There seems to be a pattern emerging in all of these 'disruptive' business models, whether it be Bitcoin (banking), AirBnb (hotels), or Uber (cabs). We look around and see these industries burdened by regulation, which tends to create entrenched players and which seem to us to be inefficient. So we create similar peer-to-peer equivalents, only to start rediscovering the reasons for all those regulations in the first place. I would argue that one reason mature industries seem inefficient to us is that it's been so long since we've encountered the problems the regulatory 'inefficiencies' were meant to address, that we've forgotten why our ancestors put them in place. Peer-to-peer is not a new idea, it's how things worked back before we started using government to solve the problems inherent in the peer-to-peer model.
That is an absolutely terrible lesson to draw from this episode.
First and most importantly, Airbnb and Uber are not disrupting industries burdened primarily by consumer safety regulations; they are disrupting industries burdened primarily by barriers to entrance that are designed to direct economic rents to politically favored actors. Huge difference.
There is no plausible 'consumer protection' story for preventing licensed livery cab drivers from picking up curb hails, whether on the iphone or otherwise. The law is there to protect the incomes of people who buy cab licences.
There is no plausible 'consumer protection' story that would explain why building codes for permanent residence are not good enough for temporary residence as well. The law is there to protect hotel operators from vacation rental competition.
So let's not compare Bitcoin with Uber and Airbnb, because they are completely different animals.
Bank security regulations, OTOH, ARE designed to protect consumers, although I'd argue that they're mostly unnecessary in practice. Legitimate banks don't get hacked because there are billions of dollars at stake for the banking institution, and their business literally depends on their ability to secure payments. The incentives are there with or without bank regulations.
Bitcoin sites, on the other hand, regularly get hacked because they are fly-by-night operations written by idiots who are probably also trying to steal from you. It's the fake-money equivalent of using www.send-monie-through-me.co.in and then being surprised when you get ripped off.
Bottom line: there is nothing wrong with regulation designed to protect consumers from actual threats. There is everything wrong with regulation designed to protect business from competition. The latter is what needs to be 'disrupted'.
Claiming hotel regulation has no benefit to consumers is simply not true. Consider the perspective of a resident of San Francisco (like me). SF has a very limited amount of housing. We can debate all day about ways to fix that and impediments to building more (and more affordable) housing, but the simple facts right now are that there are a LOT more people who want to live in SF than there are housing units.
Additionally, there are a lot of tourists that visit SF. Those two demands for places to sleep, from tourists and residents, are at odds. The price you can charge for a hotel room in SF is substantially greater than what you can charge on a nightly basis in stable rent.
So what we're seeing happen in SF is people who have rental units that would normally be on the rental market are now pulling those off the rental market and putting them on the AirBnB market, which serves tourists instead of residents. Because frankly, why wouldn't you? If you can rent your place for $200/night to tourists you can make a hell of a lot more money than you can renting to someone for a year.
The hotel regulations aren't only to help hotel consumers, they're to help the renters too. Now, you could argue the natural market economics should just play out and the city should allow as many hotels to exist as the market will support. But that's not a city I want to live in. I value prioritizing housing for residents instead of tourists.
The problem you described has a very simple solution. Grant more permits to increase the number of brand new housing units added to the market each year. The rate at which SF adds housing units given demand is absurd. In fact, you'd probably have many more small business opportunities in SF if the city were willing to add residential units faster.
Which is why the financial district was wiped off the map during the 1989 earthquake, whereas lower units such as those in the marina survived without problems?
The Marina was wiped off the map in the 89 earthquake. It's built entirely on landfill and suffers from terrible liquefaction. The buildings there suffered bad structural damage and many people who lived in the Marina at the time moved elsewhere because of all the damage, making room for all the yuppies that took over that neighborhood.
So long as the foundation is bedrock, there is nothing preventing the building of highrises in San Francisco. We have the technology.
There is actually tons of demand in silicon valley but development there is mostly illegal. Mountain View recently rejected Google's request for mixed use zoning in the Googleplex which IMO is just gratuitous nimbyism (it's not even in anyone's back yard!). This is probably related to so many silicon valley types living in SF instead of anywhere near their work.
