Unsurprisingly, using residentially-zoned space for commercial purposes is profitable. Don't most full-time bed-and-breakfasts have to get licensed? (I'm assuming that making $4,500/month implies being nearly full-time; maybe I'm wrong.)
To me, this seems fine when rare. So let's say I rent out a room once a month or something along those lines - no big deal. If I'm treating it like a real b-n-b, though, it seems like I'm engaged in some real commerce that is probably regulated. Presumably Airbnb behaves agnostically on this issue, allowing the responsibility to fall to the property owner?
I'm delighted for the specific homeowners being discussed here, but concerned about the general case.
Not sure why the Parent was downvoted. These are some legitimate questions. Cities regulate the areas in which business can occur, tax businesses differently than individuals and have regulations on food and hospitality for health and safety reasons. As the parent says most of the time this will slip through as "letting a mate stay the night" but at $4500 a month we are in a different ballgame.
Sydney used to have a problem with unscrupulous entrepreneurs who would (say) buy up a bunch of three-bedroom apartments in a fancy inner-city building, stuff sixteen beds into it, and rent the beds out to foreign backpackers for (say) fifteen bucks a night. For the backpackers, it was better than the regular hostels, and for the owners it was a license to print money, but for the other residents of the building, who would find the pool and gardens filled with drunk poms at all hours of day and night, it was pretty annoying. Eventually I think they came up with some new law to stop it.
Anyway, if airbnb is smart they should try to stop people from abusing their system by trying to set up pseudo-hotels, since it's these people who are going to bring down the regulatory hammer on the entire system.
"Hotel Toshi" in NYC does exactly this. The fact that the guy is operating somewhat high-profile and attracting attention to himself is probably what brought knowledge of this problem to the NYC media and regulators.
I have a problem with worrying whether this is 'real commerce' or whether subjectively a lot of money is being made. If someone makes money, largely it's none of my business whether this a significant amount or not.
If your concern is zoning, that's a reasonable concern if people were turning residential properties effectively in hotels. That criteria can be left to local lawmakers. However it seems in most cases people are simply using small-scale property they live in and previously would rent.
No. May I ask, out of ignorance, why that is relevant? I suspect it's not just a "You're not doing anything about it so you have no right to complain," sort of thing and actually something much more relevant to the conversation, like "If you went, you'd see that the deck is stacked against mom-and-pop shops" or something like that. However, I can't guess what you're thinking and would like to know more.
Airbnb is amazing at PR. See their interviews for examples, but in general they've got a wonderful sense for spotting a narrative the media cares about and inserting themselves into it.
New York can go fuck itself. It's insulting to the people that in a time of economic turmoil the politicians are still taking big fat campaign checks from the hoteliers and passing arbitrary bullshit laws that dick people over who are trying to make ends meet. Who the fuck do they think are to even suggest they can come into my home and tell me how "sanitary" it is?
Sorry for the rant, but this is industry after industry, entrepreneurs like AirBNB try to create efficiency and wealth and the establishment comes along and buys off politicians to eliminate the competition.
Democrats hate corporations, Republicans hate the government. Or maybe they just pit us against each other while they all laugh their way to the bank.
If you feel strongly about this, you might want to read Cato regarding licensing for e.g. cosmetologists and taxi drivers. It is the same story -- pretexts about the public safety justify anti-competition laws, whose effects are felt mostly by poor would-be entrepreneurs and the communities who they can't legally service.
The taxi thing seems totally like a pretext, but cosmetologists engage in a lot of quasi-medical stuff that seems reasonable to regulate. Perhaps I'm mostly thinking of spas and their ilk, and honestly I'm probably mostly just thinking about the rise in community-acquired MRSA (which, to be fair, has not been shown to be driven by cosmetological practices at this point).
Is it really necessary for the government to regulates?
Why not have voluntary associations that people can join but have rules on business? If the organization have honest inspectors, their reputation will show. Businesses will pay for that kind of exclusive brands. Risk-averse customers will flock to it.
If you have an organization that everyone must join by law to practice certain field, then it could be a breeding ground for corruptions. The government is now intertwined with a professional organization, and then create an illusion of safety which none shouldn't exists.
Associations that has been around for years will have more trusts than new associations that pop up. The new associations will then prove that they're not kooks that been rejected by incumbent associations.
