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Blue Cities Declare War on Popular Services


Two popular start-up companies that save people money and make their lives easier, Airbnb and Uber, are headed for the chopping block in two of America’s biggest cities.

Airbnb is a popular website that cuts down on hotel costs by matching travelers with people offering to rent out space in their home or apartment; it now finds itself on the losing end of a New York court battle. An administrative law judge has decided that an Airbnb client violated New York state administrative code by hosting a lodger for less than thirty days. The client has been hit with a $2,400 fine—a ruling that will strike fear into the hearts of thousands of other Airbnb users in New York City.

Uber, a smartphone app that makes it easier to hail a cab and pay the fare by credit card, has suffered through its own legal battles with NYC. Now it is at war with DC, where the Taxicab Commission’s new regulations will effectively prevent DC residents from using the app. A requirement that payments be made through taxis’ “on-board meter system” would harm Uber’s software-only services, and a bizarre new set of regulations, including a ban on cars under a certain weight and a demand that companies like Uber share their “ride data” with the DC Taxicab Commission, might make Uber’s operation in the capital impossible.

There are two main problems with this Big Blue impulse to regulate so many services. The first is that it harms the ability of entrepreneurs to deliver cheap and efficient services that people like. The more we slap down new businesses like Airbnb and Uber, the more our budding entrepreneurs are going to hesitate before putting money and time into ventures that may be doomed to an untimely death by regulations.

The second problem is that it creates laws that neither service providers nor customers are capable of understanding. In the case of Airbnb, New York City’s zoning and administrative codes were so numerous and confusing that the client hit with the fine had no idea that he was breaking the law simply by renting out his room. A legal system in which the average citizen can’t make sense of when or how he or she is doing something illegal is not only unfair but a serious detriment to quality of life.

America is not going to create the service jobs it needs to stay vital in the post-industrial age by making it hard for small-time entrepreneurs to succeed.

[Yellow taxi image courtesy of Shutterstock]

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  • jeburke

    I don’t have any opinion about the substance of the particular issues facing these services in NYC and DC, but it strikes me that the regulations involved have little to do with the Blue Model. These cities, like virtually all other municipalities have been regulating rooming and lodging houses and imposing zoning restrictions on land use since they were founded. And who can operate what taxis under what circumstances have been the subjects of local laws and regs since the first horsedrawn hacks plied their trade on lower Broadway.

  • jeburke

    While I have no opinion about the merits of these particular issues, I think the problems faced by these companies are not attributable to the Blue Model, as I understand it. NYC, DC and virtually every other municipality have been regulating lodging and rooming houses and imposing restrictions on property uses through zoning since they were founded, and dictating who can operate what taxis under what circumstances since the first horsedrawn hacks plied their trade on lower Broadway.

    • Corlyss

      Perhaps but most of those laws are ways merely of advantaging the government’s constituents at the expense of both start ups and citizens. IT’s really an extension of patronage: the favored groups get the government to muscle in on what would be legitimate competition to exclude it. In return, money flows from the favored groups to the toadies in office. The incestuous relationship between the DC government and the Mayor’s pals in the hostel industry to provide housing for homeless people is a scandal about as rotten as they come. Of course, nothing is done about it.

      • jeburke

        I don’t doubt that laws and regs of all kinds, including these, are an endless source of potential patronage, corruption and unfair application, not to mention bad public policies. However, some municipal government functions long preceded the “blue model” and are among the local government activities that just about everyone would regard as necessary and legitimate. For example, running a fire department and promulgating a fire safety code are certainly legit. Smothering property owners and businesses in overzealous or nitpicking fire codes, though, is bad policy. And taking bribes in enforcing the code or requiring X material to generate business for a crony are corrupt.

  • dan

    “A legal system in which the average citizen can’t make sense of when or how he or she is doing something illegal is not only unfair but a serious detriment to quality of life.” –are you kidding? That has been the situation in the United States for years. Haven’t you seen comments that the average citizen commits two felonies, on average, every day? Possibly an exaggeration, but when laws are constantly added and almost never removed . . .

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