Thank god they aren't building more housing in SF - a temporary fix (b/c eventually you'll run out of housing again) to a non-problem. The NewYorkification of San Francisco would ruin the city.
You are literally arguing for the destruction of the planet when you argue against density. More people living in a smaller space is much more efficient, and therefore less polluting energy.
San Francisco might be "ruined" by your definition, but how is it any of your right to tell people what they can and can not build on their land?
> You are literally arguing for the destruction of the planet when you argue against density.
Sure cramming people in like sardines makes it easier to make things efficient - but it's very realistic to make less dense populations efficient/sustainable too. Urban developement isn't some kind of ecological optimization problem. There are factors you are completely dismissing, like overall happiness, contribution to the community and the nation as a whole, cultural value generated etc.
> but how is it any of your right to tell people what they can and can not build on their land?
Are you serious? There is the whole idea of community and sustainability. If a community deems a certain construction project detrimental to the overall health and wellbeing of its members then they can stop projects. If I don't want to live next to a highrise and the accompanying noise, traffic, pollution, I have a say in what my neighbor can build.
I'm not personally telling people what to do (because I have no authority). I'm engaging in a public debate over the SF community's values and priorities.
"There are factors you are completely dismissing, like overall happiness, contribution to the community and the nation as a whole, cultural value generated etc."
Which is not created by suburban sprawl, either. You seem to (without support) indicate that this is not possible with denser communities.
You may value that prioritization, but that isn't strange as you are a renter and so prefer things aligned as close as possible to your personal benefit.
That is simple egoism, don't coat it in nice language.
Um, in exactly the same way that tourists prefering their interests to be prioritized is also 'egoism', right? Or property owners preferring their incomes to be maximized, just like renters preferring their rents to be minimized. So?
I'm not a "market fundamentalist" by a long shot, but markets generally do a pretty good job of balancing various interests like this. They're a lot better in a case like this than the government attempting to decide how many units must be available for which uses.
Well, in the long term turning the housing into hotels screws everyone because the people who work at and maintain the hotels need somewhere to live too, as do the employees of businesses that bring tourists into the city...
There is no plausible 'consumer protection' story that would explain why building codes for permanent residence are not good enough for temporary residence as well. The law is there to protect hotel operators from vacation rental competition.
This is not a very thoughtful comment. There are obvious reasons why properties zones for permanent residence aren't appropriate for transient residence; the latter type of occupancy is accompanied by crime and abuse.
You seem to be falling into the trap of considering "consumer protection" only from the perspective of the tenant.
Is there any evidence that apartments rented out with AirBnB are more prone to crime and abuse of non-tenants than apartments not rented out with AirBnB?
You're effectively asking whether apartments rented to unchecked strangers for days at a time are more prone to abuse than apartments rented months or years at a time.
There is a reason hotels require "special use" zoning exceptions in cities, and it's not because Mariott and Hyatt have captured the city council; it's often the residents who create uproars when those exceptions are granted.
This is seen in Berlin, where some houses have several ferienwohnung. People come and go and are usually very loud while staying. People who really live in those buildings complain a lot and for a reason.
I'm not sure if we're talking about the same thing, we might be, we might not be.
You are talking about renting apartments to unchecked strangers for days and I am talking about people renting out their apartment on AirBnB. There's some relationship between the two sets but I don't think they're equivalent.
Regardless, is there evidence for the claim that crime and abuse of non-tenants is higher for either the set you're talking about or the set I'm talking about than in the general population?
I haven't looked, but my intuition is that the differences are so pronounced that finding data should not be difficult. I would not want my neighbors regularly renting their apartment while they are out of town. There is already a substantial enough difference in decorum and responsibility between owners and renters that condo associations as well as the mortgage industry (as well as FHA) establish maximum renter to owner ratios.
I live in a high rise that also contains a hotel, but with different lobbies and elevators, and that doesn't bother me. I think this is because a hotel has a management staff that maintains common area decorum and holds occupants responsible for their actions during their stay. An apartment rented on airbnb has no similar oversight or responsibility for common facilities.
