, and it already exists to some extent for expensive tools and stuff that people only need for a short time or get bored with. I remember when I was a kid, toys and sports equipement got passed around and down a lot. Ice skates when you outgrew them etc.

However convenience has a big value and the tragedy of the commons is an economic concept that has proved itself correct over the long haul of human history.

The value of having my own kitchen lies not so much in pride of posession, but also knowing where tools are and where to find them when I need them.
Packing up these things, moving them to a central kitchen somewhere, cooking, washing them, on the spot and packing them up again makes me shudder. Leaving them for someone else to steal or break is even less attractive.

Communisim 3.0 isn't going to work any better than Communism 1.0.

There are some other economic factors here that the author didnt consider. Lets take the baby swing.
Ok. People are still going to buy them or recive them as gifts. The price point would have to be pretty expensive before someone would say, lets rent a really good one ( assuming there is even a market there for a really good one)
So lets say, either the reliability of the cheap ones is so poor, or the price of the good ones is so high, you can only afford one by renting one. There will be a transaction cost, a transportation cost, both to you and going back, and then a use fee.
Remember when exercise equipment was so expensive that people rented it? Now they buy it on Craigslist, and sell it the same way.

This isnt going to work the way the author thinks it will. It’s like light rail. A while lot of bother and expense for the fraction of the population that wants to go somewhere that the light rail goes, and live close enough to the station to make it convenient, AND they dont have an easier way to get there.

PS. Dont know how she calculated the *storage fee* but out here in flyover country, my storage fee is zero. Probably true for at least 80 percent of people who have kids. We dont live in Manhatten for a lot of reasons.

Ha! Some of this has been around for decades - it is called the local consignment shop. Inexpensive things someone no-longer-needs/wants while someone else finds that treasure for a cheap price!

And, as pointed out by others - families/neighbors have done this for generations as well - kid outgrows it, save it in the basement for the next kid or pass it to a neighbor.

Communisim 3.0 isn't going to work any better than Communism 1.0. ~ Isab at June 7, 2018 4:30 PM

"Communism doesn't work because people like to own stuff." ~ Frank Zappa

And, in owning stuff, they don't want to share the decision on how and when that stuff is used with someone else.

The idea in owning one's own woodworking tools is that when one wants to woodwork, the tool is available for the use of the owner and not rusting in some co-owner's garage.

"In the Economy of the Future, You Won't Own Your Kitchen."

In the future, you won't be able to afford to have a kitchen in your living space. You'll just be able to afford a very small room (with a hide-a-bed or Murphy bed) and, if you're lucky, a bathroom.

The sharing economy concept is just another millenial dodge of personal responsibility. They want benefit without any liability.

The person who called it Communism 3.0 had the right idea. It's shocking that a libertarian like Amy got sucked up in the hype.