20 ms·

It's almost as if AirBnB, Uber et al get by on skirting the law other people have to follow.

wyager 10y ago
"Skirting the law" is loaded language that makes it sound as though they are doing something illegal. They are not. It's true, though; the reason companies like AirBnB and Uber are so vastly superior to the entrenched competition is that they don't have to deal with all the ridiculous and pointless red tape that makes taxis so horrendous and American hotels so insanely expensive. I'm not sure how anyone can recognize that overregulation makes taxis, hotels, etc. so truly awful and then turn around and suggest that the solution is to also overregulate everyone else who managed to escape from that utility-sucking tarpit of bureaucracy and waste.
- tyingq 10y ago
  I think you may have swung a bit too far to the other side. There are certainly credible entities that did believe Uber and AirBnB was/is doing something illegal. They've certainly both been cited for violations, taken to court, etc...successfully. As usual, the truth is somewhere in the middle.
- stephengillie 10y ago
  "Loaded language" makes it sound like these are fully legitimate businesses on the receiving end of undue criticism. But then you point out how these businesses are operating in the same market, but avoiding the market regulation, almost as though they are operating in a quasi-illegal state. Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples?
  - wyager 10y ago
    > Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples? Have you ever stayed in a hotel, and have you ever stayed in an AirBnB? For me, in both cases, the answer is "many times", and the overwhelmingly clear conclusion is that AirBnB offers a vastly superior experience to staying in a hotel for a vastly lower cost. If you look at regional hotel regs; it's clear where the difference is going. Resort taxes, occupancy taxes, inspection and certification fees, etc. For all their costs and alleged benefits, they don't actually manage to make the hotel experience any better or safer than staying in an AirBnB.
    - stephengillie 10y ago
      You're right those taxes make no direct difference to the accommodation. They're not supposed to. The taxes pay for the city and public amenities, like the street outside the hotel, and maybe the city's stadium and sports teams. How do the AirBnB's neighbors feel about having renters use their streets without paying? Or about enjoying the prestige of being in a city with multiple pro sports teams, without helping with that bill?
    - digitaltrees 10y ago
      If the product is better, even after paying equivalent tax and regulatory compliance costs, the yes, that is a deserved victory for AirBnB that I would support and encourage. The problem, is that it is impossible to compare the two products if a large part of the appeal is lower cost due to regulatory arbitrage. If an AirBnB host decided to operate a brothel, some may deem that to be a superior product to a standard AirBnB host...not really a fair comparison.
- mdorazio 10y ago
  Which hotel regulations do you think are overly onerous and ridiculous? Most of those regulations were put in place to protect communities and customers, not the hotels themselves. Zoning laws prevent tourists from overrunning resident communities where people don't want them. Safety and health regulations ensure that customers won't get injured or sick during their stay. Taxes help cities pay for all the improvements, services, etc. that residents want. And yes, Airbnb is skirting the law in the loaded sense of the term. They basically encourage illegal rentals and then refuse to police them until cities like NYC force them to. They might not be directly in violation of laws themselves, but they're definitely knowingly enabling their customers to do illegal things.
  - digitaltrees 10y ago
    Your last point is important. Enabling others to break the law can, and often is, breaking the law.
  - EdHominem 10y ago
    > Which hotel regulations do you think are overly onerous and ridiculous? The many extra taxes and tariffs on guests. Occupancy taxes, tourism improvement fees, etc, that the city is only able to capture by abusing its control over the hotels. It's easy to pass laws that don't affect people who live in your area because nobody is that motivated to stop you. Hotels and other legitimate businesses suffer because the city stole (took because it could, for no good purpose) money from the guests that they'd have otherwise spent on services they actually wanted. The hotel should only be billed for services delivered. If the guests consume a lot of water the hotel needs to pay for it, etc. If that rate is below cost, it should be raised. The extra tax is just a "because we can" and is one of the things an efficient economy will route around. > they're definitely knowingly enabling their customers to do illegal things. They're enabling a primarily legal operation - people renting things. It's not their job to police which units are legal to rent and which are not. I could buy legal things at Costco and commit a crime with them and it's not Costco's duty to stop me.
    - empath75 10y ago
- JohnTHaller 10y ago
  Hotel taxes support infrastructure and city services. And things like proper safety and fire regulations in hotels ensure that guests know where fire exits are, that fire extinguishers are available and operational, that smoke detectors are present in the proper locations and functioning, etc. All of those things cost money. AirBnB offers none of those things. It took a string of deadly hotel fires in the 70s to get regulation up to speed. I wonder what it will take with the illegal hotel rental market.
  - coding123 10y ago
    I'm not coming from any experience in this comment, but I'm wondering if AirBNB rentals will ever have such extra regulation since there are no long-hotel hallways, no fire-escapes, elevators, etc... simply because these are already residences - are we to suggest we need normal homes to be safer than they already are? If these places are "unsafe" in this regard, shouldn't it be improved whether or not they are being rented on a nightly basis?
    - digitaltrees 10y ago
