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I'd qualify what you say just a bit more: I think it's not wrong to have laws that happen to protect incumbent businesses as long as there's some other purpose to them.

I'd add that since government is the mess-cleaner-upper of last resort, it's reasonable for them to limit the velocity of change. If Uber, etc, are really the future, then phasing in gradually larger quotas isn't going to stop the future from coming. But if instead there are unintended consequences, gradual introduction will let us find and fix those problems when they're small.

As an entrepreneur, that's great by me. If society gets burned on a big scale by some experiment, it may taint attitudes for years or decades. For example, the crash of 2008 has to made a lot of people extremely skeptical about financial innovation. In contrast, look at the very gradual expansion of drug liberalization in the US: people are slowing getting used to the idea that when people can buy weed in stores, nothing particularly bad happens.

> there's no law of the universe that says that "disruption" is a good thing, and there certainly isn't any clean way to weigh the interests of one big established industry with those of a large, successful, wealthy competitor industry.

There's something fairly close to a law which says that disruption is a good thing. Industries can only be disrupted by entrants that provide products that consumers prefer, so we have almost-a-law: disruption is a preferable-to-consumers thing. There a few cases where that's not socially desirable (I suppose crack replacing cocaine would be an example) but those are exceptional enough that I think we ought to regard disruption as presumed good unless shown otherwise.

Similarly, a decent heuristic for choosing whose interests to consider out of an established industry and a competitor is to let consumers choose which one is better. Of course this can be difficult for those in the established industry, but we're in a society-wide Prisoner's Dilemma over this, and a useful function of government would be making sure we all cooperate. Letting consumers choose the best companies is cooperation; protecting your own industry is defection. I'd be better off if my job and income were guaranteed, but I'd be worse off if everyone else got the same deal.

I think the real underlying problem is the jobs situation. I don't think this would be so much of an issue if jobs weren't so much of an issue.

The concern that many people have is that technological disruption is replacing old industries that employed more people with new industries that -- while preferable to the consumer -- employ less... and that those jobs will not be replaced since the same thing is happening all across the economy.

Who then will be the consumer to whom these new industries are preferable?

It's important to remember that people said the same thing when machines started becoming part of assembly lines in the 20th century. The key insight was that while there was lots of very real short term employment pain, society's increased productivity allowed it to make more goods and services and thus employ more people than it did before. You're assuming demand is constant and different forms of productivity are simply competing with each other to fulfill it most efficiently. But that isn't true! As society becomes more productive, more stuff gets made, and more money gets created to buy it with, and everyone is richer.

Now maybe you think this time it's different, either because people won't be able to move up the "ladder" (like our grandparents learned to operate those machines) or that society won't be able to generate enough demand (which seems crazy to me, but okay). You could make that argument, but you aren't. Just pointing at innovations as job killers is like pointing at the sail and complaining about all the oarsmen who will be laid off.

Another lens to look at all of this through is the Star Trek future. In, like, three hundred years, what do you want society to look like? Like it does now, where people toil away at current productivity levels, or is everyone is vastly richer? Assuming you want that future to be awesome, how do you draw a line from here to there? Because the "we can't have technological disruption" attitude just can't really be on that line, right?

"society's increased productivity allowed it to make more goods and services and thus employ more people than it did before."

I agree, but only if we can solve our energy and resource problems. If we can't do that, supply constraints will keep that scenario from happening again. There won't be any growth. No growth + automation = massive unemployment.

"There a few cases where that's not socially desirable"

There are tons of examples where that's not socially desirable. Piracy is one easy example -- people don't want to pay for stuff, and will love a product to death if it enables piracy.

Said another way: what consumers like is orthogonal to what makes society better.

You can argue that they're not always the same thing, but they're certainly not orthogonal. Consumers are a huge and extremely important part of society and the idea that the fulfillment of their preferences is completely unrelated to society's wellbeing is just silly.

>people don't want to pay for stuff, and will love a product to death if it enables piracy.

That's blatantly false at worst and misleading at best. People will love a product to death if it allows them to consume media on fair terms in an easy way.

Netflix reduced movie piracy and iTunes reduced music piracy. Because they're not priced in an insulting way, and because they're friction-free to use.

That's hardly the only example, and I think it's better to say so-called disruptors provide a service preferable to some consumers.

Many industries create negative externalities and government regulations force them to internalize some of those costs. Hotels are full of loud, annoying people; we stick them in certain parts of town only.

