Can the P2P economy evolve in line with its stated progressive, green, and utopian goals, or will it devolve into business as usual? Markets are not based on the exchange of capital but on the basis of mutual trust and faith. In the endeavor of describing the nature of the P2P system, I would like to quote the pioneering economist Phillip Kristian who humorously stated that trying to achieve economic gain without accounting for trust is like trying to print your own money and convincing retailers to accept it as a form of payment. The current market system is not perfect, it is immensely flawed and challenged by the development of society and the instabilities we face, this virus being a cliche yet relevant example, however, supporting the rise of the p2p economy would be as detrimental to human progress and destroy wealth plug a couple starts.
I aim to shine a light on the apparent transparent ecosystem and much like a dirty glass mirror of an old and abandoned shop this house will be able to see the several harsh realities of the P2P economy which entail the lack of adherence to minimum wage laws, corporate malpractice, ignorance of the labor laws and the overall exploitation of workers. The ideology that the peer-to-peer economy promotes enables the firms to engage in tremendous amounts of malpractice from providing their workers below minimum wage to being absolutely ignorant towards the very basic human rights of workers under their firms. This failure to adhere to labor laws goes undetected in a so-called transparent economy simply due to the lack of legislation imposed on these firms that promote their own employees to be entrepreneurs and shroud their mindsets with the ideologies with the notion that they are independent of the company. Whereas the reality shows that firms such as Uber provide their drivers minimum worker insurance and even go to the extent to pay them below minimum wage. As demonstrated by the lawsuit imposed on Uber by the Californian government, Uber prevents most of the drivers within the state of California from receiving more than the wage of 13 dollars an hour, which is 2 dollars below minimum wage. Doing some calculations, I would like to make it visible to the house that these workers lose over 51 thousand dollars a year due to this 2 dollar gap as backed up by John C Bogle who states that “Lower costs are the handmaiden of higher returns”.
We have evolved from building fire from sticks and stones to developing artificial intelligence technologies to help eradicate the plethora of problems prevalent within society. The very notion of the p2p economy propels the world's economy backward instead of forward by promoting the usage of debentures and taking on bad debt through several loans and Ponzi schemes from the lending economy. The 2008 crisis first occurred as banks offered mortgages that could not be paid back through bad credit loans. Over 2000+ firms within China have offered bad credit loans by selling the loans out to the rich that may gamble with the lack of security prevalent within these loans. The banks in 2008 built a bubble by providing these loans. The p2p economy in China has given loans worth over 150 billion dollars. The p2p economy will not only create a bubble that will lead to the destruction of the current economic system. The very reason why large institutions arose with the start of the 19th century. The p2p economy would propel the economy over 100 years into the past.
The viability and process of introducing a p2p structure into today's economic system must be addressed to comprehend the complexity of the situation. I’d like to point out potential job loss and extreme uncertainty in the market caused by this system. In 2010 where capitalism was in full swing the rate of inflation was a mere 5.8%. This can be compared to today's rate which is 10.8% where the peer-to-peer economy has started to grow. This further helps in interpreting the declining GDP rate and an overall disruption of the economy. And as even Benjamin Graham has highlighted the uncertainty in the market by mentioning that “You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.” The system of shared economy has wiped out consumer retention ratios and measures which has caused freefall of the public markets due to consumer's adversity for investing.
Last but not least we haven't reached the age where you, me, or even the sellers are ready to risk ourselves and money for all the potential problem, and as much idealistic approach the system brings it can never be implemented in the actual world as the system eliminates the third party and challenges the notions of the traditional economy. Hence it's a question to be asked that do we require such model which openly threats reliability and exploits our labor force?