Airbnb says this man does not exist. So I had coffee with him
pando.com
pando.com
Legally speaking, Airbnb is like YouTube and similar services in offering a service that is perfectly legal to do in proper cases and that can be done today to the immeasurable benefit of many in ways that could not even have been dreamed of in the pre-internet age. When the service is used legally and properly, it transforms how millions of people do things in their lives and does so for the better: in YouTube's case, as an outlet for video display and in Airbnb's, as a way of helping all sorts of people make more efficient use of their residential holdings. When the service is misused, however, others can be hurt: in YouTube's case, with persons posting and potentially profiting by infringing the copyrights of others; in Airbnb's, with persons attempting to circumvent laws regulating uses of commercial rental space. In each case, there is legitimate reason for many to complain of the misuses because they hurt people and people react to being hurt, and the law has measures in place to punish the direct malefactors in various ways. Yet what does this mean, legally speaking, for the provider of a lawful and, indeed, exceedingly useful service that is seen to profit in part from the activities of those who not only use their service legally but also from those who do not.
When you get to such cases, you arrive at the intersection of law with public policy. Unless one is to bar technological progress and the change that it brings altogether, one must devise rules to address the illegal uses that are bad while preserving incentives to promote the technological progress that is good.
In the case of YouTube, this was done through DMCA, which (whatever its other problems) did a pretty good job of setting up safe harbors that enable services such as YouTube to continue to do what they do without incurring liabilities for the wrongs of malefactors while at the same time requiring them to build in safeguards to protect the rights of those who might be hurt by their wrongs. This was not an easy task and even today the courts are sorting through the frictions occurring at the edges. But, though not perfect, the law has set up fundamental rules that, in the end, have managed to curb a good number of the wrongs while enabling a worthwhile service to survive and prosper.
In the case of Airbnb, the fights are occurring at the local level and are at an early stage. As the players sort through the policy issues, though, the same sort of primary issue needs to be addressed as happened with YouTube in the video streaming area: how can the rights of victims of third-party wrongdoers be protected without barring or significantly impairing the new-found value for many in using a great new service wrought by technological advances (and, of course, by the skills and talents of those who have built the service)?
I don't know the New York rental market at all and have nothing to say about how the issue is best resolved for the various persons affected by Airbnb's service there. I sense intuitively, though, that things like "15% across-the-board tax" are innately retrograde solutions that would serve to choke the beneficial and legal side of the service. Occasional users really are not in the business of providing hotel lodgings and it is a pretty big leap to say that they should be required to pay taxes as if they were. Or to require them to be subjected to liabilities and risks in ways that hotels are. These "solutions" are really just a way of governmental regulators, should they adopt the, acting on behalf of some narrow lobbing interest or other to choke a service that benefits countless others. They are overkill and would be the same as if Congress, at the federal level, had passed laws saying that YouTube-style services should be banned because they can facilitate copyright infringement that hurts others. That sort of "solution" would have been folly in our digital age and so too would any overkill-style governmental solution affecting any beneficial and innovative technologically-driven service that can come about by linking what people have to offer with what people need to use, and that includes Airbnb. Many other such services can easily follow (the "Airbnb for food" or the "Airbnb for whatever"). Do we really want to choke off the great benefits that can come from all this just because third-party abuses can arise.
The key to all this is to deal with the abuses while preserving the values conferred by the new services. If there is antipathy toward the wrongdoers, there is no basis for directing this to the innovators themselves. Why this should be happening among those who otherwise favor technological change is something that really baffles me. I for one commend Airbnb for what they are doing and for the benefits it can bring to many. If they make fortunes out of it all, so much the better. The potential third-party abuses do need to be dealt with so that innocent people are not harmed. But they need to be dealt with in narrow ways focused on the actual problems, not in blunderbuss fashion that is short-sighted and, in the long run, harmful to us all.
This is why AirBnB generates such apathy. Take the regulatory arbitrage away and AirBnB isn't a technical startup or a market disruptor; it's just another VRBO site with pretty CSS.
They are overkill and would be the same as if Congress, at the federal level, had passed laws saying that YouTube-style services should be banned because they can facilitate copyright infringement that hurts others.
No, completely different, and as a lawyer you know this. Local issues are valid concerns for local laws. If New York wants to pass an across the board tax on temporary rentals, it is absolutely not the same as if Congress passed a country-wide ban on Youtube-style service.
The key to all this is to deal with the abuses while preserving the values conferred by the new services. If there is antipathy toward the wrongdoers, there is no basis for directing this to the innovators themselves.
Existing laws already do this. And as a business that injects itself into the market governed by such laws, AirBnB has taken on the burden of complying with such laws. Moreover, AirBnB isn't an innovator--it's a copycat. The only innovation AirBnB provided was sub-unit rentals (i.e., just a room or a couch), which is no longer the mainstay of its business.
