Monday, 22 September 2014

Who? Whom? Quo Vadis, Air BnB?

Karl Marx and Saint Peter make for odd quotation bed-fellow, but a story today in Le Figaro about Air BnB brings both simultaneously to mind.

Recall, Marx in describing the political history of the world summarised by saying that one can understand any events by asking "Who?" and "Whom?" Decisions which are often confusing are answered by determining who is going to be controlled and by whom.  

The Le Figaro article describes recent actions in New York, pushed by a vague coalition of "friends, neighbours, activists, and elected officials" to block the online apartment-sharing site Air BnB.  Citing alarm at the lack of affordable housing in the city and concern about poor rental services, a video has been distributed mocking an Air BnB advert in which prosaic discussions of the joys of co-location are juxtaposed against images of filthy refrigerators, mousetraps, and a faceless guest scratching her legs due to "bed bugs."

From the "about us" post at ShareBetter.org:
Far from being a harmless service where New York City residents can share their homes with guests to the City, Airbnb enables New York City tenants to break the law and potentially violate their leases, it exacerbates the affordable housing crisis in our neighborhoods, and it poses serious public safety concerns for Airbnb guests, hosts and their neighbors.
According to the analysis of Le Figaro, in fact, about three million dollars for the campaign have been raised by local New York city hoteliers.

Hmmmm....

In other words, the owners of various hotels in Manhattan want to block Air BnB because they are concerned that guests will be attacked by bed bugs.

This is odd, given the famous and on-going outbreak of bed bugs at.... New York City hotels.  There is a web-site, in fact, dedicated to listing outbreaks, and a quick look reveals that in just the last month, hotels including Hilton, Hilton Garden, and multiple infractions at various Omni Hotels have been reported.  Don't see a single Air BnB listing there.

But yes; hotel operators are concerned about our health and safety.

It seems to me that they might be better served if they used the three million to try to clean up their own hotels rather than to use the cudgel of government power to protect their cartel.

And that's what this is really about, isn't it?  It's not about housing costs (according to a statement from Air BnB, there are 20,000 or so listings in New York, in a housing stock of three million units - not enough to have any real impact) or about tenants breaking their leases.  It's about the use of government power to protect bounties collected through rent-seeking:

Rent seeking is an economic term in which a connected person or industry "investes" in political lobbying to increase its share of existing wealth without creating wealth.  The hotels aren't creating value; they are defending their share of the existing pie.


A similar situation occurred in Paris this summer, where taxi drivers had multiple nasty (at times violent) strikes to block the infiltration of various voitures de tourisme avec chauffeur into their bounties.  Of course, the reasons given were that VTCs are 'unregulated,' and therefore 'unsafe.'  But the real reason is that Paris, like New York, severly restricts the number of licences to operate.  This has the effect that a hack licence is extrememly expensive - and thus valuable - to those who can get them.  In Paris, they are allocated for life, and are then sold at retirement, often for hundreds of thousands of euros.  Medallions in New York are reputed to be worth a million US dollars.

I find it less than convincing that, with these economics, the drivers are too concerned about the quality of my experience in a VTC.  I've used Uber, and the experience was hardly Danny DeVito driving me recklessly around Paris in a filthy, dangerous car.

We're often told we need regulation, and without it, we would be at the hands of con men and thieves.  To a point, we do need regulation - and no one I know advocates for anarchy.  But allownig hoteliers and cab drivers to set up cartels to defend rent-seeking is not for our good or protection.

Maybe one day, Bill del Blasio and others who bleat about regulation will reckon this out. 

I'm not holding my breath.

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