Economist and author Michael Munger of Duke University talks about his book, Tomorrow 3.0, with EconTalk host Russ Roberts. Munger analyzes the rise of companies like Uber and AirBnB as an example of how technology lowers transactions costs. Users and providers can find each other more easily through their smartphones, increasing opportunity. Munger expects these costs to fall elsewhere and predicts an expansion of the sharing economy to a wide array of items in our daily lives.
United States


00:00:04welcome to Aecon talk part of a library of economics and liberty I'm your host Russ Roberts at Stanford university's Hoover Institution our website is econ talk dot org for you can subscribe comment on this podcast and find links and other information related to today's conversation also find our
00:00:21archives we listen to every episode we've ever done going back to two thousand and six or email addresses male econ talk dot org we'd love to hear from today is October eighth twenty eighteen and my guest is political economist and author Michael Munger of Duke University this is
00:00:39his thirty fifth count I'm thirty five thirty but the parents any kind talk which represents about five percent Wally Kantar campus as we last heard from him in April of twenty eighteen discussing the economics of traffic his latest book is tomorrow three point zero transaction costs in the
00:00:59share economy which is our subject for today Mike welcome back to come talk it's a pleasure tomorrow three point no is a short book which is a plus in in my mind but despite its length it's short as it packs %HESITATION wanted to act of a lot of
00:01:15intuitive economics into its pages in a in a way while I was reading I felt like I was reading Munger an econ talks greatest hits their stop on middle man transaction costs the sharing economy property rights price gouging universal basic income divisional labor and more secure Fanta bikes
00:01:33on this broadcast I think you'll like the book a lot and you learn a lot even if you're not a fan who is a fan of my Munger that's our first I got nothing yeah yeah yeah yeah I hear from a lot of people %HESITATION what would get
00:01:49you to write this book of your being sort of nicely modest by saying it sounds like econ talks greatest hits at least greatest longer yes you're absolutely right econ talk because this book and it started of what I started thinking about writing it when I did of podcast
00:02:09with you on the sharing economy and realized that I understood almost none of it and then it turns out that much of what this book tries to weave together is my attempt over a period of years to try to understand that in some ways it comes from talks
00:02:24that I've given that try to understand different parts of it and I appreciate the fact that you recognize that it's a relatively short book it's a book after all about in some ways about transactions costs and after I was finished with the book I thought you know I
00:02:39bet I can shorten this by forty percent so I went back through it and spent three months doing nothing but trying to shorten every sentence every paragraph because I'm reducing the transactions cost of conveying these ideas so it really was my objective was to try to make it
00:02:54short and yet still when you read it you think car that's interesting it's only a hundred fifty three pages and dial a level people say oh this book's overpriced it's only it's like yeah wisdom you're you're complaining about the price of wisdom seriously when we have people complain
00:03:09about the dollars per page to many to was per page yeah I don't understand that exactly but okay well let's start with an example you use which I think has a lot of %HESITATION a lot of value which is I'm standing in front of a wall in my
00:03:24house I need to make a whole I need to drill something and %HESITATION I actually I have owned a drill in the past I'm not I can't I can't say I own one now but of course everyone out there listing some of them have drills some of them
00:03:37don't and die if you're in that situation %HESITATION what do you do now so many of the things that are important consumer durables we own because we want to have immediate low cost access to their services so that's true of most tools most of the time most of
00:03:57us supporter professors are working some white collar jobber most jobs you don't constantly use your tools unless you're a contractor in yet somewhere in your garage or storage you have quite a few tools so I'm standing in front of a wall my wife is said we're gonna put
00:04:13up some pictures I want to drill a hole in the dry wall so I can put an angry in so it won't tear within a couple of weeks and I could go and buy a drill I could rent a drill what I do is go to my garage
00:04:28and get one of the for her power drills that I'm embarrassed to admit that I have and then drill a hole in it she looks at it says no not that well it's not the right ones are still in that one and then I go when I drove
00:04:39a different role but still I used to drill for maybe thirty seconds and then I put it back up the question is why is it that we own so many things in the Austrian economics insight is that almost any consumer durable your car a suit that you have
00:04:56in the closet what those actually are is not something you're going to use like an apple where you eat it and it's gone it is a stream of services that expand out into the future so you have to think about the value of time and you have to
00:05:09think about the value of uncertainty now it turns out that power drills are particularly interesting because they become a kind of trope of the sharing economy literature there aren't ten million power drills in the United States if you like %HESITATION anti three or thirty million people but there's
00:05:27a bunch of idiots like me there for a few people that that have not but a lot of people have at least one power drill if you take the hundred and ten million in rank them from the most used to the least use and then look at the
00:05:40media and it has been estimated that the fifty fifth millionth the power drill ranked by lifetime lifetime use is between thirty and forty minutes because use the power drill for thirty minutes if you're a contractor isn't much but if I'm drill into holes to put up a picture
00:05:57in the house I use it for thirty or forty seconds and then I put it away so why is it that we store these things that we only use for thirty minutes over their entire lifetime and I claim that it's at least possible to think of an alternative
00:06:13where instead of owning it I share it and I shared in a particular kind of way that economists call renting renting is just a way of sharing things with people that you don't know with one residual claimant that takes care of all of the transactions costs so there's
00:06:28one person at the middle that owns the drill and that's the nexus of all contracts in the they oversee the sharing process and make sure that it's returned in good order and that is delivered in that's available %HESITATION and that people actually pay for it and for that
00:06:44service they take of a profit that is the excess of the price that they get over the cost of providing that rental service so I pull out my cell phone and I go to uber and I scroll down to power tools in a school or scroll down to
00:07:01drills and then I just press order ends the software knows which drill I want because %HESITATION the future talking about this is this is the future not some people say I'm going a bit too far you guards are or are these like our of but what I'm I'm
00:07:21picking something that's literally a bit too far because it is in the future it's a bit implausible so are you going press I press order and somewhere I don't know where bin uber autonomous car with no driver picks up of power drill from maybe it's an owner maybe
00:07:40it's a contractor is not using it is put it outside in the smart pod maybe it's or a rental company that does this for a living but the the uber car picks up the drill it has a bunch of deliveries to make so it solves the software solves
00:07:55the traveling salesman problem that is making the set of deliveries in the minimum total distance in time and in a few minutes my phone buzzes because I have a smart part in front of my house the drill has been delivered I go in I open up the smart
00:08:12part with the security code that's in my phone it takes no time I just open it up I I I I make the holes in the wall my wife says no no not that wall and I think okay I'll do it in a different wall and then I
00:08:25put the drill back I've had it for about five minutes to cost me a total of two dollars and almost no cost the pod is smart it knows the drill was been put back in it it's a software called another uber card that picks up that drill and
