Monday, July 21, 2014
Thomas Friedman had an op-ed in Sunday's NYT about the sharing economy. Relevant to this blog was one of the closing paragraphs in the op-ed, which read:
How fast [the growth of the sharing economy] happens will depend, in part, on regulators and tax collectors in different cities — not all of whom like people turning their spare bedrooms into hotels or their kitchens into pop-up restaurants. The sharing economy can complement the existing one, and make the pie bigger. But the bigger the Ubers and Airbnbs get, the more incumbents will resist them. This will be a struggle between the 20th-century economy and the 21st’s.
Friedman is right; the future of the sharing economy is, in many ways, governed by how local governments respond to the changes. It is not, however, entirely a division between the 20th and 21st centuries; rather, the kinds of issues cities are forced to balance in regulating the sharing economy go back to very pragmatic--some might even say 19th century--public health and safety concerns.
For instance, in some fashionable neighborhoods, so many people are subletting on Airbnb that critics argue rents now incorporate the potential for illegal subletting into the cost of the rent. Even if such critics are not accurate, the hyper-renting on Airbnb and similar platforms does have substantial effects on particular apartment buildings and on the character of certain neighborhoods.
Similarly, taxi drivers have not only been subject to regulations to protect their industry; rather, regulations on taxis ensure safety and much more. For instance, taxis often must maintain environmental standards for their vehicles that are specific for fleet vehicles. Sharing economy upstarts, like Uber and Lyft, are not subject to those fleet standards.
And so, I would argue it is not accurate to say that the regulatory hurdle the sharing economy faces is the 20th century against the 21st. Instead, I would say that the issue the sharing economy faces is how to provide 21st century flexibility within the parameters of public health and safety we came to expect in our urban spaces in the late 19th century.
This change will come, but it will come in fits and starts, and primarily through experimentation in governmental regulation. Interestingly, that regulation may come to rely, as Friedman writes elsewhere in the piece, on the perception of "trust" that a sharing economy vendor maintains through rankings and ratings. If it were to come to that, such a change would alter the very idea of regulation and radically decentralize it. Would it be regulation any more? Where would liability flow in a regulatory state of private opinion? These are big questions, ones I am just beginning to grapple with in a new article, and ones where I think the local government and land use legal academy could offer real assistance to local governments in the coming years.
Stephen R. Miller