Dennis Cakert

New Mini Book Released: “Uber-Positive: Why Americans Love the Sharing Economy”

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Posted by Dennis Cakert on Tuesday, June 7th, 2016, 7:30 AM PERMALINK

Jared Meyer, Research Fellow at the Manhattan Institute, released his mini book on the sharing economy today. The highly anticipated book chronicles how Americans are leveraging the power of peer to peer networks to make ends meet in a weak economy:

“Even in today’s slow economic recovery, entire industries are transforming, consumers are more powerful than before, and people are finding new ways to earn a living. All of these improvements stem from the so-called sharing economy.”

Meyer’s analysis highlights the importance of Uber for low income neighborhoods that are traditionally underserved by taxi services:

Uber’s expansion has benefited low- and middle-income outer-borough New Yorkers the most. These people live outside downtown and midtown – or core – Manhattan, in zip codes that are in the bottom half of New York City’s median household income.”

Despite the benefits the sharing economy gives low income Americans, some politicians and regulators are still trying – in the words of Hillary Clinton -- to “crack down” on it:

“Even in the face of these benefits, innovation is in danger of being suppressed because of overzealous government regulations that protects existing businesses – all behind the façade of consumer safety.”

The book is available online here. Meyer’s sharing economy writings can be found here.

TX Gov. Abbott on Prop1: “The Game Is Not Over”

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Posted by Dennis Cakert on Friday, May 20th, 2016, 4:26 PM PERMALINK

Texas Gov. Greg Abbott (R) is prepared to override Austin City Council’s decision to impose FBI fingerprint-based background checks on ridesharing drivers. In an interview with CNBC, Gov. Abbott said:

"The issue's not over…Republicans in the Texas Legislature have already raised proposals coming up in the next session to override the Austin vote."

The Austin City Council decided to shake down Uber and Lyft by imposing a raft of onerous regulations on the platforms and their driver partners. Since then, there has been a shortage of transportation options and Austinites have had to wait in long lines for taxis, not to mention the thousands of Austinites who lost their part time jobs.

 “I'd just say the game is not over. It's halftime, and we'll see what happens in the second half.”

The Texas state legislature and Gov. Abbott can override the Austin City Council by enacting a statewide framework that prevents cities and municipalities from regulating ridesharing.


Arizona Continues to Lead the Way on the Sharing Economy

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Posted by Dennis Cakert on Thursday, May 12th, 2016, 5:22 PM PERMALINK

Today, Arizona Gov. Doug Ducey signed into law three bills that make Arizona a friendly state for innovative sharing economy services.

“It’s time for our laws to get with the times,” said Governor Ducey. “The sharing economy offers people great services at the tip of their finger and the click of an app. Now, Arizona leads the nation in embracing the Sharing Economy, including the growing homesharing industry. We are committed to doing everything we can to support 21st-century companies that employ Arizonans, advance the way we do business and improve the way we live.

The bills address three of the most pressing issues facing innovators today. Taken from the Governor’s press release:

HB 2652: While other states punish companies for utilizing independent contractors, Arizona will give new start-ups the freedom to choose how to structure their business model — a vital issue in the Sharing Economy. HB 2652 gives certainty to online platforms operating in our state.

SB 1350: Arizona recognizes that in order for the sharing economy to thrive, government needs to adjust and innovate. This bill empowers companies to pay taxes on behalf of their customers, a big issue for homesharing participants.

SB 1524: Regulations should come from lawmakers – not bureaucrats – and only when absolutely necessary. As the economy innovates, this bill will ensure that regulators can’t rush to action and hamper entrepreneurism by applying antiquated regulations to new, evolving ways of doing business.”

Harsh Regulations Mean Austin is Now Uber-Less and Lyft-Less

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Posted by Dennis Cakert on Monday, May 9th, 2016, 4:35 PM PERMALINK

An inhospitable regulatory regime has chased Uber and Lyft out of Austin. Regulations imposed by the city council include “fingerprinting requirement for drivers, ‘trade dress’ for all rideshare vehicles, prohibitions on where drivers can pick up and drop off passengers, and a voluminous and invasive data reporting scheme.”

As the big regulators bragged at a local beer garden, others experienced a different feeling: “thousands of local drivers dependent on flexible schedules knew they would soon be out of work. It dawned on residents and visitors alike that their transportation options in Austin were about to be curtailed.”

For more information click here.

Study: Young and Poor Rely On Sharing Economy Between Jobs

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Posted by Dennis Cakert on Tuesday, April 5th, 2016, 2:13 PM PERMALINK

A new study by JP Morgan Chase & Co is the first to analyze financial transaction data from participants in the sharing economy. The data is crucial for understanding what some have called “the future of work” and the “fourth industrial revolution.” Here are some of the highlights:

The sharing economy is primarily used by the young and poor:

“Participation in labor platforms is highest precisely among those who experience the highest levels of income volatility - the young, the poor, and individuals living in the West.”