00:08:39then takes it to its next use no human beings are involved in the allocation or transfer of this rental product among all of the different users and it's a commercial quality power drill that's better than I would have purchased so it's a better deal than I would have
00:08:55had access to the result is that instead of having a hundred and ten million adequate power drills we have something like ten or twelve million power drills at any given time high quality commercial power drills they're extremely intensively used and maybe they get used up in a year
00:09:13or two but then we make some more of the point is that the prices for being able to rent instead of phone means that we're saving on the opportunity cost of the money that's tied up in the drill end in the storage costs because when it comes to
00:09:28consumer durables you pay for them twice first you pay for the cost of the thing and then you pay for the safe and secure storage of the thing so that it's available your closets are full of stuff your kitchen cabinets are full of stuff I have army bears
00:09:42to admit a sausage maker I've used it twice just Eugene heavy why in the world do I have those things well it's because the the the software world that I just talked about hasn't yet solved the transactions cost problem in a way that makes it possible want to
00:10:01mention a couple of other factors which that story %HESITATION klax %HESITATION one is in my case I have a couple of friends who own every tool every single one they they have every tool for reasons that are in somewhat inexplicable but they tend to do more home improvement
00:10:18and I do so I can borrow tools from them at no charge other than that I owe them emotionally as when I walked her white why is that right I owe them emotionally or why they on so many levels YA do they let you borrow it at zero
00:10:33cost as well there's referrals but they could be renting it out they could get their support for no I agree I just I'm just I'm just my world there is a fourth possibility here or third possibility of of of literally sharing as long as there's no rental market
00:10:47correct but even if there was they might decide to let me use it for for for without paying for it they might give me a bargain up but the the other day and I'm there actually that that market the true sharing a lot of people don't like the
00:11:00free sharing comic to describe saber Airbnb is because they don't really share they charge %HESITATION but but that's the side I'm compact %HESITATION compacted the the other thing is that some people do enjoy having the physical tools they like looking at them they like you know it's just
00:11:17a thing just but that just I just mention that as an aside but my room and I was going to I was going to come back to that at the very end let's do it now for just thirty seconds or so by having the most interesting kind of
00:11:28sharing is the kind that doesn't involve markets at all so I started out with this very pedestrian rental transaction I think one of the things then we'll talk about this in a minute that platforms make possible plot platforms are an integrated software hardware package that facilitate these things
00:11:47platforms make troop sharing possible and so there's this turn key open source software called a tool library and you can borrow from your friends because they know you and trust you but suppose that entrance to a tool library was just you own one or two tools that you
00:12:03agree to make available to other people when you're not using them well that means that in effect everybody all the thirty people in the tool library have a whole bunch of tools at their access to Adam Smith said that markets are limited by the extent forgive me division
00:12:20of labor is limited by the extent of the market well this kind of sharing is only limited by the size of the corporation horizon that's defined by the platforms and so you can borrow from your friends but you might be able to borrow from your neighbor the you
00:12:34don't know very well they did their %HESITATION borrow tools they need to be pretty close together software can handle this hearing problem in a way that opens a whole New World of actual sharing so it the point that you just made ice I sort of tried to push
00:12:48it away I think that's actually the place that that we should end up and maybe we'll talk about it more then but as usual you have anticipated what I think is really the most interesting question and that is is true sharing possible we needn't fetish eyes markets and
00:13:03these complicated rental agreements true sharing as possible so it could be a whole New World yeah like obviously the the cost of acquiring the object is part of the part of this question where you should share charge share or rent %HESITATION but if it's suppose I really like
00:13:20tools but I have software that makes me pretty sure that it'll be returned if I loan it out or rented out then they'll be even more people who have a bunch of tools because they like them because they can rent them out and and cheer them out reducing
00:13:34the cost to them of possessing it yep so that people are going to specialize some people are going to be owners some people are gonna be borrowers and sharers and it doesn't even it doesn't have to follow the contours of what we now think of as market exchanges
00:13:48so we to go well when I was younger I had a role which was to never went on any of my books and the reason I never let them out is I noticed how often they didn't come back yeah and it even with good friends it wasn't just
00:14:04an empirical observation I made that might tend to the land out a book two things happened I forgot who I wanted to and they forgot that they have barred so they never saw them again I think about a book I wanted to read or look at our leaf
00:14:16through and go look for it and I get really frustrated because I could find it then there is %HESITATION yeah I probably wanted to somebody and one way people solve that is they put their names on their books and they treat it like or they put a little
00:14:28card in there they they create some system that's a big transaction costs by the way yeah I never got to eventually I change my product and I did a one eighty I went out all my books now and I assume I'm not getting them back and when I
00:14:41went out a book I just go buy it again and how if if I if I care about their a few books I went out I don't care about and I'm happy to see them my storage costs but often I love them and so I am letting them
00:14:53twice as a great book you should read it now I just said that was a that's a wonderful thing that I can give that away and I can get a book you know I can get on get a used copy for under ten dollars often of of any
00:15:04any bomb most any book and so now to me that's just a I love that gift aspect of of book lending and %HESITATION that's made my that that decisions really help me but with a power tool it's not such an easy by the lab I have tools in
00:15:18my house right now that I'm pretty sure came from handy handy man and contractors who just left him here but I have I have a really nice drill I don't know whose it is Jefferson it's a shame I you know it's I feel I'm embarrassed about I didn't
00:15:33notice it for you know three years also in my basement I see what what that is it's not mine on what to do about it occasionally I have a fairly regular email say is this your first time as it takes it says now it's not mine %HESITATION anyway
00:15:48are so course he asked about anticipate questions my question about the drill is why don't we have that all ready and and I want you to talk about the different kinds of transaction costs and how that creates a set of limits on potentially on what can be shared
00:16:06what can't be what is unlikely to be sure because it doesn't work economically it'll take a little while to kind of get to the basics of the answer and then we can circle back so I think you've probably heard this story but it is worth repeating because it
00:16:24was a big event in my life when I was in graduate school one of my dissertation advisors was Douglas north end and my dissertation defense in nineteen eighty four Doug asked the question in your dissertation defense is pretty scary because you know you if you don't pass that
00:16:40would be terrible so I was worried and I did what economists do when they have a question the answer to which they don't know I went to the board and started drawing equations finally after about two excruciating minutes of silence Doug north raised his hand and he said
