Can the Sharing Economy Provide Good Jobs?

[Thailandnotes]

Re: Can the Sharing Economy Provide Good Jobs?

"The Plot Against Trains"
http://www.newyorker.com/news/daily-...against-trains

[don]

Re: Can the Sharing Economy Provide Good Jobs?

another great post, dcarrigg. You know what they say, take away the good paying jobs and they won't come . . . .

[ProdigyofZen]

Re: Can the Sharing Economy Provide Good Jobs?

But then again, I have plenty of personal quarrels with people who call themselves progressives. Not the least of which are the set that are popping up everywhere in the US these days offering "domestic micro loans" to poor people at "non-profits" charging 35% interest. They advertise this crap as a way out of poverty. It blows my mind. So I have little doubt that many are all about Uber and ZipCar too. I still think it creates a two-tiered public infrastructure though.

In any boom credit expands and the qualitative difference becomes less as the hierarchy of money flattens, in a contraction the qualitative difference widens as the hierarchy reasserts itself. In a boom credit quality begins to look like money, forms of credit becomes more liquid and in a contraction you find out what you have is not liquid and not like money. As the expansion grows there is a loss of qualitative distinction and this shows up in prices.

Peer to peer lending is a result of this credit boom and it can be seen across the world economy in various credit schemes. Quickly the holders of this "credit collateral" will realize that when the tide washes out and liquidity dries up that their credit is not highly liquid money.

Speaking of peer-to-peer lending:

Is peer-to-peer lending out of control?

There’s certainly some cause for concern. Consider these facts: P2P loan volume is poised to hit $77 billion this year, a 15-fold increase from just three years ago. LendingClub, the No. 1 player worldwide, is trading at a market value of about $7 billion even though it lost $33 million last year. And in a flashback to the subprime mortgage boom, P2P startups have begun bundling and selling off loans through securitizations.

The business of matching lenders with borrowers online—which still amounts to only 0.08 percent of the $96 trillion in global corporate and household outstanding debt—may truly be an innovative way to distribute capital. But is P2P a revolution or just another bubble?

Money managers are betting it’s the former as they pile into one of the fastest-growing asset classes in finance, Bloomberg Markets reports in its June issue. Some are taking equity stakes in P2P startups. In February, Third Point, the hedge fund founded by Daniel Loeb, led a $200 million investment round in Social Finance, which refinances student loans.

The deal valued the three-year-old San Francisco company, known as SoFi, at $1.2 billion. Others are investing in the loans themselves. In April, Victory Park Capital, a private equity shop in Chicago that backs a number of P2P platforms, announced it was increasing its funding pipeline for one-year-old Upstart Network to $500 million from $100 million.

Third Point and Victory Park are hardly outliers in pursuing loans that are generating 5 to 12 percent annual returns in an era of nonexistent interest rates. Goldman Sachs, BlackRock, Alibaba, and even Google are making deals in the space.

In the U.K., holders of tax-free savings accounts known as ISAs may even soon be allowed to invest in P2P loans, a move that could draw Britain’s top asset management houses and provide £150 billion ($220 billion) in fresh cash by 2020, according to Liberum Capital, a London investment bank. “Every single lending product that a bank provides is vulnerable to this model,” says Cormac Leech, a senior analyst at Liberum.

And now Wall Street is cranking up the volume by running these loans through its securitization machine. In November, Morgan Stanley and Goldman led the sale of securities backed by $303 million in student loans originated by SoFi. In February, BlackRock unveiled the first investment-grade-rated package of P2P consumer loans with a $281 million offering of notes from Prosper Marketplace, a site that lets users apply for loans as well as back them.

Such deals will help P2P platforms spread risk and multiply loan volume, which isn’t necessarily a bad thing. Growth is good, right? Still, the specter of the subprime-mortgage bust looms over this nascent market.

“Yes, these platforms are low-cost distributors of loans, and investors are frantically chasing yield,” says Tania Modic, the head of Western Investments Capital, a family office based in Lake Tahoe, Nevada. “But loans take time to season and go bad, and Wall Street loves to package and pass along risk. The music will stop—it always does—and this will not end well.”

Peer-to-peer stalwarts counter that their industry doesn’t look like the toxic mortgage market of the 2000s. Many platforms in the U.S. and the U.K. post their loan books online so investors can analyze the quality and performance of their debt on a loan-by-loan basis. London-based RateSetter maintains a “provision fund,” which stood at £13 million as of May 14, to make lenders whole should borrowers default, a feature other sites are now imitating.

Most P2P firms also shun subprime borrowers. Zopa, a 10-year-old British firm that’s issued more than £800 million in consumer loans, approves only one out of five applicants. Both Zopa and RateSetter have default rates of less than 1 percent, while bad loans at LendingClub and Prosper are below 3 percent.

