Seth Wenig, AP
FILE - In this March 15, 2017, file photo, a Uber car drives through LaGuardia Airport in New York.

Utah’s Constitution requires a free market, yet every year it seems that incumbent companies use antiquated laws to try to shut down their upstart competitors.

It’s a story we’ve become too familiar with: local governments protecting restaurants from food truck competitors; taxi-friendly ordinances punishing Uber and Lyft; hotels worried about Airbnb; Realtors forcing Homie to get licensed; and more recently, car rental companies looking to over-regulate Turo and storage rental companies hoping to restrict Neighbor.

These incumbent industries, in turn, often hire expensive lobbyists who can leverage their legislative relationships to curry favor for their clients and defeat legislation that would destabilize the status quo — or pass new legislation to protect it.

The emerging economy — sometimes called the “sharing” or “gig” economy — no doubt presents challenges for existing competitors, but it provides substantial benefits for those of us utilizing these services; with increased competition, we all win. Lower prices, better services and increased attention to customers’ diverse and changing preferences result from the corporate contest.

This peer-to-peer trend should not be feared. Increased flexibility for workers allows individuals to supplement income with a side hustle, such as renting out their basement or extra vehicle. It creates positive community connections between people directly interacting, rather than relying on a sterile, corporate middleman. And the individualization inherent in this approach allows for maximum efficiency as people are able to purchase and use precisely what they need.

Still, many are scared of this new trend and worry that increased automation and technological efficiency will eliminate jobs. But the fear is misplaced when looking at the overall economy. Put very simply, new companies are the ones creating new jobs.

A Kauffman Foundation study found that during a recent 25 year span, “companies more than five years old destroyed more jobs than they created in all but eight of those years.” Almost all of the new private sector jobs have been created by businesses less than five years old. In other words, we should welcome — and not fear — new competitors challenging the models of old companies.

It’s a trend that’s not going away, either. Fully one-third of the American workforce now freelances, enabled in large measure by constant connectivity online and marketplaces that allow us to find customers. Within a decade, a majority of Americans will likely be participating in the peer-to-peer providing of goods and services.

This changing economic landscape benefits both parties in the transaction. For example, peer-to-peer commerce helps the end-user whose preferences are closely matched, and whose convenience is ensured through individualization.

We see this all around us — from the Uber driver picking us up right when we need to leave, to the delivery of the dinner we’re too busy to get, to the ability to hire a person anywhere in the world whose specific abilities are a precise match for whatever task we might need done at the moment.

Peer-to-peer work also helps the provider of the service. Participants enjoy flexible hours and work arrangements to better balance life and work, a path to entrepreneurship by experiencing a low barrier to entry to being their own boss, variety of work to keep things interesting, and a way to supplement other income streams to better weather life’s sudden financial storms.

Of course, it’s difficult to argue against and prohibit these beneficial services (though it’s been done in several cities across the country). So when incumbent competitors look to restrict them in order to protect the status quo, they and their lobbyists strategically attack peripheral issues that would jeopardize their success.

For example, some try to classify independent contractors as employees, forcing the provision of legally mandated protections and benefits for employees, such as minimum wage and overtime — a difficult prospect when these workers set their own schedule. Elsewhere, arbitrary limitations curb the success of peer-to-peer alternatives in order to protect the incumbents. Even worse, some governments tax these workers to distribute the proceeds to their subsidized competitors.

3 comments on this story

Our state’s constitution doesn’t just suggest a free market is a good idea. It’s a required aspect of commerce in Utah in order to “promote the dispersion of economic and political power and the general welfare of all the people.” Life is better for all involved when a fair process allows people to compete and identify the greatest opportunities and efficiencies.

For these reasons, we shouldn’t fear a peer-to-peer economy. Policymakers should ignore the cries of incumbent companies to pass knee-jerk, regulatory protections. Instead, we should study issues carefully, watch how markets respond, and embrace the innovation and competition that a free market can bring to the Beehive State.