Fellow, Metropolitan Policy Program and Co-Director, Great Lakes Economic Initiative, Brookings Institution
Director, Southern Arizona, Arizona Technology Council
Professor and NEC Faculty Fellow, New York University
Head of Global Strategy, Envestnet
Sharing and so-called “collaborative consumption” is poised to alter city life, company life, and family life. We now use digital tools to assist in sharing cars, bikes and apartments. But we’ve always shared apartments, restaurants, libraries, workspace and health clubs. As a host of new platforms transform the economics of sharing, what are the parameters of these new transparent eco-systems? How are business, social and cultural norms re-orienting around collaborative consumption and the sharing economy?
Karabell: Like many Techonomy sessions, this is sort of a big envelope to have what will likely be a wide ranging discussion. But what’s really nice about this is we have three people as opposed to six, and each of whom has kind of a particular angle into this conversation. From sort of the academic and the theoretical, although those do not necessarily follow, Arun actually is much more applied than many of us, but we’ll just call it that for the sake of argument, to Jennifer, who sort of straddles both the policy world and the studying from an intellectual perspective, and then Alex Rodriguez who joined us from the mayor’s office.
Rodriguez: Representing the mayor.
Karabell: Representing the mayor of Tucson, so really sort of applying what does it mean to try to grapple with these ideas. One of the great challenges of everything that we’re talking about at Techonomy, is there’s this fluid world of platonic ideas about how to make the world a better place or how to match up our tools of technology needs with the most seamless, fluid integrated fashion, and that’s all wonderful. I’ve always felt like if one is going to pick a degree of excess, go to the utopian end of the spectrum any day of the week rather than the cynical end of the spectrum any day of the week. So that, I think, is not only all fine and well, but is utterly imperative. That being said it’s complicated to then take wonderful ideas, particularly when it comes to running a city or a municipality, which as messy and labyrinth even as they’re smaller, as you can imagine, how do you translate those ideas into something meaningful that’s actually going to impact peoples’ lives.
Techonomy, Detroit was an incredible experience, at least for me, largely counter-intuitive because you think going to Detroit would not be the happy-go-luckiest of experiences, yet the energy of people in that particular city of trying find ways to implement these tools of social media technology sharing as a way of being the leading wedge to urban revival or I guess in the case of Detroit, where they are urban rebirth or recreation, was extremely stimulating to see, albeit with a full recognition by everybody who was involved in this that the chances of failure were high but the chances of failure was certain if these things weren’t tried so wasn’t a question of will this work, it’s a question of we have to try this stuff or nothing ‘s going to work.
So let’s begin with Arun Sundararajan. Did I get that right?
Karabell: Thank God, the mellifluous yet devilishly complicated, it must be difficult calling people on the phone. Who has professored at NYU, an economist as University of Rochester and has been really looking at the evolution of these various social sharing media, particularly I think you’ve been doing, a good bit of discussion particularly in New York about (indiscernible) and how that challenges or does not challenge both existing modes of business and the regulatory framework and all that. So why don’t you give us five minutes or so and then we will move on.
Sundararajan: Okay, you said five minutes?
Karabell: Well, there’s going to be a lot more.
You can speak for 70, we’ll just sit.
Sundararajan: I’ve been fascinated by who people call the shared economy. I’ve started to call the shared economy because it’s, you know, it seems to be sort of the culmination of a bunch of different promises. There was the promise that all of the social information that was being taken out of the real world and brought online would some day sort of facilitate more seamless interaction, commercial interaction between people. There was the promise that, you know, the powerful computers that we carry around with us would allow us to, you know, in a way re-engineer the way we consume, much like sort of twenty years ago the powerful computers that were made available to companies allowed them to say, well, we don’t really need to work this way, we can sort of re-engineer our production. So now we sort of have the promise of re-engineering of consumption. And there’s a host of other factors which we might sort of get to as we get along. But I thought we would start by sort of at least drawing a first circle around what we mean by the sharing economy. We all know what cities are, the other part, if we don’t know what cities are this afternoon we’ll sort of make sure that we do. So I see the sharing economy as a label that’s being given to a set of, you know, I call them business models but they don’t have to be sort of for profit, but a set of models that are allowing people access to things without them having to own them. And it’s sort of as simple as that. So you know, so this means that this is not an entirely new idea. We’ve been car pooling for a long time, we have rented cars for many decades, we have stayed in hotels, we have used parks, used public transportation. So all of these sort of fall under this idea of access without ownership. Now, I guess what’s different and exciting now at this point in time is that we’re seeing a scaling of this kind of access without ownership or sharing activity because of the digital market places. And you know sort of predominantly VC backed, like hyper growth digital market places like (indiscernible) and Uber (indiscernible) and snap goods. Because of this, there’s a, there’s one set of things that come to mind when we say sharing economy. And when you say sharing there’s a set of communities that believe in cooperatives, that believe that sharing has to do with the community sort of producing and then the community consuming. There’s a set of communities that believe in sharing as a way of reducing our environmental impact, and so this sort of, these people and these ideas are now sort of coming in conflict in some sense with this new “sharing economy” so I started with this introduction because when you say sharing economy it sort of conjures up an image of different things in different peoples’ minds. And I thought it would be useful to say, well, here’s sort what it is, access without ownership.
Karabell: It’s a little bit different though than the model that we all use public parks and sort of the commons. Even then, when individuals started to take care of the commons in a way the municipality or collective government wasn’t involved in, there was a period of real tension. Someone cleans up the parks, this was before the Central Park Conservancy in New York. Who is going to responsible if the tree falls and someone dies? So the whole, this whole butting of heads now with Uber and taxi and limousine unions and Airbnb and hotel unions, the tech response is, oh, this is the next wave and you know they’re fighting a rear guard action and soon enough all the walls will crumble and we’re all just going to be transacting business. But is that the case?
