New regulatory action for home sharing is bad policy for taxpayers and is harmful for tourism.
By: Jon L. Pritchett
An industry lobbyist who is also a member of government and is proposing government action that would affect his or her industry, is clearly conflicted by interests. In fact, it would be hard to find a better example of a clear and direct conflict of interest.
By proposing government regulatory action against the home-space-exchange platforms, like Airbnb and their users, Biloxi City Council President Kenny Glavan voluntarily put himself into such a conflict. In addition to his government position, Glavan is also president of the Mississippi Hotel and Lodging Association and an employee of a Biloxi Hotel and Casino. But putting all of the conflicts aside, his ideas are just not good public policy.
Uber, Lyft, Airbnb and other companies that use mobile platforms to enable people to exchange goods and services are serving an important role in our economy – one that has played out for centuries – creative destruction.
Trying to regulate these companies in ways analogous to taxis and hotels limits the innovation of all competitors and leads to regulatory capture, where companies are rewarded more for their relationships with policymakers than for their relationships with customers. Airbnb already has major financial incentives for protecting consumers and behaving well – it’s called the free market. In the mobile/digital world, where consumer rating information is ubiquitous, reputation is everything. In short, it is in the best interest of Airbnb and other home-space-exchange platforms to ensure consumers and providers are not harmed. In fact, it’s in their best interest to ensure the experience is enjoyable.
Providing enjoyable experiences for constituents through the short-term rental industry has been good for Biloxi’s tourism economy and for other locales across the state. According to data from Airbnb, more than 5,000 guests booked stays with homeowners in Biloxi in 2017. Those homeowners earned over $760,000 in such transactions. Statewide, more than 50,000 visitors stayed in roughly 1,300 homes across Mississippi last year, generating more than $6.4 million for homeowners and who knows how much more for local businesses where tourists spent money on meals, shopping, and other things.
It is understandable why people working in the hotel industry are upset by this disruption and by the fact that these platforms and their users are not governed by the same regulatory burdens of the hotel industry. The same can be said of the taxi industry. The incumbents in these industries have paid a regulatory cost. Rather than trying to impose old regulations on new, innovative, customer-focused players, we should consider deregulating the existing industries so that competition is enhanced and innovation is incentivized. The way to achieve this is through the free market. Writing new regulations and trying to enforce old ones encourages cronyism.
If we want Mississippi to grow and prosper, we’ve got stop allocating so much of our resources to lobbying and favor seeking. We need those resources in the private sector, where customer-based innovation thrives. That’s the only way to get long-term, sustainable, economic growth. That’s how Mississippi’s economic pie gets larger. Without it, we’re just fighting for the pieces – and those with the entrenched relationships among the political class will always get more.
This column appeared in the Sun Herald on August 12, 2018.
