One of the fundamental rights we are all supposed to enjoy is the right to our property. This includes the right to use, lend and dispose of this property in whatever way we see fit, so long as those uses do not harm other people. We also believe in the power of the free marketplace and depend on this power to fuel the innovation that advances our society.
The recent explosion of 'the gig economy' – where individuals can earn money by hiring out their services or renting rooms – is an excellent example of changing conditions in the marketplace and advances in technology making something possible that could not happen easily before. Millions of ordinary people, struggling to make ends meet or just looking for a few extra bucks, are excited about a future where they are in control.
Millions upon millions of people are satisfied providing and using ride-sharing services with the help of services like Uber and Lyft. Many more are participating in the booming Airbnb phenomenon, turning empty rooms into extra cash rather than wasted overhead. Customers get a great deal and can do business with a trusted broker and real people.
And what about the contractors? Based on survey data, it appears they are mostly satisfied. A total of 85% of respondents said a major reason they work with Uber is to have a greater work-life balance. Nine out of 10 say they are finally able to be their own boss, and they love it. And while they reap these benefits, 7 out of 10 claim that they make more money operating this way.
This worries some people, and of course it worries the government. When we do not understand something a common reaction is to fear it. In government this is the usual, and encouraged, reaction. The reaction to the gig economy has been no different, and this growing fear has unfortunately turned into a legislative bloodbath.
The war on the gig economy
There are plenty of examples of the undeclared 'War on Gigs' that is being waged by government. The primary weapon in this war is legislation – laws passed that make it difficult or impossible to operate a gig type business. Lawmakers everywhere have seemingly dropped everything to focus on undermining these businesses.
One striking example of this was the fining of Uber to the tune of a record $11.4m (£7.83m) dollars by the state of Pennsylvania. The fines are traced to a period of time in 2014 when Uber operated in the city "without a license." Of course, it is worth mentioning that there was no license that could be obtained – it was created afterwards.
Just recently, Los Angeles announced the intention to pass ordinances to legislate people renting spaces in a residence. Once known as a haven for "the little guy" and entrepreneurs, it seems that it is not more profitable an politically safe to jump on the bandwagon and attack the gig economy.
A FAQ published on 15 April gives some of the gory details. Homeowners would be restricted in how they conduct short-term rentals, and the restrictions would make it difficult or impossible to be profitable using a service like Airbnb.
A direct attack on the Airbnb business model
Make no mistake – these ordinances have clearly been crafted as a direct attack on the Airbnb business model. They have been written with one purpose in mind – to discriminate against property owners that would like to earn money through the use of their property. Homeowners under this ordinance would be disallowed from renting space in their home for more than 90 days out of the year. They would also be disallowed from doing a short-term rental in a property that is not their primary residence. Further, an intrusive registration process is proposed, whereby anyone seeking to rent our a room on the short term must have a registration number. A registration number? To let someone stay in my house?
This must stop.
We cannot put the genie back in the bottle even if we wished it. Which we should not. The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit. It empowers customers by saving them money and offering far greater flexibility in their arrangements. And it empowers our economy by fostering massive, thriving industries to support these operations.
There are always losers when society evolves. In the free market, these losers are expected and encouraged to retrain and find new ways to survive and thrive. Instead the government is pandering to the dying breeds of several industries and seeking to artificially extend their lifespan. A concentrated and established industry is far easier to regulate and tax, so in government these losers have found a natural ally.
If this disturbing trend is allowed to continue – all of us will be the losers so that the few can cling to a dying business model. Is that justice? Is it practical?