Sundararajan: Well, you bring of sort of two interesting points. One is the commons problem that historically we wanted shared access to something, we faced a public goods problem wherein like, there’s a natural sort of tendency for these systems to evolve to a point where you can’t sustain them because people are taking more out of them than they should or taking more out of them than they’re giving so as a limit to which you can scale a ride sharing cooperative or a babysitting co-op or a food co-op. But there’s also the regulatory aspect, which is that I think of cities as sharing economies. I like to say that New York City is a sharing economy. And has been for many decades. And because it has been, we have evolved as a city, a whole bunch of safeguards for those sharing activities. We regulate taxis in part to keep them safe, we regulate hotels what you can and can’t do with your apartment, and we regulate restaurants in order to sort of keep our shared collaborative consumption, so to speak, safe. So you know the fact that we have these regulations isn’t a surprise. And the fact that these regulatory issues are perhaps most heightened in New York isn’t a surprise because it’s something you’d expect to be characterized by a city where the sharing economy, the old analog sharing economy, was most active. And densely populated urban areas are best suited for this kind of sharing activity. Now you’ve got the new model and the old regulations and the new models don’t fit into the old boxes. What complicates things here further is that unlike when internet radio came along, this sort of conflicted with some FCC regulations about sort of geographic scope, but you could sort of solve those regulatory challenges at the federal level. What we’re talking about here are city and state regulations and especially sort of state and local government so the battle to sort of create a new regulatory infrastructure is likely to be slow and likely to sort of be local rather than something that a federal agency can solve with the swoop of a pen.
Karabell: So Jennifer this is a good segue to some of the work you’ve been doing. Jennifer Bradley is a fellow at the Brookings Metropolitan Policy Program and is the co-author of a recent book called Metropolitan City.
Bradley: Metropolitan Revolution.
Karabell: Thank you. Metropolitan Revolution. I was going to guess that. And is trained as both a lawyer and a public policy practitioner and was at Oxford as a Rhodes scholar, which just has to be part of your ongoing bio for the next thirty or forty years, and you’ve really written about the way in which cities are, these founts of innovation, creativity, nimble addressing of problems. I’m sure you saw Ben Barber’s provocative new book, Mayors Rule the World, that’s probably not the title either…
Bradley: No you, got that right.
Karabell: I got that one right. He’s not even here. I’m bad at catching titles from my own books. I really suck about that. But so there’s this kind of wave of cities are the laboratories of good governance, and from Denver to Portland to Houston to San Francisco, to Tucson, just threw that in there, these are places where you have everything the government should be responsive, technology, innovative, creative, so I guess talk about that a bit and also talk about, if you could, some of (indiscernible) on the end which is, it’s not all just this easy, we’ve got a great mayor and he really thinks internet is cool, so we’re going to have apps that allow people like Corey, you know, my garbage isn’t being picked up, and we tweet him and he says give me your address and I’ll send someone—
Bradley: I’m there in my car, yeah. One of the things that struck me about what Arun says is, we all know what a city is. I think that what a city is, what a metropolis is, is primarily a network. And that makes metros uniquely creative in terms of policy responses and in terms of the resources and ideas that they have for economic development. And I have to say I’m borrowing heavily from John’s ideas, which were absolutely foundational for some of the work I did in the book. The thing about cities and metropolitan areas being these networks is that if one element of the network goes down, do you have the other elements of the network that can fill in. So we’re talking about Techonomy, Detroit, right? Techonomy at Detroit, famously, the city government is in bankruptcy,. Yet at the same time you’ve seen a billion dollars of private capital invested in the downtown and midtown area, through private entrepreneurs like Dan Gilbert, a lot of deals being facilitated by non-profits like the Detroit Economic Growth Corporation, Midtown Detroit, Inc., Henry Ford Health Centers, you see this rich ecosystem of philanthropies, the Kresky Foundation, the new economic initiative creating a stronger infrastructure, whether that’s the M1 Rail Line or this infrastructure of deal making and incubators. So that demonstrates the power of a network. And what makes a network powerful is the ability of people to share, to share resources, to share ideas, to be able to come together jointly to solve problems. So I think it’s no accident that you’re seeing this shared economy take root in cities, not just because of the density, but because that’s kind of what draws people to cities in the first place. That’s what makes cities work, is this notion of we’re all bringing something to the table, and none of us is sufficient unto ourselves. And when we talk about cities, I do think it’s never important to talk, not just about the city government. A lot of city governments are facing pretty significant fiscal stresses, either now or in the future, because of pension crises, and other unfunded mandates or things that they have to do that they’re not able to pay for yet. So growth is going to have to come again from this cooperative linked, shared understanding that everybody is responsible. A lot of different entities and organizations are responsible for the growth of the city. If you pull that out to the metropolitan level that’s even another level of sharing, and if you think we don’t have a great regulatory process for things like Uber, or Airbnb, we have a terrible regulatory and legal structure for sharing between jurisdictions. A tax dollar that Tucson gets is one that Phoenix or Mesa or any of these surrounding jurisdictions absolutely does not get, despite the fact that they often share labor markets, they share environmental concerns. We’ve kind of figured out how to make some kinds of infrastructure more shared between municipalities because a road doesn’t do you any good if it stops at city borders. But that didn’t stop people from creating a bus system in Detroit that did stop at city borders. So I think what’s exciting about the shared economy, when we think about it in terms of shared consumption, is how much it can teach us about shared production, shared infrastructure, and how much it can reinvigorate our sense of old-fashioned sharing economy, which, as Arun pointed out, we used to call public .Public space, public transportation, public parks, public schools. Can we think more, if learn how to share, you know, our houses, right, our bedrooms, our cars, our power tools, can we learn how to share tax space? Can we learn how to share other kinds of resources? Can we learn how to share, as they modeled in Denver, how to share economic resources so that when a company wants to locate in the Denver region you have all the municipalities in the region doing everything they can to bring that company to greater Denver and then they’re are little agnostic about whether the company settles in Littleton or Denver proper, or Aurora, because everyone understands that having the company there has greater effects and everybody can benefit from that. We’ve see the possibilities of this happening in places like Denver, in northwest Ohio where they have cottoned onto the power of networks. I think that will be trying to scale up the economy kind of mental philosophy and political is a very exciting place to watch and I think those metropolitan areas and leadership groups that understand this and can build on this metaphor and on this practice will be the ones that will be flourishing into the future. And places that still hold onto this notion of, it’s just to be just for my jurisdiction or come just form the local government are going to be places that fall apart pretty spectacularly.
