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> Competition is an essential component of effective regulation, for two reasons: First, competition keeps the companies within a sector from all telling the sa

> Competition is an essential component of effective regulation, for two reasons: First, competition keeps the companies within a sector from all telling the same lie to its regulators. I'm as pro-competition as anybody, but I don't actually buy this argument. Firstly, regulating a thousand small players is much harder than regulating a few. Which is why there is a lot of evidence that regulation (even when good or needed) eliminates some amount of competition - crash and emission testing put an end to new car manufacturers for a long time. Secondly, in industries with lots of competition and individual actors (real estate, healthcare, finance, etc) regulatory capture is actually far worse! Increasing the sheer number of special interests does not, in fact, improve regulation. And if anything, smearing it across as many voting districts as possible gives a level of political entrenchment that software companies could only dream of. Let me flip the Airbnb argument on its head - why are hotels allowed to build dense dormitory-style housing in cities where it's otherwise illegal to do so? Because their regulatory capture is so entrenched that we don't even think about it.

lokar 1y ago
Hotels are allowed to do that because democratically elected representatives passed laws to allow it, subject to strict regulations.
- dleeftink 1y ago
  It's process over product, but somehow we've come to regard the 'product' as end goal over all else. Yet no product lasts forever.
- legitster 1y ago
  This is backwards. Hotels have always existed, but zoning restrictions on who or what could be a hotel came afterwards through law.
  - lokar 1y ago
    Most modern (20th century) regulations on topics like hotels were formalizations of existing socially accepted practices and often attempts to address obvious issues (eg many guests unable to escape a fire).
dingnuts 1y ago
Hotels are a specially designated category for temporary housing so that permanent residents can exclude travelers from their neighborhoods. You aren't flipping it on its head at all, the reason hotels exist is because travelers exist and need somewhere to go. Why does Airbnb think they have a right to invert the social contract that has created a designated place for people who are likely to not know local norms and be operating on strange hours?
- aag 1y ago
  I like the modern social contract and hotels, but to be fair, AirBNB is inverting what had already been inverted. In some sense, AirBNB is returning to the old model before hotels were everywhere. A traveler would reach a new town and ask for lodging in someone's home. In many countries, providing lodging to strangers is still the norm.
  - Scrapemist 1y ago
    Yes, inverting it back to before there was regulations and a massive tourism industry.
  - piva00 1y ago
    The only travelers at that time arriving by the thousands would be armies, it's not comparable when scale matters.
    - Aloisius 1y ago
      Em. Tourism has been a thing, complete with travel guides, tour operators, souvenirs made for tourists and tourist attractions for millennia. Plenty of major destinations (holy places, resorts, etc) would bring in thousands of tourists at a time. The ancient Olympics, for instance, brought in tens of thousands of visitors.
      - piva00 1y ago
        Surely, those existed since ancient times, there's a reason why Romans had inns and waystations. There was some expectation to host strangers traveling as an act to please the gods, etc. but for any mass events there would be lodging at inns, camps, and so on... Not an expectation that everyone hosts thousands of strangers when they pour over for such events. The scale is massively different, they didn't have millions of people coming through a city during the summer, like Paris, Barcelona, or Lisbon gets. Just Lisbon gets some 5-6x its population as tourists per year, it's in a very different scale to some tens of thousands in ancient times, which wouldn't expect the same relative level of amenities as modern tourists do.
agentcoops 1y ago
Completely agreed: the way he articulates the problem is self-defeating. Apologies if this sounds absurdly abstract or hand-wavy, but I think the correct framing really has more to do with a sort of essential clash between law and software as technologies of social regulation. Written law was something very important historically: from unwritten norms to codified representations that, however imperfect and provisional, were more or less accessible to all and changeable through whatever process, democratic or otherwise. Over the last decades, we -- and this could be taken rather literally as "the readers of hacker news" -- have been encoding so many aspects of the world into software in a way that doesn't clearly coincide with the legal norms of any particular let alone every country. On the one hand, software is clearly "better" than law in at least the sense that the former eliminates the necessary ambiguity of the latter: the interpretation or "implementation details" of even just a particular law are always disputed. Perhaps a particular implementation of cross-border financial transactions, say, or of personal identity doesn't in fact reflect what the developers or product managers intended, but if that is identified it can be changed. Yet, on the other hand, it is certainly true that, from the perspective of regulators let alone the masses, the resulting situation is much closer to pre-law. Nobody has any idea how or why they were suddenly banned from Instagram or their PayPal account closed, let alone how money actually moves around the world when they