What if, by waving a magic wand, people worldwide could suddenly get 10% more activity from the existing stock of cars, houses, and manufacturing plants? That’s exactly what’s happening for people far and wide who are willing to boost their incomes simply by sharing some of the time their cars sit idle, having overnight guests in rooms seldom used, or renting out underutilized printing capacity in newspaper presses that seldom run 24/7.
We are talking about freeing up the economy’s supply side. Getting better use out of sometimes-idle resources provides a large boost for economies running short of labor, tightly built urban centers that lack prime space to expand existing buildings, and consumers and other buyers who worry about the prospects of rising prices. This, in turn, may even be making the Federal Reserve’s job easier by helping keep the inflation rate so low.
All of this came to mind recently when Marriott Corporation, one of the world’s largest hotel operators, announced it was entering the “sharing economy” by offering rental houses worldwide. Who says an old dog can’t learn new tricks? Yes, Airbnb, Lyft, and Uber have taught a lot about sharing to local hotel operators, taxi companies, and their regulators, and now even to package delivery firms. This is just the start.
But why now? Why not decades ago? The falling cost of communicating and transacting made possible by smartphone technology is the answer, of course. Nothing much else has changed.
The cast of potential buyers and sellers in our economy is largely the same. The same government agencies are writing rules and regulating. And the same Fed, at least with respect to its operating rules, is trying to figure out what to do about interest rates. Rather quickly, it seems, the world is producing more stuff with the same stock of resources.
[Also read: US employers add 263,000 workers as unemployment hits 50-year low]
Though mostly uncelebrated on the evening news and unnoticed by most Americans, what we are observing is a modern miracle. In fact, on a daily basis, headlines blare that we are running out of this or that. There are few, if any, interviews and discussions about the sharing economy miracle on mainstream broadcasts.
That’s partly because there is no key planner to interview. It just happens, more or less spontaneously, without any congressional hearings or tweets setting an agenda for entrepreneurs to follow. And since there is no one to interview, there is no one who can take credit for the surge of prosperity generated by a large group of creative people using high-speed technology to search for and find market opportunities.
Since no one can take credit for it, no one can gain votes in 2020 for having fostered the sharing economy surge. That’s how markets are, though. Without trumpet blasts or fanfare, creative people working in a million shops and locations find improved ways to satisfy customers who then satisfy them.
Scarcity has always been the prelude to prosperity — at least when free markets are allowed to operate.
Bruce Yandle is a contributor to the Washington Examiner‘s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business and Behavioral Science. He developed the “Bootleggers and Baptists” political model.
