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.

8 COMMENTS

  1. The problem with Uber is that taxi drivers have to pass through all sorts of tests, regulations etc. that Uber does not. So they are right in being angry. They should just not direct that anger against Uber.

    • I don’t think the government regulation is “the problem with Uber”–it’s the problem with the government and the taxi industry. Instead of settling under the yoke of regulation, the taxi industry could a) defend itself against the regulatory pressure; b) develop innovative new business models like Uber.To ban Uber and thus to prevent it from providing the value it does, is a major violation of individual rights. Unfortunately, Canadians tend to take it lying down.

      • Instead of performing the established taxi industry tries to block new entrants. For example:
        – decades ago in Calgary AB, a service whose drivers would help the customer get their packages into their residence
        – in Victoria BC a service oriented to people with mobility challenges.

    • I point out that taxi drivers are a rather variable lot, often speeding, sometimes blocking handicap parking so their customer can get in and out of a booze-peddling store more quickly.

      A hotel in Seattle had to limit which taxi companies could use its driveway, after customers complained.

      My position is that the regulated taxi industry is not providing what the regulations are claimed to ensure – quality service.

      • And recently a company in the taxi cartel paid Google to list it first in a search for a new competitor, falsely using the new entrant’s name as the title of their ad.

        That’s what you get when people are focused on manipulation – as economic regulation fosters – instead of on performing for honest customers.

  2. Wow, that is a huge loss to Calgarians. I use Uber in Toronto, NY, Washington, Boston, London, etc. It is fantastic. Reduces CO, CO2 and NO emissions by ensuring that cars with running engines are actually moving people, rather than sitting. Reduces the need for private autos. Delivers clean, reliable and courteous transportatiion. Allows reliable calculation of pickup time. Reduces time and energy lost trying to find oickup locations. Enables precise instructions to be delivered to the driver without effort. Allows cab/limo drivers to make a decent living. I have never used a regular cab since and wherr Uber is available as the alternative. [PS I have no coomercial connection with Uber. Its just an amazing customer experience. The difference between Fedex/Ups and Wells Fargo/Pony Express.

  3. United Airlines has given Uber a boost:

    http://www.aviationtoday.com/av/commercial/United-Airlines-Employs-Uber-to-Simplify-Customer-Travel_82902.html?utm_source=dlvr.it&utm_medium=twitter&hq_e=el&hq_m=2935483&hq_l=33&hq_v=6750c2abef#.U_tLLE_n_ox

    (As an aside, it’s another airline attempt to ease the ground portion of the trip. Airlines sometimes try that, probably partnering with an experienced ground operator.
    A funny case was Pacific Western Airlines air freight between Seattle and Vancouver, a route on which airplane cargo capacity was limited. An experienced ground operator ran three round trips a day under the PWA logo. Quite efficient in the days before Border Bureaucrats really slowed things down – terminal to terminal, bonded to go through the border without inspection, one driver shift per round trip.)

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