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The Sharing Economy versus the Centralized State

Taxi drivers in France rioted yesterday to prevent Uber from competing with them.  They attacked vehicles on the mere suspicion that they were working for that company. They broke windows on cars carrying tourists. It was a kind of economic terrorism. Even a left-liberal rock star was upset!

France is one of the most heavily regulated and centralized states in the Western world. But Uber represents the new forces of decentralizing competition that it may ultimately be powerless to block. While the French government appeared to take the side of the violent strikers today, it will have difficulty in stopping this kind of competition without deploying coercion unacceptable in a democratic society.

Uber is essentially an app that connects people who want to make a mutually beneficial transaction. Other apps will connect those who want to make other transactions—for plumbing, gardening or housework. These services will be less expensive than current services, whose cost is inflated by  regulations, not least of which are those designed to protect incumbents. And yet these services will be more reliable as easily accessible customer ratings will discipline the behavior of service providers. Thus, these services will gain public support from the benefits they provide and will be hard to stamp out because of their decentralized and personal nature.

One of the best aspects of the new sharing economy is that it will aid outsiders, those who do not already have cushy and protected jobs. France, along with many other Mediterranean nations, has created with its heavy regulations two economies—one for the connected and well-established and one for outsiders. The result has been permanently high rates of unemployment, particularly for the young and minorities. This dual system fails to integrate immigrants into the nation and thus has helped lead to no-go areas in many suburbs of major cities.  Success for companies like Uber will be a success for these outsiders as well as consumers.

As Alexis Tocqueville understood, the French Revolution was not a great victory for liberty because it replaced one centralized, bureaucratic state with another. The French today can ride the new technologies to make a more substantial advance. Aux apps, citoyens!

Reader Discussion

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on June 28, 2015 at 11:27:33 am

Awwhh, c'mon, Professor:

"These services will be less expensive than current services, whose cost is inflated by regulations, not least of which are those designed to protect incumbents." - Really? Have you heard of Uber's *surge pricing*? - As an example. during SuperBowl week, friends attending the festivities were charged at a rate TEN TIMES the regular rate. I suppose this really does help "outsiders" - you know, the ones who live outside normal economic constraints such as paying a reasonable rate for a five mile trip in a taxi - not $95.00.

Also, are we not stretching things a wee bit when we attribute the failure (yes, failure, as in volitional) of immigrants in France to assimilate to the evil influence of regulations. Doubtless, regulations play in role - but to assert that they are primarily responsible for the failure of persons holding some rather archaic conceptions of society / obligations is - well, just an "outside" view!

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gabe
on July 15, 2015 at 03:36:20 am

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