Our case was not a private dispute, or rather it was intractable as one, and in any event the use was illegal. Thus it took overcoming the normal bureaucratic wall of mud at the enforcement arm of the city zoning department and eventually offering testimony before Judge Jim* in Municipal Court on a Tuesday afternoon last spring.
*Judge Jim had been the Miss June's diforce attorney several years before his election And a fellow Rotarian of another testifying neighbor.
Apparently a lot of people are attracted to AirBnB for this very reason. This shows how badly regulations affect so many different kinds of markets.
The difference between AirBnB and YouTube is obvious. There are vast arrays of ways in which the average person can use YouTube without any question that such uses are legal.
Conversly, there are very few ways in which the average person - whether renter or rented, can use AirBnB in a way that is unquestionably legal. Few local jurisdictions allow the sort of transactions AirBnB is built upon facilitating, and even fewer allow such use without at least some minimal regulatory oversight such as business licenses and tax reporting.
The reason is the same as for other land use issues, adjoining and nearby properties are effected and real property cannot be moved. Transient lodging uses place unique stresses on a community, and their benefits tend not to accrue to nearby properties with orthogonal uses.
The better analogy would be Craigslist if Craigslist only advertised prostitution related material. Then we would stop pretending that there is wide spread legality and focus in on whether existing laws make sense, and striving to change them where they don't.
you replied: > The better analogy would be Craigslist if Craigslist only advertised prostitution related material.
My, what a big hammer you have! We've now equated avoidance of hospitality taxes on a legal and moral scale with facilitating prostitution. I'm all for the rule of law, but these days that means keeping as close an eye on the law itself as for potential lawbreakers.
Your big hammer, of course, completely dodges the nuance that grellas was getting to. Laws are created and implemented in a context. What we'be seen in recent decades with the MP3 revolution, Uber, YouTube, and ostensibly services like AirBnB are business models that are matched poorly to existing law and precedent. That is, the context has changed. Neither extreme -- throwing out The Law entirely, nor draconian implmentation of The Law -- is really a suitable response in most cases. I think Uber is a particularly relevant example, as it's been thrust directly into the midst of innovating in an existing class of business, occasionally at odds with local laws, regulations, and incumbent businesses.
To this situation, AirBnB has put forth its case that it facilitates uptake of temporarily vacant lodgings. There are good arguments as to the social benefit this provides. Imagine where AirBnB and similar services are so successful that they curb construction of dedicated hotel space. As a society we've then managed to curb unnecessary resource use. I would argue that truly occasional use of the service in this regard has little to no impact on the associated community.
However, I also agree with your comments about transient lodging and its impacts on communities. There've been a few good essays on this problem in the NYC area in recent years, but from the angle of transient owners. IMO, The Man Who Doesn't Exist falls clearly into the category of "transient facilitator". There's not even the ostensible intent to live in these properties, damn the excess, but just to use them as part of a business strategy. And there's our nuance. Some users of AirBnB are engaging in activity that steps over the line. But the law currently doesn't have any nuance to distinguish between AirBnB's stated business model and the occasional "transient facilitator" using the service.
And thus the earthquakes at the fault line between law and society's shifts rolls on.
The change in context is only that in the modern age, it is easier to advertise illegal services and get away with it.
AirBnB could ban all the illegal postings from their site, and they choose not to.
If Airbnb wanted to operate legally and protect the rights of its legitimate customers while still preventing illegal activities (as you are suggesting they do), it would only permit rentals of 30 days or more unless the 'host' has a hotel license and the proper permits. The simple fact is that Airbnb knows its business in NYC is nearly entirely built on illegal rentals and doesn't care.
A quick search for a room in Manhattan for a single weeknight next week shows that:
Shared room: 116 Own room: 819 Entire place: 911
My original point stands, though. About 1/2 of Airbnb listings in NYC are illegal and Airbnb is fully aware of that fact yet still profiting from it. If, as the original comment claimed, Airbnb was interested in operating full legally, they could simply disallow "Entire Place" listings in NY for less than 30 days if the 'landlord' does not have a hotel license.
Good. We should all strive to break at least 2 or 3 "laws" a day. It builds character.
It's also good for reminding the jack-boots who run the government that We The People are still the ultimate source of political power and that we aren't going to just roll over and accept their totalitarian bullshit.
Talk about childish... sheesh. That might be true in principle, but in practice it's anything but. There is plenty of evidence that our government does not reflect the "will of the people" in many areas, and that's even IF you accept the idea that "the will of the people" means anything and conveniently overlook the "tyranny of the majority".
Don't give me this crap that our government has some sort of legitimacy just because we go through the charade of voting and what-not every so often.
Didn't they? Hmmm...
respond to what I actually said
Glad to see that you aren't actually interested in digging deeper and examining issues that lie underneath the surface. Sure, let's all be pedantic twits and focus on the words and not the meaning. That'll make everything better!
A healthy skepticism of the status quo would do you good in life.
But, OTOH, to suggest that we need a law against it, and to bring to bear the weight of "government" and the threat of force backed by men (many men) with guns (big guns), over sub-letting a room? Pure hogwash.