Why not have voluntary associations that people can join [..] their reputation will show
This is an illusion. Are you going to check with what association your taxi driver is registered and have you done the necessary research upfront to judge the credentials of the association? If a taxi stops and it's from the 'wrong' association, but you know it's relatively cheap, are you going to send it away and wait for the next one?
Especially services that an individual uses only very infrequently, such as a taxi, can get away with very poor performance. The businessman will tell everyone that the taxis in StateCapital suck, but a few months later, when he's there again for a one-off trip, he will have forgotten the name of the taxi service that rendered him such a bad service last time. However, commerce in StateCapital is harmed by all the gossipy remarks concerning one of their taxi services (which are remembered as concerning all taxi services in the city). Requiring taxi drivers to be licensed and checked on by the government could very well be a net advantage for all commerce in StateCapital.
Do you check to see if electrical appliances are UL listed?
UL is private company that sets safety standards and tests products that manufacturers voluntarily submit for (and pay for) testing.
Does a small mid-west town have the resources and and expertise to inspect the traveling carnival rides to insure they are set-up properly? Or does the carnival's insurance carrier handle that responsibility?
There are private replacements for coercive regulation that are not theoretical but are actually working.
UL is private company that sets safety standards and tests products that
manufacturers voluntarily submit for (and pay for) testing.
Why do these manufacturers do that? Perhaps just as a lawsuit hedge: they can always claim to have been 'certified by the de facto testing standard', in which case it's the reasonable expectations laid down by the law that drive the interest in this 'independent' testing. I.e.: the government.
Another explanation is that large brand A initially wanted to distinguish itself as 'the safest' and brand B just followed the lead so it didn't seem less safe. When they control a substantial part of the market, others will soon follow. After that, the actual contents behind the logo don't matter anymore. It's a perception-driven protection racket, the actual value of which cannot be determined by consumers. But it doesn't even matter how it comes about: after most of a market sports a certain logo or association, what's to stop that organisation from growing lax and pleasing their clients? There is hardly any room for competition in that market: who's going to start a UL competitor and why on earth would a brand be interested?
Or, the more fundamental question: who tests the testers? How do you know the UL is not theoretical and actually working? Even the government suffers from corruption; I doubt such companies are any better.
> Are you going to check with what association your taxi driver is registered and have you done the necessary research upfront to judge the credentials of the association?
This is a valid point, because people don't always have the time to do detailed research when they make buying decisions. However, with the internet, and with (soon) most people carrying smartphones, this may change. One could easily imagine a registration including a computer-readable logo, that when one points one's phone at it, produces reviews of whether that registration is good or bad.
> The businessman will tell everyone that the taxis in StateCapital suck, but a few months later, when he's there again for a one-off trip, he will have forgotten the name of the taxi service that rendered him such a bad service last time. However, commerce in StateCapital is harmed by all the gossipy remarks concerning one of their taxi services (which are remembered as concerning all taxi services in the city).
Then why not have the city government issue a voluntary registration? Then, if people value it and feel it provides real benefits against being ripped off, they will value that registration.
But compulsory government licenses are if anything more likely to lead to customers being ripped off than protecting those costomers. Consider New York, where a taxi medallion costs $600,000 (source: http://www.reuters.com/article/idUSN3040666220070530 ). Who pays the $600k? Eventually the customers do.
So compulsory government licensing is more likely to lead to me being ripped off than no licensing.
One could easily imagine a registration including a
computer-readable logo, that when one points one's phone at
it, produces reviews of whether that registration is good
or bad.
Which just opens the door to abuse from anyone with an incentive to game the system. This is a complex problem (in the sense of Menken's rule) and probably a fabulous business opportunity if you can find a good way to solve it.
You might have better luck than me. Every month or so I try to solve it and so far each solution runs into one or more of: privacy, chicken-or-egg, incentives-to-use, internet-dickwad, or some kind of abuse from the various players.
> Which just opens the door to abuse from anyone with an incentive to game the system.
Pretending you've got a registration when you haven't is equally possible whether the registration is compulsory or not, so making registrations optional would not cause that problem.
Gaming the system by trying to get people to believe your product/service/company is better than it actually is, is as old as commerce, and societies have developed ways of coping with this which while not perfect, do work well enough that the vast majority of economic actors see it as not in their interest to rip people off.
You'll never get a perfect solution, but what is achievable is one that works reasonably well.
