Why Petty Statism is Unsustainable

Let’s say you have to be in New York on a job for two weeks. You need a place to stay. Good hotels are crazy expensive and cheap hotels are really uncomfortable. After years of rent control, zoning, ridiculous taxes, and regulations, there is a huge shortage of short-term housing in one of the most important cities in the world.

What’s even more incredible is that the New York housing authority actually makes it illegal for an absentee landlord to rent out a living space for fewer than 30 days. What do you suppose gave rise to such a law? Doesn’t take much speculation about who benefits. It’s the hotels and high-price condos that benefit.

If you have some extra space in your home, and you are going to be out and about for few weeks, it would only seem to make sense that you would see an opportunity for mutual benefit here. Let someone stay in exchange for money. It’s a win for everyone right? The law doesn’t think so but, hey, this is New York, the world center of getting around dumb regulations. If everyone complied, the place would fall apart in a matter of weeks.

So one company came to the rescue. It wasn’t really about New York. It was about the whole world. Airbnb makes it possible to list your space, wherever you are, and for would-be renters to make deals. The whole enterprise was started by some young visionaries with a dream of making the world a better place. And they have. They have allowed regular people to cut through stultifying regulations and make better lives for themselves. As a result, they just landed $450 million in venture funding from a consortium of investors who understand what it means to disrupt the status quo.

In response, many cities with such regulations have changed the law. Hamburg, France, Amsterdam, and possibility San Francisco, have seen the wisdom of liberality here. In a world where people have sought solutions to homelessness and housing shortages, and where nearly everyone could use a few extra bucks through trade, Airbnb has inspired a new look at bad regulations.

In a remarkable short period of time, this service has taken off to cover most population centers in the developed world. It’s amazing. Talk about pent-up demand! And one reason that governments are changing to accommodate the service is that it is just too-darn anomalous not to change. Politicians just have a hard time explaining why two parties can’t make an entirely reasonable deal when the deal makes everyone better off and harms no one’s person or property.

But then, there’s New York. The Attorney General’s office did a search of the site and found lots of lawbreakers, many listings for places to stay that are shorter than 30 days. Tut tut! There were 19,552 listings and 65% of them seem to stretch beyond the limits of the law. As a result, Airbnb is getting harassed. The government is trying to subpoena information about renters and rentees from the company but the company is standing firm in favor of the privacy that they have guaranteed their users.

As part of the story on this outrage, PCMag tried to find out the reason for such ridiculous laws. The Attorney General’s office says that in the past they have received complaints about loud parties, leftover trash, and the like, from illegal rentings. They are just trying to protect the public, don’t you know?

Well, Airbnb has a solution. If there are bad actors, they are weeded out from the system, not allowed to rent or collect rents. Makes sense, and it is a heck of a lot better than punishing everyone for the failings of a few.

This is only the latest of many examples of innovations that are breaking down anachronistic laws. Enterprise iis challenging the old order with actual innovations that serve people. It’s just the free market at work here through entrepreneurship. But unlike capitalism that involves large corporations and Wall Street moguls, this kind of enterprise is extremely popular among the public. It is peer-to-peer exchange and it doesn’t strike many people that there is much wrong here.

Of course this kind of innovation is made possible only through technology that allows people opportunities to gain from trade over large space of geography. In the past, if you lived in Los Angeles and wanted to stay in New York for a few weeks, there was no choice but to go through a broker. Now you can go directly to the party that will rent to you. This is exactly the kind of arrangement that has made the Internet such a magic tool for enhancing economic life for billions of people.

The Internet is global. Governments are geographically constrained. The Internet lives on the digital cloud. Government only control the space at which coercion is directly threatened. The Internet calls up human volition and agency. Government depends entirely on mandates that control bodies but not minds and hearts. The Internet gives life to dreamers who are thinking about the future and acting to improve it. Governments are forever trying to enforce the past.

Stack these two up against each other and it becomes obvious who the victor will be in this struggle. Freedom has a tool today that it has never had before. It links individuals by mutual interest all over the world. No government can do that. It can only pretend to somehow represent large collectives. You don’t have to be a libertarian in order to see which system works best.

And you don’t have to be ideologically committed to see that finding a great place to stay in New York, working only from your tablet computer, is a pretty fabulous way to go about things. Governments can slow down this revolution for the individual but they can’t stop it.

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Jeffrey A. Tucker

Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.

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4 comments

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  • As has been said before by people smarter than I, government moves at glacial speed. ESPECIALLY government as firmly entrenched in corporatist mire as ours is. If it weren’t for technology helping us communicate with each other, we would have a much harder time bucking that system. As it is, liberty lovers know there are others out there who support them and their efforts. Makes all the difference in the world.

  • This is such a huge shift in the way entrepreneurship is being carried out. Like in sailing, the most effective way to navigate through rough waters is to steer directly into the waves and cut through them. Less people are trying to steer around to avoid the waves and as a result less boats are being capsized.

  • I saw this NYPost article last week and was immediately suspicious:

    “Hookers turning Airbnb apartments into brothels”
    (http://nypost.com/2014/04/14/hookers-using-airbnb-to-use-apartments-for-sex-sessions/)

    It seemed like classic scare-mongering with the intent of gaining support for legislation ostensibly to benefit the public, but in reality was to further restrict the market and benefit hotel owners.

    I thought, “Why aren’t the ones renting out their apartments checking the reviews on the renters?” Of course, the article never bothers to mention that Aribnb has such a feature. Making people responsible for their own contracts or transactions? Absurd! It would be anarchy!

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