08 October 2015

Owning, Renting and Sharing

There are basically two ways to be more economically efficient, by which I mean getting more beneficial use ("utility" in economics-speak) out of the same resources.

One is with technology, and the other is by sharing.

Americans love to become more economically efficient through technology.  They like robot filled factories that produce more widgets with fewer employees.  They like hybrid electric cars that get more miles to the gallon.  They like more efficient tools, like e-filing that lets a lawyer or paralegal in a few minutes without killing a forest full of trees do the job of copying and delivering legal documents to a court and the other parties that used to full time employees who did nothing but run photocopiers, stamp and address envelopes and deliver them to the post office where more employees hand deliver the packages of documents with a three day lag, and racing to court house clerk's offices with copies to file stamp to prove delivery as the close of the business day looms.

But, sharing, while considered old school and low technology, offers some of the low hanging fruit when it comes to getting similar or better economic benefits without technological advances.

Suppose that our factory is making not widgets, but treadmills.  Sharing treadmills in gyms and community centers can allow everyone who wants to use a treadmill to do so, even if your factory produces only a tiny fraction of treadmills it would otherwise, compared to having everyone who wants to use a treadmill buying one themselves.

The most energy efficient, mass produced, gasoline fueled car in America today is the high tech hybrid Toyota Prius.  But, per passenger mile traveled, a 1950s era old bus running a quarter full is more fuel efficient, and if it is running full, it is also probably less polluting per passenger mile traveled.

E-filing is efficient, but you can get almost as efficient in the process of disseminating legal documents with pre-printing press technology, by putting up a big cork board in a room in the courthouse and having people who are filing legal papers tack their filing to it for all to see, sharing the single written copy.

Americans, however, do not love sharing.  College students clamor for single rooms.  Many building codes won't allow apartment buildings to be built with bathrooms or showers that are shared by more than a single family outside specialized contexts like dormitories or campgrounds or private or community center gyms.  You could house people in climate controlled storage units that currently rent for about $200 per month, if you could find ways for people to share kitchen and bath facilities at an affordable price for a modest additional fees.  In Europe, you see significant amounts of hostel housing on something similar to this basis.  If the residents were Boy Scouts, or members of the same church, or upper middle class people for one reason or another, or just very homogeneous culturally when it comes to the values involves in sharing space so personally and intimately, this would even work.  Many people alive in Japan have lived in housing where the only available baths and showers were in shared bathhouses outside their homes.  But, our experience in the highly heterogeneous society of the United States is informed by bad apples who abuse common facilities like these, and also by a history of affluence that has allowed us for a long time to pay the price of the economic inefficiencies that come with privacy and with the prevalent use of private property that is rarely shared.

Americans underfund our community centers, and buy lots of private household treadmills.  We rarely take the bus and often drive in single occupancy vehicles owned and usually used only by the single user. We have historically preferred to put legal notices in individual newspaper sections that nobody reads that are delivered to hundreds of thousands of people to posting legal notices on a cork board in a public place frequented by almost all of the people who would read them in the newspaper.

Certainly, there are people who use certain kinds of property regularly and for almost all of the time that anyone else might want to use it instead, and sharing isn't viable for that kind of property.  I spend a large share of all ordinary work hours for ordinary people working in my office, and frequently and without warning also used it in the evenings and one the weekends, when few people need office space.

I use my laptop computer all day long at work, and many hours at home.  I wear my belt and my shoes all day long, and sharing clothes is also complicated by the fact that people come in lots of shapes and sizes.  No one else in my household, or for that matter, for a few houses along up and down my block, would find that my clothes fit them.  So, opportunities for sharing clothes with someone else in the same time period are greatly reduced.

But, lots of individual ownership of consumption property is wildly inefficient.  Most people who own boats use them personally fewer than thirty days a year.  The same is true of most vacation homes and pied a terre apartments in New York City who make up a substantial part of all of Manhattan's housing stock.

Sharing is much cheaper.

My father used to talk about the efficiency of the Army motor pool.  You could use the car you needed for the trip you were going to take, on demand, and return it to the motor pool when you were done, while others used the same vehicle when you didn't need it.

As small family of modest means can share a single bathroom workably and a one bathroom house is much less expensive than a three or four bedroom house.

Car pooling is much cheaper than driving single occupancy vehicles to work, so long as you can find a stable group of people with whom to pool your rides.

The trouble is that for sharing to work you need everyone or very nearly everyone in the group of people that participate have sufficient social skills to behave appropriately in public.  Two or three troublemakers on a bus can turn a ride into an unpleasant experience at best and a safety threatening nightmare, at worst.  The same is true of school classrooms or public swimming pools or public bathrooms.

