Unleash the Sharing Economy

As the D.C. region prepares to host visitors from across the country for the inauguration and swearing-in of President-elect Donald Trump, affordable lodging options are increasingly hard to come by.

The task is made easier, fortunately, thanks to homesharing options, facilitated by homesharing companies such as Airbnb Inc. and HomeAway Inc. that connect local residents to consumers who are looking for a place to stay. As a result, many of the area’s apartments will be filled with fans and protestors who have booked rooms on Airbnb.

But not all of America is as lucky as our nation’s capital. Well-intentioned but misguided politicians across the country are enacting heavy-handed regulations on homesharing that stifle innovation and limit opportunity.

Take New Orleans, for example. Recently, policymakers and software company Airbnb brokered a deal to “legalize” home sharing in the Big Easy. Yet all they did was regulate an already thriving industry: They have mandated that all homeowners who want to let someone stay in their home register their name and address with the government. In other words, the government is limiting consumer choices and increasing the costs of where we stay in New Orleans.

Some places have it worse than others, but this is a trend across the country. In my home town of Chicago, the city council passed new rules that subject homeowners to warrantless searches and discrimination while violating their rights to equal protection under the law. San Francisco has proposed regulations that discourage homesharing by limiting the number of nights in a year that hosts can rent their house.

New York City has perhaps the nation’s strictest home sharing regulations, essentially banning the industry from operating within city limits. It is already illegal for apartment dwelling residents to rent out space for less than 30 days. New legislation signed by New York Gov. Andrew Cuomo takes regulations even further by punishing residents for merely listing their apartments on homesharing websites. Under the new regulations, those caught advertising short-term rental spaces on sites like Airbnb are subject to fines ranging from $1,000 to $7,500.

Wherever they are, such regulations are publicly justified as protections for consumers and homeowners. In reality, they increase the cost of homes to consumers, reduce wages and now explicitly make it illegal or cost-prohibitive to use your house as you choose. Worse yet, these measures are usually passed after vigorous lobbying campaigns from a special interest — hotels — that wants to shut down its competitors.

Like businesses in many industries, hotels would prefer to keep a corner on the overnight market, so they increasingly seek such protections in the law. Even worse, some homesharing companies are trying to get in on this game, too — they face the same incentives to rig the system in their favor. That’s exactly what happened in New Orleans. Companies like Airbnb supported the regulations in an attempt to hobble their less successful competitors.

The better bet is to let innovation flourish — and let countless consumers benefit from it. Almost one in five adults have engaged with the sharing economy in some way. So many transactions through so many different business models leads to rapid improvement. Already, sharing economy revenues globally are at $15 billion, and are expected to grow to $335 billion in less than 10 years.

Those numbers illustrate a simple point: People benefit from homesharing. Policymakers should embrace this revolution. Thousands of people will benefit from this decision as they descend on D.C. for the presidential inauguration on Jan. 20. Now it’s time for politicians elsewhere to stop kowtowing to special interests and give their own citizens the same freedom.

David Barnes is director of policy engagement at Generation Opportunity.

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