      Law usually needs to be tailor to the specific facts of a situation. Here there is a clear difference in a building being used as a residence with a small and consistent set of people using it as opposed to a much higher volume of guests using it for a business purpose. Just think about the increased risk of accidents, fire, or crime introduced as multiple guests stay in a space: they will increase the risk of crime by bringing valuables in rotating shifts, increased risk of fire as some guests will smoke or bring faulty electronic devices; I could go on, but the point seems clear. Higher traffic use results in greater risk. These factual differences should be taken into account when writing an insurance contract (a form of "law") or regulation (also a form of "law").
    - rhizome 10y ago
      Fire escapes aren't required merely to look cool, they provide a second form of egress from a hotel room in the event of e.g. a fire, which is a common requirement and not relevant to houses which will have other forms of secondary egress. Even so, my non-hotel apartment has a fire escape because the hallway through the front door is the only other path out of the building.
- digitaltrees 10y ago
  Public safety regulations are not pointless red tape. They are created after real tragedy that shows a clear need. In fact, fire regulations in NY first applied to apartments, while hotel owners fought for decades to avoid the regulation require it fire escapes (Read the following for more information http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf ) Even after fire escapes were mandated hundreds of people died in a factory fire ( see https://en.m.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire https://en.m.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_... ). I hope you are wiling to concede that these regulations, while imposing a real burden on businesses and landlords, were designed to correct a real and very persistent problem. Is your position that we would be better to just ignore fire and other safety rules for all hotels? In light of a clear rationale for such regulations, we must ask why one business should get to play by a different set of rules than another? Free market competition does not work if the only advantage is regulatory arbitrage. That would be like a race between two cars, one that has a 40 mile/hour speed limit, the other no speed limit. Which car would you pick? The only argument that I would concede is that perhaps AirBnB is closer to an actual bed and breakfast, so those regulations should apply, but I would guess that class of regulation is generally more strict than what they are subject to now.
  - wyager 10y ago
    > Public safety regulations are not pointless red tape. This is the typical refrain of people who are trying to pitch pointless red tape; "it's about public safety!" Of course, 90% of regulations in any given industry have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them. Even those regulations that are nominally intended to increase safety are often counterproductive, and cause more utility loss than they prevent. > Is your position that we would be better to just ignore fire and other safety rules for all hotels? Are you really under the impression that the competitive advantage of AirBnB comes from ignoring fire code? That's insane for multiple reasons, but mostly that all residential buildings (including AirBnBs) have to obey fire code already. > In light of a clear rationale for such regulations You're making two false assumptions here; one is that most regulations even nominally have a "clear rationale", and the second is that regulations that appear to have clear rationales to some self-interested regulatory group actually do. Most people, including regulators, don't bother to look beyond first-order costs imposed by proposed regulations. It's quite likely that many safety-oriented regulations claim a great deal more lives than they save, since the increased economic burden of those regulations sucks up resources that would otherwise be used on e.g. healthcare or personal enjoyment. On an individual level, the difference is very smal, but multiplied over the millions of people who are affected by the regulation it adds up to a lot of man-hours and lives lost. > That would be like a race between two cars, one that has a 40 mile/hour speed limit, the other no speed limit. Which car would you pick? The unlimited car is clearly superior, so you're not exactly helping your own argument here.
- jellicle 10y ago
  > as though they are doing something illegal. They are not. Of course they are. And Uber has been fined/sued/charged hundreds if not thousands of times for doing just that. The penalties have proved insufficient to deter them from their illegal racketeering operation, however.
jostmey 10y ago
Maybe we should be asking why some industries are heavily taxed and others are not
- dmix 10y ago
  Just look how successful the products are (not talking about the companies) without heavy government intervention. Both of those would not exist if they had followed laws designed a (half?) century ago for different types of businesses. And customers love those services. Rather than finding a common working ground that keeps customers happy that outnumber those unhappy with it by 100:1 and instead updates laws like improving landlords protection from Airbnb renters, improving access to employment insurance and health care to self employed contractors, etc it's easier to blame tech billionaires for being greedy.
  - wmeredith 10y ago
    Customers love Uber because it's prices are currently subsidized by VC money. Once that goes away, we'll see how competitive they are.
    - stale2002 10y ago
      Uber is profitable in the USA. So I see no reason why its won't stay competitive.
      - DasIch 10y ago
        Apple is profitable but it certainly not competitive on pricing. Monopolies also tend to be profitable, competitiveness isn't even a concern there.
        stale2002 10y ago
        ???? So are Uber's prices too low, because it is being subsidized by VC money, or are the prices too high, because it is a monopoly? You can't have it both ways. My argument is that their prices are just fine where they are now, and that there is no upcoming price hike, because the prices, in the USA, are profitable NOW.
diogenescynic 10y ago
AKA regulatory arbitrage--profit from not obeying the same laws as your competitors.