Or many industries are a form of cost pooling. The US decided that we want to have reliable mail delivery. The post office (which does an amazing job as compared to the vast majority of countries) uses the profits from short routes and urban centers to subsidize expensive and/or remote routes. Of course a business would love to come in a cherry pick the profitable routes. We -- rightly -- don't permit that, because we wish to have universal mail delivery and this is how we've chosen to pay for it. Reliable city-wide taxi service is probably similar; I don't know if uber et al are just cherry picking the best / most profitable routes, but I wouldn't be surprised. (And don't get me wrong, I love uber -- at least in sf, it's a taxi that actually comes. Amazing! But still, service guarantees are important, as are flat fares to/from airports, in part to avoid screwing tourists.)

And this doesn't even mention tax revenues; I know HN tends towards the glibertarian but the simple fact is if we, as a society, want nice things someone has to pay for them. A (big?) piece of many of these controversial startups' innovation seems to be thinly disguised tax avoidance (amazon, airbnb).

I actually think disruption tends to be neutral at best. Cities, especially dense urban living, are a large set of compromises amongst many people, and valley companies often have little respect for that.

This is a really wonderful post that captures a lot of what people overlook about Uber, AirBnB, etc. To some extent, these companies are built to arbitrage on government regulations intended to limit negative externalities, or achieve cost pooling or achieve universal coverage. Particularly Uber, because its not exactly some great innovation to be able to call a cab with your phone. The business model relies heavily on being free of taxi regulated rates and cherry picking the premium customers.

This. I have no sympathy for "Laws are for other people" as a business model.

I'm fine with the business model. Maybe these regulations need to be challenged. I'm not sympathetic to denying that regulatory arbitrage is what you're doing, and calling attempts at enforcement to be corruption.

> glibertarian

hmm.

> Industries can only be disrupted by entrants that provide products that consumers prefer

Can't industries also be disrupted by evil government bureaucrats taking them over, by ordering in jack-booted stormtroopers to drive out all competitors, for the benefit of the all-powerful state?

Or does that not count as disruption because it's not a scrappy underdog?

"I do want to know that my hired driver is insured."

So enact laws that force drivers who offer rides professionally to have insurance.

"I don't want my neighbor running an SRO out of his apartment"

Why not? The noise? We have existing nuisance laws for that.

"I like the ability to know that my prescription medications aren't radium-based elixirs."

We have consumer protection laws for that.

Isn't that what these pesky "regulations" are? You know - "laws".

That's the whole point - the problem is not with regulations or laws as such, but with harmful regulations or laws.

Protecting consumers from fraud is a good thing, as it promotes good service and (indirectly through increased trust) grows the economy, and makes people/customers/voters happier.

Protecting companies from their competitors is a bad thing, as it promotes bad service from being outcompeted, and (by allowing inefficiencies to stay unchecked) hampers economic growth, and prevents people/customers/voters from choosing what they want.

We have blanket regulations, in addition to laws such as these, because when you're sick from those radium elixirs, you don't want to have to be spending time and money suing your pharmacist on top of it. (Or searching for a class action, for that matter.) We also have them because there's a point past which enforcing individual violations is much too inefficient.

I think you're missing the nuance of what timr is saying.

He's not saying that the regulations that the Seattle City Council chose to impose were the right ones to impose. He's saying that the inverse argument--that there should not be any regulations at all--isn't correct either.

> So enact laws that force drivers who offer rides professionally to have insurance.

Those laws exist. They are called taxi regulations. Uber is flouting them.

Look, Uber can comply with all of the rules that taxicab companies have to. Uber chooses not to because it is more profitable to ignore the laws.

No sympathy for Uber. They could have played within the rules and still been disruptive--they chose to ignore the laws and now are getting bashed for it.

> it's not inherently wrong to have laws that protect established businesses. I don't like cab companies, but I do want to know that my hired driver is insured. I'm indifferent to hotels, but I don't want my neighbor running an SRO out of his apartment. I don't enjoy high medical bills, but I like the ability to know that my prescription medications aren't radium-based elixirs. And so on.

For each of those arguments to work, you would need to demonstrate that laws protecting established businesses are necessary for each result.

Nope. You would just need to show that they're an effective and convenient means of avoiding certain consumer- and citizen-unfriendly situations, and that the benefit outweighs any negative side effects.

Whether or not there are theoretically better methods to protect consumers is irrelevant unless they're practicable.

> and that the benefit outweighs any negative side effects.

Exactly. That's what I meant.

So current taxi and hotel regulations have more negative side effects than benefits as they currently stand?

I don't know. I would like to see evidence either way.

Have you ridden in a taxi recently? Are you at all familiar with the taxi medallion racket (and why millionaire medallion owners are the only ones who benefit from this)? Have you ever tried to get a taxi to pick you up during rush hour or outside of a taxi hot spot?

I rode cabs all the time in Chicago and New York. Fast and cheap. I don't see the big deal about paying twice as much for a service like Uber. Also, are there no millionaires at Uber?

>Are you at all familiar with the taxi medallion racket

Yes, I am, at least in NYC. They are there to provide some consumer protection.