This public perception is perhaps near-isomorphic with reality in the most extreme cities, which is precisely where AirBnB is the strongest. Regulatory objections aside, this suggests they are a boots-on-the-ground solution to a real pain point.
At what point must the law be recalibrated to follow norms and good sense?
AirBnB threatens a vastly wider swath of people than YouTube ever did. If you don't understand why people do not want to share a neighborhood or a residential tower with transients, perhaps you've never had to deal with the fallout and quality of life issues. Ever had to deal with bedbugs? I think I'd rather be stabbed and spend a day in the ER than have to deal with them again.
Any service that appears to increase that likelihood, I will oppose.
And no, I don't think it should be up to me to individually invest in pursuing each and every case -- particularly when there may be a new case every few days or weeks or I don't know when.
Real, stable tenants (hopefully) have an investment in keeping or finding peace with their community. Or, they can be compelled to do so.
Hotels cost more. Some of that may be "bad", but there is also a reason -- it costs more to deal effectively with transient populations.
From my perspective.
P.S. There is also the security factor. I don't want to live in a "hotel" where the faces change every day and I end up not knowing what the fuck is going on.
P.P.S. And bedbugs. Etc.
Is there actually a legal use case? I can imagine that this law is virtually unenforceable against private individuals renting out a spare room for a few days, but I suspect it still (notionally) applies.
- hosts using fake names - hosts using fake addresses - hosts giving deeply inaccurate descriptions - hosts telling me that the super might swing by, and I should introduce myself as (some other name) friend of (another name I'd never heard) if I ran into him. - neighbors of the unit giving me the stink eye, presumably because of what other guests had done.
My personal experience leads me to believe that AirBNB is, at it's heart, a platform that is built to create negative externalities. The processes in place to correct these issues are non-existent, which indicates to me that AirBNB knows this, and does not care.
Making money by breaking regulations and lease terms is hardly the stuff of the heroic inventor. What other criminals count as "disrputers"? Insider traders? Identity thieves? Insurance fraudsters?
This guy is sociopath and I hope he ends up in prison.
The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it.
I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.
which will in turn reduce the supply of apartments
available for residents
First, residents strongly oppose it.
Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood
environmental impact studies (weirdly) can be used against projects
local "community boards" have a lot of power
and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
There is a character to a city, and it is easy to destroy the things that make them worth living in.
This is happening, but naturally is not fast. There are reasons why you wouldn't someone to demolish a skyscraper in the middle of Manhattan without oversight.
Adding to this problem is the state of infrastructure. Manhattan streets are packed, and most subway lines also. There is currently a proposal to up-zone the area directly around Grand Central and raise the height limits. This is a great thing, except all subway lines feeding Grand Central are already operating past peak capacity. Creating this extra space is pointless (and in fact detrimental) unless there is infrastructure ready to support it.
There are already infrastructure projects in place to alleviate this, but digging tunnels through bedrock is understandably not a fast affair. The East Side Access project will connect Penn Station and Grand Central, and alleviate some of the traffic at both. Adding to the complexity here is that Manhattan's underground is already filled with tunnels of all varieties, forcing new projects to tunnel ever deeper, with requisite cost and slowness.
The world is complicated, city planning is complicated. This isn't software where we can just deploy a new server - apartments, offices, subway lines, streets, sewers, power plants, cannot be willed into existence at a whim.
Hell, the biggest development project going on right now involves building on top of a train yard. This does not suggest an availability of actual empty land.
> "and there are tons of under-developed areas"
And yes, that's precisely what I referring to when I mentioned that any new development would have to involve demolition and replacement. Replacing a 15-story apartment complex with a 45-story apartment complex may be a good idea, but first you'd have to buy out all the owners in the building.
That sort of thing is neither simple nor fast.
The infrastructure problem exists still also. Spanish Harlem can be argued to be underdeveloped - and we can surely replace those buildings with tall apartment complexes... except the 4/5/6 subway is already massively oversubscribed. You can build apartments there, but said residents won't be able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this pressure, but we all know how fast that is going.
Same goes for basically all of Upper Manhattan - there are plenty of opportunities to replace buildings, but not enough infrastructure to move people around. Transportation (like most cities) is the biggest developmental bottleneck.
> " it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options."
You've missed the entire point of my post. "Construction friendliness" is not Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent in building replacement (read: buying out existing stakeholders) are. For all intents and purposes, Manhattan is "friendly enough".
There is a building that's finally going up near me in the Lower East Side - a replacement of an old walkup. The owners in the old building resisted sale for a long time, as it would involve displacing them, plus they (rightly) speculated that their property value would continue to increase. The solution at the end of the day is to offer existing owners a brand new (albeit small) apartment in the new building. Not only did it cost the builders money to demolish and erect the new building, but also to buy out the old owners and give them part of the new property for free. Things like this are why Manhattan is replacing buildings so slowly, not because Manhattan is somehow opposed to development.