00:16:55in a voice that you might use to address of not very bright but will love child Michael the answers transaction costs the only answer I was looking for was transaction costs and I later realized that it didn't matter what the question was for Doug north the history was
00:17:10transaction got the answer to every question but it took more years after that for me to realize that he was absolutely right if you start out by thinking in terms of what do the transaction costs here you make a look at the it's a good way to start
00:17:23to start to break down what the answer should be so from one of the people who first started working on the economics of transaction costs was Ronald Coase and it's interesting because was pretty careful never really to give a clear definition of transaction costs because he thought the
00:17:41transactions cost or conditional on the particular kinds of institutions liability arrangements and legal process in which it's in bad it so you can talk about transaction costs but does specifically defining them with a bunch of different categories you thought wasn't a very good idea I think it's useful
00:18:00because it's a way of under breaking down the problem a little bit so I think the three categories of transaction costs are first triangulation the people who want to cooperate or buy and sell have to be able to find each other and they have to be able to
00:18:14identify each other is as possessing something that the other wants usually in economics we start with this idea that a has a widget B. has some money and once a widget and then it goes yet on price well how did the meat how do they know that they
00:18:29have a widget do they speak the same language do they have a currency that they can use to consummate the exchange is a bunch of things that have to happen before you get to the and then there's a price part so triangulation involves that the second is transfer
00:18:44transfer is we actually deliver the product we actually make the payments we clear the transaction in a way that both parties agree with and that's a big part of any transaction third is trust that is all I know that you're not going to rob me you're not I'm
00:19:01not going to rob you and we recognize that the thing that's being sold and the thing that's being used to purchase it actually are those things there's no fraud so anything that solves all three of those problems I want to call a platform and platform state way back
00:19:20in history one of the first platforms was what we now call the souk the bizarre and when you think about it it's kind of odd that these very large markets grew up why would it be suppose you have three you you've worked for a year you have three
00:19:39bags of wheat that is the product of your farm you don't have much of a farm because it's not automated this is four thousand BC and you're thinking of going to the souq in our %HESITATION why because you're we're all right %HESITATION it's over as for listeners who
00:19:56do who don't speak middle eastern if you're talking about you are right I I am talking about you are a town yeah we was a decent sized city in Samaria ends it near it was between the Tigers Tigers in your freight is in this one of the oldest
00:20:15cities on earth and that's why I pronounce it right this time if something is a very old book we call it in or texture that it is the the something that that's very old so suppose I have three bags of grain in war well but I'm I'm I'm
00:20:30ten miles outside of town why don't I just go to the middle of the field and sell it why would I transport it all the way to a place where a bunch of other people are trying to sell their great but seems like to lose because of the
00:20:43competition so I have to transport it and then there's all these competitors whiter I go to the middle of a field and sell it there the answer is I'm going to be in that field while nobody knows that I'm there with my three bags of green and what
00:20:57they're trying to do is put together a caravan to go north nobody is going to pay the transport costs so I pay the transport costs and I go to a place where there's a settled price so that the soup and it did yes %HESITATION you okay SO you
00:21:15cute depending on how did it it's transliteration from Arabic meaning a place were market so at the souk there's a platform instead we can find each other we can agree on a price because there's many buyers and many sellers there's a way to deliver because I can I
00:21:37know to bring it there it reduces the transactions cost of knowing where to take it there's a bunch of camels waiting to move it somewhere else and we trust each other because we're providing security just along the roads and in this concentrated area so we have those three
00:21:52things all at once and that's why people would go to a souk and not to somewhere else so those kind of market arrangements those things existed for thousands of years one of the next examples of a platform that's really still quite old but I think interesting comes from
00:22:11what I think is the single best podcast that you have done on all of econ talk and it was the thirteenth one that you did in August of two thousand six with a guy named Chris Anderson of wired and we're talking about a book of his called the
00:22:26long tail in in that podcast he talks about the Sears catalog and I listen to the podcast again yesterday kind of just by accident and I realized that the Sears catalogue is a platform this was not selling stuff their job was not to sell stuff what they were
00:22:43selling was reductions in transactions costs so some of the stuff in the Sears catalog because so you you live in a little town on is in southern Illinois there's a real road that goes by now and then but it doesn't stop and it's the only place you can
00:22:59buy stuff is you can go to the dry goods store or maybe there's kind of a hardware store and they have a couple dozen items that's the extent of the market that's the cooperation arise in your world not much specialization is possible not much division of labor as
00:23:16possible is there a way to deliver access that's your discretion to the wide world of division of labor well yes because twice a year this enormous six hundred page book arrives in your mailbox from Sears it's absent in the print is really small there's thousands and thousands of
00:23:38products that are available some of them are made by Sears a few more are purchased under contract from Sears but a lot of them were just third party items that Sears give space to in its paper soak so I can find I can solve the triangulation problem because
00:23:56I can find stuff that's available I didn't even know it existed but I want to I need that for my farm I need that because that's that clothing is much more beautiful than anything that a local seamstress or Taylor can provide me well what about transfer Sears specialized
00:24:13in reducing the costs of delivery and payment much of what's yours did was provide credit to people that had problems annually of coming up with enough money at the right time so they would Sears would loan out money and then they would process the payment so the seller
00:24:29gets paid Sears would wait until the buyer could make the payment so they were the intermediary on all these payments and for trust they would give an implicit guarantee so if the product didn't work they would refunded if it arrived broken Sears would take care of it what
00:24:44that meant was that Sears the Sears catalog and the the services behind it or a self contained platform now a number of other of those have happened since in you we maybe can talk about some other examples but let's get to the the the drill you may remember
00:25:04that there was a company called Amazon that sold pretty much just one product yep books Amazon sold books a pretty remarkable now because you can still buy books from Amazon but Amazon is the Sears catalogue of the twenty first century because almost everything that Amazon sells is manufactured
00:25:26by someone else and was on makes most of its money from the software called Amazon web services which is a platform I can find the product I can identify price I can search across different sellers very easily because Amazon set up for these searches I can arrange the
00:25:43payments because I'm actually paying Amazon and the Amazon pays the sellers so Amazon as intermediary is protecting me from the credit card fraud and Amazon has a truly remarkable delivery system in fact this morning %HESITATION I got an Amazon delivery it wasn't Amazon truck it was a rental
00:26:01U. haul truck that pulled up in front of my house and brought me a box which I had ordered on Saturday I ordered something on Saturday it was delivered to me today was a big heavy box of dog food and this was in a rental truck Amazon doesn't