The sharing economy is composed of labor platforms and capital platforms:

“Labor platforms, such as Uber or TaskRabbit, connect customers with freelance or contingent workers who perform discrete projects or assignments. Capital platforms, such as eBay or Airbnb, connect customers with individuals who rent assets or sell goods peer-to-peer.”

Individuals choose to work on a labor platform when they are in between jobs or experience a decrease in pay at their current job:

“There is a negative correlation between labor platform earnings and changes in non-platform income. In other words, labor platform earnings were higher in months when participants experienced a dip in non-platform income. This further suggests that labor platform earnings were used as a substitute for non-platform earnings.”

It is easier to find labor jobs in the sharing economy:

“The Online Platform Economy also adds an important new element to existing labor markets, where finding new or additional work typically involves a lot of effort and high transaction costs. Simply put, landing a platform job is often easier and quicker. Likewise, individuals can, and do, generate additional income on labor platforms in a timely fashion when they experience a dip in regular earnings.”

The number of people participating in the sharing economy is growing:

“In September 2015, 1 percent of adults actively earned income from the Online Platform Economy. This monthly participation rate increased 10-fold over the three-year period. Cumulatively, more than 4 percent of adults received income from the platform economy over the three years. This cumulative participation rate increased 47-fold over the three years.” 

Ironically, Dem Convention Might Need the Free Market

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Posted by Dennis Cakert on Wednesday, March 30th, 2016, 4:07 PM PERMALINK

The Democratic National Convention is in for a wild ride in Philadelphia. Taxi and limo drivers are threatening to boycott driving passengers to the DNC unless regulators “crack down” on Uber and Lyft.

One taxi driver said they will “shut down the road, we’ll block the roads, we’ll shut down the airport and train station.” Taxi drivers are upset with the regulatory system in Philadelphia because they are required to pay yearly licensing fees to the Philadelphia Parking Authority, undergo criminal background checks and comply with 74 pages worth of regulations. Taxi drivers want Uber and Lyft drivers to be treated the same.

But equality under the law does not mean subjecting everyone to the same extortionist laws. Instead, Philadelphia regulators should deregulate the taxi industry. Requiring licenses, fees, criminal background checks and other regulations creates a regulatory regime that makes it hard for drivers to earn a living. Good policy would be to allow all drivers the right to work and earn a living without needing to get permission from unelected bureaucrats.

This would not be the first time Philadelphia taxi drivers have protested by blocking traffic in the streets, but if they do it again during the DNC, attendees will have no choice but to use Uber and Lyft. Ironically, the delegates of the Democratic Party will have to rely on the free market to get to their own convention. 

The Sharing Economy is Not Ready For Hillary

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Posted by Dennis Cakert on Wednesday, March 23rd, 2016, 9:40 AM PERMALINK

This op-ed was originally published at  

The 2016 presidential election will determine the fate of the sharing economy. Donald Trump has yet to voice his opinion, but other candidates have made their positions clear. Hillary Clinton promises a regulatory shake down and GOP candidate Ted Cruz promises to leave it alone. 

Hillary thinks the sharing economy is “raising hard questions about workplace protections and what a good job will look like in the future.” In her economic policy address, she said she will “crack down” on independent contractors.

That would be a big mistake. The independent contractor designation is the backbone of the sharing economy. It allows the flexibility and freedom for people to be their own boss and set their own schedules. Drivers are able to flip back and forth between different apps to find passengers. Homeowners make ends meet by renting out spare rooms and parking spots. Skilled and unskilled workers find all sorts of gigs to supplement their income. If someone wants to work, the independent contractor designation lets them do it whenever and however they want.

There is nothing to “crack down” on. “Cracking down” on independent contractors will only punish Americans who need the new jobs the most. Someone struggling to pay rent every month is a lot more likely to rent out a room in their house than someone who is financially well off. They should not have to ask Hillary’s permission before doing so.

If elected, Hillary will make sure independent contractors have a boss. Her threat to “crack down” on the sharing economy is a political favor to labor unions supporting her candidacy. The AFL-CIO, International Brotherhood of Electrical Workers (IBEW) and International Association of Machinists (IAM) are already working to unionize the companies’ drivers. Hillary received an endorsement from the IAM, while the AFL-CIO and IBEW are waiting to endorse the Democratic candidate. Any doubt that she is going to leave the sharing economy alone should be thrown out the window. 

On the other hand, GOP candidate Ted Cruz promises a much different approach.

In a letter to the FTC, Cruz demonstrates he has the best interest of Americans in mind. He warns the agency to tread carefully when considering regulation on the sharing economy and advises the commission to “embrace permissionless innovation and use its statutory authority to examine anti-competitive efforts to restrict competition within the sharing economy.” He believes Americans do not need a politician’s permission to innovate and work in the sharing economy.

