7 ms·

I think the reason that {Uber, AirBNB, DraftKings} succeeded in flouting the law is that they operated in industries that are consumer-facing, and where the cos

I think the reason that {Uber, AirBNB, DraftKings} succeeded in flouting the law is that they operated in industries that are consumer-facing, and where the cost of regulation is obvious to consumers. Many people understand that taxi regulations (for the most part) negatively affect them, and in many cases are extremely frustrated with them: see Washington, DC. Most people aren't familiar with and don't care about the company that manages their health insurance, and as a result there's little public support.

pron 11y ago
Exactly, but I'd phrase it a bit differently: when it comes to taxis and apartments, regulations are bad for you, the consumer, and good for the people in your community (taxi drivers, neighbors), while in insurance, regulations directly protect the consumer. Because people (especially in the US) couldn't care less about other people, regulation that annoys consumers is "bad", and the consumers then defend the companies breaking those particular laws. Those companies exploit the fact that in every industry, consumers always outnumber providers (or conversely, every person consumes from many more industries than those where they provide), and so the disregard for this kind of regulation will always work. Every new company will get consumers to gang up on the far fewer incumbent providers until they break the regulation that protects them, and so on, industry by industry. It's a little like the robber barons, who used every new wave of immigrants to beat up the previous generation of immigrants who tried to unionize, and then hired the new ones in their place... that is, until the next wave of immigrants. Except the new way of doing this is far more effective, because it's always easy to obtain a majority that supports you and feel like they're doing the right thing at the same time.
- yummyfajitas 11y ago
  Similarly, Jim Crow regulations were bad for the consumer, but they were good for the people in your community who were protected from economic competition by Negroes. Of course, taxi regulations and Jim Crow laws are very bad for the people who are not lucky enough to get into the favored class...
  - deleted 11y ago
    [deleted]
  - gclaramunt 11y ago
    I hope you're just trolling :/
    - GFK_of_xmaspast 11y ago
      Check his post history.
  - deleted 11y ago
    [deleted]
  - rmxt 11y ago
    Flamebait aside, is it that hard to see the material differences in the classifiers between your example of a "dis/favored class" and the classes discussed by the GP? Hint: one has classifiers that one can eventually overcome, and the other doesn't. Regardless, comparing regulations imposed on modern industries to Jim Crow is nothing more than oblique tedious posturing that ignores the full picture of what Jim Crow laws were.
    - yummyfajitas 11y ago
      I'd be interested in hearing a principled argument why "right race" is a bad way to choose a favored class for rent seeking, but "politically connected", "nepotism" or "random chance" (as pron was advocating for) is a good way. Further, suppose we brought back only the economic protectionism bits - would that change things and make Jim Crow somewhat more acceptable? If not, bringing up the "full picture" seems like a non sequitur. Let me clarify the question I'm asking. Jim Crow makes me emotionally angry, more so than taxi regulations. But I don't have a reasonable principle to back that up. On a rational, rather than an emotional level, I can't actually justify why Jim Crow protectionism would be unacceptable but taxi protectionism is acceptable. Can you?
      - rmxt 11y ago
- CPLX 11y ago
  Don't know why this is downvoted it's spot on.
- lazerwalker 11y ago
  For the most part I think you're spot-on, although it's worth emphasizing the nuance that not ALL taxi/hotel regulations are bad for the consumer. Most of the AirBnB and Uber horror stories you hear are things that don't happen, or happen far less relative to the overall volume, in a world of licensed taxis and professional hotels/B&Bs. Does the good of current regulations outweigh the bad? Likely not, in many cases. But there are reasons (at least some of) these regulations exist outside of capitalism being terrible and the successful trying (and succeeding) at pushing out competition.
  - nommm-nommm 11y ago
