The battle over Airbnb is taking center stage at the Democratic National Convention. The fight is emblematic of the dispute between Republicans and Democrats over who should steer the economy: government regulators, on the one hand, or consumers and business innovators on the other.
Democrats are attacking Airbnb and similar Internet sites that enable people to earn cash renting their homes out. Senator Elizabeth Warren and several like-minded lawmakers are calling on the Federal Trade Commission to crack down. They’re determined to regulate anything and everything. They claim to be for the little guy, but they’re protecting a rigged economy that favors hotel unions and the real estate industry. To heck with the budget traveler who needs a temporary place to stay for less than a pricey hotel or the home-sharer who needs to make extra cash.
Airbnb is fighting back, running ads defending its service. Meanwhile, in New York State, Governor Andrew Cuomo is still mulling over whether to sign a bill that would make it illegal for most New Yorkers to advertise their apartments on the sites.
And in California, Airbnb is being pummeled with local regulations in Los Angeles, San Francisco, and Sacramento. Visitors to Disneyland used the short-term rentals until the city of Anaheim banned them entirely in January.
The attack on Airbnb is an example of pro-regulation politicians depriving consumers of choices and impeding start-up industries. For decades, politicians from both parties have piled on regulations. But Donald Trump declared war on excessive regulation during his GOP presidential acceptance speech last week, calling it “one of the greatest job killers of them all.”
Airbnb is now used by people in 34,000 towns and cities in 191 countries. In New York City, for example, it is heavily used by women over sixty who rent out their homes to make ends meet, allowing them to stay put after retirement or the death of a spouse.
But Dems like Warren say Airbnb drives up rents. How? Renters who can earn cash a few days a month on their place can manage to pay higher rents. Warren and other senators wrote to the FTC last week urging an investigation of Airbnb’s impact on “the cost of housing in our communities.” The federal government has no business interfering with local housing prices. Read the Constitution, Senator Warren. Nothing in there on that.
New York’s Attorney General, Eric Schneiderman, parrots Warren’s argument about Airbnb pushing up rents. Schneiderman has the authority under state law to intervene, but common sense is another matter. Does he really want to tell an elderly lady she can’t rent out her apartment because New York’s affordable housing shortage matters more than her need to make enough money to stay in her home?
Schneiderman even suggests that Airbnb brings an “influx of out-of-town visitors upsetting the quiet of longstanding residential neighborhoods.” In New York — The City That Never Sleeps?
It’s a typical case of politicians targeting a beautifully disruptive industry in order to defend the status quo. Over-regulation is destroying growth in the U.S. by discouraging innovators from even starting companies.
The White House conceded last week that growth for 2016 will stay at an anemic 1.9%. That’s less than half the rate during Reagan’s presidency or Bill Clinton’s best years , and well below the rate needed to get America working again. This horrible news provoked not a murmur of concern from Democrats.
In fact, Obama doubled down on his defense of regulations last weekend with vague platitudes about protecting the public.
The gravest harm done by regulation is not time and money squandered on compliance, but rather the forfeited opportunities — companies never launched, technologies never invented, jobs never created, and products consumers will never see. Uber, the popular taxi-alternative, narrowly escaped destruction at the hands of the taxi industry and its elected henchman. Fortunately, Cuomo — unlike many Democrats — appreciates Uber as “one of these great inventions” in “this new economy.” Cuomo said “it’s offering a great service for people and it’s giving people jobs.”
Let’s hope Cuomo takes the same enlightened approach to Airbnb. And other Democrats see the light.