4 ms·

The customers aren't the ones being exploited. What you're missing is what we in economics call an "externality"[1]. Let's say you rent out your apartment throu

The customers aren't the ones being exploited. What you're missing is what we in economics call an "externality"[1]. Let's say you rent out your apartment through Airbnb to somebody. Well, now what you've done is taken money for that transaction, but who assumed the risk? Sure, you risked some of your things, but your landlord has assumed the risk of liability and property damage without his or her knowledge or consent. In fact, it was probably strictly prohibited in your lease. The cost of the landlord's risk (which is not $0) is an externality. Let alone your neighbors, who are now living in a less secure building due to your actions. Understand that these businesses have a larger impact on the economy and your community than just the money flowing between them and their customers. Also understand that laws exist for reasons--not infallible reasons, just reasons. Whenever a law seems to be completely nonsensical to you, start looking into it a bit more. Typically, the answer is just behind the curtain, or people were exploiting the system in ways you didn't even think of. [1]: https://en.wikipedia.org/wiki/Externality https://en.wikipedia.org/wiki/Externality

Houshalter 13y ago
There is an externality, but it's still smaller than the total benefit. I think the ideal way to handle it would be to find some way to insure for it, or hold the tenant responsible. It certainly shouldn't be illegal, just at best violate a private contract/agreement with the landlord.
- JonFish85 13y ago
  Isn't violating a contract by definition illegal?
  - Houshalter 13y ago
    I mean in the sense they can agree to any contract they want in theory. As opposed to having a law that no one anywhere can do it legally even if the owner agrees to it.
  - sneak 13y ago
    Nope - illegal generally refers to violations of criminal laws. Breaches of contractual obligations are civil matters. You don't go to jail, generally.
- pilom 13y ago
  >I think the ideal way to handle it would be to find some way to insure for it That is absolutely the best way to handle it and Airbnb should require appropriate documentation that hosts are insured appropriately and aren't violating the terms of their leases. But Airbnb wont do that because then they would have fewer hosts and thus less revenue. The answer that the original article tried (and failed) to say is that Airbnb and others should be responsible for ensuring that their operators are within the law but they don't and claim ignorance.
- endersshadow 13y ago
  > There is an externality, but it's still smaller than the total benefit Benefit to whom? And how can you say that? Nobody knows yet what the total cost of externalities and benefits are for Airbnb. You're also thinking about one use case. What about a condo owner that decides to use Airbnb for profit, and just rents the room from afar, hires a cleaning service, and treats it like a hotel? The other residents of that condo end up assuming all of the risk, security breaches, and headaches of an endless supply of tenants. There are many other uses cases with different externalities associated with each. As a society, we have to decide what's acceptable and what's not--and that's where laws come into play.
  - Houshalter 13y ago
    Good points although I still think it's very debatable. Housing is one of the biggest costs, and this is a great way to improve efficiency and save everyone money and resources. It would be said if it was banned entirely due to hypotheticals. >As a society, we have to decide what's acceptable and what's not--and that's where laws come into play. That sounds great in theory. In reality the government is far from perfectly competent. Additionally you get corruption where the government tries to protect an existing industry from competition at the expense of everyone else. Or jerks that shout "Not In My Backyard!" whenever anyone tries to change anything. People are irrationally resistant to new things and that is, on average, far more of a problem than the new things themselves.
- rayiner 13y ago
  > There is an externality, but it's still smaller than the total benefit. The problem is that the benefit and the cost of the externality accrue to different people. When that happens, you get a higher level of the activity than is economically efficient.
stickfigure 13y ago
This argument is wholly disingenuous. This externality may actually not exist (the landlord may be the one putting the property on AirBnb) and in any case, you have no standing to object because this is a contractual matter between landlord and tenant. It's one of countless contractual issues that are spelled out in thousands of different lease agreements throughout the country, and can be resolved in the same way that these contractual issues have been resolved for hundreds of years. As far as your neighbors are concerned, they're probably more concerned about the rotting car you have on blocks in your driveway. Or any of the zillion other perfectly legal but annoying things you do, like paint your house bright pink or let your kids run screaming around the yard at all hours of the day. At least with Airbnb properties, if you don't like your neighbors, they'll be gone in a week. Permanent neighbors you have to live with, no matter how batshit crazy they are.
- endersshadow 13y ago
  As I said below, there are many different externalities associated with Airbnb, and it's nigh impossible to even begin to know them all. I was providing a common example--it wasn't an argument. My intent was the educate on how economists talk about these things, and what types of issues you need to think about when understanding a business. I also wanted to clear up some confusion about the language used in the article. Anyway, I will not address your other points--you are clearly only thinking about one use case and trying to start an argument where there is none.