Karabell: What about the private part? I mean, I remember and I actually don’t know what happened with this, and I may be well behind the time, there was a point about ten years ago where Philadelphia was trying to free high speed or digital wiring, and that got halted by a consortium. So the Detroit thing was interesting in that cities are completely bankrupt and totally desperate, so take just about anything because the option is to really collapse. But a lot of this initiatives, particularly coming from private individuals and collectives do meet with resistance. You can say I want to, the school movement was part of that, another way of people dealing with things. Where odes that stand right now where the willingness of governments to not solve certain problems because you have a group of concerned citizens of businesses saying, hey, we’ll do it. Which would have been the case before you had centralized governments do them. When they don’t (indiscernible) everyone just tries to make do. Private associations come together. They solve stuff. Whether that’s technology or not. Now if these governments that increasingly, even if they can’t do it, they’re not necessarily willing for someone else to do it. So where does that stand now across the country?
Bradley: I think that you bring up an interesting point about the intersection, and is it an intersection or is it a clash between this kind of DIY, we’re going to do it ourselves, it’s, you know, we’re going to adopt a fire hydrant, right, which was a code for America Project, or we’re going to be a neighbor watch blight remediation squad as you have in Detroit, with our notions of accountable democratic representative government. In a place like Detroit, I think people have lost their faith in traditional representative government, and they just really need that blighted house boarded up, so they don’t really care who’s doing it. So far, there haven’t been any problems with them, you know, boarding up a house that’s still habitable, there hasn’t been that kind of democracy conflict. I think in more functioning places, you will start to see this renegotiation of the public and private boundaries, you have things like business improvement districts. Well, why do you need to join a bid? Aren’t you supposed to, aren’t you paying city taxes to get this kind of stuff done? I’d be really interested to hear how Tucson and other municipalities are working this out. I don’t have a set solution, but as somebody who’s spent a lot of time studying political theory and political philosophy, these, this sort of semi-privatization, you know, is Uber public or private, right, is shared public or private. I don’t always know how to assign that, and I don’t know, I think it’s generally better that things get done than that things don’t get done, but we do have this thing called representative government. We have government for a reason. It can’t do everything, but it shouldn’t do nothing. And I think cities all across the spectrum are trying to figure out where on that continuum between nothing and everything there, they want to land, particularly as their own resources get squeezed. So what are they going to outsource, what are they going to turn over to networks of philanthropies of public and private actors, I think you’ll just see a taxonomy of different cities making different kinds of choices.
Karabell: So this is a good segue for Alex Rodriguez, who’s taken out some of his time, shown up rather quickly, and I know the whole thing with Major League baseball, must be a good distraction for you. So it’s great that you could show up here. You have an incredibly impressive bio and resume, Alex, in addition to having a master’s degree in public policy from the Kennedy School. Also served as a captain in the reserves, military, is a local, you grew up in this area, part of the mayor’s office now for technology and a variety of other issues, and I’m wondering, one thing that’s been true of Tucson is, so the development here, which is actually not part of Tucson proper, right, even though we say it’s Tucson, it’s not. And the benefits of the development of this area, I guess—
Rodriguez: Missed opportunity.
Karabell: Do not flow, right. So that’s a good segue, Jennifer’s point about not just the sharing economy in the sense that Arun is talking about, which is individual sharing, but also sharing, in a geographic collective to meet collective needs.