Cruz is spot on. “Anti-competitive efforts” will punish average Americans. Before the rise of the sharing economy, it was difficult for someone with a car or an open bedroom to locate someone who needs a ride or a place to stay. And only the wealthy were able to have personal drivers and seconds homes. Services like Uber and Airbnb allow for everyone to participate in the market. The services act as middlemen who facilitate trade between parties. As more middlemen enter the market they will be forced to compete over who can offer a better service for a lower price.

Dealing with onerous regulations and strict labor policies is a death sentence for the entrepreneur working out of his or her garage. It drains resources away from product development and redistributes them towards compliance and litigation. This gives big businesses an advantage in the market because they have the resources to navigate the complex web of regulations. Cruz notes this when he explains how oftentimes the most difficult barrier to entry for new businesses are the regulations imposed by politicians. Fewer businesses in the market means fewer choices for workers and consumers.

Hillary’s “crack down” will strip away worker freedom as a favor to the labor monopolies supporting her campaign. She claims she wants to “protect” the public, but in reality she is protecting special interests at the expense of the little guy. As Sen. Rand Paul tweeted “America shouldn't take advice on the sharing economy from someone who has been driven around in a limo for 30 years.”  

The upcoming election has major implications for the sharing economy. Likewise, the sharing economy will have major implications on the election. The drivers, homeowners, and taskers who value their economic liberties are a new coalition of voters. Their numbers are growing and their votes will have a resounding impact, especially in crucial swing states. 

5 Examples of Bad Policy in the Massachusetts Bill to Regulate Ridesharing

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Posted by Dennis Cakert on Wednesday, March 16th, 2016, 1:00 PM PERMALINK

Massachusetts House of Representatives voted 139 to 16 in favor of a bill riddled with cronyism and protectionist policy. The bill regulates Transportation Network Companies (TNCs), such as Uber or Lyft, in a manner that no other state should emulate. Here are 5 policies the Massachusetts bill includes that other states should avoid:

1) TNCs are assessed an annual fee to fund the operating costs of a new “ride for hire division” that will regulate TNCs. The division is allowed to charge a fee each year “to reimburse the commonwealth for funds expended for the division’s activities.” There is no limit on the fee or on the expenses of the division’s activities.

2) TNC drivers must submit to the government their name, address, picture, and license plate number and pay for a background check.

3) It is illegal for anyone under 21 years old to drive for a TNC.

4) It is illegal for a TNC driver to pick up passengers from Logan International Airport

5) Taxicabs will receive subsidies for "economic stabilization measures," technology advancements, loan guarantees for medallion financing and low or no interest loans on vehicles.

Small Victory for Uber in France

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Posted by Dennis Cakert on Thursday, March 10th, 2016, 1:38 PM PERMALINK

French regulators eased their crack down on the sharing economy and took Uber’s side on Wednesday. France’s Conseil d’Etat, the country’s highest administrative court, overturned a law that made it illegal for Uber to show customers the location of available drivers.

The previous law, passed by the French Constitutional Court in May, was ignored by Uber. The ride hailing service continued its spirit of permissionless innovation and showed the locations of drivers anyway.

This is a small victory for the sharing economy in Europe and an important step in the right direction. So far, it has been challenging for Uber to operate in France. Regulators have sided with incumbent taxi firms and cracked down heavily on ride sharing. This summer, for example, French prosecutors indicted two Uber executives on criminal charges for running an illegal taxi operation and threatened them with fines and jail time. 

Chamber of Commerce Defends Independent Contractors From Seattle Organized Labor

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Posted by Dennis Cakert on Monday, March 7th, 2016, 3:28 PM PERMALINK

The U.S. Chamber of Commerce is challenging a Seattle ordinance that threatens the freedom of on demand drivers to be their own boss. The ordinance gives unions the green light to organize for hire drivers working as independent contractors, regardless of an individual driver’s consent.

Matt Patterson, executive director of the Center for Worker Freedom, notes:

"All across the country government agencies and union officials are colluding to restrict market access to these shared-economy companies. Sadly, if the government/union coalition is allowed to succeed, the result will be fewer opportunities for workers and fewer - and more expensive - options for consumers."

In addition to violating federal antitrust and labor law, Amanda Eversole, president of the Chamber’s Center for Advanced Technology and Innovation, said in the Chamber’s statement:

“This ordinance threatens the ability not just of Seattle, but of every community across the country, to grow with and benefit from our evolving economy. Technology companies are leading the charge when it comes to empowering people with the flexibility and choice that comes with being your own boss, and that is something to be championed, not stifled”

If Seattle is permitted to enact draconian policy in conflict with federal law, other local governments might be able to as well. Jones Day, representing the Chamber, stated:

“There are nearly 40,000 general purpose local governments in the United States. If Seattle is permitted to adopt its own set of regulations here, then 40,000 other municipalities may attempt to do so as well. But permitting literally thousands of separate and independent regulatory regimes would cripple the for-hire driver industry and, more broadly, the ‘on demand’ economy writ large. Federal labor and antitrust laws were designed precisely to avoid this result, and to encourage the free flow of commerce among private service providers across the Nation.”