Yes. There is enough evidence of this that NYC created an entirely new beauracracy just to handle these issues. Numerous papers have published articles describing fraudulent or deceptive AirBnB listings, the guests' lack of resource, AirBnB's lack of assistance.
I'm asking about evidence for the higher rates of crime and abuse to non-tenants that tptacek claimed, not about deceptive listings on AirBnB or damage to tenants.
The rationale behind this is that with permanent residence there is the expectation of a careful examination of the dwelling, and that's relatively cheap because you only have to do it once every couple decades, whenever you buy a house, and hey, people should be able to make their house however they like. With temporary residence, the cost of doing that would be prohibitive, because visitors visit new temporary residences for short durations, and an individual visitor has a low probability of being hurt. Having a shoddy structure is the exact sort of thing where making decisions for immediate profit that have a low probability of high damages in the future that regulations make sense for.
I agree with the general sentiment, I think many of these regulations exist as protection for existing industry, but isn't the risk of a hotel burning down much greater than a home burning down? The potential loss of life in a single incident is far higher.
I imagine the rules about what safety equipment a small ocean-going yacht and an ocean liner must have are pretty different too, for similar reasons.
I think it's important to use language that's fair and reasonable when arguing your point.
When you say "There is no plausible 'consumer protection' story for preventing licensed (sic) livery cab drivers from picking up curb hails" (I think you meant unlicensed) it's easy to dispute that point.
Here is the first hit on Google for "cab rider ripoff": http://www.nypost.com/p/news/local/taxis_taking_wBtAr13EzaKS... - "At least a dozen hacks have been caught hitting unsuspecting passengers with pricey tolls for bridges and tunnels that the cab never actually crossed".
And the result: "We are confirming these data, and if appropriate, will likewise seek to revoke their licenses," Yassky said. "We will continue to comb the GPS data for any similar incidences."
That type of legal solution is not possible if taxi drivers are unlicensed.
And the well-publicized instances of Airbnb problems (e.g. prostitution) are already demonstrating that at least some of the regulations are in fact necessary.
Finally, the point about consumer bank regulation is, if your bank account does get ripped off, you're insured to $250K by the FDIC, which BitCoin doesn't have. Though perhaps that is a market opportunity for an aspiring YC company?
In any event, you're overstating the case to make your point -- keep the language reasonable if you expect to make your point.
"There is no plausible 'consumer protection' story that would explain why building codes for permanent residence are not good enough for temporary residence as well. The law is there to protect hotel operators from vacation rental competition."
As an apartment owner in a multi-unit apartment building, I don't want the neighboring apartments being used as short-term rental properties - and the building regulations forbid it. It's absolutely a quality-of-living and consumer-protection issue protecting property owners from the risks associated with transients.
Why do you need to government to require that? How about you only rent from land lords that disallow tenants from renting out their apartment. Maybe some people don't mind this and would like to have that as an option.
I don't rent - I own my apartment. I've invested in a property and a neighborhood zoned for a specific purpose. Cities are generally configured with zoning laws designed to preserve a certain standard of living for the larger community that extends beyond just a single apartment or building. It helps to preserve the intended use of those properties for people that choose to buy in those neighborhoods.
For instance it gives property owners in a residential neighborhood an assurance that a neighboring building can't decide to convert their rooftop to a nightclub potentially disturbing the neighboring buildings with noise, foot-traffic, car traffic, drunks, trash, fights, etc. If you gave individual landlords the right to make these decisions without wider oversight, you'd run into a lot more issues like these. Sure - today they can petition to override existing zoning regulations and that sometimes happens, but residential issues are larger than just an individual apartment or building.
I always wonder why people with this attitude live in cities. If you want peace and quiet, shouldn't you go get a few acres in the country? Living in the city means you're living right next to a bunch of other people. Living in the city and having the expectation of peace and tranquility and total control over your home just seems like expectations out of whack.
Maybe it's just that I get peeved when people get all "landed gentry" and start thinking that somehow because they are privileged to have been able to buy a piece of property that they have a moral right to control the lives of their neighbors.