“There’s always tension in any credit business between how fast you grow and the quality of your loan book,” says Giles Andrew, Zopa’s co-founder and CEO. “We publish data on every loan. So any signals that bad debt had started rising would be very visible.”

But as institutions pour money into P2P, some platforms may relax their credit criteria and welcome riskier borrowers to accommodate the flow, especially if they can offload risk through securitizations, says Michael Tarkan, an equities analyst at Compass Point Research & Trading in Washington who covers P2P companies.

In the U.S. market, LendingClub and its brethren have enabled consumers to pay off pricey credit card balances with cheaper P2P term loans. So what’s to stop consumers from levering their credit cards back up? Such behavior could spell bad news for investors in P2P loans if an interest rate hike or an unforeseen shock pressures borrowers, Tarkan says.

“We’ve created a mechanism to refinance a credit card into an unsecured personal loan,” says Tarkan, who’s rated LendingClub a sell. “This may prove to be a superior model, but we just don’t know because it hasn’t been tested yet through a full credit cycle.”

Renaud Laplanche, the founder and CEO of LendingClub, says borrowers may indeed max out their cards again. But so far, he says, they’re boosting their creditworthiness after converting card debt into P2P loans by paying lower interest rates. Moreover, Laplanche says, the global lending market is so vast that platforms like his, which is multiplying its volume by 20 percent a quarter, won’t have to take on riskier borrowers for years.

“There’s no need to loosen standards,” Laplanche says. “It’s all growing very fast, but it’s a controlled growth.”

It may well be that the speed and efficiency of the Web fundamentally changes the business of lending. Institutional investors are certainly betting that way. The P2P boom won’t just test a new business model. It will also show whether Wall Street has learned its lesson.

[LorenS]

Re: Can the Sharing Economy Provide Good Jobs?

"The Plot Against Trains"
http://www.newyorker.com/news/daily-...against-trains

The author is nuts.

I rode the light rail in Portland recently. It was a nice train and the route was perfect for my needs. However, it was incredibly slow because it stopped every block in downtown. I would guess that the train in the above article that "ran faster 50 years ago" has a similar problem.

Also, the nice new light rail in Portland seems to be frequented by folks who use illegal substances and hence their behavior is pretty annoying. In just one ride I was serenaded by kids who smelled strongly of pot and used profanities more than real words as wall as a lady who "wasn't messed up right now" and was telling her friend very loudly that she recently had been (and obviously still was).

When I lived in Denver it would have taken me 1.5 hours to make a 20 minute by car commute on public transit. Our new Fort Collins "Max" system is similarly flawed. And the idiots who say "but it was mostly federal money" still don't get the fact that wasting money costs us all no matter which ignorant bureaucrat approves the waste.

We also had a bunch of people with antibiotic resistant TB riding around on the 16th street mall in Denver a few years back. Chalk up another "win" for public transit.

Americans love trains, they hate wasting time and money. The last time I looked into an Amtrack trip it was measured in days not hours and cost significantly more than airfare.

The public transit shils also never look into the cost for a family. Put 5 folks into a mini van - then compare it to public transit. We are not stupid out here in "flyover" country and thank goodness for the Senate or the urban mobs would totally destroy us.

[vt]

Re: Can the Sharing Economy Provide Good Jobs?

+1

I love trains too, but you have to pay to ride. The city folks want it subsidized.

Efficient subways, trains between key cities are fine. It's the money losing route that need to be done away with unless it is the only way to help the working poor.

[Thailandnotes]

Re: Can the Sharing Economy Provide Good Jobs?

On the coasts, train travel is often a no-brainer.

In 10 days, I am leaving North Carolina to fly out of D.C. and return to Thailand.

Door-to-door

By air: 6 hours, 350 $

By train: 8 hours, 67 $

By car: 6 hours, 50 $

(last option requires storing car for 9 months)

[vt]

Re: Can the Sharing Economy Provide Good Jobs?

$350 by air? I can fly from Raleigh-Durham (RDU) of Charlotte (CLT) to Dulles or National for $121 to $126.

How much of the train ride is subsidized?

[lektrode]

Re: Can the Sharing Economy Provide Good Jobs?

On the coasts, train travel is often a no-brainer.

In 10 days, I am leaving North Carolina to fly out of D.C. and return to Thailand.