But what city with taxing authority would ever do this? As long as cities can take revenue from everyone regardless of their satisfaction with the city, there is a perverse incentive to oversubscribe city services. Since they are a monopoly over their whole territory, it is the same pressure as upon telecoms to add more customers without building out infrastructure.
The rent is too danged high because the supply of rentals is too danged low with respect to market demand. If hotel demand is high enough to cut that far into regular rentals, that just means there aren't enough purpose-built hotels. The regulation chooses to protect long-term residents at the expense of visitors and owner-investors.
Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. And does it even truly protect them?
People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
Attacking rogue AirBnB users may satisfy shortsighted political goals, but removing artificial barriers to new housing construction would be better for everyone in the long term.
That said, the guy from the article is a dick that engages in willful fraud on a daily basis. NYC is right to go after people like him, but not at the expense of solving the underlying problem that produces such people as a symptom.
Price is high because the cost to produce additional supply is high. Period.
Regulations can and do stop lots of things. If the regulations don't stop anything, then why do they 'distort the natural behavior of the market'?
You can't claim that regulation is ineffective at affecting behavior while decrying its distortive effects at the same time.
Isn't that normal and just? People want something to happen, and they formalize this as law rather than applying mob violence, which is a Good Thing.
> People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
What you do with your property affects those around you; there's no god-given fundamental right to use your building for whatever you want to. We have things like zoning regulations for a reason - because we voted for them, because we wanted them.
> removing artificial barriers to new housing construction would be better for everyone in the long term.
I think everyone is in favour of new housing construction, but there's only so much Manhattan to go around. The choice is not between new houses and no new houses, or hotels and no hotels; it's between residential housing and hotels, and it's right that that choice be made democraticly.
People who are subletting in violation of thier lease terms or co-op/condo agreement are not only breaking the law but also willfully breaching contracts they have freely agreed to. I thought that libertarians considered negotiated contracts a key mechanism of ordering a society?
I believe NYC forbids short-term sublets - that's the big issue here. Plus the taxes, of course.
That's why the person in this story not only needs to avoid the government, but also private-sector contract enforcement. Hence, he's looking for buildings with no doorman and no live-in super, since those would be more likely to notice his illicit activity. I don't see how that's libertarian or even Randian. Rand's view was that violating a contract is an act of indirect violence, essentially theft.
The devil's advocate here would say, "These contracts are in place because the market is rigged here by powerful, entrenched, rent-seeking interests that are colluding."
The "inefficiency" you've spotted is that a business which ignores all rules, regulations and taxes will have a huge competitive advantage over those who comply. That's true in any industry, not just housing.
I don't agree with the guy, but I also suspect he may have a point about some of the regulations being over prescriptive.
Also, I think that believing that this guy should be in prison for these actions is far more sociopathic than anything this article claims that this guy is doing.
Having said that, I am extremely sympathetic to the notion that NYC markets may be over-regulated, and have mixed feelings about the notion that evasion is an appropriate way to deal with that. I don't necessarily think this guy should be in prison; I was narrowly answering your question: "[W]hat possible benefit would prison be here?"
And therein lies the rub. Sociopaths are not deterred by any but the most credible of threats. They will always find new avenues of exploit down at the bottom. To make an extreme effort to try and wipe out all sociopaths, parasites, free riders (or whatever else you want to call them) would impose enormous, crippling costs on our society.
I don't see how this guy is any different from Airbnb itself (or other disruptive-and-dubiously-legal operations like the various digital gypsy cab companies).
He breaks the law directly. AirBnB merely induces its customers to break the law. In both cases, they're bad actors.
The Helsinki Design Lab (HDL), a governmental agency originally created in 1968 to encourage design thinking in Finland, engaged in an interesting study. In Helsinki, there's an unofficial day where historically, citizens have essentially opened illegal restaurants for the day. They sell out of homes and apartments and open windows, or often just give it away for free. Obviously all of this is highly illegal, but it's an amazing cultural experience that is beloved.
HDL polled some of the people who created these pop-up restaurants, trying to figure out whether they had any interest in openning real restaurants. The answer was an overwhelming no.
So the lab set out to answer an interesting question: "Why is it that none of these people who open free restaurants for a day -- these entrepreneurs who clearly love the essence of serving and creating food -- why is it that they find it such a ridiculous proposition to open a business?"
It's a good question and worth asking.
Here was a result of that investigation (among other things, such as streamlining the bureaucracy around registering and managing the business):
http://www.helsinkidesignlab.org/dossiers/open-kitchen
You say AirBnb is a "bad actor" for breaking the law, and I say that that's incredibly unimaginative. Every single person on airbnb wants to open a hotel, but they frankly disengage from the formal process, likely for valid reasons. AirBnb is helping to identify that this is a problem that needs solving.
I wouldn't say they guy in the article wants to run a hotel. Running a hotel is hard work with ordinary margins. HFT (in all likihood exaggerated day trading), illigaly importing iPads to France and running an illigal airbnb business all strike me as someone looking to get rich quick. Drug dealing would fit in better than running a legit hotel.