send a friend funds through Transferwise. Certainly, if we don't even know how things are working there is no process by which it could be decided that things should work differently, let alone a process by which software would concretely be made to work differently. Indeed, I am skeptical that law as such will ever be able to regulate software: even just considering the problem in terms of a single country/legal system, how does one actually guarantee that the ever-changing corpus of code complies with the ever-changing and essentially ambiguous body of regulations? One of course sees this with the EU as the "avant-garde" of the struggle to regulate software. They pursue either these incredibly general wars on "cookies" that don't solve real problems, or endlessly deliberate when it's already too late about how to handle AI, or produce something relatively well-conceived like GDPR where enforcement is then incredibly unclear if not impossible. TLDR I have no idea what the solution is, but I think the intrinsic problem of law and software is incredibly important to take seriously as software eats the world. At the very least, it's not just a problem of "competition" since, as you note, monopoly is at least one sufficient condition [1] of eventually rendering the way software regulates the world transparent and open to change. [1] Undoubtedly, there are other ways this could possibly transpire through open source etcetc -- however, even in that case there has to be a guarantee that particular software defines the operations of a particular domain, i.e. that there exists software through which one can understand that domain and hypothetically change, which is in some sense just a "public" monopoly.
Spooky23 1y ago
I disagree. Finance is a good example. The core regulated parts of finance like retail and commercial banking are pretty good. Costs are low, they’ve gotten more efficient, services are uniform and poor performers get purged. The issues with finance are on the edges and areas where there are really a small number of industry players. They have an outsized impact and the worst practices are usually skirting the regulatory framework. The Airbnb argument isn’t regulatory capture example - the issue there is that it’s impossible to build anything. You have to build a giant hotel to justify the overhead of building anything hotel. Airbnb fills a gap of creative reuse and provides a tax shelter for rich people.
- anovikov 1y ago
  How does Airbnb provide a tax shelter? Also aren't they all doing "buy, borrow, die" thing so don't need a tax shelter?
  - Spooky23 1y ago
    The “big beautiful bill” essentially subsidizes short term rentals by allowing investors to fully depreciate the properties year 1.
  - fragmede 1y ago
    You turn personal housing costs into business deductions. The property throws off paper losses through accelerated depreciation while generating cash flow and then you get to reclassify lifestyle spending as investment activity.
    - anovikov 1y ago
      So in other words, someone can rent out a property for a small portion of time on airbnb, while living it in the rest of the time, and yet count everything spent on it as a deductible business expense?
      - Spooky23 1y ago
dreamcompiler 1y ago
> Because their regulatory capture is so entrenched that we don't even think about it. Nonsense. Residents don't complain about hotels because of the perception that hotels are too expensive for poor and working-class people to afford. Whereas the perception of apartments is that they are cheap enough that such people will choose to live in them. It's all about not wanting to live near "poor" people.
- SoftTalker 1y ago
  Clearly your familiarity with lower-tier hotels is limited. People can and do complain when Motel 6 wants to build. > It's all about not wanting to live near "poor" people. That much is true. And mostly because poor people make poor neighbors.
yed 1y ago
It depends on whether you're measuring competition as "number of competitors" or "market concentration". You can have a lot of actors but still have high concentration. Healthcare for example has many actors but the concentration is very high among the big health systems and insurance providers.
lesuorac 1y ago
> Firstly, regulating a thousand small players is much harder than regulating a few. I don't agree with this. Get you and a thousand friends to submit fake mortgages documents and let me know how many of you end up in jail. Compare that too how many people went to jail from Wells Fargo. More smaller players is easier to regulate because you can literally use any punishments. If you dissolve Wells Fargo the economy is going to throw a fit (see Enron) but if you dissolve a tiny company then nobody cares. Real Estate and Healthcare seem to be pretty highly concentrated industries imo. Even though there are a zillion agents/doctors they're part of a professional guild and that guild does the lobbying on their behalf. Like good luck getting antibiotics on your own but after a doctor looks at you for 1 minute you have a prescription for the same drug you always take for an ear infection.
usrxcghghj 1y ago
People take regulations for granted. The economics not only survive, they thrive. It doesn't exist in a vacuum. Protected citizenry is happier and more productive.
thomastjeffery 1y ago
It's really quite easy to regulate many small competing entities. There are plenty of people ready to fill the role of IRS agent, and even the cost is relatively trivial. What's practically impossible is regulating a few anticompetitive megacorporations. You can't regulate an entity that writes your nation's laws.
kcexn 1y ago
There is a bigger issue with any argument around competition as to whether market participants are really competing head-to-head or if they're finding subtle ways to collude.