    I would argue that many (most?) housing regulations are good for the consumer. My landlord has to provide me with a safe and structurally sound place to live, which is good for me. If my heat breaks in the winter he's obligated to fix it, he can't evict me and leave me on the streets on a whim, or turn off my water if I am late on the rent, etc. Laws around security deposits are usually good for the consumer as well. Nobody wants what is referred to as a "slumlord." Landlords often are annoyed about regulations (and some tenants unfortunately abuse them) but many came about because of the abusive practices of the slumlords. Our society deems having a safe place to live pretty essential so landlords have a massive amount of power over their tenants if unchecked.
- mason240 11y ago
  > regulations are bad for you, the consumer, and good for a small group of rent-seekers (like taxi drivers) FTFY
  - pron 11y ago
    Well, that's a tradeoff. If the number of medallions is kept up with demand (as is the case in many places), I'd argue that some mechanism to protect the livelihood of those who can't obtain better jobs is a net positive, as it allows the less fortunate to get ahead, especially in an economy where decent blue-collar jobs are getting harder and harder to come by. It's not like taxi drivers are fat cat millionaires who get rich off the back of poor consumers.
    - pkaye 11y ago
      Generally the medallions are owned by someone else invariably rich (or lucky to get it early) and then rented out to the taxi drivers. The taxi drivers start doing shady things in order to pay the rental costs and earn a living. Then various sides get into the game of how many medallions should be available in the market to play with the supply/demand curve and maximize their own profits.
      - pron 11y ago
        I think Uber is owned by someone much richer than any taxi company owner, and the difference is that the shady things in Uber's case are done not by the mistreated employees but by the owners themselves (often against their own employees), and they don't do it to earn a living. I am not saying taxi company owners are saints, but Uber is by no means better. If you've seen the HBO series Deadwood (a masterpiece, BTW), I'd say we're replacing an Al Swearengen with a George Hearst. Both may be villains, but the scale makes all the difference...
        AJ007 11y ago
        If Uber ultimately goes public, then the owner will be society. The medallion owners largely were individuals who had the access to credit and leveraged in as the values rose. There is a lot more transparency with Uber, however if they achieve a near total monopoly on transportation such as Google did for search, the end result from a consumer experience standpoint may end up the same, with different trade offs. The alternate issue, the employees/drivers, won't matter in the long run because there won't be drivers whether it was Uber or medallion holders.
- run4yourlives2 11y ago
  This is a little simplistic. I won't argue that these regulations have morphed into things that are overall negative for the consumer, but the reason they where introduced in the first place is because you had instances of people actually being killed by unregulated nefarious actors. That is certainly negative for the consumer. When people are asking politicians why Joe Doe was able to operate his "taxi" company that wouldn't stop his car outside of the ghetto without a $50 "oops, I got lost fee", it seems obvious why regulation is put in place. That isn't to say that said regulation remains entirely useful, just that your argument isn't really bore out by the history. The reason why zenefits is having issues is that the laws they broke are still entirely relevant to everyone involved.
- bambax 11y ago
  Well said. The so-called "sharing economy" could as well be called "fuck you economy".
Retric 11y ago
Most Taxi regulations are good for the public not the consumer. Go back and you find people wanted to cut the number of Taxii on the roads. I would much rather you use a bus than a Taxi. The problem was regulatory capture constricted past this point. ex: We don't want a lot of them on the road making traffic worse. Drive to B -> C you add X congestion, call a cab they drive from A -> B to pick you up, then B->C that's X + Y congestion, pollution, risk for accidents etc. PS: The real issue is after regulation people tend to forget why it was added. "Let's deregulate Banks!"
- Zach_the_Lizard 11y ago
