Last week, the State of New York banned rentals of unoccupied apartments for fewer than 30 days on Airbnb. The move was not without controversy, resulting in a protest in front of Governor Cuomo’s office, immense public debate and a federal lawsuit citing “irreparable harm” to the company.
It is not hard to see why this move would do such harm — not just to the company, but also to the millions of travelers and hosts — largely young people looking to travel on a budget and make some extra money to afford crippling rents. And yet, it is the attitude of the framers of such laws that is the most troubling. When asked about how the law would affect individuals renting their homes to make ends meet, New York Assembly member Linda Rosenthal brushed it off with a naive statement about how “tourism will always increase,” and then blaming rising rents on shadowy commercial operators buying up properties by the dozen to rent on Airbnb.
The problem with this assertion is that it is just patently false. Less than 10 percent of Airbnb listings in the United States are commercial properties, and a host in New York earns approximately $5,000 a year from renting their property on the platform. That is good money in an era when rents in large cities regularly lurch upwards of $1,000 per month. It does not help that the law appears clearly designed to help the hotel industry stave off any form of competitive disruption that might help consumers travel more affordably. Now, other cities are considering similar de facto bans on the service, ostensibly to maintain “quality of life” or keep housing affordable.
These moves are wrong, stupid and self-serving. However, they are the latest in a long pattern of major cities aggressively fighting against disruption from the tech industry — specifically the app-enabled “sharing economy.” Earlier this year, the burgeoning tech hub of Austin, Texas passed prohibitively harsh regulations on ridesharing services, prompting both Uber and Lyft to withdraw services from the city. Nevada had banned the use of Uber for a year until legal permission was granted again in fall of 2015. Germany, France and Spain have all clamped down on ridesharing in the past few years. And San Francisco, the Mecca of the tech world, has forced Uber and Lyft drivers to obtain business licenses for $91 per year while also enacting laws to punish Airbnb for listings similar to those just banned in New York.
As with Airbnb, concerns over Uber’s and Lyft’s effects on cities are widely misplaced. Ridesharing services can allocate resources more effectively, resulting in lower congestion, reduced drunk driving and cheaper options for commuters across the board. However, proponents of such laws seem to disregard the data while enacting these regressive laws — almost as if they were trying to please multiple interest groups.
Cities like San Francisco and New York have become booming centers of the 21st century because they have been hosts to companies creating disruptive innovations in technology and business models. While that rise has been accompanied by serious problems such as gentrification, skyrocketing rents, an increase in inequality and potentially shady business practices, the answer to these problems is not to kill and stifle innovation with idiotic regulations.
Instead, managing the perils of this new prosperity must include elements of the same approach that disruptive and innovative companies have taken in their paths to success. That means using data-driven solutions, listening to multiple stakeholders and taking bold, decisive and intelligent action. Aggressively increasing the housing supply and reducing onerous regulations on taxis might be a good place to start instead of trying to kill services that are actually serving consumers well.
Tech hubs tend to be seen as centers of progressive, forward-thinking ideas and policy. The largely liberal and Democratic governments of these cities ought to embrace that same ethos and put an end to government overreach that serves little purpose except to line the pockets of hoteliers and prevent taxis from providing decent service.
Contact Arnav Ravi Mariwala at arnavm ‘at’ stanford.edu.