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Beltway Confidential

Are regulators quashing the greatest wealth generator of our generation?

By Timothy P. Carney
Published April 9, 2014 4:00am ET
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Are regulators quashing the greatest wealth generator of our generation?
In this photo taken Friday, March 14, 2014, Jerad Bernard hands out cards to passersby offering one free ride through the Lyft ridesharing service in Seattle. In a fight pitting upstart technology and traditional business, app-based car share companies and traditional taxis are fighting for supremacy. (AP Photo/Elaine Thompson) | Elaine Thompson

Economists have many arguments about what boosts an economy and what drags it down — monetary policy, tax reform, property law, regulations. These are hotly debated questions. But on a granular level, we know that an economy gets wealthier when we make better use of the time, effort, and materials we have.

That’s why the “sharing economy” made possible by the Internet and smart phones could be one of the most valuable economic developments of our time.

It’s also an argument for making it a priority to kill regulations that block services like AirBnB, Uber, RelayRides, and StoreAtMyHouse.com. (These regs are often supported by incumbent businesses that don’t like these new alternatives that operate with lower overhead.)

Dan Rothschild tells a compelling story about the sharing economy and the reviving of “dead capital”:

America is seeing what Peruvian development economist Hernando de Soto calls “dead capital” come to life.

This “peer production economy”—the development of new platforms to connect buyers and sellers who otherwise would not have connected, either because of supply- or demand-driven constraints, regulatory barriers, or high transaction costs—is placing that which we didn’t formerly think of as productive capital into the stream of commerce. The result may be a blurring of the lines between personal consumption goods and productive capital, and we may become much wealthier as a consequence. …

The question now is whether regulators and policymakers will allow this capital to make us wealthier—or send it back to the grave.

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