Airbnb allowed rampant price gouging following L.A. fires, city attorney alleges
latimes.com
latimes.com
Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.
The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
The hard question is how do you find the balance?
When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
> The hard question is how do you find the balance?
Why is that a hard question? What balance are you looking to find?
At some point there is no supply to alleviate the problem. Some effects may be dampened by new ride share drivers signing up, but even then, not everyone wants to be a driver regardless of compensation.
I don’t know of a good approach to free-market around a supply limitation in the short-term.
So if the goal is to maximize how many people get what they want, prices, plus some mechanism to avoid temporal speculation (for instance someone saving their sealed pokemon cards for 20 years hoping for price increases) makes the most sense.
One might have an aesthetically favorite version of deciding who is going to go without, but there's always going to be a problem with just that. What really helps is increasing the supply of what people want. And for that, it's hard to beat increasing rewards to the suppliers.
People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.
Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.
Having government mandated prices for everything is a very silly approach.
If only there were an entire field of study dedicated to matching supply and demand to maximize utility while encouraging efficient resource allocation...
That's an easy question - you find the balance by letting people do what they want, then it automatically balances. Banning that, you can't find the balance because you've banned the mechanism that balances.
Making stuff up for dramatic effect is also not an acceptable argument.
> there's no time or deliberation or competition that capitalism requires to find "balance".
That's not a requirement, but also there is time and all that- otherwise how did the people manage to use airbnb in the first place if they had no time? And you can deliberate for 5 minutes looking at a very high price and decide that you can temporarily stay in a much smaller place and further away than you wanted/used to. Or maybe move to your friends /relatives instead
That law, like many, is written in blood.
No, there is a balance, you've made up an argument
> I am absolutely allowed to use worst-case.
And I'm allowed to call out this faulty rhetoric
> That law, like many, is written in blood
That law, like many, is causing blood. It was the same thing with masks - instead of incentivizing people to drive far away to get masks from places of low demand and move them back to the city with high deficit, the FBI cracked down on gouging grounds, leaving people in cities exposed to the deadly virus without a mask.
Don't fucking gaslight me like I'm illiterate and can't look up three damn messages. You literally said that there should be no controls, ergo no balance between free market capitalism and controlled emergency economy.
Talking with people like you is such a waste of time.
The real answer here is to figure out a way for the people who need it most to get it, and the people who need it most aren't always the richest.
And I'm aware I didn't provide an answer. I specifically said there is no answer.
Edit: the same basic problem appears everywhere, e.g.
-*the need to make money exceeds the ability to solve general problems
-your need to understand exceeds my ability to explain
-my ability to focus exceeds your need to continue this thread
-healthcare insurance ie try to get tptacek on your side
The issue isn't "what should we do here," which is a political question, for whom each person will have their own answer. The question is what do you do about a "we're just a venue, we're not actually conducting business" company that is very clearly facilitating mass-violation of laws.
This undermines rule of law, simply because our legal system isn't designed for centralized vehicles for criminal behavior, without being able to charge the catalyst for the behavior, the app, with penalty such that it compels behavior going forward. Facilitating these crimes is criminal behavior.
It's a tough question, both politically, and practically. We like the idea of AirBnB, but if we can't find a way to create an enforcement mechanism for local hotel rules, then we're basically endorsing lawlessness... which isn't politically sustainable.
Let people sort it out, they know what's going to work best for them far better than you.
Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
It was an unconvincing argument then, and is an unconvincing argument now.
Second most convincing argument is people who hoarded toilet paper during COVID
That's not an argument for price gouging, it's an argument for rationing.
Sure, you can limit amount per customer per store. But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…
All the toilet paper is still gone, encouraging fear in other people to do the same as the couple above.
The alternative would have been “you idiots are buying all the toilet paper? Fine. It’s 5x more expensive now.”
People then see that toilet paper is still in stores and prices can come down gradually but rapidly, and if people start being nervous again prices can quickly raise to stamp that out.
During a panic toilet paper shooping spree that would allow like 100 other customers to also get toilet paper.
I bet most of those same people would lose their minds if their favourite restaurant tried to double prices overnight. "Yeah we sold a lot of burgers yesterday..."
If there was less egg available for a given day, McDonald's [^1] don't charge more for a McMuffin, they sell fewer McMuffins
I'd argue AirBnb's approach here is more like Uber's surge rates. Which are clearly more extreme than anything taxi cabs did (bar the occasional bad actor)
[^1]: mcdonalds is stretching the "restaurant" analogy here, but they have a higher consistent turnover so seem like a closer comparison
Restaurants are now double what they were, just a couple of years ago; even the cheaper ones.
The prices shot up, and have yet to back down.
So then real price gouging is... what, when you charge more than everyone else (and drive all your customers away to competitors)?
So one can argue that some cartel-like algorithms are price gouging, but it's unlikely to be what a provider of a lone AirBnb unit will do, as for them, going empty is worth zero.
Honestly, a myth. It’s aesthetically pleasing (outside perishable personal essentials, like staples in a crisis). But if you have less housing than the population, the problem is the lack of housing. Getting uppity about pricing while builders wait months to get permits issued is performative at best.
This seems pretty undesirable. Very easy for Airbnb/third party to increase prices even without demand just to increase their prices.
We recently saw a similar price fixing lawsuit for renters. Landlords, co-ordinating together, ended up increasing prices of Condos across major American cities (via means of a third party). The consumer ends up paying unnecessarily high prices in an inelastic market.
Huh. I know a number of AirBNB hosts (the new kind that treat it like a business, not the old kind) and they all absolutely do model the market out months in advance and 100% manually set the prices.
“the market responds the same way as if it was a business conference in town.” Normal people definitely complain about that and use the word gouging when they do so.
we don't need to know.
if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.
if airbnb raised the prices and the market stayed strong, they'd raise the prices more.
the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.
the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.
let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.
if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
Markets tend to the second and need state intervention in order to prevent the proliferation of monopolies. Functionally this is intervention every time price coordination happens, which... is pretty clearly what AirBNB is doing!
but the real estate shortage and natural monopoly you allege (it's not true as I already pointed out) would explain the post fire short term situation, so you don't need to grasp for conspiracy theories.
as i said already, airbnb's potential to manipulate RE prices is a problem to be concerned about in normal times. When a fire burns down much of the city, prices go up because there is an actual shortage, not price manipulation.
time for you to hit the books again.
BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.
$62 before tip.
I would love to see some innovation in this space like India's ONDC and more Direct-to-Driver apps.
Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.
If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.
You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
Or just removing needless restrictions so the market can provide the incentive for private entities to build housing? The government is not the primary builder of housing, nor should it be.
But I guess if we accepted that, nobody would be to blame.
Not a California thing either. Southern states have similar laws thanks to common natural disasters like hurricanes.
It isn't just a regional problem.
Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
from my view you are a great "host"
Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave.
LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds.
In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy.
Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway?
Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
Genuine question because you seem passionate about it and I don’t have a good answer for this, I wrestle with it often.
Where should they put themselves instead? Or where should the state allow them to be?
"...sources with knowledge of the incident have told news outlets that it appears to have been intentionally set and that the storage of wood pallets and hand sanitizer under the overpass contributed to the intensity of the blaze. Both wood pallets and hand sanitizer are known to fuel fires."
Why was there bulk pallets and hand sanitizer? It's basically kindling, with a napalm icing. Look at the photo. It is likely this product was stored there due to it was removed from somewhere else where it was illegally stored. And it was likely to be a business operating illegally, without the proper licenses and permits. Or they needed to dispose of the product and simply did not want to pay for it.
Governor Newsom has already acknowledged this was and is a failure of governance.