That said, I support regulations "within reason" and I suppose it all comes down to a quantitative difference in where we draw that line.
Because that's not always an available option in the housing market. There are some cities (for example, present day San Francisco) where city wide apartment vacancy is so low that tenants basically have to take what they can get. Tenants are at a serious disadvantage to the whim landlords in this kind of market. Thus laws exist that restrict what landlords are allowed to provide, which serves to protect the tenants.
You can make an argument about not restricting the free market, but shelter is such a basic human need that I think it merits a healthy amount of regulation.
And the inadequate amount of housing availability is because of government regulation as well. If they would allow more building this would be less of an issue.
> There is no plausible 'consumer protection' story that would explain why building codes for permanent residence are not good enough for temporary residence as well. The law is there to protect hotel operators from vacation rental competition.
I think Uber and Airbnb stand on different ground here. The building codes issue is a red herring; Airbnb faces more severe problems. I can think of plenty of "traveler protection", "hotel protection", "tenant protection" and "landlord protection" stories. Real stories detailing Airbnb's failure to answer these issues are already circulating the internet:
Thank you. As an Uber user in DC, I have yet to encounter, or hear of any news event in which Uber put people in a dangerous or even inconvenient situation. It's infuriating to see people compare Uber to a poorly secured Bitcoin site, as if the regulations in banking are somehow equivalent to those with taxi cabs.
Uber only uses licensed sedan drivers. They are already subject to safety regulation, but unlike taxi cabs they are also checked by reviews from passengers. The most frightening experience I ever had in a vehicle was in a taxi cab taking me from the airport in San Antonio to my hotel. He was exceeding 90 mph, and driving recklessly, ignoring the turn signals of other drivers on the interstate. Where was your touted regulation then?
...I have yet to encounter, or hear of any news event in which Uber put people in a dangerous or even inconvenient situation.
Not surprising, considering that Uber currently carries a tiny fraction of the traffic that the cab companies do. As the company scales, it's not hard to imagine that they will need to bear more responsibility for background checks on their drivers, and assume liability for damages those drivers may cause. Full-time drivers will begin battling one another for preferred territory, and Uber will have to mediate the conflicts. In short, Uber will start looking more and more like a traditional cab business, and less and less like a peer-to-peer matchmaking service.
It's not always about the direct users. Having Airbnb people show up next door and have a 3 day party impacts people. Or from a health and safety standpoint, bedbugs easily spread though apartment buildings.
They've been getting hacked as long as there have been banks, it's just that they used to have to physically break in, rob the tellers at gunpoint, or commit fraud by assuming someone's identity (say, by forging their signature). Either way, there is a regulatory framework in place that ensures that the depositors are made whole in the event of a such a 'hack'.
"I was told confidentially by an IT Security specialist from a major bank that the public would be shocked if they knew the amounts that are stolen daily from online financial institutions via ACH and wire fraud. Typically, breaches and total numbers are not revealed because they don’t want to advertise a weakness and they certainly don’t want to alarm customers. Some of the more vicious attacks are State sponsored. I believe him. That’s what bitcoin is up against as it progresses into the mainstream. The leading security experts are in that world, already protecting against the barbarians at the gate. They are not in the bitcoin world."
Bank accounts require identification and bank transactions have paper trails. Additionally international transactions have a lot of delays built in. Robbing a bank is probably safer then hacking one.
You don't hear of any high-profile bank disclosures, which I imagine is probably because they have security teams that keep up with everything religiously. Most old brick banks have internal systems architected in ways that a younger intruder in the Anonymous mold wouldn't know anything about, as well; you're starting to get into big iron Cobol land.
That said, I don't think it's an impossible task (is anything?), and I'm sure some day there will be a large disclosure through some means, internally-assisted or otherwise.
Nothing is impossible, but remotely hacking a bank is pretty damn close. A number of years ago, a friend worked for a large multi-national bank. He once described to me some of the key components of the security system. While the details are hazy (such as I understood them at the time), I do remember that one of the key points was that one of the "very important" servers that handled transactions between outside entities (i.e. other banks) and internal systems was double-firewalled. That is, you couldn't initiate connections from the internet or the intranet. The server would only make connections to hosts of its own choosing, on its own schedule.
