European Commission VP Neelie Kroes on the Shared Economy

This week Dutch politician and European Commission vice-president Neelie Kroes gave us her perspective on the sharing economy and recent taxi protests. She believes that there is a 'valley' start-up culture in Europe and it needs greater support. On her blog she responds to widespread strikes and attempts to ban or limit taxi app services across Europe.

“The debate about taxi apps is really a debate about the wider sharing economy. That debate forces us to think about the disruptive effects of digital technology and the need for entrepreneurs in our society”

She recognizes that this is a fearful time for cab drivers stating "it is right that we feel sympathy for people who face big changes in their lives" but "we cannot run away from these debates either". 

“We cannot address these challenges by ignoring them, by going on strike, or by trying to ban these innovations out of existence. That is why a strike won’t work: rather than “downing tools” what we need is a real dialogue where we talk about these disruptions caused by technology.”

Kroes believes that Europe needs more entrepreneurs to create jobs and growth. These entrepreneurs understand that services can no longer be designed around the producers, but need to empower the consumers. She is concerned that if Europe does not embrace entrepreneurship Europe will be know as "the place that used to be the future, but instead has become the world's tourism playground and nursing home". Kroes states that the disruptive force of technology is a good thing. "It eliminates some jobs and it changes others. But it improves most jobs and creates new ones as well".

She also warns that sharing entrepreneurs need to follow the rules and pay taxes but also sheds some interesting light on the role of regulators:

“The job of the law is not to lie to you and tell you that everything will always be comfortable or that tomorrow will be the same as today. It won’t. Not only that, it will be worse for you and your children if we pretend we don’t have to change. If we don’t think together about how to benefit from these changes and these new technologies, we will all suffer.”

She concludes with a plea for Europeans to stop running away and face facts: "digital innovations like taxi apps are here to stay. We need to work with them not against them."

Check out the rest of her blog post on her website and let us know what you think. It's certainly one of the more in favor responses to the sharing economy by a regulator thus far. Is she right? Are regulators running from digital technology instead of embracing it's potential? Is there a way for both apps and taxi companies to live in harmony?

Trust and the Sharing Economy

This last week several articles came out regarding one of the collaborative economy's most popular keywords, trust. It's a massive piece of what it takes to be an active participant of the peer economy and now a hot topic of conversation.  

Jason Tanz' recent Wired article "How Airbnb and Lyft Finally Got Americans to Trust Each Other" covers everything from interviews of Sharing Economy users to a history lesson on when America's started losing trust in each other in the first place (according to Tanz, sometime in the mid-19th Century). 

Shortly after Tanz' article released, Christine Lagorio-Chafkin of Inc. published "Why Trust Is the Sharing Economy's Pipe Dream", which concluded that any sense of real, organic trust "still feels like a hologram".

A recent Wired cover story seemed poised to explore how companies in the sharing economy foster compassion, community, and trust, but it actually surfaced a more complex and compelling argument, one with which I agree: These companies actually have built quite a sturdy backbone of protections for users (certainly these fail from time-to-time, but they exist) that they've eliminated much of the need for that elusive trust by customers.

Lagoria-Chafkin goes on to quote Tanz's article who writes:

Indeed, for the time being the boundaries of the sharing economy are protected fairly rigidly. If you’ve ever been caught driving more than 20 miles over the speed limit, you can't rent a car on RelayRides. Aspiring Lyft drivers must pass a background and DMV check and get approved by a mentor, who judges applicants not just on driving ability but on personality. DogVacay hosts go through a five-step vetting process that includes training videos, quizzes, and a telephone interview.

She goes onto say:

In comparing the evolution of the modern marketplace economy to the explosion of institutional banking and insurance in the early 20th century, Tanz continues: "this new system acted as a trust proxy; it didn't require people to trust one another, because they could rely on a centralized system to protect their interests."

The digital marketplace as a trust proxy: Now this makes a lot more sense. 

Both articles make interesting points. Read Jason Tanz's enttire article advocating trust here and Christine Lagorio-Chafkin's rebuttal here. 

What do you think? Is the Sharing Economy based on real, organic, neighborly trust? 

Will the Peer Economy help Rebuild Greece?

You can probably recall Greek's government-debt crisis from the not so distant past. It's citizens still suffer from the collapse as Greece's economy has shrunk by about 25% since 2008 and unemployment stands about 27%. Many small business owners are turning to the 'social' economy to stay afloat.  Savvas Mavromatis, a small family business owner that makes detergents decided to give it a shot.

"He started selling his products directly to consumers for cash at fixed prices through a nonprofit collective, instead of to shops and traders as he had always done. Fourteen months later, he credits the group with saving his enterprise from a Greek economic meltdown that rivals the Great Depression."

Mavromatis' previous supermarket purchasers were demanding bribes just to accept his product as well as requiring additional payment for how his product would be displayed. Once he started selling without the middlemen group he was suspicious that no one even asked for a money under the table. 

It's starting to happen all over Greece. Christos Kalaitzis, who grows kiwis, olives and chickpeas, "had gotten so fed up with not being paid by big wholesalers and exporters that went bust after taking his products that he had taken the chance".

“The goal is not to destroy the old market system but just to slow it down and get it to change,” Mr. Kalaitzis explained. “Maybe this is a bit romantic, but why should I sell to big companies if their checks bounce? If the free market in Greece worked properly, none of this would be necessary.”

Check out the entire article by New York Times here and let us know what you think. Could this turn around Greece's economy?