New York State & Airbnb

Did you ever see the 2002 movie Minority Report with Tom Cruise? It is a great film with a brilliant premise which is that  it is better to stop a crime before it ever happens. Tom Cruise plays a police officer in a unit called “The Pre-Crime Task Force.”  With the aid of super psychics, they use their abilities to stop crimes just prior to their commission.

precrime

Once notified by the psychics, the police officers arrest the perpetrators before the crime is committed and incarcerate the “criminals”  before they can take action. So, even though they’ve committed no actual crimes, they are still sent to prison.

The “intent” was all that mattered.

Although it’s a science fiction movie and takes place in the “future” you’re left with the impression that the idea is far fetched and could never happen. That is….until now.

Just last week Andrew Cuomo, Governor of New York State, signed a bill making it illegal to advertise your home for short-term rentals on websites like Airbnb. So, even though you might not ever rent your space, the sheer fact of publicizing your intent to rent will run you afoul of the law. Like pre-crime, you don’t even have to rent out your unit to get into trouble.  You just need the intent. No it’s not science fiction…its New York State.

As it stands, New York already has a law on the books making it illegal to rent out your home, or rooms, to short term tenants. The state also has heavy handed condo Boards that rule and restrict New York real estate associations. Most of them have stringent measures that forbid short term rentals.

The penalties to advertise carry up to a $7500 fine. Seem egregious? Yes…when D.W.I fines in N.Y range from $500 to $5,000 dollars and reckless driving fines are only $300 dollars! These are fine for actual crimes not an intent to commit one.

The fact is, Airbnb solved a huge issue for visitors to N.Y.  New York, especially New York City, has some of the highest hotel rates in the world along with some of the highest hotel occupancy rates. It is hard to find a hotel room that rents for less than $200 a night in New York City, so cheaper alternatives were needed.

Companies such as Airbnb filled a need. It’s not like New York City isn’t benefiting. Airbnb generated over $400 million dollars for New York City property owners last year.  So, at face value, it would seem everybody would be better off by having Airbnb in New York.  Hotels still have high occupancy rates that are not being negatively effected and property owners can generate additional income while having visitors enjoy a better experience. Finally, even the politicians get their tax slice of the $400 million.

Now those benefits are gone.

The reason why Airbnb was barred was alleged to be “safety reasons.” This seems always to be the justification of every action the government takes.  The statement read, “The government must ensure that all buildings comply with fire, building and other safety codes relative to their class.”

Give me a break!

I lived in New York City. You can barely walk down the street without obtaining a multitude of permits. Now, all of a sudden, those rental properties built over the years somehow slipped through licensing and zoning agency purview and were built without the government’s oversight in the first place? Please.
 
State Senator Liz Krueger issued a statement in favor of the law, calling it “a huge victory for regular New Yorkers over the interests of a thirty-billion dollar corporation.” Really?  The majority of Airbnb’s profits flow to individuals. In fact, the company Airbnb has lost billions of dollars since it was founded. It has never generated a profit. The platform was designed for individual parties to benefit, not corporations. Senate Liz Kruger is a liar for saying something so blatantly false and misleading!

So this “victory” is actually one for the power brokers and against regular New Yorkers…ordinary people who use the site to generate extra income and help make ends meet. These people will now lose that needed extra income.

With stupidity like this so pervasive in government, especially in N.Y., it’s no wonder why people are leaving the state. Since the 2010 census  653,071 people have left the state. This was the largest decrease of any state, both in absolute terms and as a percentage of estimated population since the start of the decade.

The Empire State doesn’t say why residents are leaving, but we can think of several possible reasons: high taxes, high unemployment upstate, high housing costs in the city, and a large (and corrupt) bureaucracy—for starters.

Ironically, New York City already has the infrastructure within the surveillance state to “detect” pre-crime…not unlike the world which “Minority Report” portrayed.  So it should not come as a shock that in real life, and in real time, the bureaucrats and administrators are already writing laws that will allow them to impose upon New Yorkers what they obviously thought was a darn good plot.

Truly scary stuff.