These people don't want to open a hotel, they are doing it illegally because it is easy money without having to do all the hard parts. No pesky tax forms, no regulators sniffing around, no employees to have to pay payroll taxes to. I'm guessing he probably hires some illegals or homeless people under the table to clean the place and pays them in cash. That's like saying all drug dealer want to open a store, and would if drugs were legal.
In what world is renting an apartment, albeit against regulation and terms of the lease, an offense ANYWHERE NEAR insider trading, identity theft, or insurance fraud?
Am I missing something?
* He is hurting the neighbors to the properties he re-rents. They arranged to live in residential neighborhoods adjacent to other semi-permanent residents, not an illegal hotel. Hotels are not found in charming residential neighborhoods for a reason: nobody wants to live next to them.
* He is evading taxes that are used to improve new yorkers' quality of life at little/no expense to local residents.
* Insurance fraud is a probable consequence of his business. Since it's hard to get commercial insurance for your illegal venture, if he has ANY insurance, it would be a renter's policy and maybe a personal umbrella policy. Any claims he made would be fraudulent.
Well, except for the losses from non-visitors who avoid cities with outrageously high "let's rip off our guests" taxes.
Those people may not be directly visible, but I assure you they are real.
(To be a little less snarky, the microeconomics of the situation indicate it's probably not that damaging. Your hotel stay is probably less than half of your costs of visiting, so a 15% markup on that component alone doesn't raise the overall price of a trip very much.)
- Bedbugs. They're at pandemic levels in NYC, and the more volume of people moving in/out of a place the more likely you are to get them. Hotels are required to mitigate the bedbug threat with a level of thoroughness that simply is impossible unless the building owner is aware that there's a hotel operating under their roof. I would be mighty pissed if I found a AirBnb in my building, as that dramatically raises everyone's risk of infestation.
- Noise. Particularly in neighborhoods like mine that are restaurant and bar districts, where a large part of the attraction of the location is the ability to stumble home directly from an innumerable number of bars. Temporary residents have no incentive to keep things reasonable. Whenever this point is brought up you get a few anecdotal stories about "the British family that was sooooo quiet", but no mention of the rest of the time where we'd have to put up with the noise.
- Security. I live in a small pre-war building with 20 units. I've met literally every one of my neighbors. This building isn't Fort Knox - once you're inside the main door it doesn't take Harry Houdini to break into any one apartment. Real hotels have security cameras, personnel on-site, and much more elaborate locks on doors... we do not.
These are real risks and real harm happening to neighbors of guys like this. His actions have a negative impact. While calling him a sociopath might be a tad extreme, it certainly isn't completely without merit.
None of these problems are unsolvable - but they are unsolvable unless the hoteling party is operating in the open. If we're going to allow people rent out their apartments in a pseudo-hotel manner, then the neighbors, the building owner, and the city needs to know about it in order to mitigate all of the above.
And if you think that insider trading is a serious crime, why shouldn't tax evasion (he doesn't pay NYC hotel tax), which deprives needy people of city services or causes law-abiding people to pay higher taxes, be a real crime?
> After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing.
Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms?
I agree that it's a bit far fetched, but IMHO it's plausible and I wouldn't be surprised if more than one person had already landed a lucrative job in the financial sector that way.
No kidding. Not to mention, if he indeed 'made a killing' in the finance industry, why would he be hustling trying to resell iPads and now Air-bnb suites? Seems something programming-related or becoming an ex-pat in a tropical country with nice beaches would be more suitable for someone in their 20's that hates their job and has a lot of money...
He is a step or two above a drug dealer. That's about where I would land him.
It can be very hard to tell.
Woah, that escalated quickly. This type of comment is more what I would expect from a sociopath then the mostly harmless individual described in this article. Don't you have any empathy for him? Have you considered that the author might not have depicted him in an accurate way? Don't you think prison would be a disproportionate punishment for his alleged crimes? Geez, the world is not black and white.
> Business is a zero-sum game.
That's pretty much as far from "libertarian Ayn Rand disciple" as you can get. This Man That Does Not Exist sounds more like a Libertarian Straw Man, serving the purposes of a writer with an authoritarian streak.
Color me surprised that he's a Rand disciple.
If Alice performs well at her job, and her company gains a lot of marketshare as a result, she has likely caused discomfort for the employees of her company's competitors. It's frightening to imagine a world in which Alice is forced to stop performing as well because of her competitors' discomfort.
A simpler example: "hapless" is all over this thread, causing discomfort for those who don't want this man thrown in prison. Should "hapless" be forced to stop?
Additionally, everyone is entitled to (and does) ignore public goods that they don't pay for. It's frightening to imagine a world in which we force Alice to pay for her neighbor's renovations, or to pay for a weekly advice newsletter she never signed up for.
People like the man in the article make these value judgments more independently from government policy than most people do. If anything, that is your contention with him, not that he doesn't pay for things he didn't ask for, and not that he sometimes ignores the discomfort caused by his actions.
