Avoiding square one

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Avoiding square one

San Francisco’s Yellow Cab Cooperative filed for bankruptcy in January. The company’s president said it was struggling with liability claims from taxi accidents and competition with new mobile application-based services. One of the mobile apps referenced was Uber. Around the same time, Parisian taxi drivers protested over Uber.

Also in January, over 100 Uber drivers in the New York City area held a protest in front of a local Uber office, denouncing the headquarters’ decision to lower fare rates by 15 percent.

One driver explained he had been working six days a week, eight hours a day, but the rate cut would force him to work 10 to 14 hours a day to make as much. “They call us partners, but they’re treating us like slaves,” he said.

Uber is often considered synonymous with the “sharing economy.” In 2008, Harvard University professor Lawrence Lessig first used the term to describe the way existing goods and services can be lent and borrowed as necessary. Through this, a new market is created.

But there are adverse effects. Taxi companies are closing their doors as they lose business to Uber, and the protests from Uber drivers have shown that the company has become just an app-based car service. This is far from collaborative consumption.

The sharing economy has become a buzzword in Korea. The government recently finalized a deregulation plan to nurture new service businesses. Most notably, the Korean version of Airbnb, which allows people to use their homes as guesthouses for tourists, is now permitted. In the United States, Airbnb has grown to threaten global hotel chains and was recently valued at $24 billion.

Nurturing new ICT-based industries is a global trend that Korea cannot go against. However, we also need to thoroughly study the consequences of participation, such as existing companies going out of business and people losing jobs. Some argue that industries without competitiveness are bound to die when exposed to a free market. As ICT-based industries develop, the number of existing jobs may decrease, but the service market will grow to create new jobs. Still, a complete lack of regulation could highlight inherent inequality among competitors.

The creation of new jobs will take time, but bankruptcy and unemployment are imminent. That is why we cannot transition to the new paradigm so quickly. The sharing economy may destroy just as many new jobs as it creates. We need to be prudent and make sure we don’t wind up back at square one.

The author is editor of People & Section of the JoongAng Ilbo.

JoongAng Ilbo, March 3, Page 34

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