Sina-cism: Disruption can give economy an Uber Lyft

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What do you think of when you hear the word “disruptive?” Many reflexively think of losses — of certainty, of income, of yet another foothold in a world that often seems to move too quickly.

Chris Sinacola

Chris Sinacola

But disruptive is mostly a matter of perspective, and every loss brings gains. The Reformation was disruptive to the Church, but today’s Protestants don’t regret it. Automobiles disrupted old ways of transportation, but humans the world over love cars. Television disrupted radio, yet radio survived.

The internet takes disruptive to a new level. Building data-rich dreams upon satellite streams, tech companies are begotten, born and die in matters of days and weeks. Some endure. And some of those disrupt.

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Ride-hailing services such as Uber and Lyft are disrupting taxi and livery services, while Airbnb is doing the same with the hotel and hospitality industry. The San Francisco-based company lists 1.5 million rental properties in 191 countries. Travelers who want something other than the standard hotel or motel experience — a more authentic, cheaper, or off-the-beaten-path experience — are sure to find something.

The difficulties of regulating disruptive industries spark heated debate.


[Related] Editorial: Making Airbnb work for Worcester from July 13


Some public officials, joined by the traditional hospitality and transportation industries, have pushed hard for rules, ranging from taxation and restrictions to outright bans.

One can argue for no regulation at all, on the basis that those who use Airbnb are making trips they might otherwise not make — and going places not well served by existing hotels and motels. Against that point must be weighed the concerns of residents whose neighborhoods have been subtly (sometimes rudely) transformed by temporary guests.

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In June, residents of Zenith Drive in Worcester asked the City Council to draft regulations to stop what they call a constant presence of unrelated guests at one particular residence.

The residents have a point. Most municipalities have rules that limit how many unrelated individuals may live at a particular address — unless that property is licensed as a boarding house or other kind of group home. But the Zenith Drive case is atypical of Airbnb, the vast majority of whose rentals are between perfectly respectable and respectful hosts and guests. [Editor’s note: Worth remembering the high-profile, Airbnb-related alleged murder in Lynnfield in May.]  It should be dealt with separately from any legislation.

Still, it is clear that what drivers and riders are doing with Uber, Lyft or other such services, and what hosts and guests are doing with Airbnb, is commercial in nature. Thus, government has a right, even a duty, to regulate and/or tax that activity in some fashion.

But how it does so matters greatly.

Massachusetts recently enacted the nation’s first statewide tax on upstart transportation services — 20 cents per ride,— but in so doing, the Legislature and Gov. Charlie Baker made a serious misstep by designating five cents of each ride’s tax — a quarter of all the revenue — for the traditional taxi companies [10 cents to cities and towns, and 5 cents designated for a state transportation fund].

The official, public reactions from Lyft and Uber were muted and conciliatory — and no wonder, for it is in their interest to get along with the state. But the state’s action is folly.

Travis Kalanick, Uber founder

Wikimedia Commons / by Dan Taylor

Travis Kalanick, Uber founder

Call it rent-seeking, call it protectionism, call it what you will. It amounts to this: The state is choosing winners and losers, and taxing its citizens, however indirectly, to finance an assault upon the free market.

It’s bad enough when government does so in order to subsidize nascent or established industries — whether solar energy or oil and gas companies. To subsidize an industry whose business model is clearly inferior to that of the new kids on the block takes matters to a new level of folly.

Which brings us back to Airbnb and Worcester.

Among the regulatory ideas being floated here is a ban on Airbnb in residential zones. Before councilors endorse that idea, they should recognize that those seeking an affordable alternative to an expensive hotel, along with those offering their homes for short-term rent, are overwhelmingly located in residential zones.

Ban that and you might as well shut the city’s doors to an emerging form of commerce, along with killing the new revenue you might otherwise garner, and the spinoff activity such rentals create.

Beyond that, if licensure and taxation are approved, city councilors should avoid the state’s error and not designate any portion of any tax for existing hotels and motels.

Whatever regulations councilors draft should recognize that by its very nature Airbnb is a different kind of business. Disruptive? You bet. But one of the surest paths forward throughout history has been to find creative ways to embrace disruption, and turn it to the common good.

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