People are not entitled to ignore all externalities that cause discomfort to others. For example, creating toxic pollution that spreads to people around you and forcing them to pay the cost of cleanup is not OK, but you're suggesting it is? If you were affected by this kind of pollution, would you just shrug and say, "It's OK for them to ignore this externality?"
And the part about not paying for public goods that you use, you seem to have misread as "not using public goods that you don't pay for".
People are upset with the AirBNB guy in the article because he's causing problems for the neighbors, and profiting because he's ignoring regulations. It's profiting off the backs of other people, so he's more like a leecher than any Ayn Randian hero.
if you are aware of the externality you're creating, but continuing with the activity because of even greater positive externalities, and/or exercising your rights consistent with how you would expect others to exercise them, then you're not ignoring the externality, you're taking it into account in your social calculations.
If you were ignoring it, and acting for your own benefit regardless of any externalities to others, that would be antisocial.
In TFA, it sort of seems like he is aware of the negative impact on neighbors and illegalities, but feels inexplicably entitled regardless.
we already live in this world, and you haven't even noticed:
NYC Build it Back program: http://www.nyc.gov/html/recovery/html/home/home.shtml
"Rep. Michael Grimm wants federal government to earmark $600 million for NYC 'Build it Back' program": http://www.silive.com/news/index.ssf/2013/11/rep_michael_gri...
New York Assisted Home Performance Grants: http://www.dsireusa.org/incentives/incentive.cfm?Incentive_C...
low interest housing renovation loans from NYC: http://www1.nyc.gov/nyc-resources/service/1869/housing-renov...
e.g. just in new york there's plenty of publicly (or in the case of assisted home performance, ratepayer funded, e.g. a tax on energy bills) funded housing renovation programs.
I think that's the exception rather than the rule. People are expected to act competitively in their job in a way that doesn't extend to other spheres of life.
And not so long ago there was a view that there were limits on that competition; one could outdo one's competitor, but it was unseemly to press them to the point where they were forced to fire people or go bankrupt. Workers who were very successful would charge higher prices or spend less time working so as not to outcompete others too severely; companies that were very successful would license technology cheaply, or found ways to spend their money without expanding too aggressively. In the worst case, if you put a competitor out of business you were expected to acquire them on friendly terms. Many parts of the world still operate like this. It may be less efficient than the ultracapitalist way, but it's by no means "frightening".
I'm an AirBNB host in NYC and I know a lot of other people who are too. We're all exactly the kind of people AirBNB wants -- we have places that occasionally are available/empty, and AirBNB has become a great way for us to make a few extra $$. I personally don't make a dime of profit off my place (I do, however, offset a good portion of my rent).
I know the bad actors exist, and I know we do need some form of compromise between "No AirBNB!" and "AirBNB free-for-all". Not sure what the perfect solution is just yet, but I m confident a good one can be found.
* Sub-leasing is legal in NYC, for medium-term rentals. You are free to sub-lease your place during your month in europe, you are not free to sub-lease it nightly to transients.
* Owner-occupied Bed-and-Breakfasts are legal, but carefully regulated.
If AirBnB restricted itself to listings in these two (completely legal) categories, no one would object to them.
What happens is that a certain, usually small, percentage of residential apartments is made available to the tourists.
Each apartment means about one/two less hotel rooms.
Hotel rooms take space too, they are not floating over the city. They often replace old residential buildings to build hotels effectively taking away space from residents who are pushed out of the city.
So we may say that tourism takes space in the center, not apartments.
I didn't hear much complain about this neither, as tourism brings money and, if anything, they want more of them. It seems to me that NY has a very specific situation so Airbnb may be actually harming the residents, I don't know, but in general Airbnb is not doing anything particularly new in Europe, where apartments for short term rent have been existing for long time.
The hype is all about "rent from another human being" but the reality, and I guess most of their business in Europe, is simply providing a better platform.
Maybe NY regulators could look at Prague or Croatia to solve the problem.
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The public and our representatives in government are more internet savvy too so these issues (or at least the stories) bubble to the top more quickly.
As a resident in NY and I can appreciate the ability AirBNB gives me to rent out my apartment easily (I haven't). But I also see that "The Man That Doesn't Exist" is "stealing" apartment stock for hotel use, which drives up my cost of living as a renter (on the flipside, his "theft" of the apartment would be beneficial to me if I was an owner, driving up the value of my property).
What I am saying is that NY may seems pretty special but it may not be. The fact that Hotels are so expensive may be a sign that Airbnb is bringing some needed change in an overly protected business environment.
What if Airbnb forces some hotels to close and they free up residential space? Is this a possible effect?
Didn't Paris have a big uproar a few years ago over shorter than 30 day rentals similar to NYC's current issues?
Why not instead use the article (as it was probably intended) as a way to think and debate about things that are hard to agree on or that are hard to define?