Even the most elemental and small scale forms of sharing that are nearly universal do not come without some strife.  The single biggest source of conflict between the current generation of school aged children and their parents, and a major source of conflict between spouses or other couples that cohabit, involves disputes over household chores and standards of household cleanliness.  Intentional communities like college co-operative housing and co-housing projects, find that their members spend inordinate amounts of time in meetings and discussions over household management.  One of the oldest forms of sharing, polygamy, is famous in practice for infighting between sister wives.

A society needs an immense amount of social capital, culturally shared norms about public behavior ("civic virtues"), and group cohesion for sharing solutions to work well.  A deeper examination of who has those norms and how those norms are developed is a topic for another day.

Between the highly inefficient but conflict free approach of individual owners of property that isn't intensely used by a single owner, and the highly efficient but socially demanding regime of sharing, there is the intermediate bridge of renting.

Much of what people are describing as a "sharing economy" is really a new, pervasive rental economy made possible with technology.

Take the Car2Go program.  In this program, there is one Smart Car per hundred subscribers (about 35,000 subscribers and 350 cars in Denver, for example).  Subscribers go up to any car on the street, or reserve one for only a bit more than the brief period of time needed to get to it, swipe their card, get in, and drive where they want.  They pay by the minute (more or less) with all costs from fuel to maintenance to insurance to car payments to parking covered by the payment.  When their done, they leave the car anywhere within the "home" region for the car (previously about 50 square miles but soon to be reduced to about 24 square miles).  Downtown, a Car2Go Smart Car may be used 19 times a time, although the program works less well at its fringes where a car may go unused for a couple of days at a time in a lower density residential neighborhood.

Several other "car share" programs work on similar principles, as do a "bike share" program in Denver and many other cities.

AirBnB, a short term residence renting exchange, is similarly a rental based economy that is facilitated in ways that previously might not have worked, using the Internet.  Before AirBnB there were real bed and breakfasts that turned homes into temporary housing on a fee for service basis.

Homeowners and small contractors rent pickup trucks and rarely used expensive major tools from Home Depot so that they can access resources that would otherwise only be available to larger scale contractors who can make these expensive tools earn their keep by using them regularly.

Between the private plane and a commercial flight, there are charter jets that allow you to rent a private plane and a pilot for a few hours or a few days, rather than buying the entire jet and keeping the pilot on salary, something that only the biggest corporations and wealthiest multimillionaires could afford.

Renting from a single owner of property can resolve many of the difficult political and social skills issues involved in sharing property that aren't present in ownership, while still allowing multiple people to use something valuable.

One can even describe many financing arrangements as a form of renting.

As a footnote for further consideration, lets get back to sharing.  One of the keys to making sharing work in a society that isn't highly homogeneous and lacks universal strong civic virtues is exclusion. In a society where only 10% or 50% or 80% of the population is cohesive enough to make sharing a gym a viable solution, sharing is still possible, so long as the people in that society who are capable of sharing form private clubs that exclude people who lack the shared social norms necessary to make sharing work.

For example, before the condominium form of ownership allowed people to separately finance, tax and alienated units in multifamily housing buildings and minimize sharing by placing a corporation called a homeowner's association in charge of common elements of the building, pro-social New York City residents used the sharing based solution of cooperative housing units with a single mortgage for the entire building to achieve similar ends and limited the downsides of sharing through exclusion by carefully interviewing and vetting prospective fellow cooperative housing co-owners. Exclusion is one of the most natural ways to solve the sharing problem and unlock the immense economic efficiency that sharing can product, if private ownership or rental based solutions aren't possible or desirable for some reason.

American discomfort with the exclusion (for a variety of entirely legitimate deep historical reasons like our legacy of slavery that gave way to de jure segregation that breed anti-racist distrust for private sector attempts to recreate de jure racial segregation, and collective memories of anti-Semitism and anti-Catholicism that affects many American's recent ancestors), which are necessary to make sharing work in many of its more heterogeneous communities, is one reason that many Americans (especially in communities that aren't homogeneous ethnically) are so uncomfortable with sharing solutions and opt instead to rent and own to what would otherwise be economically inefficient degrees.

Instead, Americans prefer to either exclude in only subtle, non-de jure ways (like ethnic identity clubs that in principle aren't allowed to discriminate against members who aren't part of that ethnicity), or to actively inculcate social virtues that facilitate sharing with active policing of anti-social conduct (e.g. Americans have used relatively strict enforcement of traffic laws and tort remedies for careless driving by international standards in order to develop widespread norms of safe driving habits in the use of commonly shared road resources that have produced adherence to traffic law in the U.S. that are unrivaled almost everywhere in the world except Scandinavia and Japan).

But, because these aren't particularly efficient solutions to the problem of sharing with people are abuse their use of the shared resource, we remain a less sharing people than we might be.

(There is also an alternative view on these conundrums focused on clannishness and its opposite, with a partially biological route associated with inbreeding, but that perspective is beyond the scope of this post.)

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