Free Market Under Attack In San Francisco……Again

Expanding the Regulatory State with the “Anti Airbnb Measure”

The best thing one can say about “Proposition F” is that it will be up to voters to decide on its adoption. However, it actually shouldn’t be up to them, because it concerns an issue that is really none of their business.

Here is what it is about in a nutshell: as noted in this article, if the proposition is adopted, “you will be able to do anything in your bedroom, except rent it” (sic). Meaning, if one has a spare bedroom one occasionally rents out to travelers via Airbnb, one will in future no longer be able to do so – by law.

San Francisco: a nice place, but housing and rental prices have become unaffordable for many people

Photo credit: Alex Zyuzikov

In short, other people will now decide what one can or cannot do with one’s own property. Given that this particular use of property doesn’t infringe on anyone else’s property rights in the slightest, there should not even be a debate over whether it should or shouldn’t be “allowed”.

So what is behind this push to make life difficult for Airbnb, countless tourists and countless people who make a little money on the side with the help of Airbnb? In all likelihood it is a well-connected established business lobby. The main suspects are hotel owners, whose businesses are under threat from Airbnb’s competition.

What makes this case especially bizarre are the utterly transparent lies used to argue in favor of adopting the measure, in combination with San Francisco’s terrible housing reality. Note that the interests that are actually behind the proposition are craftily hiding behind the “little guy” (whom they are about to trample on). As an aside, it should be seen as a huge red flag that Dianne Feinstein is all for it as well.

Consumers love it: Airbnb

According to the article linked above:

“The measure would impose additional restrictions on short-term rentals. Supporters can claim to be the little guys because the deep-pocketed opposition — headlined by the home-sharing technology platform Airbnb — has $8 million to bury the less than $400,000 raised by the “yes” campaign, according to proponent Dale Carlson. Prop F does have high-profile supporters, notably Sen. Dianne Feinstein, but when the other side outspends you by a 20-1 ratio, you can call yourself the underdog.

The No on F folks also stand for the little guy (or gal) who rents out a guest room to make ends meet. San Francisco Supervisor Scott Wiener says he opposes the measure because more and more of his constituents rely on Airbnb. Many are women, often older women, who are “house poor” and presently could not afford to buy the homes they bought years ago. They don’t want to take on a full-time roommate; they also enjoy the energy young travelers bring with them. “The one thing they have is that spare bedroom,” Wiener told the San Francisco Chronicle’s editorial board last month. If Prop F is approved, “they are going to get thrown under the bus.”

The “yes” folks have a populist message. Former San Francisco City Attorney Louise Renne put it this way: “The short-term rentals, in my view, are reducing the housing stock.” Tourists don’t belong in residential neighborhoods, the “yes” side adds. Speculators are buying properties so that they can cash in by setting up pseudo-hotels that aren’t up to code. Something must be done.

The “yes” side’s remedy, however, threatens to cut into the income of middle-class residents — people like architect Kepa Askenasy, who told me last year she was “just trying to survive in this beautiful city and do it in a way that’s positive for everybody.” Because City Hall adopted legislation championed by former Supervisor David Chiu, she registered with the city and pays the 14 percent hotel tax. Airbnb now pays about $1 million each month in taxes. Askenasy is proud that the San Francisco startup also threw in some $25 million that would have been levied as taxes if the Chiu legislation had taken effect earlier. Now, she said Thursday, critics should give the new rules time to work.

What really frosts Askenasy is that a small group of city big shots wants to cut into her side business on the grounds that there is not enough affordable housing. City Hall failed to ensure there would be more homes for working residents. Large-scale developers did not build those homes. Somehow the proponents of Prop F are blaming the sharing economy — that is, entrepreneurial San Franciscans — for a housing shortage.”

(emphasis added)

As noted above, this “housing shortage” argument cannot be called anything but a brazen, transparent lie. Given house prices and rental prices in San Francisco, there can be only one reason for the housing shortage: over-regulation that is keeping the housing stock too small. One wonders moreover, if spare bedrooms can no longer be legally rented out, how exactly is this going to increase the housing stock?

We were unable to find out what the proponents of the measure have in mind in this context. Perhaps the “city big shots” plan to have them confiscated, so theycan decide who should stay there? After all, the property rights of their owners will already be violated, so surely they can be violated some more.

Given that regulations are undoubtedly co-responsible for the fact that housing in SF has become unaffordable for average people (the Fed’s insane monetary policy is admittedly the chief culprit), how are even more regulations going to do the trick? Regarding the affordability of housing in SF, we are not exaggerating one bit: consider this story of asoftware engineer who is living in the streets in a rusty van because SF rents are simply out of this world.

Median San Francisco home prices compared to California and nation-wide prices (by Paragon Real Estate) : a bubble for the history books.

Apart from the fact that the proposition is an attempt to restrict the property rights of people and their ability to earn an additional income that they actually rely on and need in many cases, the point about tourism shouldn’t be neglected either. No back-pack tourists can possibly afford to stay in this hyper-expensive burg without the help of services like Airbnb. As the article notes:

Keith Freedman rents out a spare bedroom and a Murphy bed in his apartment’s living room. He told me, “Most of the guests I get couldn’t afford to come to San Francisco and stay in a hotel.” Gag Airbnb and San Francisco becomes a town for well-heeled tourists only. If Prop F is approved, big government will dictate what people cannot do in their own bedroom – rent it out.

(emphasis added)

Conclusion

We have ceased to live in a free market economy a long time ago. The only sector of the economy that has managed to remain relatively free in many ways is the technology sector, because it innovates so rapidly that is tends to stay a step or two ahead of politicians and the oligarchies giving them their orders. They simply cannot catch up quickly enough with regulating all these innovations to death.

Lately technology has begun to invade the turf of a number of established service businesses, such as banking (think Bitcoin, and now Bitgold as well), taxi services (Uber) and hospitality services (Airbnb). This provides us all with a reminder of how free market capitalism is actually supposed to work. In the market economy, no successful entrepreneur can rest on his laurels. He can be deposed from his exalted position at anytime by a start-up competitor offering a better or cheaper (or both) product to consumers.

Should horse breeders and buggy whip manufacturers have been protected from the motor car? Should the inept US Post Office have been protected from the evils of email and instant messaging? The answer to such questions seems obvious enough. Why should an exception be made for taxis and hotels?

Note here that such measures as a rule see nominally “capitalist” cronies and assorted socialists/ collectivists happily working together: the former because they want to use the State to preserve their income by force, the latter because they want to stop economic progress, as they hope this will increase the number of State-dependents voting for them.

Do not fall for their snake oil.

Unfortunately a great many people don’t understand that asking the government for “help” is simply going to invite more of the