Friday, November 4, 2016

Stop Trying to Regulate the Sharing Economy

From Fortune, an article titled New York Just Cracked Down on Airbnb With a New Law:

Things aren’t going in Airbnb’s favor in New York.
On Friday, New York Gov. Andrew Cuomo signed into law a controversial bill that makes it illegal to advertise short-term rentals that violate New York City’s rules—and imposes steep fines to the violators. New York City’s regulations prohibit rentals for less than 30 days without the host being present—also known as entire-home listings.

These attempts to regulate the sharing economy are really pointless. These are regulations that probably should never have existed in the first place, and now a completely new thing is being crammed into a generations-out-of-date regulatory structure.

A left-wing version of the narrative is that the regulations are a foregone conclusion, and Airbnb and Uber are evil and cynical for trying to flout them. I don’t buy this framing. I think it gloriously misses the point and papers over the possibility that regulating business the way we do *might* be a bad idea. That’s kind of the point. When people voluntarily transact with each other, and a regulation makes that transaction impossible, that means government has imposed a cost on those parties. It would be nice to see *some* acknowledgement that regulation can be costly or wrong-headed. Technology is making it easier for people to transact with each other, and government is making it harder. That’s what’s happening here. It’s easier to hook up someone who wishes to sell his labor to someone who wishes to buy it. It’s easier to hook up someone with an empty car seat with someone who needs a ride. It’s easier to hook up someone who needs a place to stay with someone who has an empty room or basement. The buyers in this market get needed stuff more cheaply, and the sellers can earn some extra income. That’s what economic growth looks like. Every little regulation makes these transactions more costly, which ensures that at least some of them won’t happen. In some extreme cases, they force the Ubers and the Airbnbs to exit a state or a city entirely.

Some people are very worried about economic stagnation and weak economic growth for the middle class. Okay, so let’s stop hindering progress. Stop giving petty bureaucrats veto-power over consensual transactions between adults. Capitalist acts between consenting adults ought to be allowed.

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