  >Go back and you find people wanted to cut the number of Taxii on the roads. The explicit reason given, at least in the case of NYC, was the desire to make driving taxis more profitable. During the Great Depression there were more drivers than passengers and it couldn't pay the bills. How do we solve this? Limit the supply of drivers, therefore raising the price and reducing competition. From a consumer standpoint this is terrible. We would have ended up with an explicit monopoly for a specific company if it weren't for some folks getting convicted of corruption (taxi company bribes) scuttling that deal. > I would much rather you use a bus than a Taxi. The problem was regulatory capture constricted past this point. >ex: We don't want a lot of them on the road making traffic worse. Drive to B -> C you add X congestion, call a cab they drive from A -> B to pick you up, then B->C that's X + Y congestion, pollution, risk for accidents etc. Why limit it to taxis? There is a great way to promote public transit, reduce air congestion and pay for roads: tolls and congestion pricing. This would affect all drivers, not just certain drivers. >PS: The real issue is after regulation people tend to forget why it was added. "Let's deregulate Banks!" The irony is it appears you've forgotten why these regulations were created in the first place.
  - abduhl 11y ago
    This source would disagree with you about the reason for taxi medallions: https://books.google.com/books?id=VXpyNs5EaHEC&pg=PA119&lpg=PA119&dq=taxi+medallion+economics&source=bl&ots=uJJmmmmZsi&sig=gLzqx7oq1UaUrYPhm0HGBMgO1hc&hl=en&sa=X&ei=ioJlUYm5Mo_liwKe9IGQCQ#v=onepage&q=taxi%20medallion%20economics&f=false https://books.google.com/books?id=VXpyNs5EaHEC&pg=PA119&lpg=... It confirms the story that I have heard previously that taxi medallions were introduced to protect consumers. This doesn't mean that profit was not a reason but I'd like to see something that shows the "explicit" reason you state.
bobby_9x 11y ago
It's more the 'unions' than the 'regulations'. It's in the best interest of any union to keep prices inflated artificially by utilizing government regulations, like the medallion system.
mathattack 11y ago
The other difference is the consequences of the laws being broken. Insurance industry laws are much stricter in enforcement than rental or auto laws. Lawmakers may look the other way on taxi or rental regulation, because they realize there's a market shortage. They're much less willing to look the other way on insurance (or any financial services) fraud. It could also be that insurance industry participants are more centralized and organized than taxi and real estate companies, but I'm less sure that this was a driving factor in the regulation.
- shanacarp 11y ago
  They are also backed by the financial industry and are considered financial and legal instruments. while it isn't possible to "front run" your insurance deal as your broker, putting you into the wrong insurance has a variety of outside financial consequences that are not insurance related at all. For example - Zenfits could theoretically "redline" certain kinds of businesses into certain kinds of insurance, even though the employee pools qualify for something better/totally different. By doing so, Zenefits could make more profit per insurance policy sale and renewal, but their is more risk in the lifetime customer that they will explode, since it is the wrong policy. Zenefits see hypergrowth and projections towards even further hypergrowth. However, they also create systemic SMB risk Since SMBs do not typically get lots of help with these sorts of HR issues, the "wrong" insurance could be the difference between bankrupcy and existence 5 years down the line, even though there is competition among policies. The broker is supposed to act as guidance among many competing insurance policies against that eventuality, hence the regulation. If Zenefits can't guarantee their employees can actually act not in Zenefits interest as brokers when queried about two policies and the benefit to the customer, despite what Zenefits would make out of the sale, because of behavior within Zenefits, then there are problems for the businesses that brokered with them, and any bank that loaned them money (since part of the premise there is that this stuff is properly managed!)
  - mathattack 11y ago
    Interesting. I hadn't thought of it this deeply - that's there's an insurance equivalent of fiduciary duty.