lokar 1y ago

Hotels are allowed to do that because democratically elected representatives passed laws to allow it, subject to strict regulations.

dleeftink 1y ago
It's process over product, but somehow we've come to regard the 'product' as end goal over all else. Yet no product lasts forever.
legitster 1y ago
This is backwards. Hotels have always existed, but zoning restrictions on who or what could be a hotel came afterwards through law.
- lokar 1y ago
  Most modern (20th century) regulations on topics like hotels were formalizations of existing socially accepted practices and often attempts to address obvious issues (eg many guests unable to escape a fire).

dingnuts 1y ago

Hotels are a specially designated category for temporary housing so that permanent residents can exclude travelers from their neighborhoods. You aren't flipping it on its head at all, the reason hotels exist is because travelers exist and need somewhere to go. Why does Airbnb think they have a right to invert the social contract that has created a designated place for people who are likely to not know local norms and be operating on strange hours?

aag 1y ago
I like the modern social contract and hotels, but to be fair, AirBNB is inverting what had already been inverted. In some sense, AirBNB is returning to the old model before hotels were everywhere. A traveler would reach a new town and ask for lodging in someone's home. In many countries, providing lodging to strangers is still the norm.
- Scrapemist 1y ago
  Yes, inverting it back to before there was regulations and a massive tourism industry.
- piva00 1y ago
  The only travelers at that time arriving by the thousands would be armies, it's not comparable when scale matters.
  - Aloisius 1y ago
    Em. Tourism has been a thing, complete with travel guides, tour operators, souvenirs made for tourists and tourist attractions for millennia. Plenty of major destinations (holy places, resorts, etc) would bring in thousands of tourists at a time. The ancient Olympics, for instance, brought in tens of thousands of visitors.
    - piva00 1y ago
      Surely, those existed since ancient times, there's a reason why Romans had inns and waystations. There was some expectation to host strangers traveling as an act to please the gods, etc. but for any mass events there would be lodging at inns, camps, and so on... Not an expectation that everyone hosts thousands of strangers when they pour over for such events. The scale is massively different, they didn't have millions of people coming through a city during the summer, like Paris, Barcelona, or Lisbon gets. Just Lisbon gets some 5-6x its population as tourists per year, it's in a very different scale to some tens of thousands in ancient times, which wouldn't expect the same relative level of amenities as modern tourists do.

agentcoops 1y ago

Completely agreed: the way he articulates the problem is self-defeating. Apologies if this sounds absurdly abstract or hand-wavy, but I think the correct framing really has more to do with a sort of essential clash between law and software as technologies of social regulation. Written law was something very important historically: from unwritten norms to codified representations that, however imperfect and provisional, were more or less accessible to all and changeable through whatever process, democratic or otherwise. Over the last decades, we -- and this could be taken rather literally as "the readers of hacker news" -- have been encoding so many aspects of the world into software in a way that doesn't clearly coincide with the legal norms of any particular let alone every country. On the one hand, software is clearly "better" than law in at least the sense that the former eliminates the necessary ambiguity of the latter: the interpretation or "implementation details" of even just a particular law are always disputed. Perhaps a particular implementation of cross-border financial transactions, say, or of personal identity doesn't in fact reflect what the developers or product managers intended, but if that is identified it can be changed. Yet, on the other hand, it is certainly true that, from the perspective of regulators let alone the masses, the resulting situation is much closer to pre-law. Nobody has any idea how or why they were suddenly banned from Instagram or their PayPal account closed, let alone how money actually moves around the world when they send a friend funds through Transferwise. Certainly, if we don't even know how things are working there is no process by which it could be decided that things should work differently, let alone a process by which software would concretely be made to work differently. Indeed, I am skeptical that law as such will ever be able to regulate software: even just considering the problem in terms of a single country/legal system, how does one actually guarantee that the ever-changing corpus of code complies with the ever-changing and essentially ambiguous body of regulations? One of course sees this with the EU as the "avant-garde" of the struggle to regulate software. They pursue either these incredibly general wars on "cookies" that don't solve real problems, or endlessly deliberate when it's already too late about how to handle AI, or produce something relatively well-conceived like GDPR where enforcement is then incredibly unclear if not impossible. TLDR I have no idea what the solution is, but I think the intrinsic problem of law and software is incredibly important to take seriously as software eats the world. At the very least, it's not just a problem of "competition" since, as you note, monopoly is at least one sufficient condition [1] of eventually rendering the way software regulates the world transparent and open to change. [1] Undoubtedly, there are other ways this could possibly transpire through open source etcetc -- however, even in that case there has to be a guarantee that particular software defines the operations of a particular domain, i.e. that there exists software through which one can understand that domain and hypothetically change, which is in some sense just a "public" monopoly.

