Why the Sharing Economy might be Dangerous for the Majority of People

This article is a 3 min read.

First of all, let’s define what a sharing economy is. In my opinion, Airbnb is a famous example of the model of the sharing economy. The company Airbnb offers more than 1.9 million listings for rooms, apartments, and homes in more than 191 countries of the world. This means that Airbnb offers more rooms than the five major hotel brands combined.

While a regular hotel chain owns all of its real estate and employs hundreds of thousands of employees, Airbnb does none of that. Airbnb is a platform where home owners can list their own apartment or any free rooms. Travelers can then book these rooms by using Airbnb as a platform.

However, the sharing economy becomes apparent in many other areas of our lives. While we previously owned music, movies, or software as a CD or DVD, today we lease them. We pay services like Spotify, Netflix, Amazon, or Microsoft monthly in order to listen to music, watch a movie, or use Microsoft Word. The economy is switching from an ownership economy to a lease or rent economy.

The economy is also becoming more and more location independent. Previously companies owned large office buildings and required their employees to show up there. Today we see a trend that more and more companies allow and expand their home office programs, where employees can work from home instead of commuting to the office. Simultaneously, we see that we are changing from an employment economy to a gig economy. A gig economy means that companies prefer freelancers or contractors over employing own employees.

In the future, we will be less dependent on a single location. When we don’t have to show up in an office every day, we can use the internet to work from any place in the world. This flexibility will lead to the scenario that more and more people will simplify their lives. Instead of owning an apartment or a house, they will simply rent completely furnished apartments for the short or long term. Without any restrictions from showing up in the office or for children to attend a school physically, families will might live in more places and thus move more frequently. Owning a house and two cars is not fitting into this lifestyle anymore. As a result, people will switch from owning to leasing or sharing goods and services.

From one perspective, this development might be dangerous for a majority of the population. While renting a home may be slightly cheaper than financing one, the impact sharing instead of owning becomes shockingly apparent a few years down the road. Somebody who finances his own house will own his house i.e. 30 years later. The other person who rents his home will not have any assets at all – unless he actively invests his money otherwise. However, the point I want to make is that many people struggle to invest their money wisely. Financing a home passively raises the assets a family possesses.

To ensure that families are better of in the sharing economy than they were in the ownership economy, we must introduce super simple ways to invest a percentage of the income to buy long-term assets. By doing so, we will ensure that the sharing economy will not fall into the greedy hands of large investors and corporations. Instead, the sharing economy will be a chance for people to actually share their valuable with each other. A family who owns a home in California can rent their home our to other families while using the resulting income to pay the rent for a home in Germany.

Never forget the importance of owning assets and having a look on your own personal balance sheet and income statement.

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