Rodriguez: So, Zach, I’m here as a pinch hitter. But hope to hit a grand slam. First, on behalf of the city of Tucson mayor, Mayor Jonathan Rothschild, he welcomes all of you to Tucson, and to this pristine location we’re in. Isn’t it amazing? Just about four or five days ago, I was in Wisconsin, and when I left, the white funny stuff started coming down. I learned to appreciate where I’m originally from. The southwest. But in any event, I wanted to say that I’m inspired by Techonomy, by Techonomy’s vision, and definitely the convening power that’s represented here today. The mayor is interested in transformation. And he believes that the sharing economy can be a part of fostering a transformation for the city of Tucson and its citizens. But he’s not only the mayor of Tucson, he sort of acts in his role as a city mayor, in the interest of the region. Because as you might know, the city of Tucson is the largest city outside of metropolitan Phoenix, and as a result, it’s kind of a unique situation. So he gets involved in issues that may be are not as common, if you will, for other mayors. He’s heavily engaged with the agenda with Mexico, for example, and the issue of trade and immigration and so forth. Now, having said that, being on television, there’s a jurisdiction that we’re in, so collaboration between jurisdictions is very, very important. And that’s something that is of interest to the mayor. We’ve recently had annexation issues, and parts of southern Arizona look to establish their own cityscape. I’m also here as sort of dual role in my role as director of the Arizona technology council. And just briefly there, the Arizona technology council is the premier trade association in the state for science and technology companies. There’s a like association probably somewhere near where you live, and so what we’re trying do in the state of Arizona, our vision is very simple, is to be the driving force behind making the state economy one of the fastest growing leveraging technology for economic growth. So I think if the mayor were here, he would tell you first that he was very proud to sign Resolution 87. In broad terms, defines essentially what Arun is talking about, and Jennifer, with respect to the principles, the promise, and the possibility of the sharing economy. What does that mean, exactly, on a day to day basis, to people like myself, that work with the mayor an others in the city staff to make things happen? By the way, I don’t work for the city of Tucson. So I’m here as a representative of the mayor’s office, but not part of the city bureaucracy, as it were. You may get a whole different outlook if maybe the city manager’s staff was here. His interest is obviously to foster efficiency, where efficiency can be had. I think what’s driving this from a policy perspective, is the question, how can we, in light of the sharing economy, achieve more optimal, the optimal public good? That’s a difficult question that’s always front and center in everything that a mayor does or does not do. What could be the optimal public good. There’s political limitations, there’s bureaucratic limitations, there’s policy limitations, there’s talent limitations, and on and on, tax based limitations. So that’s an important question to ask when considering issues like the sharing economy. And frankly, we know that citizens and the public sector are usually light years ahead of what the government is doing. Or a particular government agency is doing. So maybe to add color to this dialogue, here, one of the dimensions of the city of Tucson is that obviously we’re in Arizona, right, we have big, open spaces, and therefore big, open spaces within the city, there’s no core urban density issue, or part of town, as there is maybe down in Soho, in Greenwich Village, or San Francisco, or Boston. You know, that’s partly a challenge when crafting public policy in a city like this. It’s a lot more dispersed, a lot more open, and therefore different challenges apply to that. So just as an opening, mayor is happy to have all of you guys here and I’m so happy to join you guys.
Karabell: I’m sorry, on that challenge of open spaces, a lot of these, first of all, a lot of people who have developed these tools we’re talking about do come from more urban, dense neighborhoods, younger people who may not own a car, you know, some of the sharing is, it’s cheaper to do it if you don’t have the money to pay for it. And certainly one of the challenges in a place like Tucson is public transportation, or the lack thereof. That’s not a Tucson challenge, that’s true of almost any western city, and Denver ameliorated it, it took a long time.
Karabell: Not the easiest thing to convince people, so things like the Uber equivalent in a place like Tucson, where it wouldn’t even be people calling up a professional and paying. It would literally, I’ll give you a ride, and apps make that possible in a way that you used to hitchhike. And people actually feel much more trusting of the app side of it because you register your information so you’re not as worried that a stranger is going to pick you up and do something, because all their information is there. They would easily be caught. But cities don’t usually like this stuff, oh, we shouldn’t just allow people to be driving around and picking people up. But would be a real good solution to, how do you get people from point A to point B without spending a billion dollars on a transportation network that you’re not even us convinced people would use.
Rodriguez: Very true. The transportation issues here have historically been the big challenge, and most recently it’s the areas fraught with politics. I do want to point out I think we have Uber here in Tucson, Justin, just launched recently. And it was—
Karabell: Is it the Uber X parts? I’m sure this is one of the only rooms where people with apps actually know the different classifications of Uber service.
Unidentified: We were asked specifically because the college demographic and the sort of lower (indiscernible)
Karabell: You be you be, you use your own car and you pick people up. It’s how much more equivalent to the
Rodriguez: No, I mean Uber was featured at an angel conference recently where Justin was involved. Just very unique to this community. We just improved Light Rail recently and it’s now being constructed in the downtown and university areas as well for the same reason, density. But we have, again, those vast open places. One, a big transportation issue for us is do we approve an intra-city highway or not. And that historically depending on what side of the equation you were, you know, people don’t like that change, they don’t want to see that big highway coming through as you have, say, in Phoenix.
Karabell: Arun, does a lot of the stuff you’re looking at, do you think it works once you take it out of a concentrated urban core?
Sundararajan: I think there are certain things about a created density populated urban area that are naturally attractive to sharing economy models. And so, you know, the ability to rent a vacuum cleaner if your neighbor is much more appealing if you can sort of walk down the street and pick it up. Less appealing if you have to drive ten miles to get it, you know, come back, the same thing with the power drill. There may be 80 million of them but you’re going to buy one more and keep it in your garage, rather than (indiscernible) a marketplace. I’m thinking about this video that I saw on YouTube. It’s sort of, it’s a rendering of the (indiscernible)city to city rights sharing service that operates I think in like 45 different countries in Europe. They’re not active in the United States yet. They’re threatening to launch in the sort of box, D.C., New York corridor. But they sort of have this, they show you this map of all the different rides that people are taking. And you look at it and it looks like a transit system. You can sort of, this is what exactly, you think that it’s the high speed rail. But it’s not. And so from that point of view, going back to sort of like what we were talking about five minutes ago, there’s certainly a tremendous amount of potential for sort of long distance transit, sort of in an area like, you know, like Tucson, that is represented by the sharing economy. It may not be the Uber X model, necessarily—
Karabell: WhenSallymetHarry.com, ride service.
Sundararajan: Well, there’s also probably opportunity in some of the other sectors. I mean, you know, another map that is always compelling to me, and I sort of want to sort of, you know, I want to be at the point where I can take off my phone and sort of project it in the air and you guys can see what I’m talking about. It’s not going to happen today.
