As the Democratic National Convention begins here in Philadelphia, the city’s nearly 16,000 hotel rooms will be at capacity. This might’ve been a problem during the city’s last political convention 16 years ago, but this year the “sharing economy” is providing a workaround.
Thanks to home-sharing, facilitated by software companies such as Airbnb and Homeaway that connect local residents to travelers looking for a place to stay, overbooked hotel rooms don’t mean a city is off-limits to visitors.
But some lawmakers want to pull back the welcome mat. A group of U.S. senators who are attending the convention just wrote a letter to the Federal Trade Commission, urging it to investigate home-sharing and consider new regulations that could handicap this innovative provision of service.
This is only the latest salvo in politicians’ ongoing war on the sharing economy and innovation in general. Although the sharing economy has proven itself time and time again, with my generation helping drive its meteoric success, politicians still fight tooth and nail to protect the last millennium’s economic status quo.
The Sharing Economy Is a Huge Win for Everyone
Like other sharing economy activities, home sharing connects people and empowers them to make the most of their time, money, and belongings. It is a pure win-win transaction: Visitors get access to a comfortable, comparatively affordable place to stay, while residents can earn as much as 81 percent of their rent or monthly mortgage payments, on average, by listing their living space.
On top of that, many home-share users report enjoying opportunities to meet people and make friends from around the world. Visitors from other countries use home-sharing, with 45 million people worldwide participating. In short, any city with home-sharing users can become an international destination.
Welcoming guests into a city has the added bonus of stimulating the economy. In San Francisco, where many of the software companies that connect home-sharers were launched, home-sharing had a $56 million effect in one year alone. That includes more than $40 billion local businesses earn due to the influx of new visitors, who become customers for local businesses.
Millennials already feel right at home with home-sharing and other activities of the sharing economy. Recent analysis by Pew shows 71 percent of adults have used one of the many innovative services offered in the sharing economy, with 11 percent using home-sharing. Among people aged 18-44, one-third have integrated multiple sharing economy activities into their lives.
We’re Not Stupid, Mr. Bossy Man
Where my generation sees lower costs and better service, many politicians only see threats to the establishment to strangle with red tape. Their attitudes are best summed up by one local regulator in Florida. While defending restrictions on the sharing economy, he noted, “Sometimes, we have to protect people from themselves.”
These misguided attempts at protecting us from ourselves almost always end with regulatory overreach. Philadelphia legalized home-sharing last year, although not without subjecting it to a slew of extra taxes and regulations. Other cities and states around the country have jumped on the anti-sharing-economy bandwagon, either driving it out of town or limiting its benefits to the everyday people who choose to engage in it.
Then there are the national threats. Last year, Hillary Clinton promised to “crack down” on the sharing economy, threatening to saddle us with outdated, innovation-destroying regulations. Following her lead, senators Brian Schatz, Dianne Feinstein, and Elizabeth Warren used their letter to urge the FTC to do much the same. The sharing economy’s only offense is that it has upended powerful business and special interests—groups that, unsurprisingly, carry a lot of political heft.
But the politicians now saying we should be concerned about the sharing economy overlook the real economic danger: Outdated rules and regulations that stifle innovation and limit opportunity. The sharing economy immensely benefits the 50,000 visitors converging on Philadelphia for the Democratic National Convention and the local residents who can offer their homes or serve more customers. For the politicians among them, this is a valuable opportunity to embrace the twenty-first century, rather than cling to the twentieth.