Modifying or updating anything on the server required physical access.
There was actually a high-profile incident not too long ago with one of the big banks' online banking system. Users could view other people's account information just by incrementing an integer in the URL as I recall. It's not necessarily so much that banks are secure, but hacking them is much riskier than hacking Bitcoin sites, especially for white-hats.
re: "Legitimate banks don't get hacked because there are billions of dollars at stake for the banking institution. "Legitimate" financial institutions do get hacked, and to suggest otherwise is crazy talk. Look here where a financial institution has an exploited flaw ongoing since at least 2008. http://www.batstrading.com/alerts/ ( http://cdn.batstrading.com/resources/system_self_help/BATS_N... )
> There is no plausible 'consumer protection' story that would explain why building codes for permanent residence are not good enough for temporary residence as well.
Your home is your home, so if you die in a fire it's your look out.
But a hotel, or a temporary residence, is not your home, and if you pay money to someone to provide a service they should meet minimum standards for safety.
This is a good thing. It allows small businesses to compete but without using "safety" as an area which can be cut.
I disagree 100% with your non-Bitcoin factual assertions because they are demonstrably false but I do not have the time to address them point-by-point.
But I will address this one major factual error: Legitimate banks don't get hacked because there are billions of dollars at stake for the banking institution, and their business literally depends on their ability to secure payments.
Banks are not in the business of securing payments; that is what payment processors like Mastercard and Visa do. Banks are in the business of investing money which has been deposited with them. As a result of (state and federal) legislation, banks are liable for making depositors whole in the event of theft, so they are motivated to invest significant sums in security.
Except that regulating things is not the same as holding a monopoly on regulations. If government is so completely confident that its currency is much more superior and stable, well, allow the competition! Make it legal to receive whatever I want to receive as a payment. Let businesses regulate the currency market and determine what currency is reliable. Oh wait, except that then government cannot tax you, of course.
Also, this incident has nothing to do with regulating bitcoins. It has to do with Rails and this particular exchange site, whose reputation is now damaged and who's going to lose business. Note how free market works great in this case: the organization costs people their lost money and will most likely go out of business. Unlike big banks.
This has everything to do with regulating bit coins and the exchanges. No bank in the US would ever dare run a stock rails site, I would bet they would be rightfully sued. On top of that, funds in a bank are insured to a point so if someone at a bank messes up, the innocent people who lost their money won't lose everything they own. The free market is cruel and so are it's proponents, we've advanced past this "fuck you I've got mine" mentality as a species. If bit coin was regulated like a bank, this wouldn't be a problem. Since anti-regulation people fail to grasp this point, let me add that I do not support every bit of regulation ever passed. There is good regulation and bad regulation. Only intellectually childish people view it as ALL good or ALL bad.
> No bank in the US would ever dare run a stock rails site, I would bet they would be rightfully sued.
Why so? Even banking websites build on frameworks and if you'd have chosen Spring for example, there was a Remote Code Execution vulnerability in 2010. And even if you roll your own framework, you're just as likely to introduce a critical flaw. The Dutch governmental DigiD service runs rails [1]. The critical difference between the BC service and a bank or the government is that a responsible party would have secured their app immediately. The DigiD service was taken down pretty quickly and stayed down until patched. There were multiple workarounds that did not involve major patches and even if you didn't know which of your apps was vulnerable, you could filter the payload at your load-balancers if you had some [2].
[1] http://lwn.net/Articles/532224/
[2] An xml tag with the type "yaml" was required to trigger this. It's a pretty specific payload that is very unlikely to be used in a regular request.
My point is not that all regulation is bad. People decide if a regulation is bad or good. One may think a guns regulation is a good thing, the other may decide that a drugs regulation is a good thing. You can't reach objectivity in most cases. And then regulations have side effects: we always have to look not at just the intentions of those regulations, but also at the incentives they create (and that we cannot always foresee, example: minimum wage law).