Maybe next year. But this is, if you look at where the Airbnb—are located, in New York, and you look at where the major hotel chains are located, these are almost completely distinct. In some sense it’s representing, it could partly be, like these, Times Square is not a residential area, but there’s certainly a desire to sort of increase the short term accommodation footprint that is represented where these things are, and that’s certainly something that isn’t sort of densely populated urban area-specific. And so, you know, if there are particular neighborhoods that are desirable to stay in, they will sort of be natural magnets for sort of short term accommodations through (indiscernible) like marketplace.
Karabell: Jennifer, do you see this is, so a lot of municipalities get a focus on the kind of infrastructure projects, sometimes, because they have to. But even there, you know, you could imagine things like, as energy grids shift, you can share a photovoltaic cell for your energy using the utility grid. It would drive them nuts because would be outside of that particular realm. But is there, I mean, are there things particular to more dispersed environments versus more concentrated, the models just work as well, they, have to be adapted differently?
Bradley: One of the things I think is an interesting area potential is if you look at the new geography of poverty. You see a lot, we I had to think of poor people living in very dense environments in the central city, and that’s often true. But numerically, not percentage-wise, but numerically there are more people living in the suburbs than there are in the cities. One of the challenges that these people have is access to work because even though there are a lot of jobs in of the suburbs, they tend not to be in the jobs, in the suburbs where poor people live. So something like Uber X, right, or these informal car pool or van pool systems, could be incredibly important for neighborhoods that are full of people who need to get places that the transit grid doesn’t go. But I haven’t seen any, you know, studies about it, but the people who talk about Uber and shared economy and how exciting it is tend to be people with a lot of resources who are just choosing to opt out. Right, people who could buy a car, but who are saying, God, why do I want to deal with the hassle? So I think it’s interesting to see if cities can serve, and by city, I mean city governments, but it could also be, you know, a particularly entrepreneurial non-profit, or other kind, you know, philanthropy or social entrepreneur trying to get people who don’t necessarily have resources and who could benefit most from of the sharing economy around transportation, around other kinds of big, fixed cost resources, getting them into it. A lot of low income people do have cell phones. So is there a way to use cell phones, maybe not through an app, but some other way to connect people, and have a city regulatory infrastructure that supports that, as opposed to trying to regulate it out of existence. I haven’t seen any place, you’re saying no, okay, I haven’t seen any place that has said, wait, let’s figure out Uber and make it work for poor people who need to get, you know information one side of the metropolis to another. I think it would be great if we thought about, yeah, the sharing economy for low resource people as opposed to high resource people for whom this is a fabulous thing talk about as a conference.
Unidentified: My name is Justin Williams and (indiscernible) Tucson. My question is, are there inherently shareable resources in that space? If you’re looking at from city planning perspectives or if you’re looking at from just future forward thinking where do you see sharing, we’re seeing it in automobiles, really expensive assets. Are there inherent characteristics that will make these things naturally shared? Where we should be looking at, looking for the next round of this, and in particular, then, in the case of cities, what, where do we see that overlapping with the role that city can play?
Sundararajan: Well, you know, you’ve covered accommodation, short term accommodation transportation. These are the ones where there is the most potential because you have a lot of underutilized assets, especially transportation. And because the, there is a lack of sort of public transportation options across most of the cities of the United States. I think an area of considerable interest to a lot of cities is disaster recovery. This is not something that is, I mean it in the following way. You know, after Hurricane Sandy in Manhattan, in New York, we saw a lot of information flow on the typical networks that we’re used to. (indiscernible) was very valuable, Google maps, we (indiscernible) collections so that there was sort of, a challenge, but one of the things that the sharing economy platforms represent is not just platforms for information, but platforms for access to resources. And so any, I think about (indiscernible) tells me that a thousand three hundred people offered up their apartments through the platform as sort of free short term accommodation for people who were displaced. This is a small number but it’s also reflective of the fact that there was no prior partnership in place and this was completely ad hoc. We shared cabs because there was a shortage of, like taxis. But you can very easily see sort of existing ride sharing applications, sort of being repurposed on the fly. And I think the opportunity here actually is greater for sparsely populated urban areas than for densely populated urban areas because in some sense the challenge for a city government seems to be greater there, you have sort of a more broadly dispersed, I also think there’s a lot of opportunity in the shared, like what we use restaurants for now. It’s certainly not something that, of course, like food is a basic need and all of that, but it’s not, not so much towards socioeconomically disadvantaged populations, but in terms of this being a space that is growing. And it’s going to pose challenges for city governments as to like if you have sort of marketplaces that come along that allow people to sort of open up their dining tables to other people.
Karabell: You need cell towers and electricity for that to work. That’s sort of like the bare minimum, otherwise you can’t—we have two of those. Well, the third, David, do you want to—oh, sorry.
Unidentified: Just to piggy back, while the microphone makes its way, on the comments and maybe framework a little more from a city perspective, anyways, what potentially as sharing economy continues to, you know, to grow, to find new ways to adopt and so forth, at what point are there policy implications that are unintended, negative consequences, or just to say it in political terms, whose (indiscernible) are you now (indiscernible)? You enter a market space that is an established market space, and you disrupt it in essence, because if you’re now no longer channeling that foot traffic to that particular business. So it’s redirecting of where resources go. I really liked what Jennifer mentioned as far as defining what the shared economy promise is, and certainly how it applies. Where’s the optimal application for the sharing economy? I could easily see interest groups pop up and say, don’t you dare do that! For Y, X and Z reasons.
Karabell: That’s a really good point. David?
