The Rise Of The “Sharing Economy” Spells Further Declines In Manufacturing Employment

Danielle Sacks has a great article in Fast Company about firms that use information technology to promote “sharing” of physical goods. Some firms, like ZipCar, are sort of explicitly oriented around this sharing idea. Others, like AirBnB present themselves more as peer-to-peer rentals. But I would actually even include a straightforward hub-and-spoke rental operation like Netflix under this heading. The point is that a traditional ownership model entails the average middle class person massively over-investing in physical goods that are idle the overwhelming majority of the time. In an excellent post jumping off Sacks’ article, Dave Roberts notes that “the average power drill is used 15 minutes over its lifetime.” (see also Rachel Botsman’s TED talk).

With improved information technology, we can better coordinate the allocation of where stuff is at any given time, which means there’s less need for excess stuff just lying around.

Roberts teases out some of the implications of this, but to take things in a different direction, this is going to further drive the tend to manufacturing’s declining role in the overall output and employment picture. If we use physical objects more efficiently, then we won’t need as many people to spend their time making physical objects. That frees up more people to be police officers or scientists or maids or hairstylists or chefs or preschool teachers or bartenders or surgeons according to their skills and inclinations. And that is why I spend what I know some people think of as a wrongheadedly large share of my time worrying about barriers to entry and the quality of education.