Make it legal to receive whatever I want to receive as a payment.
This is already. You can legally trade things for other things. There is no law saying that you have to use Euro (or your local government issued money)( for everything.
The only think you have to use it for, is taxes or paying fines.
"Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency for the benefit of all citizens of the nation."
Note how free market works great in this case: the organization costs people their lost money and will most likely go out of business. Unlike big banks.
That sounds horrible. If a bank gets hacked and "loses" my money, they owe me that money. Federal and state law requires them to put that money back into my bank account, at the bank's expense. (Note, this is not the same as FDIC insurance, which applies in the event of a bank failure.) The free market still applies: on top of getting their money back, customers can take their money to more secure banks.
Make it legal to receive whatever I want to receive as a payment. Let businesses regulate the currency market and determine what currency is reliable. Oh wait, except that then government cannot tax you, of course.
You can receive whatever you want to receive as payment; this has been a basic principle of English-based law for hundreds of years. The currency requirement is merely that any debt obligation must be satisfiable through the use of currency equivalent to the value of the debt. Also note that the government reserves the right to tax you regardless of the currency you use. This has been basic law in some form or the other for hundreds of years, and is explicitly stated in I.R.C. section 61.
> The free market still applies: on top of getting their money back, customers can take their money to more secure banks.
Unless the bank goes bankrupt. Basically, if the bank plays fast and loose with customers' money the customers shoulder the risks whilst the bank owners get the rewards - and there's no way customers can tell whether this is happening, since they neither have access to the bank's internal records and systems nor the skills and resources to make sense of them.
Actually, the only reason the baks have to return the money in the first place is because of Government intervention, and even that's not enough. Unfortunately, thanks to binding arbitration the US has a free market of sorts in dispute resolution, and the banks and financial providers have so much more market power than consumers that they can effectively pressure arbitrators into siding with them. If they don't, the bank won't do business with them and they can't find work, whereas most consumers only need to use arbitration a few times in their lifetime at most.
FDIC insurance applies if the bank goes bankrupt (and has since the 1930s), ergo, I would still get my money back. It is not a matter of arbitration; banks have gone bust frequently enough that there is a settled procedure for issuing insurance proceeds to depositors of a failed bank.
Banks pay for FDIC insurance coverage as part of their capital requirements for being a bank.
>Basically, if the bank plays fast and loose with customers' money the customers shoulder the risks whilst the bank owners get the rewards - and there's no way customers can tell whether this is happening
Tip: This is happening. This is how banks have and will always make money.
It is the role of governments to regulate to what extent the bank can use your money and for what purposes in order to minimize customer risk.
This argument seems to beg the question (in the actual meaning of that phrase), at least w.r.t Uber and AirBNB. All the problems they've had have come from the regulatory authorities, except for those one or two bad incidents on AirBNB which are pretty much unavoidable in a business like that. So is the argument that regulation is good because it's hard to cope with the regulators?
I just don't buy into the abrogation of common sense argument for regulation. If you let random people stay at your apartment, there's a chance they'll destroy it. If you're really worried about that then buy renter's insurance or don't sublet your place! If you give your bitcoins to some random website, there's a chance it'll get hacked! It's not like those people didn't have option of putting their money someplace more secure, like a bank.
I think regulation in general is really important for making our society a decent place to live, but when it makes reasonable activities effectively illegal that is generally a sign that it has passed that point and started making things worse.
All the problems they've had have come from the regulatory authorities...
I'm not sure about Uber, but this is most definitely not true of AirBnb, which has come under fire from many neighborhood associations. It's not just your quality of life that gets reduced when you rent your house to bad apples, it's your neighbors' as well.
I guess I can take other people's word on this argument, I live in New York (where AirBNB is illegal) and there's plenty of odd loud people running around my building any given day. Inside a building is different but I have no problem with individual building leases banning AirBNB (I'm sure some would and some wouldn't).
All the problems they've had have come from the regulatory authorities, except for those one or two bad incidents on AirBNB which are pretty much unavoidable in a business like that.