Unidentified: I just wanted to follow up on some of the things Jennifer was saying. And maybe what we heard earlier about what Tucson’s recently done with this particular initiative is a step in this direction, but question is, have there been cities that have basically said, look, economic conditions are so and so now, or projected to be so and so in the future, therefore, we have to do this because the nature of the future populations, earning power, et cetera, et cetera, and in other words, just a purely practicing markets I mean, we’re sort of heard about it in this discussion, there’s a little more idealistic, not so much purely pragmatic given the direct of employment and incomes which I frankly am concerned about, so I guess I wanted to ask all of you, but especially Arun, how much you think that at a macro level, this is becoming a necessity as time goes on? Because you know what you is economic direction. But first I did like you, any of you, but especially Jennifer, on this pragmatic, short term.
Bradley: What is the “this” you’re talking about? Is it the sharing economy?
Audience: Sharing of resources for people who now and possibly in future will never be able to afford the traditional fashion.
Bradley: I haven’t seen any city government or non-profit that I know of, think about the potential of, or at least using the name of the shared economy to talk about helping people without resources have access to resources. Right there have always been kinds of, you know, informal van pools and car pooling, and the way those usually interacted with the city government was the city government would bust them up for being unregulated. Now, I’m going to sound like the Jewish mother that I am, when I look at, I can certainly understand the city regulators’ point of view which is, it’s all a lot of fun until someone gets hurt. The unregulated van carrying a bunch of, you know, young women to work in a hotel, crashes and they all die terrible, fiery deaths, and where was the city making them safe? Someone gets into a bad situation with an Airbnb rental, in a transitioning neighborhood, then suddenly the city, which has been the enemy and heavy handed regulator, is supposed to have made them safe. So I understand why cites are a little reluctant to think about how to engage this. I do think they need to open up and understand that this can solve a lot of their, certainly, I think transportation is probably the easiest way for them to get into this, figure out how to get people, as I said, from one corner of the metropolis to another corner of the metropolis. I think you’re seeing an openness to sharing of resources in the wake of economic crisis. So Denver started, the municipalities in Denver started to share essentially economic development resources when they realized that in the 1980s when the bottom dropped out of the energy economy in the state, economic pain didn’t know the difference between Denver and Aurora. They were all feeling it, so they felt they this to do something they had never done before. In northwest Ohio when philanthropies got together to pool their money to fund group intermediaries who would connect entrepreneurs with inventors at places like the Cleveland Clinic with manufacturers, again, it was because they had fallen so low and they thought well, God, we have to try something we never tried before. So I think your question is moving in the right direction. I just haven’t seen any place say, oh, this is going to solve some of our socioeconomic problems and it’s not just going to be for fancy people. I would imagine that some place like New York, or San Francisco, or Seattle, which are places that are both incredibly conversant in sharing and technology, but also have significant income gap challenges, would be the first places to move on this.
Rodriguez: Just on that point, I found the question fascinating. I want to share this. I think that’s where we’re headed, anyway. And frankly, if you take a much broader perspective at this, we used to live in a world of six billion people in 1999. We’re at seven-point—
Sundararajan: Two. I don’t know why you’re looking at me.
Rodriguez: That was perfect.
Well, let me go back to you. In 2025, either, or, it’s either a billion or two billion, difference. Than today. So from a context information a global context perspective, boy, capacity, right? There are 75, in fact, where I’m going there, is something called the Sun Corridor. One of 75 global megapolitans, you will, over 30 million or so in that megapolitan, there’s 75 of those forming, according to McKinsey study. Within those, there’s ample opportunity for sharing platforms left and right. I think they’re going to spring up. The question for me is, what’s government’s capacity, capacity to be able to deal with some of these things as they come up?
Sundararajan: It’s, just to sort of quickly address your point, but then you’ve sort of given my something new to think about here, will this be an economic necessity at some point in the future? I don’t think so in the sort of the context of, is the, like you know, is the current model of taxi cabs or of hotels, is it economically vibrant? Yes, it is. It may become an economic necessity down the road because the sharing economy models disrupt the existing ones, that it’s no longer viable as a business to have assets dedicated to short term transportation or to short term accommodation. I also think that, I’ve said this before, but it’s worth saying again, that these represent sort of productivity enhancing technological advances as you’re getting more output from the same input. Same output from less inputs, user capital. So in the long run they will lead to economic growth. And in some sense, they will then become a necessity in that they will be the model. I think another place going back to a point, that’s sort of that Alex raised, and I’m glad you raised the Sun Corridor thing and the notion of sort of megapolis, right?
Sundararajan: Because if you sort of look outside the context of the United States, and to, for example, India and China, and other countries that have to build cities for hundreds of millions of people, I think my colleague, Paul, says two billion people will have to be accommodated in new cities. That’s like 200 New Yorks. There’s certainly a tremendous amount of opportunity and perhaps even a necessity to think about these asset-efficient models of urban living. If you’re going to have to build cities for sort of the populations outside the United States, I mean, they tell me that between New Nelhi and Mumbai, which is, I think, a 900-mile stretch or something, will be one continuous sort of urban corridor at some point.
Rodriguez: We’re going to need infrastructure for this. If you have asset-like models, maybe they sort of become viable. Or they become a substitute for sort of the shanty towns that otherwise might—
Karabell: The Sun Corridor is here to Phoenix. North of Phoenix, actually.
Karabell: That’s a good segue for some of the stuff Dominique has been doing and I was actually going to ask you, but, I don’t want to preclude the question of, one thing we didn’t talk about that’s been true in a lot of European cities is things like spectrum sharing. Wi-Fi hot spots has been a much more regulatory problematic one here. People try do that for free. A lot of European cities, you can get, you get to be the representative of Europe here, by the way. Speak for Europe.
Even with the regulatory framework, somehow, being more dense, there seems to be much more of this going on in a way that’s either a facilitator or not opposed by municipalities.