> Gaming the system by trying to get people to believe your product/service/company is better than it actually is, is as old as commerce, and societies have developed ways of coping with this which while not perfect, do work well enough that the vast majority of economic actors see it as not in their interest to rip people off.
I'm not sure that this is true any more. I remember that it used to be possible to find bad—or even just informative—reviews of products; but now it seems to me that there's a ‘conspiracy’ (in an informal sense, not an actual plotting-together sense) between
• providers who have no scruples about packing reviews with spurious praise,
and
• review-collectors who are either
•• less powerful than the providers (in which case they will winnow the reviews to just the good ones to curry favour) or
•• more powerful than the providers (in which case, because power corrupts, they will informally censor reviews for the providers who provide them bribes).
(Trying to find reviews of apartments, as I was doing recently, really drives this point home. Almost no-one reviews his or her apartment unless he or she is really unhappy, and, since it's so easy to do and there's effectively no penalty for it, it's more or less a given that the top reviews for each complex will be posted by staff of that complex.)
Government often regulates when an industry doesn't regulate themselves. Sometimes you need the government to step in because the social cost isn't being borne by the industry.
Not always. Often government regulates on behalf of existing business in order to create barriers around said industry. This way the existing businesses continues to operate while newcomers are deterred. Look at cable tv, cosmology, etc.
> Is there a cosmologist's guild I don't know about?
Yes. Almost every "trade" has one.
Every regulated one does. More to the point, every newly regulated trade had one that helped write the rules that they pushed through the relevant govt body.
> So what are the regulatory rules that apply to cosmologists?
No idea. However, we're discussing whether regulated trades have trade associations and whether those associations are involved in the regulations. No one implied that every trade was regulated, or even that every trade with a trade association was regulated.
Well, the customers should be the ones who regulate industry. In some markets (medicine, food, financial advice, etc), it's very hard for customers to make informed decisions. In other markets, negative externalities are an issue.
I think I can spot if a hotel room is clean or not. I doubt I could tell if the bedsheets had been properly sterilized, or if the shower was cleaned with bleach, but I can carry a sleeping bag and a pair of rubber slippers.
Neighbors will complain about tourists partying till 3am every night, but that could be handled by the cops. They could raise some revenue by fining noise polluters, just like they fine people who break the speed limit.
You raise a valid point. I suspect that professional associations are neither superior nor inferior to government regulation. Perhaps it's best when both exist to the most useful extent necessary, and no more. (I guess that's a trivially true statement; sorry.)
Government is susceptible to lobbying by interested parties (thinking about hoteliers vs Airbnb). Professional organizations are susceptible to antitrust (thinking about Wilk vs AMA) and perhaps to perpetuating the problem they are designed to solve.
Sometimes it might be better to wait and see if a problem arises rather than preemptively legislating it in a way that might do far more harm than the anticipated problem.
Indeed. And not only is it good to wait until problems occur, but it is also good even after a problem occurs to wait to see how businesses and their customers adjust, rather than assume that every new problem needs a regulatory solution.
Once a problem occurs, and gets enough media coverage to drive regulation, it has also achieved enough awareness to become a point of marketing/competition/consumer-activism. That might be enough to control the risk, even without official state inspectors/licensors/bureaucrats. Especially in the modern era of costless sharing/archiving/finding of customer reviews and discussion.
Are you referring to Champagne that can only be called from Champagne if it's from that area? Because it's different from the florist issue. The EU Protected Designation of Origin system was meant mostly to let local producers protect the local and artisan character of traditional products.
Florists probably argued the same thing that most professions that try to round the circle of the guild argue: the profession required special knowledge and for the sake of consumer protection we need to let only vetted people into the group. It's the same argument doctors use - yet I hardly ever meet anyone who questions the need for certification by a professional group or government of the medical profession (for the record I oppose such barriers to entry and advocate putting more responsibility with the consumer).
I was more specifically thinking of the requirements (depending on the country) for certain types of whiskey, beer, and IIRC some grain alcohols. I know the French do the same thing, but never delved into it because wines and cognac and brandy seem to be worlds more complicated.
Yeah probably the same mechanism, it works and is administered on the EU level. It's used for many spirits, wines and agricultural products in the EU. An area close to where I'm from in Belgium even has a type of pie protected that way.
I appreciate your consistency, but you must admit that the consequences of hiring an incompetent doctor are much worse than the consequences of an incompetent florist.