00:26:16actually owned this they're renting all of the things that they need to provide this delivery service but Amazon's ability to deliver is remarkable it's really unbelievable so the three things that come together there triangulation transfer and trust make Amazon a platform on that platform you can buy an
00:26:34amazing different array of stuff why not drills well the answer is that Ms on set up for ownership it's not really set up set up for sharing or rental you can buy watching and have it delivered the question is why not you asked about my scenarios why isn't
00:26:53that possible my scenario was something more like %HESITATION renting and then you suggested rightly that there's other kinds of sharing and those things are also not really possible yet so why not well the answer I think is that were on the verge of a new platform that's going
00:27:10to solve a lot of those problems so Amazon used to sell books we forgotten about that ten years from now we're going to say you know Cooper used to be a taxi company we will have forgotten about that because %HESITATION preserve platform uber can solve the problems of
00:27:24triangulation transfer in trust for almost any product the thing that's great is that uber is actually set up for delivery of people maybe they're going to provide some kind of service maybe it's food maybe it's a drill that I then want to to take back now okay over
00:27:42at this point is still what Amazon was when they were just selling books but uber soon will be able to start delivering all sorts of other things that are not just human beings they'll be able to deliver products of services what that means is that the big battle
00:28:02is not really between %HESITATION bring the taxi companies the big battle is between something like uber in something like Amazon for primacy that why would you say why would I say that there's primacy is important and part of the reason is that trust is a network economy one
00:28:19of the things that Amazon has that gives it a big lead is an inventory of reviews so what do I go on Amazon I can find hundreds of reviews of almost every product I want to look at anybody else who wants to enter this market someone else to
00:28:35make up the shortfall that you have at the beginning you don't have reviews of all these products since the troll are is a chance of overcoming the S. the reason it hasn't happened yet is that uber is not yet moved into rental markets and that barrier to entry
00:28:51on the trust park which is absolutely crucial it's just a footnote on your your %HESITATION U. haul rental bought my impressions at Amazon doesn't doesn't have drivers they just they outsource that also I think what you saw was probably an individual well put who delivers for lots of
00:29:10people and happens to have rented a U. haul trucks for him or herself %HESITATION I see people pull up in front of my house in cars it I'm slightly surprising who's visiting me at at ten at night or two in a bit seven in the morning it's somebody
00:29:25delivering an Amazon package they don't have a uniform look like a UPS driver their interests are renting the people to your right to renting the people to that just that to support %HESITATION number one I think the other question is and I you didn't is a lot of
00:29:39really interesting things just every didn't answer the peace the question on that I'd like to get to which is there certain natural limits so %HESITATION even if uber solves the autonomous car problem eight or somebody does %HESITATION I'm willing to wait I might be willing to wait a
00:29:58half an hour to get the drill to drop to drill a hole I don't know if I'm ever gonna remember going to but bar somebody else's church jeans which clothing is another example that you mention in the book %HESITATION or just as a given seller example I probably
00:30:16can own my own sewer because even though I could rent silverware for when I'm about to eat that the transaction costs of that even though the app is seamless and fabulous and quick I really don't want to walk out to the to the curb because the price savings
00:30:32on the sober usage is so small that that time cost is going to actually be large enough to keep me from doing it so talk about some of the ways those factors interact those are both really good questions I'm so I think that's the this sharing I'm more
00:30:52confident now about calling it the sharing revolution because I think that my earlier claims about rental are pretty short sighted that we'll think of better ways to do it then the FTSE consort of formal renting but sticking with formal renting there are many kinds of and I'm afraid
00:31:10I'm going to make a sort of cozy in point close S. this really great question in nineteen thirty seven if markets are so great wire their firms in his answer was hi this will sound familiar transaction costs explain the question first though because it was a what what
00:31:24what kind of questions that we've talked about before was a long time ago grad well economists brag about the ability of prices to organize decentralized of distributed at activities transactions among people that don't know each other so I can nineteen forty five gives the example of ten of
00:31:45the price of ten goes up I don't need to know why I just know that I need to a compromise people who produce ten don't need no need to know why they'll just try to make more tea and entrepreneurs don't need to know why they'll just figure out
00:31:57a way to make substitutes so the price system directs people to do what they would do if they had perfect information and that's a great saving so prices are really wonderful prices organize the economic system co said we'll have prices is so great why are these are these
00:32:15little command economies that we call firms imbedded in them because if I work for Ford Motor Company I don't put a bolt into the chassis of the Ford car and then go on eBay and auction it off and find the highest price deliver it to them and then
00:32:31they put on the fender instead the next guy in the line just puts on the fender price is not operating here I'm being ordered to do this year right an entrepreneur that's the and what most people when you ask who tells you what to do they don't say
00:32:46prices they say my boss yet so bosses do a lot more ordering around in prices because his question was where is the margin and firms call this the maker by decision so firms make some things but they buy other things so maybe for a while Ford Motor Company
00:33:03considered going out and making its own steel for cars but they never grew the wheat for the sandwiches in the employee cafeteria they always bought some things so that line between may occur by coast claimed was based on transactions cost it was the cost of using the market
00:33:21versus the cost of organizing this transaction within the company well the weight of the gift I buy say in the book I think that if clothes were alive today he might ask the question why is it that we own instead of here and the answer is still transaction
00:33:38costs the margin between owning and sharing will be determined by transactions cost the thing is that coast recognize that there was a dynamic component to this that is the size of firms both in terms of the scope of products in the amount of products that they produce will
00:33:56be determined over time by transaction costs if it's cheaper to buy things in the market then firms will shrink well it the endogenous thing about sharing and I think this is possibly worry some is that there will be a greater and greater gap between urban and rural people
00:34:15%HESITATION people who live in cities are going to be able to participate in the sharing economy you said you don't want to wait thirty minutes if you live in a large city and there are these uber robots that are going around delivering things and they can go on
00:34:29the street and they can also go up the elevator it may only be for five minutes before it's delivered because the density of transactions is so high in the city but that means that people who live not in the city you're going to find themselves facing much higher
00:34:44costs to participating in the sharing economy either because they can borrow it from their neighbor in a tool library or it's delivered by in new Bern robot from someplace that they've rented so the transactions cost is going to drive more than just which products are shared in which
00:35:01products are owned over time if that claim is right it's %HESITATION it's actually going to drive the structure of communities meaning that people just like in the industrial revolution are going to move from rural areas to urban areas in the question is how can we think about that