Unidentified: Well, discussions I’ve seen (indiscernible) exactly the same ones in this hall. So in every city and every country. More or less difficult because the political situations are different or the city situations are different but it’s the same kind of discussion. I think the last questions, taking a turn where I think it’s really interesting and important to dig. Because (indiscernible) disturb me. Sharing economy is actually, is it really sharing? Because we pay, so it’s a trade. In most of the cases. It’s not sharing. It’s a commercial exchange. It’s an economy. And therefore let’s be very careful with the word sharing. Yes, in some cases we can share for free, in which cases it might be an economy that’s different. It’s an economy of (indiscernible) and we have to be extremely careful with that. So it’s, haven’t heard about (indiscernible) sharing, solid (indiscernible) economy. This is a different world. We have it but it’s in a different world, too. If we stick to sharing economy. Uber or (indiscernible) of this world and so on, it’s a trade. And the interesting point by comparing both city and sharing economy, is that the city was always a place to trade. The origin of city is markets. Why do we come to markets? Because we reduced the transaction cost and we could sell and buy easily even within a few yards. That was it. So what is sharing economy doing today? It’s recreating the market with infinite number of suppliers and infinite number of takers. Of buyers. Which is quite interesting because somewhere, we create a sort of perfect market. Yes, but unfortunately, there was another market before, regulated with taxes, hotels, and so on. And suddenly, this perfect market is like another layer. The problem, they interact. So if instead of taking a taxi, I take a Uber, the result is that the guy in his car, the Uber car, has a competitive advantage. He doesn’t have to pay the (indiscernible) insurance, the same taxes, some cases he may even forget to pay his taxes because they’re not controlled. Same thing with (indiscernible). So I think basically what this tells us here is, it’s a formidable opportunity to recreate the market, I’m not against it, on the contrary, but it’s a fabulous challenge to re-regulate everything. And how are we going to re-regulate, we have to re-regulate. We don’t have the option. So how are we going to re-regulate everything? If we don’t, we create a parasite economy. Because these new elements are actually parasitic. They get profit out of an existing system, which is becoming too costly. And therefore they get some benefits. But by parasiting, who is paying the charges? Who is paying the taxes? Who is paying the social charges and so on? The traditional economy. It’s unfair. So how are we going re-regulate?
Sundararajan: I sort of feel like you’re being provocative. You’re being provocative by design, right?
And you know, there’s, there’s one philosophy that like, I’ve learned to experience, not to argue about regulation with people from Europe.
Always a losing battle. You know, but I see it’s sort of like—I come from the free markets in India.
There is sort of a vibrant, unregulated sharing economy. But it’s sort of, it makes you back and say what is the purpose of regulation. One philosophy is that you regulate when the market can not take care of itself in fulfilling some objective. The objective might be trade, it objective might be sort of equal access, the objective might be safety, you know, sort of providing the things that the market can’t provide by itself, so you need sort of intervention in order to make things work. You know, if, so as we think about re-regulating, and I’m not one of those people who says, well, regulation 2.0 is no regulation, and transparency will, there’s clearly going to be a role for like government, and for like, you know, providing certain things. We don’t know what they are yet. But I think at, while we re-regulate, I think it’s important to sort of think about why the regulations exist in the first place and worth the new market places can take care of some of the things that we needed regulation for. Rather than saying, well, you know, the taxi cab sort of like the yellow cab in Manhattan has to pay a million dollars for a medallion, and now the Uber X guy gets a $600 sort of like limo license and is sort of stealing their business. To me, that’s well, that’s sort of like, that’s something is sort of Darwinian about that because it’s a certain efficiency to the new model. Say than we want to put up the same road blocks to Uber that, in order to level the playing field, is sort of, it’s, you know, one has to tread carefully down that path because this are efficiencies that are being created by these market places and we want to give them a safe place to play, not stifle them. I had a point to make about public goods, actually. Yeah, so I’ll say this real quick and then I can see your hand sort of telling me to stop talking.
But on the (indiscernible) sharing economies I have seen people try to popularize shared economy. There was the indie economy, the freelance economy, there were lots of other, somehow sharing economy label has stuck. So I get the feeling that in a few years it will just take on a different meaning that will not coincide with what we think of as sharing. It will definitely have (indiscernible) trade as part of it and trade and markets might be a good way of solving some of these public goods problems, but I think of the way social meant something else a few years ago and LinkedIn was not happy about being associated about the label social because they weren’t a social network. They were a professional network, and now LinkedIn is part of social and social means something elements. So sharing economy probably will, as well.
Karabell: Good point.