"Skirting the law" is loaded language that makes it sound as though they are doing something illegal. They are not. It's true, though; the reason companies like AirBnB and Uber are so vastly superior to the entrenched competition is that they don't have to deal with all the ridiculous and pointless red tape that makes taxis so horrendous and American hotels so insanely expensive. I'm not sure how anyone can recognize that overregulation makes taxis, hotels, etc. so truly awful and then turn around and suggest that the solution is to also overregulate everyone else who managed to escape from that utility-sucking tarpit of bureaucracy and waste.

tyingq 10y ago
I think you may have swung a bit too far to the other side. There are certainly credible entities that did believe Uber and AirBnB was/is doing something illegal. They've certainly both been cited for violations, taken to court, etc...successfully. As usual, the truth is somewhere in the middle.
stephengillie 10y ago
"Loaded language" makes it sound like these are fully legitimate businesses on the receiving end of undue criticism. But then you point out how these businesses are operating in the same market, but avoiding the market regulation, almost as though they are operating in a quasi-illegal state. Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples?
- wyager 10y ago
  > Why do you believe the regulation of these markets is particularly onerous? Can you provide some specific examples? Have you ever stayed in a hotel, and have you ever stayed in an AirBnB? For me, in both cases, the answer is "many times", and the overwhelmingly clear conclusion is that AirBnB offers a vastly superior experience to staying in a hotel for a vastly lower cost. If you look at regional hotel regs; it's clear where the difference is going. Resort taxes, occupancy taxes, inspection and certification fees, etc. For all their costs and alleged benefits, they don't actually manage to make the hotel experience any better or safer than staying in an AirBnB.
  - stephengillie 10y ago
    You're right those taxes make no direct difference to the accommodation. They're not supposed to. The taxes pay for the city and public amenities, like the street outside the hotel, and maybe the city's stadium and sports teams. How do the AirBnB's neighbors feel about having renters use their streets without paying? Or about enjoying the prestige of being in a city with multiple pro sports teams, without helping with that bill?
  - digitaltrees 10y ago
    If the product is better, even after paying equivalent tax and regulatory compliance costs, the yes, that is a deserved victory for AirBnB that I would support and encourage. The problem, is that it is impossible to compare the two products if a large part of the appeal is lower cost due to regulatory arbitrage. If an AirBnB host decided to operate a brothel, some may deem that to be a superior product to a standard AirBnB host...not really a fair comparison.
mdorazio 10y ago
Which hotel regulations do you think are overly onerous and ridiculous? Most of those regulations were put in place to protect communities and customers, not the hotels themselves. Zoning laws prevent tourists from overrunning resident communities where people don't want them. Safety and health regulations ensure that customers won't get injured or sick during their stay. Taxes help cities pay for all the improvements, services, etc. that residents want. And yes, Airbnb is skirting the law in the loaded sense of the term. They basically encourage illegal rentals and then refuse to police them until cities like NYC force them to. They might not be directly in violation of laws themselves, but they're definitely knowingly enabling their customers to do illegal things.
- digitaltrees 10y ago
  Your last point is important. Enabling others to break the law can, and often is, breaking the law.
- EdHominem 10y ago
  > Which hotel regulations do you think are overly onerous and ridiculous? The many extra taxes and tariffs on guests. Occupancy taxes, tourism improvement fees, etc, that the city is only able to capture by abusing its control over the hotels. It's easy to pass laws that don't affect people who live in your area because nobody is that motivated to stop you. Hotels and other legitimate businesses suffer because the city stole (took because it could, for no good purpose) money from the guests that they'd have otherwise spent on services they actually wanted. The hotel should only be billed for services delivered. If the guests consume a lot of water the hotel needs to pay for it, etc. If that rate is below cost, it should be raised. The extra tax is just a "because we can" and is one of the things an efficient economy will route around. > they're definitely knowingly enabling their customers to do illegal things. They're enabling a primarily legal operation - people renting things. It's not their job to police which units are legal to rent and which are not. I could buy legal things at Costco and commit a crime with them and it's not Costco's duty to stop me.
  - empath75 10y ago
JohnTHaller 10y ago
Hotel taxes support infrastructure and city services. And things like proper safety and fire regulations in hotels ensure that guests know where fire exits are, that fire extinguishers are available and operational, that smoke detectors are present in the proper locations and functioning, etc. All of those things cost money. AirBnB offers none of those things. It took a string of deadly hotel fires in the 70s to get regulation up to speed. I wonder what it will take with the illegal hotel rental market.
