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Governing the Sharing Economy with Technology

Governing the Sharing Economy with Technology

What would happen if you and your family were living paycheck to paycheck and you lost your job tomorrow? For more than half of all Americans, this is an all too real fear as they have less than a thousand dollars in the bank and little to no financial cushion should a catastrophic life event occur. Whether out of necessity or a desire for greater financial freedom, one of the modern marvels of the headline-grabbing sharing economy is that it provides citizens immediate access to income if they need it, and flexible work arrangements that can fit into complex lives. That is, if the right technology is in place to help them quickly.

Perhaps you have a spare room that could be posted for availability on Airbnb. Or a car you could drive for Lyft or Uber. I would venture to say that many Americans have been reassured knowing that they could leverage opportunities within the sharing economy to put food on the table, make the next rent or mortgage payment or pay unforeseen medical bills. And there are others who are using these opportunities to live life on their own terms — drive an Uber in the morning so they can be available to coach their child’s soccer team in the afternoon.

I strongly believe that this emerging piece of our economy, made possible by a convergence of the internet, mobile devices and our nation’s technology entrepreneurs, is a good thing for Americans and our cities.

Yet, our cities and its leaders also have a responsibility to make sure that this new segment of our economy is safe for its citizens and guests, respectful of neighborhood integrity and pays for its fair share of the public services that it relies on — just as with any other piece of our economy. Today, across the country, city leaders are considering these issues and looking for the right policy balance.

The policies themselves are taking many forms and involve combinations of permits, licenses, inspections, background checks, reporting requirements and business tax obligations – all of the usual mechanisms of regulation. However, while the regulatory requirements may differ from city to city, one thing seems to be a constant: In order to be in compliance you must trudge down to at least one, and often multiple, city departments and get in line with your paper forms.

The goals of bringing regulation to this new industry are well meaning, but compliance rates thus far have been less than stellar. Why? Most of the time, city technology leaders (CIOs, CTOs, etc.), and the technology they will use to actually implement these policies, are an afterthought during the policy debate about how best to regulate the sharing economy. This needs to change. Technologists need a seat at the policy table from the get-go.

I’ve worked with innovative governments around the world that are providing their citizens with technology-enabled customer service that rivals the private sector and bridges the gap between citizens and government. Online, not standing in line. This means 24/7 access that is mobile, simple and efficient.

Yet, most cities haven’t gotten around to applying these technology principles to their sharing economy regulations, setting up a stark contrast in customer experience for aspiring sharing economy participants. Imagine that you’re going through the process of becoming an Airbnb host — or an Uber driver — and the user experience is easy, seamless, even beautiful. In fact, you can even register right from your smartphone. Companies like Airbnb and Uber take the user experience into account at every step. They understand it is critical to the success of their companies. Now imagine that you’ve just completed one of their online applications and you start to look into complying with local government regulations. The contrast is glaring. Is it any wonder why compliance rates have been so low?

Cities can’t just pass a policy and expect it will work. They must take a page from Silicon Valley and use modern technology to meet the citizen where they are — online.

The sharing economy is not going away. It is a good thing. If you lose your job on Friday, you should be able to drive next week for a ride-hailing app or rent out one of your bedrooms to put food on the table without the fear of getting fined. Government must rise to the challenge, enact smart regulations enabled by agile technology that meet citizens on their own terms in our modern world. If government cannot, we shouldn’t be surprised when citizens fail to comply.

This article originally appeared on the official blog of the National League of Cities.

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