Spooky23 1y ago

I disagree. Finance is a good example. The core regulated parts of finance like retail and commercial banking are pretty good. Costs are low, they’ve gotten more efficient, services are uniform and poor performers get purged. The issues with finance are on the edges and areas where there are really a small number of industry players. They have an outsized impact and the worst practices are usually skirting the regulatory framework. The Airbnb argument isn’t regulatory capture example - the issue there is that it’s impossible to build anything. You have to build a giant hotel to justify the overhead of building anything hotel. Airbnb fills a gap of creative reuse and provides a tax shelter for rich people.

anovikov 1y ago
How does Airbnb provide a tax shelter? Also aren't they all doing "buy, borrow, die" thing so don't need a tax shelter?
- Spooky23 1y ago
  The “big beautiful bill” essentially subsidizes short term rentals by allowing investors to fully depreciate the properties year 1.
- fragmede 1y ago
  You turn personal housing costs into business deductions. The property throws off paper losses through accelerated depreciation while generating cash flow and then you get to reclassify lifestyle spending as investment activity.
  - anovikov 1y ago
    So in other words, someone can rent out a property for a small portion of time on airbnb, while living it in the rest of the time, and yet count everything spent on it as a deductible business expense?
    - Spooky23 1y ago

dreamcompiler 1y ago

> Because their regulatory capture is so entrenched that we don't even think about it. Nonsense. Residents don't complain about hotels because of the perception that hotels are too expensive for poor and working-class people to afford. Whereas the perception of apartments is that they are cheap enough that such people will choose to live in them. It's all about not wanting to live near "poor" people.

SoftTalker 1y ago
Clearly your familiarity with lower-tier hotels is limited. People can and do complain when Motel 6 wants to build. > It's all about not wanting to live near "poor" people. That much is true. And mostly because poor people make poor neighbors.

yed 1y ago

It depends on whether you're measuring competition as "number of competitors" or "market concentration". You can have a lot of actors but still have high concentration. Healthcare for example has many actors but the concentration is very high among the big health systems and insurance providers.

lesuorac 1y ago

> Firstly, regulating a thousand small players is much harder than regulating a few. I don't agree with this. Get you and a thousand friends to submit fake mortgages documents and let me know how many of you end up in jail. Compare that too how many people went to jail from Wells Fargo. More smaller players is easier to regulate because you can literally use any punishments. If you dissolve Wells Fargo the economy is going to throw a fit (see Enron) but if you dissolve a tiny company then nobody cares. Real Estate and Healthcare seem to be pretty highly concentrated industries imo. Even though there are a zillion agents/doctors they're part of a professional guild and that guild does the lobbying on their behalf. Like good luck getting antibiotics on your own but after a doctor looks at you for 1 minute you have a prescription for the same drug you always take for an ear infection.

usrxcghghj 1y ago

People take regulations for granted. The economics not only survive, they thrive. It doesn't exist in a vacuum. Protected citizenry is happier and more productive.

thomastjeffery 1y ago

It's really quite easy to regulate many small competing entities. There are plenty of people ready to fill the role of IRS agent, and even the cost is relatively trivial. What's practically impossible is regulating a few anticompetitive megacorporations. You can't regulate an entity that writes your nation's laws.

kcexn 1y ago

There is a bigger issue with any argument around competition as to whether market participants are really competing head-to-head or if they're finding subtle ways to collude.