21 Apr 2016

Airbnb: Regulation Without the State

Economics, private law, Shameless Self-Promotion 10 Comments

My latest at FEE. An excerpt:

If potential renters had perfect information and deliberated over such decisions with the discipline of a samurai, there would be little need for external rules or regulation. Owners could offer rooms of varying attributes (including price), and each renter would pick the option that he or she liked best. There would be no surprises or regret.

In reality, it is difficult for renters to ascertain whether a room in another city has cockroaches, or the likelihood that one’s car will be stolen if parked outside that building. Furthermore, some people might not have the willpower or wisdom to pay $1 more for a room that has a smoke alarm, rather than a cheaper room that is a death trap in the (unlikely) event of a fire. In this world, we can imagine that without regulation, renters might end up in less desirable rooms than they’d been expecting and would occasionally realize they had made a foolish mistake by not paying enough attention to a certain risk.

 

10 Responses to “Airbnb: Regulation Without the State”

  1. Gabby Domingo says:

    So does AirBnB have all the features you describe? its not clear if it were the case, or if u were describing a hypothetical.

  2. Tel says:

    Is this the first time anyone has put forward a structured definition for a “sensible rule” vs an “absurd rule” ?

    I’ve not seen that construct before… did you borrow it? I could see a lot of potential for that approach.

    These types of tweaks to the “regulations” Airbnb imposed on the rooms offered for rent through its website would happen quickly in response to new information. Furthermore, Airbnb would be drawing on reports from the whole community of users. Finally, if Airbnb made incompetent or corrupt decisions, then owners or tenants could switch to competing companies offering similar services.

    I think that’s the key point that perhaps isn’t emphasized enough… If you want this to work, you need to have competing services, and you need to have a system where there’s no easy way for the person who screwed up to escape the consequences of what they did. This competition already operates at the level of the individual landlord within the overall Airbnb network, but it also needs to operate between competing networks.

    I kind of see a role for government in making sure a well designed set of property rights are in place to facilitate such competition, although I accept that we must be ever-vigilant because governments are typically not good at making these decisions (especially when left to themselves). For example, suppose Airbnb tried to impose an exclusivity contract such that a given landlord listing on Airbnb was banned from listing anywhere else (I dunno if they do that, just an example). That would be anti-competitive IMHO, and yes I do support the ability for people to make contracts, but when it comes to enforcement government should outlaw any anti-competitive contracts and just say, “Sorry, that’s null and void.”

    • guest says:

      “… but when it comes to enforcement government should outlaw any anti-competitive contracts and just say, “Sorry, that’s null and void.””

      But that wouldn’t be anti-competitive. The consumer voluntarily entered into that agreement.

      Given his alternatives, he thought that signing an exclusivity contract was the most beneficial.

      Competition isn’t where there must exist other companies providing the same goods or services; It’s where you compete – and sometimes one company is better at meeting the customers’ preferences than would-be alternatives.

      A single seller, provided he has no government protections, was made the single seller by consumers, themselves.

      Other would-be entrants tried *and failed* to compete for consumers’ money, and the consumers chose the single seller.

      There’s nothing anti-competitive about that.

      I refer people, again, to the following video:

      Dominick Armentano The Case for Repealing Antitrust Laws
      http://www.youtube.com/watch?v=xBT-fnJsfo0

      • Tel says:

        The enforcement of contracts requires, well force, from somewhere.

        So far, this rule has usually been handled by some sort of government or similar organization (even with organized crime they have a central Mafia type group willing to impose enforcement of whatever rules they work under). Maybe there’s other ways to do it, who knows?

        A single seller, provided he has no government protections, was made the single seller by consumers, themselves.

        Sure, that means no contract enforcement by any central power.

        Other would-be entrants tried *and failed* to compete for consumers’ money, and the consumers chose the single seller.

        If the second network attempting to get started finds that all landlords have been permanently signed up to the first network then it never really did try and compete… it failed before it even got started. Consumers don’t get a choice, they never even see the potential second network.

        That’s the reason why certain types of contract should be simply rejected out of hand, or if you prefer to see it another way, certain types of property rights (e.g. slavery) should not be allowable. You can own some things, but you cannot own other things.

        • guest says:

          “If the second network attempting to get started finds that all landlords have been permanently signed up to the first network then it never really did try and compete”

          They have the choice of alternatives businesses to run, or to produce for themselves for income (in the form of food and such).

          At any rate, they are not entitled to patronage for simply trying to start a business.

          • guest says:

            Also, this is the same as if all of a physical resource has been justly acquired by someone.

            If it belongs to someone else, it’s not available for use by someone else. That’s property rights.

            The would-be second network wasn’t attempting to compete when some of the landlords were available.

            They snoozed and lost.

            Also, if a landlord wants to enter into such a contract because it’s more beneficial to him, at the time, than not entering into the contract, that’s his right to do so.

            To ban such contracts would be a violation of the landlord’s property rights.

            • Tel says:

              If it belongs to someone else, it’s not available for use by someone else. That’s property rights.

              Sure, and if a third party steps in who happens to be stronger and decides this really belongs to them… well, that’s also property rights.

              Indeed, every nation on Earth was created by exactly that method. The property is in the hands of the people who successfully took it for themselves by force of arms. That’s property rights. Really, that’s how it works.

              The would-be second network wasn’t attempting to compete when some of the landlords were available.

              They snoozed and lost.

              Sure, so the second network decides to go hell bent for leather and just barges in. You want to take us to court? No problem, we will steamroller everything long before you get that court case anywhere. If the other guys don’t like it… ummm I guess they must have snoozed and lost. Too bad huh?

              This is exactly how Uber took on the taxi networks, by deliberately not following the law, just ignoring anything that seemed inconvenient… and in many cases it worked for them too.