- coding123 10y ago
  I'm not coming from any experience in this comment, but I'm wondering if AirBNB rentals will ever have such extra regulation since there are no long-hotel hallways, no fire-escapes, elevators, etc... simply because these are already residences - are we to suggest we need normal homes to be safer than they already are? If these places are "unsafe" in this regard, shouldn't it be improved whether or not they are being rented on a nightly basis?
  - digitaltrees 10y ago
    Law usually needs to be tailor to the specific facts of a situation. Here there is a clear difference in a building being used as a residence with a small and consistent set of people using it as opposed to a much higher volume of guests using it for a business purpose. Just think about the increased risk of accidents, fire, or crime introduced as multiple guests stay in a space: they will increase the risk of crime by bringing valuables in rotating shifts, increased risk of fire as some guests will smoke or bring faulty electronic devices; I could go on, but the point seems clear. Higher traffic use results in greater risk. These factual differences should be taken into account when writing an insurance contract (a form of "law") or regulation (also a form of "law").
  - rhizome 10y ago
    Fire escapes aren't required merely to look cool, they provide a second form of egress from a hotel room in the event of e.g. a fire, which is a common requirement and not relevant to houses which will have other forms of secondary egress. Even so, my non-hotel apartment has a fire escape because the hallway through the front door is the only other path out of the building.
digitaltrees 10y ago
Public safety regulations are not pointless red tape. They are created after real tragedy that shows a clear need. In fact, fire regulations in NY first applied to apartments, while hotel owners fought for decades to avoid the regulation require it fire escapes (Read the following for more information http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf http://www.uvm.edu/histpres/HPJ/AndreThesis.pdf ) Even after fire escapes were mandated hundreds of people died in a factory fire ( see https://en.m.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire https://en.m.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_... ). I hope you are wiling to concede that these regulations, while imposing a real burden on businesses and landlords, were designed to correct a real and very persistent problem. Is your position that we would be better to just ignore fire and other safety rules for all hotels? In light of a clear rationale for such regulations, we must ask why one business should get to play by a different set of rules than another? Free market competition does not work if the only advantage is regulatory arbitrage. That would be like a race between two cars, one that has a 40 mile/hour speed limit, the other no speed limit. Which car would you pick? The only argument that I would concede is that perhaps AirBnB is closer to an actual bed and breakfast, so those regulations should apply, but I would guess that class of regulation is generally more strict than what they are subject to now.
- wyager 10y ago
  > Public safety regulations are not pointless red tape. This is the typical refrain of people who are trying to pitch pointless red tape; "it's about public safety!" Of course, 90% of regulations in any given industry have nothing to do with "safety" and everything to do with sustaining the bureaucracy that created them. Even those regulations that are nominally intended to increase safety are often counterproductive, and cause more utility loss than they prevent. > Is your position that we would be better to just ignore fire and other safety rules for all hotels? Are you really under the impression that the competitive advantage of AirBnB comes from ignoring fire code? That's insane for multiple reasons, but mostly that all residential buildings (including AirBnBs) have to obey fire code already. > In light of a clear rationale for such regulations You're making two false assumptions here; one is that most regulations even nominally have a "clear rationale", and the second is that regulations that appear to have clear rationales to some self-interested regulatory group actually do. Most people, including regulators, don't bother to look beyond first-order costs imposed by proposed regulations. It's quite likely that many safety-oriented regulations claim a great deal more lives than they save, since the increased economic burden of those regulations sucks up resources that would otherwise be used on e.g. healthcare or personal enjoyment. On an individual level, the difference is very smal, but multiplied over the millions of people who are affected by the regulation it adds up to a lot of man-hours and lives lost. > That would be like a race between two cars, one that has a 40 mile/hour speed limit, the other no speed limit. Which car would you pick? The unlimited car is clearly superior, so you're not exactly helping your own argument here.
jellicle 10y ago
> as though they are doing something illegal. They are not. Of course they are. And Uber has been fined/sued/charged hundreds if not thousands of times for doing just that. The penalties have proved insufficient to deter them from their illegal racketeering operation, however.

