Over the last several years, there has been an explosion of innovation in the hospitality and local service industries; what is now commonly known as the sharing economy. Organizations like Airbnb, Vacation Rentals by Owner (VRBO), HomeAway, Uber, and Lyft have created a new and exciting way to execute the incidentals of overnight business trips, impromptu weekend getaways, and family vacations. These companies, in their immensely competitive niches, have filled a gap in local economies that traditional taxi services and hotels/motels have been unable, or unwilling, to accomplish. Not only do they provide a service to travelers, but they also provide an avenue by which those who have unused capital, namely second homes, investment properties, and extra time, can make use of that money to better their circumstances.
And isn’t this just the glory of the free enterprise system? People with unused time and property serving the unmet needs of others while improving their own lots in life: brilliant! People helping people; the most moral possible outcome of any relationship between men, and a seemingly perfect opportunity for local and state governments to exert authority over the commoners.
Despite the lightning-fast growth of the sharing economy, the regulators are catching up. Across the US, and frankly the world, the most public-service-oriented and naturally developing sector of modern economic growth in recent history is being demagogued and regulated into oblivion by the most self-serving and least efficient actor in every economy: the government.
In my home state, Virginia, the General Assembly has burdened transportation network company (TNC) drivers, e.g. your friendly neighborhood Uber or Lyft contractors, with personally maintaining $1 million in liability insurance. This is eight times the requirement which taxi drivers in the Commonwealth are expected to maintain by the Virginia Department of Motor Vehicles. Similarly, the 2017 Virginia legislative session saw the passage and signing of Senate Bill 1578, allowing local authorities to enforce property registration as well as provisions which strictly regulate the ability of property owners to rent their private property to what essentially amounts to paying house guests.
Senate Majority Leader Tommy Norment, who has reported owning stakes in at least two Virginia hotels, suggested the bill was supported by a “broad coalition including Realtors and bed-and-breakfast and tourism associations.” To put it another way, the direct competitors to the short-term rental movement were supportive of the Senator’s effort to restrict said competition. Difficult to imagine, I know.
What’s more concerning, the charge against the sharing economy is being led by Republicans, albeit the Progressive wing of the party. These Progressive Republicans have stated that the local and state governments need to protect communities from transient occupancy; of course, the reasoning behind the fear of short-term rentals and ride sharing is always vague and never supported by more than whining platitudes.
Enough of this nonsense. It seems that legislators – no matter the party – are ready to part with the free market and step in where they are not wanted. How is this not American Guanxi?