Door-to-door

By air: 6 hours, 350 $

By train: 8 hours, 67 $

By car: 6 hours, 50 $

(last option requires storing car for 9 months)

yup - either on the coasts - or - from CHI to DEN, GSC (glenwood spgs) and on thru to SLC & RNO..

in 2000, i rode the trax from BOS to ALB got off and drove to NYC (gr.ctrl) - got back on and rode down to RGH
(altho the food - in the dining car - was the best on that leg, i'd hitchhike b4 riding the rails south of richmond again)
hung out with the NC contingent - got back on to FTL (lottatail or liquordale depending on 1s POV)
then FLEW back to RGH (raleigh) vs waiting on CSX coal trains (since amtrak was typically LATE down theyah, and so... the freight made the folks WAIT - on the side, of the single-track 'mainline' - while the 100 cars of coal lumbered on by...)

other that having to be at RGH at 0300 (for a train that was 3hours late, BOTH times..)
it was a bucket list expedition and i'd never seen DC, so that part was cool - as was the 5pm orso departure out of Union Station, westbound, headed for CHI - with cocktail hour in the clubcar, as the sun went down...

oh yeah baybee - this was the only way to travel...

[Thailandnotes]

Re: Can the Sharing Economy Provide Good Jobs?

I've looked into it several times in the past 3 months. CLT to IAD was consistently 100 to 200 dollars more expensive than RDU.

Depending on what you factor in, air travel (per mile/per passenger) is more-subsidized to way-more-subsidized than rail.

[Thailandnotes]

Re: Can the Sharing Economy Provide Good Jobs?

I've looked into it several times in the past 3 months. CLT to IAD was consistently 100 to 200 dollars more expensive than RDU.

Depending on what you factor in, air travel (per mile/per passenger) is more-subsidized to way-more-subsidized than rail.

[LorenS]

Re: Can the Sharing Economy Provide Good Jobs?

Prices are not so bad as I thought. $181 for Denver to Detroit. But it takes 24 hours. For a family of 5 with two drivers it's really a toss up, especially when you need a car at the other end and the fact that neither myself nor my family members live close to a train station - that adds a couple more hours and more $$ to the trip.

I would like to see more development of our rail systems. Especially our Ski train in Colorado. But, again, family costs and lack of a close station make it difficult to justify ($60 per person).

[lektrode]

Re: Can the Sharing Economy Provide Good Jobs?

....
I would like to see more development of our rail systems. Especially our Ski train in Colorado. But, again, family costs and lack of a close station make it difficult to justify ($60 per person).

+1
having taken the Zephyr from CHI thru DEN and up to WIP (fraser) - to get beat up on good ole MaryJane's world class bumps for a week or so - then back on/over to glenwood - for aspens final weekend that year - must say that the zephyr makes as good a 'ski lift' as they get (beats the crap out of taking the bus, anyway) - altho the sched over to SLC aint zactly convenient (midnight, if yer lucky arr/dep) - it does work out OK for going over to RNO/tahoe (arr 0900 or so), as ya can sleep perty good straight-lining thru the desert at 79mph

fixing the rail system would allow more convenient 500miles or less DOWNTOWN TO DOWNTOWN travel
(ultimately some sort of mag-lev tube to go tween the coasts - at 500mph - would make sen$e at some point as well)

and ya cant convince me that the air travel system isnt EVEN MORE HEAVILY SUBSIDIZED
personally i've about had it with getting groped+irradiated by the TSA gestapo with their anal focus on how big my toothpaste tube is...

O&BTW - just soz we try stay on topic here? ;)

can someone get hold of the rest of this one (its behind ruperts paywall and the goog's news wont let me have it):

How Everyone Gets the ‘Sharing’ Economy Wrong

seems to be an op/ed, by the sounds of it

Uber isn’t the Uber for rides—it’s the Uber for low-wage jobs

By Christopher Mims

May 24, 2015 3:32 p.m. ET If you want to start a fight in otherwise polite company, just declare that the “sharing economy” is the new feudalism, or else that it’s the future of work and all the serfs should just get used to it, already.
The “sharing economy” being, of course, a hodgepodge of mostly unrelated but often lumped-together startups, many originating in Silicon Valley, that...

and ole uncle warren weighs in with his take on wages:

Better Than Raising the Minimum Wage

altho this sounds like a subsidy for uber...

Help Americans who need it with a major, carefully crafted expansion of the Earned Income Tax Credit.

