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Is The Sharing Economy More About Soft Language A Commentary Part 1 of 2

Over a decade ago now famed comedian George Carlin attacked the idea of political correctness for using what he called “soft language” when referring to many long standing issues which politicians and some community groups tend not deal with. For example, as Carlin pointed out, the old world war I term shellshock sounds exactly as what it is, a emotional disorder which is common among those in the military who have dealt with the physically damaging experience of being on the field of battle. By the Second World War the pentagon referred to the exact same condition as “battle Fatigue” which seems to make the condition not so severe. By the time we reached the first Iraq war the condition was being referred to as Post Traumatic Stress Disorder, a term that not only obscures the condition but also sanitizes it. The architects of this so called new “Shared Economy” may be using similar soft language in selling their plan of what is being described as a form of corporate populism. In New York it is easy to see this new business model in practice, from shared bikes to Airbnb. There is even a plan that is being floated about to create a shared umbrella service for those of us who ignore the wet season. However what lies below the surface of Economy For All varnish tells a different story.

The poster boy for the shared economy is Airbnb which has sold itself as a service which can be used by tenants who are having trouble paying their rents while neglecting to ask the question why there is a rent crisis in many cities around the US and the world at large. But the disdain for this company is now bringing together strange bed partners from both the left and right. Journalist Nicole Gelinas of the conservative leaning “Manhattan Institute’s City Journal” has just released a new article which focuses on the hotel service chain, titled 7 Questions For Airbnb. .

The first question in the article centered on the legality of Airbnb’s operation model in cities such as New York and how it violates local housing laws. The company was issued a subpoena by New York State’s Attorney General Eric Schneiderman who is looking to gain access to Airbnb’s client list from the past three years in order to get the names and addresses of hosts who may be running illegal hotel service. Gelinas posed the question of whether the company has any intention of handing over the information or not. A judge’s ruling on May 13th of this year may make obtaining those records more difficult than the state’s attorney would have liked after the subpoena was stuck down for being too broad.
Schneiderman promptly reissued the subpoena restricting the inquiry only to areas covered under the state Multiple Dwelling laws.
The rest of the questions focused on zoning laws and the right of the state to set their own regulations when protecting rent regulated tenants and landlords while offering subsidies to those building owners who receive tax breaks in order to create new affordable housing and how Airbnb sees the benefit of their services in these units. Perhaps the one question missing from this piece is how Airbnb is different from other illegal hotel operations, any instance in which a residential unit is rented for less than 30 days and not as a primary residence. So far Airbnb and other similar operations have been allowed to get away with circumnavigating the Multi-Dwelling law in part by hiding behind the current so-called “Sharing Economy” which the company claims is a way for the average renter to keep their overly inflated priced apartments. What is not mentioned is that the company prospers from these operations, even if the client is evicted from their apartments for illegally subletting their unit, a violation that no housing court judge will overlook. It is also important to point out at this time that Airbnb expects clients to understand that they the client are the ones taking the legal risk and the company is not responsible for any legal repercussions to the tenant.

The final point to be made about this company is that their claim that they only provide services to students and working class New Yorkers looking to save their homes is actually false. A report released earlier this year by Skift showed that the majority of income is generated by a small group of “super hosts”, individuals who sublease as many as 29 or 30 units on a transient basis. These apartments are effectively removed from the rental market, furthering the local housing crisis. Legislators both on the state and city level are looking for ways to combat this problem.

The housing market is not the only sector that the shared economy has set up shop. In wealthiest neighborhoods of Manhattan and parts of Brooklyn one can easily find what are called, “shared bikes” located in stations from Midtown to the lower part of the commercial district and even in parts of northern Brooklyn. The program is fully funded by Citi Bank for the sum of $40 million dollars as part of a six year contract. In exchange the too large to fail banking giant can paste its logo on the bikes as a form of advertising campaign. . According to an article by Saya Weissman of DigiDay, the users of this system have travelled a total of 3.3 million miles as early as a year ago. The company’s decision to become involved with this project was at a time when much of the public was still outraged over the part financial giant’s role in the collapse of the US economic. It seems to be a major PR move to restore its name along with being a business venture. If it is working or not is a subject of debate. While the tone of Weisman’s article is that of positive gain for the company, a piece by John Petro of the Petro Public Policy tells a different story.

According to John Petro the large blue bikes have become an important mode of transportation in mid-town Manhattan along with the lower west side. However Citi Bank and New York City’s public officials are reportedly struggling to find a way to expand the program to the boroughs of Queens, further into Brooklyn and the Bronx, along with upper Manhattan since there is very little profit being shown for the corporate backers. As a result of not meeting Citi Bank’s financial expectations, there will probably be no shared network in most of the other boroughs anytime soon. Petro stated that 102,000 riders have used this shared bike program but this was in-spite of a slew of problems including technical difficulties and hurricane Sandy. To recoup lost funds from the rollout short comings, Citi Bank’s operator has proposed raising the renting price by 50%.
Despite the lack of financial payoff, according to Petro’s piece, Citi bank actually did see a huge boost to their advertising reach thanks to the logo being printed on 6000 bikes at 330 stations all of which are in predominantly wealthy and white areas. As stated above, there are no current plans to expand into lower income communities of color.

It should be noted that the entire “shared bike” program is part of a public/private sector endeavor which seen in the larger picture, is government involvement in Citi bank’s advertising campaign while keeping the working class community out for the time being. To be clear the program itself is a limited bike renting program for short distance travel on Citi banks dime and the City’s resources. The idea of any bike rental business is certainly nothing new in New York City but most of the businesses that have provided this service hardly have ever considered using the term “shared bikes” seeing the whole operation is nothing more than a business venture. For Citi bank this business/advertising campaign requires its customers to pay for the short term renting of these bikes and at the same time become human billboards for the nominal fee of around $95.00 a year. Like any other advertising campaign it is safe to say that Citi bank is getting new business every day with residents being constantly bombarded by the bank’s logo all over various communities. The actual profit to these banking giants is as yet unmeasured.

Part 2 of this series will focuses further on the so called “sharing economy” and how it may be just another way for large business to prosper while working class communities see little to no benefit.

Until next time…

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