00:35:18in a way that makes it possible the advantages you'll need far less storage you won't need parking spaces you won't need much closet space and yes you're not going to borrow jeans but well the example that I use in the book is toothbrush I am a deciduous pressure
00:35:37of teeth I don't brush other people's teeth that's not creepy I just brush my own teeth but I brush my teeth two minutes in the morning two minutes in the evening so for twenty three hours and fifty six minutes my toothbrush hangs there on use it is hard
00:35:50to imagine any way of being able to commodified that excess capacity to modify the handle which has the if it's an electric toothbrush the transaction costs are too high we you you could share the handle and in fact it's set up for that it you know for families
00:36:06because you accept different separate but that's a good point it is set up for sharing but there are some products that it's unlikely transactions cost would ever fall enough that we would share the but if transactions cost for the thing is that entrepreneur any problem that you and
00:36:22I can think of is a problem that some entrepreneur is working to solve because they can solve this problem because you can make money they can make profits by up anything that looks like a problem is actually a profit opportunity so there's a company in this is my
00:36:36favorite example of the sharing economy called blah blah car end I usually ask if I'm giving a talk on this subject I'll ask a young woman in the audience ma'am do you hitchhike and of course the answer is always know when I've already told them that the answer
00:36:51to every question this transaction costs but okay I ask why don't you hitchhike because she looked horrified and they you know that would be creepy it's too dangerous know the answers just transactions costs suppose that you had an app and in Europe it's called blah blah car we're
00:37:07awful lot of people end up hitchhiking so all the trucks that go on the interstate between the large cities many cars they just have one passenger if you could come modify that excess capacity and solve the three transactions cost problem triangulation transfer in trust you could have hitchhiking
00:37:25in so public car that the app provides four pieces of information the first is where are you now second is where do you want to go the thirty is at what time do you want to go in the fourth is how much do you want to talk so
00:37:38blah means I really don't like other people very much blah blah means enjoys a Natcher blah blah blah means really pauses even for Brett so you you can go from where you are where you want to go using a completely on use eat that would otherwise be empty
00:37:57at the time you want to go and have a conversational partner that is interesting the reviews that are available means that both the writer and the driver can evaluate each other so I love that one of the reasons I love that %HESITATION first I try to make a
00:38:15point about the toothbrush again it's not just that the transaction costs are too high it also is the factor that into the person's relatively inexpensive so you always want to compare the cost of ownership to the to the benefits of ranting and in the case of his precious
00:38:32it's a relatively inexpensive thing again I don't really want to try it out to the smart pot on my that the %HESITATION mailbox say and pick up my hand over my toothbrush and then shove my brush part into the handle then go back down to the pod and
00:38:44all that as first thought I had second second point I want to make is that you really imagining you you basically said this I just want to restate in a different way but we could have a smart apartment building where the whole building and maybe the whole city
00:39:00but certainly to start with the building is designed for this kind of reduction in transaction costs where the delivery part would be much more seamless than it is in a rural area or even in a suburb or even in some cities so that's that's %HESITATION that's very cheap
00:39:15but I want someone to come out the blob blob car is really a fantastic thing because what do they charge is it a free straight nobody but they charge you know there are there are there are some companies that try to arrange it in basically it's like a
00:39:28it's a membership so sometimes you drive and sometimes you're a writer but the you do actually pay but it's for blabla car suppose I'm in but no and I want to go to Prague it's a requirement of a hundred dollars to go on the train it's ten or
00:39:42twelve dollars to go on blah blah cars which dramatically cheaper and the driver is getting some of the benefits some of that profit I assume not just the platform right but the drivers also getting company don't know exactly you pay could be have to pay to be a
00:39:55driver because they want the company right so obvious which way the payment it's going to go well I I think that the driver gets some of the driver of the owner of the vehicle get some of it blah blah car takes a small bit but the the since
00:40:09many people would just as soon have company particular company that's compatible the cost is driven down the part I really like is that there been a couple times in my life where instead of renting a car on a trip more than a couple I don't rent a car
00:40:25just use super and but on some of the trips I've had to take a lot of trips it still might be worth it to me to take over but on a day where I've had four or five uber rides %HESITATION sometimes I'm just talked out and I always
00:40:40I I struggle sometimes when I get a new per because I sometimes say to the driver I'm really tired I apologize I'm just going to rest and I feel like I have let them down certain certain circumstance course some abroad ours don't wanna hear me talk maybe also
00:40:51actually %HESITATION but in general I know there are some who were drivers the reason they are driving uber is partly for the money but partly for the to meet people literally just chat and to have an interesting day alarm over drivers I've met a retired and they literally
00:41:07enjoy it when the recent rise enjoy meeting new people and that's part of obviously what blah blah cars but what bothers you get to set it in advance yeah there is a recognized a brilliant idea I love that so we're working but it's part of the name yeah
00:41:22yeah exactly but the other aspect of this though which is I think god interesting on this are question of of monetary aspect of true sharing versus semi whatever you wanna call it rental more like rental is couch surfing so couch surfing is this again it it in a
00:41:40different generation people or older find this bizarre but younger people find it normal %HESITATION you rent out your couch we already know you share your couch and you say I'm gonna let anybody stay in my house you could put different your gender preferences and other things on the
00:41:56on the app time let people come to spend a night my house on the couch there's no charge of my son recently was on the floor in a culture thing experience also it's not literally couch but it's basically different ways to spend the night under one roof but
00:42:10there's no money exchanges sometime evidently is a gift expected %HESITATION my sensitive or a six pack of beer as a thank you and there's also no terminal limit on that you stay it's sort of it's all up for grabs this is different a different a different providers course
00:42:27choose how many nights they want to limit or whatever but it's just an extraordinary %HESITATION change that this platform you're talking about makes possible that couldn't be imagined that he was staying at a stranger's house dot is frightening hitchhiking is frightening and all the sudden it's now normal
00:42:45and because the app is proof solved that trust problem and along with the translation in the transfer and it's just a it's a passing thing I often to ask then and I'm sorry to pick on young women but there are there are less likely to hitchhike so after
00:43:01you know we've all laughed and said okay hitchhiking is possible all ask do you use Airbnb and without exception she has always said oh yes so you're willing to say in somebody else's apartment and know they have the key but you're not willing to ride in somebody else's
00:43:19car and the difference is Airbnb has normalized and other other companies but Airbnb in particular has normalized our sense that this is a transaction that the app can handle and that trust because of these reviews tells you something about so that will be such as the reviews the
00:43:38fact that if if god forbid something happens to be in that house male or female you don't have to be a female dazzling Arbel happened you in a strange house yet still is the app knows where you are that is huge you don't walk up to a stranger