This caught my attention for example: "The Man Who Does Not Exist claims regulations that govern rental apartments are akin to drug laws. They are useless, unenforceable, and an affront to the general public.", and although I don't have a strong opinion about hotel regulation in NY (or elsewhere), I do agree that current drug laws pretty much only benefit government agencies (they get funding) and drug cartels (by artificially raising prices).
He breaks the law for money. As a result, I would like to see him punished.
(As a secondary matter, he is loathsome for defrauding his landlords -- renting out space to be used as a hotel is a much higher-risk proposition than a long term residence)
This is a similar (if not the same) issue that Uber/Lyft and similar companies are facing with current regulation all over the world.
Slavery was legal in the US for a long time, and a lot of people were fine with it. Does that mean it should have stayed that way?
And I simply cannot believe you compared hotel regulation to the institution of slavery. It is not just in-apt, it is totally inappropriate. You should feel ashamed of yourself.
Also, get off your high horse.
I should be ashamed for making a factual comment? Slavery is only shocking now, but it was completely normal a few hundred years ago and for thousands of years before that. Would you prefer I compare hotel law to gay marriage then? The principle is the same anyway, people believe or agree on something until the premise for that is no longer acceptable or no longer true. Then a debate starts and change must happen. You are rejecting change and accusing the people who are creating the change of being criminals, I think you should be ashamed of that.
Given your nickname and the tone of your comments, I recommend you read this and put it into practice: http://www.telegraph.co.uk/technology/3304496/Be-lucky-its-a...
This is utter bullshit. There have people making political stands against slavery for centuries. In the US, there were laws being brought in in 1777, right after independence. In England, there was a 16th century case where a slave brought from Russia would not be recognised under English law. Slavery in France was prohibited early in the 14th century.
Slavery has a long tradition of people opposing it. Even 'thousands of years before that', there were societies where slavery was explicitly forbidden. The Achaemenid Empire (500-300BC) banned slavery due to its Zoroastrian religion.
But that is besides the point. I don't want to debate about slavery, and that is not the point of the article, I used slavery only as a contrast to exemplify how people agree or disagree with something, then debate, then come to some agreement.
The analogy also fails because while drug laws are motivated by health/moral concerns, hotel regulations are to a large extend motivated by the fact that the common resource required by both tenants and hotels is limited simply by the amount of available space in NYC,. This restraint on the available space would effect the outcome of a perfectly free market to be rather bad™, since it would turn the whole of the city (and most other popular cities) into one large hotel without any permanent residents.
I'd be surprised if he actually thinks this (though only mildly) - Some business activities are zero-sum, but in general business exists precisely because it's not a zero sum game.
Society suffers from the externalities of a criminal business.
Also, at a large scale "the customers" are the same as "society."
Externalities are an important topic but what are those externalities? Fewer tax dollars, annoyed neighbors, that all I can think of. Both of those are easily solvable problems in a free market. Allow apartment complexes to choose if they allow airBnB.
The benefit far outweighs the negatives. There are also positive externalities. We all benefit from sharing our resources.
Air BnB should be legalized. That would also get rid of some of the externalities of crime, like paying for prison and enforcement of laws.
Building roads is important and benefits society, but regardless taxation is still zero-sum. Taxation is just a funnel of inlets that eventually go to a bunch of outlets. The money in equals the money out. Nothing was created. benefit = the amount. Zero-sum. The government can spend it on things that are positive-sum, but so can we.
Now, lets take roads again, the economic benefit of roads is much much higher than the amount it takes to build and maintain them. Roads create wealth. But taxation is still zero-sum. We as a bunch of private individuals could have paid to have the roads built for all intents and purposes the same price the government can. Obviously that's impractical so we don't do it that way. The positive-sum of government is exactly this -- the organization of community projects among other things.
It's a difficult idea to wrap your head around, I know. The government can invest tax dollars, but so can you. Taxation, regardless of what it is spent on is inherently zero-sum by definition. That said, plenty of zero-sum things are incredibly important and worthwhile. Taxation is one of these things.
Killing all those brown people with drones sure is positive sum!
Taxation is zero-sum in dollars.
Trade of dollars and unmodified material goods is also zero sum in those dollars and goods, and can still be positive-sum in utility.
If you have X kg gold, and I have $Y, and you value that X kg gold at less than $Y, while I value that X kg gold a more than $Y, we can make a trade, all be subjectively better off - a non-zero sum transaction - and yet there is no more gold and there is no more dollars.
I think you're defining taxation so narrowly as to be meaningless. One could equally argue that buying something in a shop is inherently zero-sum - your money goes to the shopkeeper, the product goes to you, by definition that's zero-sum.
With more usual definitions we'd say that was a positive-sum trade, because to you the product is worth more than the money, while to the shopkeeper the reverse is true. But the exact same reasoning can apply to taxation - taxation is positive-sum for most people, precisely because it is more valuable to them for that money to be in the hands of the government than for it to be in their own hands (because, as you say, the government can use it more efficiently, because it can undertake projects that while positive-sum are impractical for private individuals).