Steve

sleeclark@gmail.com

Break The Rules

The world has changed and the lawmakers and regulators are having a hard time keeping up.

A few months ago, the creator of the underground website Silk Road, Ross Ulbricht, was sentenced to life in prison for creating an online space that allowed people to use bitcoins, a cryptocurrency, to buy and sell things anonymously. Some used Silk Road to buy and sell  legal,  as well as illegal, drugs.  Since people do this anyway in the physical world, with or without Silk Road the drug trade marches on.

Break Rules

Ulbricht’s aim in creating Silk Road was to establish a marketplace free of government interference. He believed that some of the methods used by the government to regulate commerce are a form of coercion and aggression.

If you disagree and think the government is not heavy-handed, check out these examples:

  • Don’t pay your taxes, you will end up in jail. (see Wesley Snipes)
  • Don’t pay your property taxes and your house can be purchased by tax lien buyers. In most states, tax liens are senior to mortgage notes. What this law is telling you is that the government’s claim come first.
  • Don’t want to bake a cake for a gay wedding – watch your business get shut down. (Gay Baker Story)

We have been taught that the nation that we live in the freest nation in the world. But, try not paying your taxes and see what happens to you. Or take the example of  The Branch Davidians, who were massacred by the police, resulting in the death of 76 people, for not letting the Federal authorities enter their compound. Many of those killed were innocent women and children.

Ulbricht was convicted of money laundering, computer hacking, conspiracy to traffic narcotics, and procuring murder although the murder charge was later dropped. He claimed he just wanted to let other people engage in peaceful transactions absent the government’s increasing encroachment and force by way of regulation, law, and police actions. Consequently, there is a real need for the entrepreneurs of today to break the government stranglehold of business and create new means for people to determine how they want to work and live.

Take the many issues Uber has had to deal with. For the uninitiated in the transportation world, most cities have a Taxi and Limousine Commission that regulateS the drivers, the cars, the hours they work, the areas that people can be picked up in as well as the rates that can be charged. It’s a lot of laws for a fairly simple transaction! One party needs a ride and the other wants to provide it.

But this is where politics enters the game. All of these laws, rules and regulations add up to lots of fees, tickets and massive revenue for the cities. In addition, given the plethora of regulations, this keeps the flow coming into the cash trough for political donations.  And also realize that given the amount of employees in the transportation industry, it is much easier to organize and coalesce a large block of these voters (union employees) rather than independent entrepreneurs providing the same services.

Currently, regulators are having a hard time deciding which rules apply to Uber and which don’t. Part of the issues is that Uber is really just a platform that connects drivers with people who need a lift. So in every city Uber has tried to enter the marketplace, they have encountered brutal resistance from the political class. The good news is that the politicians have had a hard time stopping Uber due to the enormous popularity with its users and fear they will experience even greater backlash from the voters if they don’t allow Uber’s operation.

Or take the case of Free Ride, whose shuttle service offers exactly that — free rides in New York State, Florida, San Diego, etc., made possible by the low operating cost of the company’s small electric buses and paid for by local businesses advertising on the vehicles. The Free Ride idea seems simple. Like all good ideas, in retrospect it’s hard to believe no one else was doing it. The model now exists where commuters can travel for free. Imagine the backlash that is going to come from all the bus companies and the people they employ!

All of these changes, and the rapidity at which they are occurring,  has the government worried. We are forging ahead with a new communities and, hopefully, a society unfettered by the rules of government. In every area, the technological age is transforming our lives right before our eyes. Actors no longer need the gatekeepers of Hollywood as they can now upload their talents directly to YouTube; authors self-publish via CreateSpace. Need a hotel?  Skip the hassle and get a room via Airbnb and so on.

The overall reality remains that every aspect of our lives is still ruled by the government, with its control implemented and maintained by way of police, courts, jails and weapons (both civil and military). For now, the consequence can still be dire. So caution is the word of the day as you can yet end up on the wrong side of the political class. One need to look no further than the founders of Silk Road to see how badly, in fact, it can end.

Caution. Yes. But optimism for the future.

Steve

sleeclark@gmail.com