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Regulate Don't Kill
Is New York About to Kill Airbnb?

Airbnb may be unable to operate in New York State if Governor Cuomo signs a bill passed by the New York State legislature earlier this week. The FT reports:

The San Francisco start-up has waged an eleventh-hour campaign to thwart the legislation, offering to impose a mandatory host registration system to help the state keep track of renters and a “one host, one home” rule to curtail the challenge it poses to New York hoteliers.

Mr Cuomo must decide whether to sign the bill by the end of next week. If it becomes law, it would impose fines of up to $7,500 on any host who advertised short-term accommodation through Airbnb.

Linda Rosenthal, the state assemblywoman who co-sponsored the bill, told the Financial Times that Airbnb’s concessions were “absolutely not” enough to address her concerns.

“The lawbreaker does not get to make the law, the lawmakers do,” Ms Rosenthal said, adding that Airbnb was reducing affordable housing stock in Manhattan. “The most hypocritical part of this is that Airbnb says they are really looking out for the average New Yorker who needs to make ends meet.”

Airbnb isn’t an unalloyed good, to be sure. The service might contribute to rising rent costs even as it makes higher rents more affordable for Airbnb-using landlords. But overall, Airbnb makes travel easier and more affordable, and puts some extra cash into property-owning and property-renting people’s pockets.

In any case, services like Airbnb aren’t going away. The information revolution is going to upend industries like hotels one way or another. Rather than running around trying to preserve the old system, lawmakers would be smarter to think about how to modify regulations to allow new companies and business models to flourish while also protecting users.

This doesn’t mean that states should avoid regulations altogether. Just as at the beginning of the industrial revolution, there are surely sound ways for the government to get involved in shaping burgeoning industries. But trying to apply blue model thinking to post-blue problems doesn’t help. By threatening Airbnb, New York State would be giving in to the hotel lobby and misguided neighborhood activists. We hope Governor Cuomo seizes this clear opportunity to use his veto pen.

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