I don't understand your second point at all. But remember, prices are "set" by firms competing for the lowest price/best value, not by "what the market can bear." There should be no reason rents will go up.
And yet which brings thousands and thousands of visitors to New York (with spending and lodging money) yearly. Move the Javits Center to Jersey and the surrounding hotels, restaurants and immeneties suddenly have very little reason to be there.
(This may finally change in a few years' time with the opening of the Hudson Yards redevelopment and the western extension of the 7 subway - so of course it's been proposed to tear down Javits and build a new convention center at the even more isolated Aqueduct Racetrack site. Ugh.)
> Thus far, he's found two properties that fit the bill. He charges around $500 a night for the first one; this second one is set to launch in the coming weeks with a similar price tag. He’s received funding from outside investors...
Parts of this story seem odd. If the Man Who Does Not Exist made a "killing" in finance, why exactly does he need or want investors for this venture? It sounds like the investment required is relatively modest and would quickly be recouped. And I can't imagine that increasing the number of people formally involved in his illegal enterprise will be to his benefit when, for one reason or another, the gig is up.
Currently the most successful people doing that are child psychiatrists and big pharma, but they convince the parents to buy the drugs for the kids instead. Government seems to be fine with this though, as well as most of society.
Assuming your rent is 500$/month, to give one room to some random person for a night you should charge them 20$/night to offset your entire rent for that day after deducing the city tax. The person in the article charges 500$/night. In that case you can even charge 50$/night and make money on top of having enough to pay rent.
In no case would you need to charge more than a hotel - you both pay 15% tax, but you don't need to pay a whole hotel's worth of workers for that room's upkeep.
It would be so nice if journalists who write about "Ayn Rand disciples" would actually read something by her first, so they would know what they're talking about.
Not every effect that a person has on someone else is an externality. In general, externalities are direct physical impacts you have on others. In this case, noise is a good example, though the general "vibe" of having strangers moving in and out, and the risk of violence from these people, assuming it is higher, is also an externality.
On the other hand, anything that operates via prices is never an externality. If AirBnB increased demand for rental housing and therefore raises prices, this wouldn't constitute an externality.
The ethics of free market economics basically states that the government should regulate externalities, but if someone is only effecting you via market prices, that's your own problem.
Another kind of externaility is network externalities. Even though pricing residential housing out of the market isn't itself an externality, there may be a network externality associated with residential housing which means that the market wouldn't provide the optimal balance of residential housing and hotels (even if there was no noise issue). Because of this, the government may also want to intervene by restricting the total amount of hotels. However, I doubt this is a big factor in real life since the demand for hotels is clearly much smaller than the demand for residential housing (who spends more than a tiny fraction of their life in a hotel?)
Yes, hotels in Manhatten are expensive, but calling it an activity for the 1% is a stretch. The rhetoric of 99%/1% was in response to 1% of US earners taking 20% of total income, at an average of like $400,000.
No, sounds like easy-to-pull-off arbitrage models fit him.
Furthermore, he takes all these steps to avoid 15% hotel tax, but pays 30% on the LLC profits and then pays income tax when he takes earnings from the LLC?
Am I missing something here?
In practice, it probably wouldn't work. LLCs are subject to a lower veil-piercing threshold in New York than corporations are (though the requirements are otherwise generally the same), so the LLC will do little to protect him legally, especially since he's violating Delaware's laws regarding the formation of the LLC.
He's also most likely using this structure avoid attracting unwanted attention, since one of NYC's avenues for tracking down AirBnB offenders has been to compare corporate filings with rentals offered on the site.
> “Why are they entitled to a cut?” he asks.
The hotels may pay the tax, but I believe the idea behind this sort of arrangement is that they would take this into account when pricing rooms. So effectively, out of towners pay the tax when they get a hotel room. Even if you ignore the other benefits the city and its businesses get from out of towners passing through, the question being asked here is: why does money paid by out of towners go into something that benefits out of towners?
Of course I agree with others that this story is at least embellished, too much of this guy's history seems like goofy fantasy. (Paying homeless people to purchase iPad 2 for export, really?) So this question being asked probably reflects the author more than it does the interview subject.
The author(s) of this drivel obviously want to paint this man in 50+ shades of dark grey and blood red, but really is there anything wrong, morally, with what he's doing, what is the purpose of the law other than to retroactively add value to the investments of people who could already afford to offer housing like this, and increase the barrier to entry for those who couldn't?
So, he makes an extra profit dodging taxes (as he did by dodging VAT by smuggling ipads). Well, surely it isn't news that crime does pay, as long as you can avoid getting caught?
Why think the man who does not exist exists? why not assume pando made him up, and made the whole story up? The story isn't so implausible that people would doubt it. If anything,the story is toogood - count the number of times the man comes across as a bad guy. Randian of the worst kind? tick. Used to work in wall street? tick. In HFT? tick. Why did he grant an interview if he was trying to keep his business secret? I don't know if the story is made up, but its ringing bells in my head...