Audience: We’ve been looking at this, at some of our scenarios. Oh, sorry, Jim (indiscernible). One of the things that’s been bothering us had to do with the question of regulation is where we have seen high levels of a sharing economy is in places where there are high levels of and we used to say high level of homogeneity and their culture, but actually was high level of homogeneity in their values, in the Nordics, Switzerland, Germany, France. And it almost is like when you’re looking at sharing economy, you start using the word regulation, what you’re talking is you’re going to have the government enforce a set of shared values that the culture doesn’t have. And that doesn’t seem to work. What works is when the government is actually facilitating the shared values that are already in place. So is that because of the nature of our country and Congress demonstrates it on a regular basis, our inability to get to a consensus of shared values that, maybe we can’t execute a sharing economy? Some of this has been not just government, right. You would get it from a corporate—some of the opposition to this hasn’t just been regulating. It’s been businesses that are going to be undermined. The hotel one, a hybrid, Europe, (indiscernible) free Wi-Fi share, which had a really hard time into the United States, not because any cities are opposing it, but because (indiscernible) Wi-Fi doesn’t want free hot spots will compete with their franchise, and yes, they turn to government to enforce not a monopoly but a franchise. So it’s not just governments are worried about the (indiscernible) issue, businesses are worried about the rotation of their—
Bradley: Before I came back to Brookings, I worked as a lawyer on supporting cities and governments that wanted to regulate and are the people who we were lawyering against had very strong views about private property. And I think it would be really interesting if you could sort of map the roll out of the sharing economy, and see how that played out around where people feel very, very strongly about the sanctity of private property, boundaries around private property, hands off my private property. We don’t, people in cities are accustomed to a more porous boundary of public and private because if your neighbor is thumping around upstairs and you can’t sleep, you really do have a very clear sense that what he or she so doing with his or her private property directly affects you. If you’re living on one or two acres, whatever, they can turn the music up loud, they can do what they want to and you’re less enmeshed. I think that’s why these standards will have to be worked out, locality by locality, as opposed to the state level, or the federal level, because there’s just a different set of norms about what we want to do with what’s private and what’s public and what’s shared and what’s not. I think one of the great flexibilities about the U.S. system—that you can have all these experiments running, it will be interesting to see, though, how, if these models don’t, can’t scale or where they hit barriers to scaling and that what worked really well N, you know, on the coasts—going to come to a dead stop in Dallas. But it will fine in Austin, or in Kansas City, Missouri, but not Kansas City, Kansas. And how state legislators will eventually try to come up with some thing because they are the place that are more likely to have industry capture from the hotelier industry or somewhere else. So this is going to be, there’s no way to keep this out of the regulatory maw. How we end up regulating it will say a lot about what our, not only what shared values we have at the front end, but what kinds of shared values we work out in the political process at the back end. There’s no way to keep this kind of fabulous and apolitical, and, you know, clean in the app world because it’s actual people doing it.
Karabell: You’ve been very patient, sorry.
Mark Bonchek: I want to build on the question about shared values. And to ask a question – is there a sharing culture or are there different sharing cultures? Many of you may be familiar with Bob Putnam’s work on social capital, he was well known about (indiscernible) alone, what many people don’t know is his earlier work, which looked at region in his Italy and found that success today was measured by engagement and participation in choral societies hundreds of years earlier. The major finding being that cultures don’t change. And whether those shared values are in place or not, we’re not going to fix that in the next few decades as sharing economy unfolds. So my question is, if your finding is that you have to reinforce existing shared values, and Bob Putnam’s finding is those don’t change, does that mean that one should look at the culture and see what kind of culture we have and therefore is there a different kind of sharing economy we should put in place? For example, sharing assets and resources and infrastructure may be prototype to some cultures, whereas direct human to human kind of sharing where people have to connect to each other and pick each other up may be appropriate for other cultures. I come from Boston, and people will respect the lawn chair put outside where you shoveled your car. That does not get touched, but to get people to actually talk to each other and do something, that may be very difficult.
Sundararajan: I certainly think that you have a very good point. Both of you make a real good point, that the, if you contrast, say, the United States with Germany, with Brazil, with, you know, sort of Poland, with India, you’re going to see different kinds of extent to which the sharing economy is embraced. In part because, even without going to sort of the culture or the shared values, the willingness to sort of share your space with someone is very different across different sort of geographic areas. So the extent to which the new services are sort of foreign to you is going to be different in different geographic areas. It’s something I’m trying to measure, actually, in terms of sort of understanding the sort of, what I sort of, the elasticity of this, you can sort of think of a particular services being legitimatized. I guess the short answer is yes, definitely, I think it’s very important for researchers to look at sort of the existing culture of, you know, not just sharing, but the things that are different about access or ownership. And see how that varies across geographic areas norms of both catalyzing certain kinds of sharing and predicting what’s going to come.
Rodriguez: In a sense, the sharing economy has, it has a great model in the microenterprise finance world. You think about that. Some of you might be aware of the (indiscernible) international. In Latin America. You know, the same dollar gets re-circulated through the neighborhood for not even mom and pop shops. These are micro, individual actors in a market leveraging that dollar, giving back, and it’s that pure network that keeps that dollar moving. I think the, there’s an interesting thesis, maybe. At stake here, where you look at the difference between the sharing economy in the developing world and in the most advanced economies. Because if you look at in the context of the most advanced economies, what you have, I think, are contradictory economic development goals, that individual examples where in Tucson there might be somebody in my neighborhood on the far east side of town organizing folks for coming to downtown for work. That model, there’s a market, there’s a well established market, there’s regulation, there’s a competitive landscape around it with the taxis and so on. All these existing services. So when you under mine that, then you’re going to against the, what is in essence the current prevailing economic development model, right? But I just think that on that applies differently when you’re look at, say, that same situation in Paraguay, in a suburb outside of (indiscernible) then the dynamic changes. You mentioned the buses, people hanging on the minivans or whatever. That happens all over the world, as we know. And they do it out of necessity. So I think it would be interesting to dive deep to see if there could be any subtleties in the difference between the sharing economy in the advanced industrialized nations and that of developing countries.
Sundararajan: What Jennifer calls the sharing economy for fancy people. I like to—
Karabell: At the end I think it’s a real good way to end it. And if we had more time, this notion of how (indiscernible) dynamic technology enhance inherently no-bureaucratic, non-mega corporation ways of people meeting their needs, having very fluidly, also then feed back into some sort of common experience. It’s wonderful to believe that everybody suiting their needs collectively through different apps that allow them to hook with people either in a barter system or commercial transaction will make everything flow perfectly. But it probably still won’t build road or build Light Rail, and that’s got to come from somewhere, and there has to be some degree of (indiscernible) it may collect the garbage but won’t maintain the dump.