00:43:51yeah it time or anything like that it might it is their financial information is there IDE %HESITATION many people and I've done this as an Airbnb host I've five they they have a %HESITATION of an image of my passport so you can do quite a bit of background
00:44:07check so once we've normalized that experience then yes we start to think of this is that it's not a big deal there's you raise the question of couch surfing though which is much more like a sort of cooperative sharing activity so I wanted to bring up the example
00:44:25of a platform that people may not have thought about and that is wikipedia wikipedia is also a platform the triangulation problem is that people sort themselves into groups based on their interest and knowledge and I don't have to go out and find people because wikipedia has all these
00:44:44different categories I have that the transfer is they have a protocol for I get to make edits in it I'm invited just to make edits and then the community decides whether those edits are going to be accepted or not in in terms of trust there are reviews if
00:45:02I'm always a troll then you can disable my ability to make changes now yes I can come back and try to make it but we keep PD is remarkably consistent in being able to provide the three things that a platform needs in order to have this service but
00:45:19nobody's getting paid we only pay with honor and a sense of contributing to the public good so it's a voluntary contribution to the public good and it works really well so I I think the the the idea of sharing if you can reduce the transactions cost a voluntary
00:45:36provision of public goods then things like wikipedia may proliferate and the the the idea that there has to be some kind of fee for service may start to disappear there's there's a way there are ways of sharing that are based on honor and our sympathy for other people
00:45:53are desire if you're if you're out there playing the drinking game here it comes although it Russ isn't saying it but our desire to be lovely we want not just to be loved but to be lovely and so the being part of a community that's an expert on
00:46:08some subject that takes care of the wikipedia entries on that subject means that I have connections with somebody in South Korea somebody with Europe in Europe that I've never met but we have this feeling of being part of something larger than ourselves and that is something that software
00:46:26platforms can also advance sematech isn't ever direction now %HESITATION because I think hard to believe I think to some but I'm gonna say next we haven't talked about %HESITATION some of what we talked about today we've talked about before trying but it new ways always %HESITATION you know
00:46:41I think you and I could have a conversation for six months on transaction costs and I would learn something every time so I ate it is one of those topics like the division of labor out like a merge in order that I think is so rich and how
00:46:56so challenging to think about and keep everything juggling in your mind at once that it's very fruitful to talk about it at length and in depth but I want to change our focus just a little bit here which is this idea of platforms that are for profit in
00:47:12platforms that are not new course actually we did an episode on nonprofits that this is somewhat related to I'm sure but here's the thing I want to raise so I mentioned recently on it can talk that George Sigler probably would would say that wikipedia doesn't exist because obviously
00:47:28it's not gonna can't be possible without using money to create a good encyclopedia that would be even possibly decent forget about the fact that he is probably better than most %HESITATION printed encyclopedia's in many dimensions but I will also say so is wrong about that or did it
00:47:44music port charges %HESITATION as as sort of a hallmark an amicus a little bit of a straw man yeah those that goes that no we would say it's not that much of a straw man yeah he's there for you exactly so that was George and I put it
00:48:00but he represents the way a lot of economists look at the world they don't as they assume that people do things for money and they need reward sometimes are non monetary but in general money works really well and I think that's generally true so wikipedia is an extraordinary
00:48:14example of how without money just honored just pride just showing off are earning a reputation for his things returns people crazy something rather extraordinary having said that it's my impression wikipedia is a little bit static it does not hasn't quite for filled the %HESITATION promise that it that
00:48:34it had as it was growing and it is less dynamic than I thought it would turn out to be and let me suggest a related challenge so there are a lot of apps out there that that you and I might use some love I'm gonna pick one that's
00:48:50a big part of my life which is Evernote so every note it's an app that I use for just storing all kinds of information on my computer I'm I found a really like it it's a second sample be medium I write a medium dot com I love the
00:49:04platform is fantastic both those may disappear %HESITATION it some point they may just like %HESITATION other apps and other websites don't make it in the in the internet economy so then the question is what's going to happen to my stuff and I've always wondered and I've talked about
00:49:22this before any kind are but not with you which is what couldn't foundation then run the app in in a nonprofit way couldn't maintain could foundation run over at some point could %HESITATION is there and return is there a benefit from using than a nonprofit focus to run
00:49:43a platform and let me just give you one more point and then I'll let you respond which is you say at the end toward the end of the book that you print Amazon or competition a surprisingly surprisingly Hooper's not competing with cab companies Amazon's Maccabi with Barnes and
00:49:57noble anymore %HESITATION they're both competing with each other for providing stuff there in ways that reduce transit not providing stop for just reducing transaction costs things a deep deep inside but it seems to me the what's going to happen is that Amazon blood choir ruber or will create
00:50:13their own platform that that solves the the delivery problem in its own with driverless autonomous vehicles and then there's going to be this giant platform which will be phenomenally pleasant but it will have some monopoly power because it probably will kill it really tells all the promise that
00:50:30we think about it will kill all the brick and mortar stores that act now is something of a restraint on Amazon's profitability so I just I wonder about the power and a lot of people trying to wonder about this the power of these very broad platforms to price
00:50:47sometimes information to provide to this case goods and services how are they going to work in a world that benefits the consumer when competition may not be what used to be a one answer as well somebody will cradle Turner that is improper driven and then the question is
00:51:02when I think about Evernote when we get up to iOS twenty forward I always say twelve now on the my phone we get to I was twenty four is the foundation that runs Evernote going to be able to work with iOS twenty four because I don't really need
00:51:17keep getting better that was my point about wikipedia I'd like we competed to keep getting better but it's pretty great as it is if Evernote stayed the same didn't add any new features I'd be fine the course is tremendous pressure on to add new features because it it
00:51:30needs a complete it because stock if it's a public company but now they want more money they bought at a time when it was already established so Facebook has to keep finding new for example ways to generate money out of its out of its user base afterall I'm
00:51:43thinking maybe this would be better if it weren't profit based on that's a radical sing for a hard core three marker like me to say but that's my thought so that's a lot of rambling and %HESITATION your turn U. S. three gigantic questions each of which takes a
00:51:58twenty minute answer all see if I can do all within three or four well I've I do does the problem is a really great questions so one thing you asked was about motivations that are not profit driven and one of my favorite Nobel Prize winners in economics and
00:52:15a guest on econ talk is gene fama gene fama has a series of papers with of course there with Michael Jensen in the nineteen seventies early nineteen eighties where he looks at the non profit as a form of financing that is designed to attract capital now that might