pron 11y ago

Exactly, but I'd phrase it a bit differently: when it comes to taxis and apartments, regulations are bad for you, the consumer, and good for the people in your community (taxi drivers, neighbors), while in insurance, regulations directly protect the consumer. Because people (especially in the US) couldn't care less about other people, regulation that annoys consumers is "bad", and the consumers then defend the companies breaking those particular laws. Those companies exploit the fact that in every industry, consumers always outnumber providers (or conversely, every person consumes from many more industries than those where they provide), and so the disregard for this kind of regulation will always work. Every new company will get consumers to gang up on the far fewer incumbent providers until they break the regulation that protects them, and so on, industry by industry. It's a little like the robber barons, who used every new wave of immigrants to beat up the previous generation of immigrants who tried to unionize, and then hired the new ones in their place... that is, until the next wave of immigrants. Except the new way of doing this is far more effective, because it's always easy to obtain a majority that supports you and feel like they're doing the right thing at the same time.

yummyfajitas 11y ago
Similarly, Jim Crow regulations were bad for the consumer, but they were good for the people in your community who were protected from economic competition by Negroes. Of course, taxi regulations and Jim Crow laws are very bad for the people who are not lucky enough to get into the favored class...
- deleted 11y ago
  [deleted]
- gclaramunt 11y ago
  I hope you're just trolling :/
  - GFK_of_xmaspast 11y ago
    Check his post history.
- deleted 11y ago
  [deleted]
- rmxt 11y ago
  Flamebait aside, is it that hard to see the material differences in the classifiers between your example of a "dis/favored class" and the classes discussed by the GP? Hint: one has classifiers that one can eventually overcome, and the other doesn't. Regardless, comparing regulations imposed on modern industries to Jim Crow is nothing more than oblique tedious posturing that ignores the full picture of what Jim Crow laws were.
  - yummyfajitas 11y ago
    I'd be interested in hearing a principled argument why "right race" is a bad way to choose a favored class for rent seeking, but "politically connected", "nepotism" or "random chance" (as pron was advocating for) is a good way. Further, suppose we brought back only the economic protectionism bits - would that change things and make Jim Crow somewhat more acceptable? If not, bringing up the "full picture" seems like a non sequitur. Let me clarify the question I'm asking. Jim Crow makes me emotionally angry, more so than taxi regulations. But I don't have a reasonable principle to back that up. On a rational, rather than an emotional level, I can't actually justify why Jim Crow protectionism would be unacceptable but taxi protectionism is acceptable. Can you?
    - rmxt 11y ago
CPLX 11y ago
Don't know why this is downvoted it's spot on.
lazerwalker 11y ago
For the most part I think you're spot-on, although it's worth emphasizing the nuance that not ALL taxi/hotel regulations are bad for the consumer. Most of the AirBnB and Uber horror stories you hear are things that don't happen, or happen far less relative to the overall volume, in a world of licensed taxis and professional hotels/B&Bs. Does the good of current regulations outweigh the bad? Likely not, in many cases. But there are reasons (at least some of) these regulations exist outside of capitalism being terrible and the successful trying (and succeeding) at pushing out competition.
- nommm-nommm 11y ago
  I would argue that many (most?) housing regulations are good for the consumer. My landlord has to provide me with a safe and structurally sound place to live, which is good for me. If my heat breaks in the winter he's obligated to fix it, he can't evict me and leave me on the streets on a whim, or turn off my water if I am late on the rent, etc. Laws around security deposits are usually good for the consumer as well. Nobody wants what is referred to as a "slumlord." Landlords often are annoyed about regulations (and some tenants unfortunately abuse them) but many came about because of the abusive practices of the slumlords. Our society deems having a safe place to live pretty essential so landlords have a massive amount of power over their tenants if unchecked.
mason240 11y ago
> regulations are bad for you, the consumer, and good for a small group of rent-seekers (like taxi drivers) FTFY
- pron 11y ago
  Well, that's a tradeoff. If the number of medallions is kept up with demand (as is the case in many places), I'd argue that some mechanism to protect the livelihood of those who can't obtain better jobs is a net positive, as it allows the less fortunate to get ahead, especially in an economy where decent blue-collar jobs are getting harder and harder to come by. It's not like taxi drivers are fat cat millionaires who get rich off the back of poor consumers.
  - pkaye 11y ago
    Generally the medallions are owned by someone else invariably rich (or lucky to get it early) and then rented out to the taxi drivers. The taxi drivers start doing shady things in order to pay the rental costs and earn a living. Then various sides get into the game of how many medallions should be available in the market to play with the supply/demand curve and maximize their own profits.
    - pron 11y ago
      I think Uber is owned by someone much richer than any taxi company owner, and the difference is that the shady things in Uber's case are done not by the mistreated employees but by the owners themselves (often against their own employees), and they don't do it to earn a living. I am not saying taxi company owners are saints, but Uber is by no means better. If you've seen the HBO series Deadwood (a masterpiece, BTW), I'd say we're replacing an Al Swearengen with a George Hearst. Both may be villains, but the scale makes all the difference...
      - AJ007 11y ago
        If Uber ultimately goes public, then the owner will be society. The medallion owners largely were individuals who had the access to credit and leveraged in as the values rose. There is a lot more transparency with Uber, however if they achieve a near total monopoly on transportation such as Google did for search, the end result from a consumer experience standpoint may end up the same, with different trade offs. The alternate issue, the employees/drivers, won't matter in the long run because there won't be drivers whether it was Uber or medallion holders.
run4yourlives2 11y ago
This is a little simplistic. I won't argue that these regulations have morphed into things that are overall negative for the consumer, but the reason they where introduced in the first place is because you had instances of people actually being killed by unregulated nefarious actors. That is certainly negative for the consumer. When people are asking politicians why Joe Doe was able to operate his "taxi" company that wouldn't stop his car outside of the ghetto without a $50 "oops, I got lost fee", it seems obvious why regulation is put in place. That isn't to say that said regulation remains entirely useful, just that your argument isn't really bore out by the history. The reason why zenefits is having issues is that the laws they broke are still entirely relevant to everyone involved.
bambax 11y ago
Well said. The so-called "sharing economy" could as well be called "fuck you economy".

