Have you tried Airbnb to find a place to stay during your summer travels, or used Uber to find a ride? Whether you have been able to use the accommodation booking site or the ride sharing app depends on where you tried. If you want to rent a room in someone’s apartment or house in New York City for your long-weekend trip, you cannot. The hotel industry there successfully lobbied the municipal government to avoid competition from Airbnb, and it is now illegal to rent a room in your home for less than 30 days. If you live in Calgary, my home town, you cannot use Uber, at least yet. The company has tried to break into the city’s market for months but is facing regulatory hurdles, such as $78.34 minimum charge for a sedan or limousine trip. Uber has similar obstacles in the city of Vancouver. (See the Calgary Herald article here).
Like the Montreal landlord whose tenant had sublet his apartment using Airbnb during a music festival (see the story here), you may think that by using regulations to effectively ban these Internet-enabled new services the government is protecting you from unscrupulous renters (or tenants) and unsafe drivers. If you do, you are mistaken. By regulating against companies like Airbnb, Uber, and others like them, the government is violating the individual rights of their owners and their customers and thus harming their lives.
By preventing technology-enabled new markets for accommodations and ride sharing from operating, the government is violating the companies’ and their customers’ right to liberty and property. With government regulations like those above, buyers and sellers cannot freely trade by mutual consent for mutual benefit. You need accommodation or a ride and connect through the Internet with someone else who can provide them for an agreeable price—why should the government restrict your ability to perform such a transaction? Government regulation limits your and the renter’s or the ride provider’s ability to achieve the values you choose and thus harms your lives.
The ability of the sellers to build a reputation through customers’ online reviews and for the buyers to assess potential sellers makes these technology-abled markets inherently safer, for both parties, than any government regulation can. As an illustration of the beauty of free markets, for example, bad drivers or apartment renters will not be able to get business and will be quickly weeded out. And the solution for landlords whose tenants sublet apartments is not banning of Airbnb but writing a lease with a clause that prevents subletting and using the existing laws to enforce it. Calling for banning of a technology or a product because there are those who abuse them is like banning the sale and the use of kitchen knives because they can be used for violent purposes. Such a regulatory force is completely unnecessary because there are laws already to protect us against contract violations and criminal acts.
Those businesses, such the hotels in New York City and licensed taxi companies that lobby government for protection against innovative, new types of competitors, are also guilty of violating our rights. They are asking the government to use force to prevent markets from operating freely, without realizing that free markets are also in their own long-term self-interest. If a business firm—including hotels and taxi companies—wants to maximize profits in the long term, it must innovate and grow. If it embraces the principle of government protectionism instead of free trade, it curtails its own incentive and ability to innovate and create better products and services and to develop new types of business.
Free markets and competition that drive innovation and wealth creation—exemplified by companies like Airbnb and Uber—represent win-win situations. But government must make them possible by bringing an end to the regulatory state and protecting our individual rights instead. And we should tell this to government at every opportunity we have; by silently consenting to government violation of individual rights, we perpetuate it and curtail our own flourishing.