00:52:36seem paradoxical but what nonprofits do after all is there a particular way of arranging financial activity and so farmers insight was a lot of non profits out there and a lot of them behave a lot like profit making companies because they're trying to make revenue in there trying
00:52:54to maximize revenue after taking out because it's just that they're not there could be financed the fact that they're not equity finance means that people are more willing to make contributions in those contributions may be the impulse that we have to act for the common good so when
00:53:11you do experiments it actually turns out that people are willing to make voluntary contributions to public goods it's not true that markets can't provide these things now for profit price driven markets may not be able to provide public goods but non profits are pretty good at providing public
00:53:30that's a lot of people voluntarily give money or make contributions to the public good give blood so they they they give contributions to public radio of they make contributions to the opera to the zoo to art museums to children's museums there's all sorts of things where we make
00:53:48contributions yeah voluntarily without any question at all suppose that you were able to write an app that reduce the transactions cost of doing that is supposed to live in a little community and there's a park and we decided that having a public works department is pretty expensive we're
00:54:07just gonna do this voluntarily so what we have is a an app based on something we haven't talked about yet the blockchain the blockchain is a distributed ledger that can't be tampered with and the the part of the blockchain that this app works on is that everybody has
00:54:26glasses they have wearables and you can switch these glasses to have of of of the R. E. of virtual reality component so I I come up by the park and I see dang look at that the grass is really high somebody ought to move the lawn so I
00:54:43switch on the V. R. component nice see that somebody has bid to pay for the mowing of a hundred yards over there I will I will pay for mornings the grid right ahead of me and so I take out my phone or whatever tool I have to connect
00:54:58with in I put up a bid that then is available to everybody else and my name is there and none of the bills are paid in west everybody has been unless another if people have put in bids to make sure that the park gets moat well that would
00:55:13reduce the transactions cost of this impulse that we naturally have in it can't be counterfeited because its connected to the the blockchain ledger that make sure that that payment that I have is now income bird it's in effect in escrow as soon as someone says yes former the
00:55:30park because there are a total of forty five dollars worth of bids the money is transferred to the more he does the mowing and we just have accomplished that whole thing voluntarily we have one now we have the now with indigo go and other crowd sourcing crowd funding
00:55:47acted I think it's in the go go but there's others go fund me up with a great a minimum it just we have to get in the habit of doing it the public goods we deal with you know designing a new suitcase or a new kind of smart
00:55:58phone but I don't think this is that far away we have the V. are and we have this habit already for crowds sourcing the thing is that with economists tend to make this hard line about public goods that they can't be provided by for profit companies well they
00:56:13don't have to be we actually have almost all of the tools we would need to solve this problem by a kind of voluntary hearings instead of me sharing the tools I'm sharing the costs but I'm doing it in a way that really encourages other people also to share
00:56:29so you ask what is the future of hearing that's not based on profits I think I'm not smart enough to understand %HESITATION predict all of the ways that it could be changed but I think there's an enormously rich set of connections as long as it's tied to something
00:56:44like the blockchain that solves the trust problem which brings me to the second question you asked which was about monopoly so a big part of the reason why these companies are becoming monopolies is network economies where I want you to be able to see the picture of my
00:57:02dog that I put up on Facebook in if we have different platforms it's going to be more difficult so we're all gonna tend to use the platform that everybody else he's using and one of the things that confers this monopoly is having a big inventory of reviews so
00:57:20I'm worried about that that kind of monopoly I I don't know the the barriers to entry of having first the place where everybody goes to look at pictures and second in inventory of reviews that means that you can't just body that information very easily sounds like it's going
00:57:40to be a problem I think the solution is what I would say was your third question about reputation we're probably looking at a world where instead of me having a reputation on Airbnb that I cannot easily transfer to uber or to blah blah car what we could have
00:57:59is a single universal reputation and again it's going to be a blockchain app so it can't be very easily counterfeited and so you'll be able to tell whether I'm the sort of person that has the qual I haven't cheated on things you could look at my credit report
00:58:13that's a big problem for privacy but that ship has sailed we've already lost any claim that we had about privacy and you know if you don't want to participate you can already do that you can unplug offer Facebook you're not on Twitter you don't use Amazon you don't
00:58:27get any of the ad you don't want to see that's a really high cost way of doing it but if you are plugged in and take advantage of this universal reputation then if I will if I want to check I can just go to this nonprofit company that
00:58:41operates a reputation app that's based on the blockchain and then the monopoly doesn't exist anymore because it is that something that's easily publicly available and we would all be willing to contribute something to that voluntarily in order not to have companies be in charge of our private information
00:59:01or we would have a some sort of summary information about trustworthiness debts willingness to pay I don't know what the actual categories are but I I think there's a way around this that combines a blockchain application with universal reputation and the ability of non profits to solve this
00:59:19problem if you can reduce the transactions Koster participation and make it clear who's given the contributions so that I can claim credit for it so if if I if my standing in the community is raised because you can look and say well look they've really done a lot
00:59:34of good things they provided a lot of public goods I'm willing to participate more because I care about being lovely yeah I was thinking I think that's the name of the app otherwise that's or going to call it lovely dot to dot com if it's taken already maybe
00:59:48it's like I was like be lovely is yeah I guess %HESITATION and it could be the letter B. if be lovely dot com will be is already taken but I I'm just thinking get there's something really deep there %HESITATION if I were twenty five years old I think
01:00:03I would be interested in trying to work on it but I'm not twenty five some hoping there's a twenty five or thirty or forty year old younger than somebody younger than I am a little more ambition and drive to work on it and talent course but the issue
01:00:16of le I'm called the you know my loveliness quotient so I do a number of lovely things during the year I know you do every human being does right I'm back I'm not bragging your every human being does lovely things they open the door for somebody who's got
01:00:32too many groceries they make a donation to charity they help out somebody who's %HESITATION struggling emotionally and mostly things are only observed by a very small circle around us writers circle of of immediate friends and it's an interesting idea of whether of of a a cumulative record stores
01:00:51a glamour rating of collected horrible word Oakley word but a way of collecting my reputational success the things I've done maybe that would ruin and of course if if I break if it became publicly known but the idea of that that across different I give me just a
01:01:05small example a friend of mine the ride saw it as a a bike ride for a hospital in Israel that helps %HESITATION couple friends my do this it's called the Ellen hospital ale why and it helps kids is extraordinary hospital %HESITATION and I give money to that right
