Businesses would often prefer to shut out new innovators through regulation than compete with them. For example, taxi companies across the globe clamor for government to regulate the ride-sharing services of Uber and Lyft. These anti-competitive urges hurt economic growth and constrict liberty.
This process is playing out today in New York City, where the City Council met to discuss Airbnb and the home-sharing it facilitates. Airbnb is a website that connects travelers with hosts who want to let out a room or living space short-term. Many Airbnb hosts rent out a single room. Others rent out their homes while they’re away. Some use properties only for short-term renters.
Airbnb presents a fine example of the benefits of market innovation. The site makes possible millions of transactions that would not otherwise occur. Living space that would otherwise lie dormant is put to good use and both parties benefit. Hosts get a little extra to help with the bills. And travelers get a cheap stay and an experience that sterile hotel rooms can’t provide.
Despite its benefits, Airbnb has drawn criticism. Hotels complain that Airbnb facilitates “illegal hotels” that skirt regulations. Tenants worry that their landlords have a financial incentive to evict them and use Airbnb to rent the space as a short-term rental. Some fear that Airbnb increases rents by reducing the overall housing stock because some landlords opt to use housing for short-term rentals only. Others worry about safety for both guests and landlords.
These concerns don’t justify regulation of ordinary people’s homes. If hotels are worried about unfair competition, government should put them on the same playing field by deregulating them. And worries about higher housing costs reflect a misunderstanding of the economics at work. After all, Airbnb actually presents one way to offset the cost of housing. Airbnb also attracts visitors who otherwise might not be able to afford travel. As these new tourists inject more money into the local economy, the whole community benefits. To deal with safety concerns, Airbnb has a rating system for both hosts and guests, which encourages good behavior.
Beyond these policy advantages, governments shouldn’t interfere because property rights and personal liberty are at stake. An individual’s control over their own home borders on the sacred. Voluntary activities that occur in that hallowed space deserve to be free of government. Renters and landowners have a right to invite into their homes whoever they wish. The choices of whose home to enter and who to let into your home are choices that belong to hosts and guests–not government bureaucrats.
Laws regulating Airbnb’s actual service would also raise First Amendment concerns. Airbnb’s business, after all, is premised on communicating information. Governments have a constitutional obligation not to interfere with the right of a website to communicate to its users.
The debate over whether Airbnb and its users should be regulated is an especially important one in NYC, where the cost of living has skyrocketed. Airbnb has 25,000 active hosts in the city. 90% of the hosts rent out rooms in their own homes or apartments. Airbnb has connected over two million guests with hosts in NYC. These guests typically pay far less than they would at a hotel, inject money into the local economy, and help hosts offset high housing costs. If NYC respects New Yorker’s rights and the laws of economics, it should let Airbnb and home-sharing thrive free of regulation.