Yes I do. The question is where you draw the line. Once you admit that there are professions where certification / professional associations with legal rights to enforce entry to the profession / licensing etc. are needed or at least a less bad solution than the alternatives, the discussion will degenerate into everybody falling over each other to have their professions declared 'difficult' or 'a risk to public health'.
Of course I choose the florist and the doctor because they're two ends on the spectrum, but where do you draw the line?
Case in point: jacuzzi salesman. Doesn't sound like much of a problem, does it? Couple of years ago there was a show or trade fair of some sort around here where a jacuzzi salesman failed to disinfect the water in his sample jacuzzi. Salmonella developed in it, people walked by (thousands of them) and 10 or so died. Could this have been prevented with a licensing mechanism for jacuzzi salesmen? Probably. Is jacuzzi salesman a bigger health risk than florists? I don't know. Once a florist screws up and sells a flower with a fungus on it or whatever that they could've recognized, there will be calls for 'professional standards' and what not.
Because of this slippery slope, I oppose all forms of registration. But yeah that probably means that there'll be some quacks who call themselves medical professionals. It'll be up to the patient to check if a hospital employs doctors who didn't go to medical school, or the mortality stats of a certain hospital. Let organizations like Consumer Reports find out who are trust-worthy and who aren't. I don't consider that a government job, let alone a job that we can reasonably expect the profession to self-regulate.
"Every decision an interior designer makes in one way or another affects the health, safety and welfare of the public. Those decisions include specifying furniture, fabrics and carpeting that comply with fire codes and space planning that provides proper means of egress. Additionally, interior designers deal with accessibility issues, ergonomics, lighting, acoustics and design solutions for those with special needs."
His prognosis for the general situation doesn't look good: "My colleagues tell me that it would just seem silly to make a fuss over this; it is just not a serious topic. Yes we can't take seriously the idea of legally requiring a college degree to suggest where pillows go, but we also can't take seriously an economist who would focus on such a trivial and obvious point. [...] But if we cannot actually apply that knowledge effectively to obvious cases, what is the point exactly?"
I just recently had a conversation with a friend who does interior design professionally (not licensed though). At first my reaction was exactly - "that's stupid to require license for THAT". However, she made a great point - people confuse interior DECORATORS and interior DESIGNERS. You hire decorators to make certain taste decisions, but designer to design interior from ground up. Designer will make choice whether to put certain important things like, say, lights. I bet, you'd better have someone who understands how much lights your staircase must have.
When politicians say they are "pro-business" many people hear "pro free market" and vote accordingly. They of course really mean "pro-some-specific-businesses-who-lobbied-or-contributed".
If someone gets sick because your last airbnb "customer" contaminated a room or because you didn't realise you served some out of date chicken you haven't signed any legal waiver to my knowledge.
There is one high profile illegal hotelier in NYC who is probably solely responsible for all the media attention and ruining it for everyone else: Hotel Toshi. He's a wannabe actor who was the asian chippendale gag on Conan a few years back. The guy even advertises for cleaning staff and has his own vans and trucks painted with his logo. I found AirBNB unusable in NYC because half the listings were from Hotel Toshi.
Yes, but their lobbyists are working hard on other things, like the complete damn re-regulation of the entire financial industry, at the moment. Whether a handful (hundreds?) of extra mortagees go into foreclosure isn't a big deal for them.
Oh, but it would picture them fighting for the small guy. That's something representatives like. It would be far easier to de-regulate an industry that fights for the small guy, wouldn't it??
If I were AirBNB, I'd be sending this to whichever organization coordinates lobbying for the lending industry to fight the law against this sort of activity. Mortgage lenders have a serious interest in having their customers pay mortgages, if this sort of activity helps them they'd be fools to not support it.
If we're being technical, capitalism != free market, though the terms are often used interchangeably. Capitalism means the rule of those with capital (in this instance, corporations) while a free market is a system which guarantees the free exchange of goods.
To me, this seems fine when rare. So let's say I rent out a room once a month or something along those lines - no big deal. If I'm treating it like a real b-n-b, though, it seems like I'm engaged in some real commerce that is probably regulated. Presumably Airbnb behaves agnostically on this issue, allowing the responsibility to fall to the property owner?
I'm delighted for the specific homeowners being discussed here, but concerned about the general case.