By Warren Buffett

May 21, 2015 7:12 p.m. ET 1023 COMMENTS

The American Dream promises that a combination of education, hard work and good behavior can move any citizen from humble beginnings to at least reasonable success. And for many, that promise has been fulfilled. At the extreme, we have the Forbes 400, most of whom did not come from privileged backgrounds.
Recently, however, the economic rewards flowing to people with specialized talents have grown dramatically faster than those going to equally decent men and women possessing more commonplace skills. In 1982, the first year the Forbes 400 was compiled, those listed had a combined net worth of $93 billion. Today, the 400 possess $2.3 trillion, up 2,400% in slightly more than three decades, a period in which the median household income rose only about 180%.
Meanwhile, a huge number of their fellow citizens have been living the American Nightmare—behaving well and working hard but barely getting by. In 1982, 15% of Americans were living below the poverty level; in 2013 the proportion was nearly the same, a dismaying 14.5%. In recent decades, our country’s rising tide has not lifted the boats of the poor.
No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like.
Instead, this widening gap is an inevitable consequence of an advanced market-based economy. Think back to the agrarian America of only 200 years ago. Most jobs could then be ably performed by most people. In a world where only primitive machinery and animals were available to aid farmers, the difference in productivity between the most talented among them and those with ordinary skills was modest.
Many other jobs of that time could also be carried out by almost any willing worker. True, some laborers would outdo others in intelligence or hustle, but the market value of their output would not differ much from that of the less talented.
Visualize an overlay graphic that positioned the job requirements of that day atop the skills of the early American labor force. Those two elements of employment would have lined up reasonably well. Not today. A comparable overlay would leave much of the labor force unmatched to the universe of attractive jobs.
That mismatch is neither the fault of the market system nor the fault of the disadvantaged individuals. It is simply a consequence of an economic engine that constantly requires more high-order talents while reducing the need for commodity-like tasks.
The remedy usually proposed for this mismatch is education. Indeed, a top-notch school system available to all is hugely important. But even with the finest educational system in the world, a significant portion of the population will continue, in a nation of great abundance, to earn no more than a bare subsistence.
To see why that is true, imagine we lived in a sports-based economy. In such a marketplace, I would be a flop. You could supply me with the world’s best instruction, and I could endlessly strive to improve my skills. But, alas, on the gridiron or basketball court I would never command even a minimum wage. The brutal truth is that an advanced economic system, whether it be geared to physical or mental skills, will leave a great many people behind.
In my mind, the country’s economic policies should have two main objectives. First, we should wish, in our rich society, for every person who is willing to work to receive income that will provide him or her a decent lifestyle. Second, any plan to do that should not distort our market system, the key element required for growth and prosperity.
That second goal crumbles in the face of any plan to sizably increase the minimum wage. I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills. Smaller increases, though obviously welcome, will still leave many hardworking Americans mired in poverty.
The better answer is a major and carefully crafted expansion of the Earned Income Tax Credit (EITC), which currently goes to millions of low-income workers. Payments to eligible workers diminish as their earnings increase. But there is no disincentive effect: A gain in wages always produces a gain in overall income. The process is simple: You file a tax return, and the government sends you a check.
In essence, the EITC rewards work and provides an incentive for workers to improve their skills. Equally important, it does not distort market forces, thereby maximizing employment.
The existing EITC needs much improvement. Fraud is a big problem; penalties for it should be stiffened. There should be widespread publicity that workers can receive free and convenient filing help. An annual payment is now the rule; monthly installments would make more sense, since they would discourage people from taking out loans while waiting for their refunds to come through. Dollar amounts should be increased, particularly for those earning the least.
There is no perfect system, and some people, of course, are unable or unwilling to work. But the goal of the EITC—a livable income for everyone who works—is both appropriate and achievable for a great and prosperous nation. Let’s replace the American Nightmare with an American Promise: America will deliver a decent life for anyone willing to work.
Mr. Buffett is chairman and CEO of Berkshire Hathaway.

with at least one reaction already

Warren Buffett's Right But Not Correct; Raise the EITC, Not The Minimum Wage

[dcarrigg]

Re: Can the Sharing Economy Provide Good Jobs?

can someone get hold of the rest of this one




altho this sounds like a subsidy for uber...

Try this link. If not, this one will do it. Different formatting is all. Best argument I've seen against expanding EITC and couching all social welfare within the tax code is in this book. EITC already costs more than welfare and food stamps and all that combined. People just don't realize the gargantuan size of these tax credit programs. No other country hides their welfare state quite like this.

[don]

Re: Can the Sharing Economy Provide Good Jobs?

here's an Uber twist . . .

RelayRides

Put your idle car to work for you

List your car

You decide who rents your car and when. Coordinate with RelayRides’ approved renters who want to rent your car, and earn money on every rental.
List your car for free

Park & Earn

Get paid to park at select airports*. Earn guaranteed money each month, without lifting a finger.
* Currently available at SFO and LAX
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Keeping you and your car safe is our priority

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• $1 million liability insurance policy
• Strict renter screening

Renters can count on

• Insurance coverage
• 24/7 roadside assistance & support

(my wife's cousin does this, boards dogs and hasn't paid his mortgage in a couple of years. Seems to be living pretty good . . . .)

[lektrode]

Re: Can the Sharing Economy Provide Good Jobs?

here's an Uber twist . . .

RelayRides

Put your idle car to work for you...
(my wife's cousin does this, boards dogs and hasn't paid his mortgage in a couple of years. Seems to be living pretty good . . . .)

nice work, if ya can get it...