01:01:22now and I can tell much I give because that's neither here nor there but I give some amount and I can choose to make that public on the website and I choose to make public because I think it's helpful to encourage other people to get but I could
01:01:33choose to make it anonymous if I wanted mostly a lot of people do it anonymously allow people to a publicly also do another different thing I gave money to the sure which which I've done and you don't know the people on the hospital website don't know about that
01:01:46other one and would be a good thing the for all the quote good deeds I did during the year were collected one place you can decide how lovely it was this something repellent about that I have to say but on the other hand maybe it's not so repellent
01:01:59maybe it's kind of a there's something beautiful about it sort of the modern way that people gossip about you know in in a small town he was %HESITATION he's he's a great guy or he's not a good guy and in in the modern world we could make that
01:02:12available more widely and maybe that would make people are likely to trust me to you know on my reviews or whatever just that world calming someone's going to develop that I think it will change the world and in some ways it's already here were you eat it doesn't
01:02:27have to be all or nothing there are some things you could do anonymously in some things that you would do and be part of your reputation but on uber I have a reputation as a writer I can look at it again this year round scores yeah and on
01:02:42Airbnb %HESITATION I've been a host sometimes my son Kevin has often been a host and for a while had a little bit of trouble with some of his hosting he needed needed some work on that but you you're getting feedback but if you get feedback and you get
01:02:58better then there's a reward like any brand name so the the reason why I think this is going to take off and where the blockchain is important is that you are acting on your own behalf in a sharing economy some of which is for profit some of which
01:03:14is not in what that means is you're basically your own book your own brand so I can look up on linked in what your skills are and may be linked in or some program like it will connect to my reputation and I'll I'll try to curate my reputation
01:03:31of maybe there's some things that are all %HESITATION keep anonymous because I think I would be should be wrong for me to trade on on that as part of my reputation score but I think a lot of people think well this is kind of a a video game
01:03:44it might change the nature of what was it altruistic or charitable impulse into something that's now instrumental but the fact remains that your reputation would then condition the extent to which you're willing to act badly index that there's been what the desire to be lovely has always meant
01:04:06is I care more than I should if I were home more economic us about the opinions of those around me it's not just instrumental I care about them because I value primitively value the opinion of other people about me not because it gets me something but because I
01:04:22care about that yeah having thank you haven't spoken about it now and thought about for about four minutes I guess I'm kind of uncomfortable the idea that you know when I was younger I was in a business school washing oversee find institutions I think you are fine institution
01:04:38have a high regard for %HESITATION I think that's where that conversation with Doug are took place in your PhD defense it may have few did %HESITATION I remember being in a business school in thinking that we had a speaker come and he said you know you you have
01:04:52a brand your brand is your performance or reliability your it cetera and there's something %HESITATION that's not a bad thing for a young person to be aware of at the same time again it's a little weird for us our core free market to say I really don't like
01:05:10the idea of turning my charitable altruistic activities into something instrumentalists you described it it comes back to this idea of %HESITATION and mention in the past about rabbi Jonathan Sachs you talk so that it was in a covered in a contract contract it's it's a contract about what's
01:05:29in it for me a covenant is about a commitment that doesn't necessarily use cost benefit analysis and I'm not sure what to make of lows good that's the idea that I mention of having reputation a charitable reputational %HESITATION score or some kind of %HESITATION reputation general for being
01:05:47a decent person and and introducing it to a number or reducing it to %HESITATION a web page of this semi final bit creepy about it I have to say it might look I think it would lead to a lab maybe would lead to more charitable giving I don't
01:06:00know it is an alternative way to generate public goods which is where we got started on this I think there's something really potentially a magnificent about that is a way to reduce the transaction costs the government treasure transaction costs the government are the tax system compliance monitoring %HESITATION
01:06:20dead weight loss from those you those prices that we pay the distortions and to be able to do that through some kind of sharing our app maybe would be true for national defense but it could be true very much so at the local level for schools say in
01:06:34bad neighborhoods that struggle to generate enough money to pay for them and that we could outside those guys were lucky enough to do well could have contributed that in an easy effortless low cost way that's a glorious thing retro wanna go far as far as the trans act
01:06:48is the reputational scored technologists that's gonna make me a little nervous I think you have identified both sides of the argument Mike Duke colleague %HESITATION Jeffrey Brennan has a favorite joke and it goes like this two elderly gentleman or sitting in a park in the sun and one
01:07:07turns to the other and says are you say how is your wife and the other one thinks for a moment and says welcome compared to what well the problem of the public goods is we're comparing this to a system where we have very little information and where local
01:07:27public goods decisions are made co where simply so we don't have much information and we're taking tax money basically at gun point the alternative would be what is it that people really care about and they get the sense of participation so the having local public goods be provided
01:07:43voluntarily by the things that people actually care the things that people actually care about and have them be crowd sourced well compared to what compared to the existing system that might very well be an improvement and it might increase people's sense of participation and belonging the overall reputation
01:08:01score the problem is economic revolutions don't care what we think about them I agree with you it's not good but you already if you participate in this economy if you're a young person you already you already have a reputation on linked in on Airbnb on uber on yelp
01:08:20if you operate any sort of business where you're trying to sell stuff you really need to solve this problem of not having a reputation and not having a reputation is an entry barrier in this kind of economy so yes maybe you don't want it to be instrumental but
01:08:37compared to what the alternative is not to be able to participate at all in it's like the industrial revolution the commodification of labor was in many ways bad for people who lived in villages who found that you know I need a source of money income right can't acquire
01:08:52the things that I need they had to go get a job economic revolutions don't care what we think about them was the industrial revolution good maybe not maybe not at first the ultimate result though was we found ways to manage it that improved the wealth most of those
01:09:08who had been very poor so I guess I'm optimistic that will solve this reputation problem though I don't deny for a moment that there is something really repulsive about the idea of of changing these relationships that we have that are based on a deep sort of human trust
01:09:27in to a trust it's being manufactured through some algorithm that's a different thing and it's not good my guest today has been Michael Munger is book is tomorrow three point zero transaction costs and the sharing economy Mike thanks for being part of the come talk he was great
01:09:43to talk to you Russ thanks this is econ talk part of the library economics and liberty for Mari Kontakt contact dot org or you can also comment on today's podcast and find links in readings related to today's conversation sound engineer free Cantacuzino yet I'm your host Russ Roberts
01:10:07thanks for listening talk to you on Monday

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