jostmey 10y ago

Maybe we should be asking why some industries are heavily taxed and others are not

dmix 10y ago
Just look how successful the products are (not talking about the companies) without heavy government intervention. Both of those would not exist if they had followed laws designed a (half?) century ago for different types of businesses. And customers love those services. Rather than finding a common working ground that keeps customers happy that outnumber those unhappy with it by 100:1 and instead updates laws like improving landlords protection from Airbnb renters, improving access to employment insurance and health care to self employed contractors, etc it's easier to blame tech billionaires for being greedy.
- wmeredith 10y ago
  Customers love Uber because it's prices are currently subsidized by VC money. Once that goes away, we'll see how competitive they are.
  - stale2002 10y ago
    Uber is profitable in the USA. So I see no reason why its won't stay competitive.
    - DasIch 10y ago
      Apple is profitable but it certainly not competitive on pricing. Monopolies also tend to be profitable, competitiveness isn't even a concern there.
      - stale2002 10y ago
        ???? So are Uber's prices too low, because it is being subsidized by VC money, or are the prices too high, because it is a monopoly? You can't have it both ways. My argument is that their prices are just fine where they are now, and that there is no upcoming price hike, because the prices, in the USA, are profitable NOW.

diogenescynic 10y ago

AKA regulatory arbitrage--profit from not obeying the same laws as your competitors.