Atlantic, Wired, the NY Times, Chicago Tribune, and the L.A. Times have variously run horror stories for renters who made the mistake of using AirBNB to book rooms (see, e.g., Toshi hotels and their variants). The whole point of hotel regulations is to protect the guests, not the hotelier.
This is the freedom from risk argument for regulation? There are plenty of horrible legal hotels in the world. I personally think cheap hotels are an important part of the ecosystem.
> The whole point of hotel regulations is to protect the guests, not the hotelier.
Brilliant point. It's a case of experimenting with the balance of freedom vs regulation.
Perhaps it's not vital that a hotel(or taxi) is licensed today, because we can easily see its realtime feedback from previous users. But then again, perhaps those users don't notice that there is no emergency lighting and the fire alarm is disabled, or that the driver has multiple convictions for dishonesty.
It's great to see that this post has triggered so much discussion. Let me add that I'm not saying the status quo shouldn't be challenged, or that there aren't efficiencies to be had, only that if a business model looks too good to be true ("hey, I can rent a whole house for the cost of a hotel room and have 10 people stay for the price of 1!"), it probably is. Neighbors (who also qualify as consumers, I believe) are raising serious objections to AirBnb. At least one Bitcoin exchange has qualified itself as a bank---presumably raising its costs and requiring it to charge more fees than its competitors in return for the security it offers. Meet the new boss, same as the old boss.
A decent observation, but it's also true that sometimes complexity becomes an end in itself. It cyclically begets more complexity until it collapses and a new, simpler form emerges.
This Tetris-like complexity-collapse model is very common in biological evolution.
When it works well, the new simpler system will still solve the problems that the old complex system solved. It will just solve them more elegantly.
Paypal encountered many of the problems that central regulators were set up to solve. Their solution to fraud protection was better than anything else out there, and has been widely copied in the industry. Do they have false positives? Yes, but international person-to-person (vs. company-to-company) money transfers have never been easier. Newer startups will make it easier still.
Regulators and incumbents need competition. No new product is ever better than an existing product in ALL respects, only in some features. Hitting the features that existing regulations are meant to ensure might not be #1 on the feature roadmap, but it's on there.
The problem is when features that are less important to customers are prioritized by regulation (and therefore by guns) over features that are incredibly important to customers. Clearly, the existing taxi regulations did not incentivize rather important features like "convenient for taxi customers" but instead were about edge cases that are important, but only at scale.
I agree that companies need to take a look at how their industry is regulated and what purpose those regulations serve. But the fact that companies can come into these types of industries, openly skirt the regulations, and still be massively successful shows that the existing laws aren't meeting the needs of the people who use these services.
And how exactly has government solved "the problems inherent in the peer-to-peer model"? I'm not sure what problems you're talking about in the first place.
I'm not sure what problems you're talking about in the first place.
That's the point. :-) A number of them have been enumerated above: protecting banking customers from loss in the event of theft; regulating the location and safety of hotels; providing some means of recourse against a dishonest cabbie.
They are inherent in peer-to-peer because peer-to-peer transactions are based on trust, and trust ultimately has to be based on accountability. If I'm in a small town, I can trust a local resident because I know their history and where they live. If they injure or steal from me in some way, I have some recourse, if nothing else with the social shame that can be brought to bear in a small society. But in a large-scale business, in a society of strangers, that accountability has to be enforced by some kind of regulatory body. And that kind of regulation implies at least some kind of comparatively centralized authority, which is at odds with a true peer-to-peer ideal.
No, I'm saying someone will have to be the regulatory body for AirBnb, because their business is infringing on other people's rights, for example neighboring homeowners who are disturbed or damaged by AirBnb renters, or customers who are exposed to dangerous conditions on an AirBnb property.
Are you saying that AirBnb, for example, can't be the regulatory body for its customers? Or is there a reason why it's necessary for the government to step in?
Much of the regulation was created for good reason but it is hard to argue that there aren't a lot of regulation that is merely special interest to prevent competition or grant special favor.
Rather than more regulation, perhaps more transparency is a better solution. 3rd party certification would do a much better job at security than a government regulation. And have much less abuse and overhead.