Retric 11y ago

Most Taxi regulations are good for the public not the consumer. Go back and you find people wanted to cut the number of Taxii on the roads. I would much rather you use a bus than a Taxi. The problem was regulatory capture constricted past this point. ex: We don't want a lot of them on the road making traffic worse. Drive to B -> C you add X congestion, call a cab they drive from A -> B to pick you up, then B->C that's X + Y congestion, pollution, risk for accidents etc. PS: The real issue is after regulation people tend to forget why it was added. "Let's deregulate Banks!"

Zach_the_Lizard 11y ago
>Go back and you find people wanted to cut the number of Taxii on the roads. The explicit reason given, at least in the case of NYC, was the desire to make driving taxis more profitable. During the Great Depression there were more drivers than passengers and it couldn't pay the bills. How do we solve this? Limit the supply of drivers, therefore raising the price and reducing competition. From a consumer standpoint this is terrible. We would have ended up with an explicit monopoly for a specific company if it weren't for some folks getting convicted of corruption (taxi company bribes) scuttling that deal. > I would much rather you use a bus than a Taxi. The problem was regulatory capture constricted past this point. >ex: We don't want a lot of them on the road making traffic worse. Drive to B -> C you add X congestion, call a cab they drive from A -> B to pick you up, then B->C that's X + Y congestion, pollution, risk for accidents etc. Why limit it to taxis? There is a great way to promote public transit, reduce air congestion and pay for roads: tolls and congestion pricing. This would affect all drivers, not just certain drivers. >PS: The real issue is after regulation people tend to forget why it was added. "Let's deregulate Banks!" The irony is it appears you've forgotten why these regulations were created in the first place.
- abduhl 11y ago
  This source would disagree with you about the reason for taxi medallions: https://books.google.com/books?id=VXpyNs5EaHEC&pg=PA119&lpg=PA119&dq=taxi+medallion+economics&source=bl&ots=uJJmmmmZsi&sig=gLzqx7oq1UaUrYPhm0HGBMgO1hc&hl=en&sa=X&ei=ioJlUYm5Mo_liwKe9IGQCQ#v=onepage&q=taxi%20medallion%20economics&f=false https://books.google.com/books?id=VXpyNs5EaHEC&pg=PA119&lpg=... It confirms the story that I have heard previously that taxi medallions were introduced to protect consumers. This doesn't mean that profit was not a reason but I'd like to see something that shows the "explicit" reason you state.

bobby_9x 11y ago

It's more the 'unions' than the 'regulations'. It's in the best interest of any union to keep prices inflated artificially by utilizing government regulations, like the medallion system.

mathattack 11y ago

The other difference is the consequences of the laws being broken. Insurance industry laws are much stricter in enforcement than rental or auto laws. Lawmakers may look the other way on taxi or rental regulation, because they realize there's a market shortage. They're much less willing to look the other way on insurance (or any financial services) fraud. It could also be that insurance industry participants are more centralized and organized than taxi and real estate companies, but I'm less sure that this was a driving factor in the regulation.

shanacarp 11y ago
They are also backed by the financial industry and are considered financial and legal instruments. while it isn't possible to "front run" your insurance deal as your broker, putting you into the wrong insurance has a variety of outside financial consequences that are not insurance related at all. For example - Zenfits could theoretically "redline" certain kinds of businesses into certain kinds of insurance, even though the employee pools qualify for something better/totally different. By doing so, Zenefits could make more profit per insurance policy sale and renewal, but their is more risk in the lifetime customer that they will explode, since it is the wrong policy. Zenefits see hypergrowth and projections towards even further hypergrowth. However, they also create systemic SMB risk Since SMBs do not typically get lots of help with these sorts of HR issues, the "wrong" insurance could be the difference between bankrupcy and existence 5 years down the line, even though there is competition among policies. The broker is supposed to act as guidance among many competing insurance policies against that eventuality, hence the regulation. If Zenefits can't guarantee their employees can actually act not in Zenefits interest as brokers when queried about two policies and the benefit to the customer, despite what Zenefits would make out of the sale, because of behavior within Zenefits, then there are problems for the businesses that brokered with them, and any bank that loaned them money (since part of the premise there is that this stuff is properly managed!)
- mathattack 11y ago
  Interesting. I hadn't thought of it this deeply - that's there's an insurance equivalent of fiduciary duty.