Houshalter 13y ago

There is an externality, but it's still smaller than the total benefit. I think the ideal way to handle it would be to find some way to insure for it, or hold the tenant responsible. It certainly shouldn't be illegal, just at best violate a private contract/agreement with the landlord.

JonFish85 13y ago
Isn't violating a contract by definition illegal?
- Houshalter 13y ago
  I mean in the sense they can agree to any contract they want in theory. As opposed to having a law that no one anywhere can do it legally even if the owner agrees to it.
- sneak 13y ago
  Nope - illegal generally refers to violations of criminal laws. Breaches of contractual obligations are civil matters. You don't go to jail, generally.
pilom 13y ago
>I think the ideal way to handle it would be to find some way to insure for it That is absolutely the best way to handle it and Airbnb should require appropriate documentation that hosts are insured appropriately and aren't violating the terms of their leases. But Airbnb wont do that because then they would have fewer hosts and thus less revenue. The answer that the original article tried (and failed) to say is that Airbnb and others should be responsible for ensuring that their operators are within the law but they don't and claim ignorance.
endersshadow 13y ago
> There is an externality, but it's still smaller than the total benefit Benefit to whom? And how can you say that? Nobody knows yet what the total cost of externalities and benefits are for Airbnb. You're also thinking about one use case. What about a condo owner that decides to use Airbnb for profit, and just rents the room from afar, hires a cleaning service, and treats it like a hotel? The other residents of that condo end up assuming all of the risk, security breaches, and headaches of an endless supply of tenants. There are many other uses cases with different externalities associated with each. As a society, we have to decide what's acceptable and what's not--and that's where laws come into play.
- Houshalter 13y ago
  Good points although I still think it's very debatable. Housing is one of the biggest costs, and this is a great way to improve efficiency and save everyone money and resources. It would be said if it was banned entirely due to hypotheticals. >As a society, we have to decide what's acceptable and what's not--and that's where laws come into play. That sounds great in theory. In reality the government is far from perfectly competent. Additionally you get corruption where the government tries to protect an existing industry from competition at the expense of everyone else. Or jerks that shout "Not In My Backyard!" whenever anyone tries to change anything. People are irrationally resistant to new things and that is, on average, far more of a problem than the new things themselves.
rayiner 13y ago
> There is an externality, but it's still smaller than the total benefit. The problem is that the benefit and the cost of the externality accrue to different people. When that happens, you get a higher level of the activity than is economically efficient.

stickfigure 13y ago

This argument is wholly disingenuous. This externality may actually not exist (the landlord may be the one putting the property on AirBnb) and in any case, you have no standing to object because this is a contractual matter between landlord and tenant. It's one of countless contractual issues that are spelled out in thousands of different lease agreements throughout the country, and can be resolved in the same way that these contractual issues have been resolved for hundreds of years. As far as your neighbors are concerned, they're probably more concerned about the rotting car you have on blocks in your driveway. Or any of the zillion other perfectly legal but annoying things you do, like paint your house bright pink or let your kids run screaming around the yard at all hours of the day. At least with Airbnb properties, if you don't like your neighbors, they'll be gone in a week. Permanent neighbors you have to live with, no matter how batshit crazy they are.

endersshadow 13y ago
As I said below, there are many different externalities associated with Airbnb, and it's nigh impossible to even begin to know them all. I was providing a common example--it wasn't an argument. My intent was the educate on how economists talk about these things, and what types of issues you need to think about when understanding a business. I also wanted to clear up some confusion about the language used in the article. Anyway, I will not address your other points--you are clearly only thinking about one use case and trying to start an argument where there is none.