              In some cases cities have stood up against Uber, and tried to hold them out, although that’s often unpopular so gradually Uber can get the voters onside and use leverage against the politicians. That’s how democracy works, if the majority decide you don’t own your property… then guess what? You don’t own it any more!

              Here are the magic words:

              “If you can keep it.”

              Not a whole lot of use having property unless it’s secure is it? Lot of breakable things around here, you know, property rights. Never know what might happen.

              • guest says:

                “Indeed, every nation on Earth was created by exactly that method. The property is in the hands of the people who successfully took it for themselves by force of arms. That’s property rights. Really, that’s how it works.”

                I feel like I’ve discovered something you weren’t previously willing to share.

                And I’m glad you’re willing to express it, because now we can at least deal with it.

                “This is exactly how Uber took on the taxi networks, by deliberately not following the law, just ignoring anything that seemed inconvenient …”

                No, the law is held to the standard of natural rights. Law can be illegitimate, and the proper response is nullification.

                That’s just logic.

                The government was preventing individuals from entering into voluntary transactions for taxi service.

                That’s a violation of an individual’s natural rights – or at least the negative right to not be forcefully prevented from using your own resources in voluntary mutual exchange.

                I have a right to my body, and that which I transform into something useful to me becomes mine since my labor doesn’t belong to anyone else.

                I expended my labor for my own purposes, not for those who would make me to be their slave by forcefully repurposing those things which I’ve transformed (which was previously unowned).

              • Tel says:

                No, the law is held to the standard of natural rights. Law can be illegitimate, and the proper response is nullification.

                Because you say so? Or even if you can find a handful of others who agree with you. How many divisions do you have to support this natural law of yours? If it was really “natural” it wouldn’t need any support, it would just happen.

                The real natural laws are the laws of physics and the law of the jungle… all property laws are man made, and subject to human whim. Not so long ago it was considered perfectly natural for some people to be the slaves of other people. Then humans decided it was better not to do that.

                That’s just logic.

                Real logic would always give the same answer from the dawn of time until today. Pythagoras Theorem will never change, but human laws do change from time to time and from place to place.

                I have a right to my body, and that which I transform into something useful to me becomes mine since my labor doesn’t belong to anyone else.

                You can consider it your right, and good luck to you for that matter… but there’s nothing guaranteed about that, slavery may come back, in some ways government already claims your body, and there’s not a whole lot you can do other than grumble. That claim changes from time to time, we just don’t know where it will go.

                Even parasites are “natural”, you could potentially catch rabies or syphilis, or a bunch of other things that can hijack your body and use it for their own purposes. You might get addicted to a drug, that saps your will and leads you to do things you didn’t really want to do. All of this is perfectly “natural”, in the natural kingdom one species takes over the body of others all the time.

                As humans, we see this as a bad thing to do to other humans (morally evil) but we do it to animals and think nothing of it. I mean horses and dogs are not naturally obedient, they have been selectively bred for thousands of years to fulfill tasks. Bent and modified by the masters to become no longer an independent entity but a tool belonging to someone else.

                Before you cry foul on that example, I’ll further point out that certain races of humans were once considered equivalent to animals and this was only a handful of generations back. Please don’t take these things for granted, you are welcome to your preferences but reality has a habit of stomping over preferences.

                Anyway back to the topic at hand, with my vote, I don’t support anti-compete agreements in a contract, and from my point of view such contracts are void.

              • guest says:

                “Because you say so?”

                Ah, but that’s precisely my point.

                Your challenge recognizes that it’s not enough to say “because I said so”.

                And since none of us are born with natural authority over someone else, we all get to make this challenge to each other.

                Thus the concept of negative rights.

                That’s natural law: the right not to have your labor or property used by another contrary to your desire, because nobody has the authority over you to justify doing so.

                “How many divisions do you have to support this natural law of yours?”

                “If it was really “natural” it wouldn’t need any support, it would just happen.”

                Rights are rights whether or not they are defended.

                This is why we have the concept of “theft”. It’s a recognition that the possessor of a thing is not necessarily it’s owner.

                “… all property laws are man made, and subject to human whim.”

                I’m not talking about legalese, but about rights that obtain logically from the fact of self-ownership (or body ownership, if you prefer).

                “Not so long ago it was considered perfectly natural for some people to be the slaves of other people. Then humans decided it was better not to do that.”

                That doesn’t change the fact that it’s not natural.

                In the biblical paradigm, slavery is ok because god owns us, and he says it’s ok. But there’s no natural right for someone to make someone a slave.

                “Pythagoras Theorem will never change, but human laws do change from time to time and from place to place.”

                Again, I’m not talking about legalese.

                “… but there’s nothing guaranteed about that, slavery may come back, in some ways government already claims your body, and there’s not a whole lot you can do other than grumble.”

                Again, rights are rights whether or not you’re able to defend them.

                Yes, in some cases, there’s not a whole lot you can do but groan. But that doesn’t mean your rights disappeared.

                “As humans, we see this as a bad thing to do to other humans (morally evil) but we do it to animals and think nothing of it.”

                This comes down to whether or not you believe that animals have the same rights as humans, and is ultimately settled by appeal to religion.

                Most of us already agree that animals don’t have the same rights as humans, and so we never have to address this.

                I don’t think we’re going to get anywhere going down this road, but if you think it’d be helpful, I’ll indulge you for a bit.

                “Before you cry foul on that example, I’ll further point out that certain races of humans were once considered equivalent to animals and this was only a handful of generations back.”

                I’m actually of the opinion that racist slavery was never about some races being considered animals, but about them being naturally suited to different qualities of society.

                I’m pretty sure racist slave owners understood their slaves to be perfectly human.

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