I will be speaking of New York.

First of all, a medallion isn't strictly required to operate a taxi-like car (for hire vehicles). It only affords them the permission to pick up passengers who flag a cab off the street. You are allowed to operate what is called a "car services" or "livery cab" too, they are allowed to only pick up and service people who call ahead to arrange the ride. Since the summer of 2012 livery cabs may pick up people who hail a cab outside the borough of Manhattan to serve undeserved populations (excluding the airports). Having a medallion means you are required to pick up any passenger who hails a cab, the first one you see, no matter if they are drunk, homeless, disabled, black, going to an undesired destination or otherwise "undesirable" passengers. Having a medallion also strictly regulates fares no matter what kind of car your medallion taxi is, including flat fees to get to the major airports. Taxis are regulated to look a certain way so you know you're getting into a licensed taxi and not a serial killer van. There are also very regular inspections of the vehicle to make sure it is up to safety standards. The authorities conduct undercover operations that ensure taxis are following the rules. The license plates bear a variation of the medallion number so that police can easily identify violators. It can be said or argued the limits of number of medallions is because there is limited space on the streets and you might not want them to be mostly taxis at the expense of other vehicles, before the medallion system there were at one time more taxis than taxi passengers. You also don't desire taxi drivers working very long hours to make a profit with excessive competition, because they might become fatigued and fall asleep at the wheel. Also the cost can facilitate the funding to enforce the regulations.

Is this the best system? I don't know, but it is there for a reason.

http://en.wikipedia.org/wiki/Taxicabs_of_New_York_City

The problem you get into instantly with that is: unfriendly according to whom (which bureaucratic panel?), and deciding whether the benefit outweighs the negatives according to whom?

You make it sound like it's a scientific process. Once you hand it over to a political system, that goes out the window. See: New Jersey / Tesla for a nice recent demonstration.

>I don't like cab companies, but I do want to know that my hired driver is insured. I'm indifferent to hotels, but I don't want my neighbor running an SRO out of his apartment. I don't enjoy high medical bills, but I like the ability to know that my prescription medications aren't radium-based elixirs. And so on.

That's not protecting established businesses. All those laws are arguably meant to protect consumers. I can't see any justification for "caps". This is just the needless contrarianism that appears in the top comment of every HN post. This is undefendable though.

The problem of industries resisting change through the legal system is far worse than whatever small problems might be caused by disruption. In general humans are heavily biased against change. We need less resistance to change, not more.

timr isn't arguing in favor of caps.

Not inherently wrong? Laws are there to protect established businesses? I thought they were there to protect consumers and indirectly, of course they protect properly run businesses. What's 'established' got to do with it?

To the extent that stability of certain kinds of businesses is essential to the stability of our society, it's actually a very good thing that governments are somewhat conservative about protecting the establishment.

If a certain kind of business is essential to the stability of our society then it should not be a business, it should be part of the government. "Essential" is a pretty strong word. A business should never be too big to fail. Free market competition should ensure that existing businesses will be quickly replaced by competitors if there is sufficient demand for their product or service.

we have bigger problems, not the least of which is the question of why those big, successful companies get so much influence over the laws in the first place

These are not even different problems, they are one and the same. The big, successful companies get so much influence over the laws because their friends in government shield them from competition, allowing them to grow into monopolies that are wealthy and powerful enough to exert influence over the laws.

This is done through industry regulations passed under the pretense of protecting consumers from the dangers of untrusted companies offering products of unknown quality, a concern that you expressed above. But when you look at who is actually lobbying for the tighter regulations and licensing requirements, it's always the established businesses looking to raise the barrier to new market entrants. That's their ulterior motive.

Food is essential to survival, but we don't rely on the government to provide it.

Whatever is essential needs to be reliable. Granted, there are several ways to do it, of which state monopoly is only one, and I reckon, often not the best: centrally planned economy works rather poorly, as demonstrated by the Soviet Union.

But you do need to ensure the reliability of your chosen mechanism. You can't just unleash the market on it, and hope for a good result. Unconstrained capitalism doesn't last, as demonstrated by its numerous crises, most notably in 1929.

Most of the time, the government will just heavily manipulate the market into doing what it wants to do. American farms are heavily subsided, for instance. Doesn't work too poorly, and lasts quite long.

Even if you strongly believe in free market and cut-throat competition, you need to ensure the market stays free somehow. You don't want any challenger to actually win.

http://en.wikipedia.org/wiki/Food_Security_Commodity_Reserve

http://en.wikipedia.org/wiki/Agricultural_subsidy

The restrictions at issue are protectionism run amok, but you do nobody any favors by making easily-debunked non-arguments.

Even with agricultural subsidies, the food is still grown and supplied by businesses and not the government. Kyllo was arguing that any businesses which are so essential as to justify the government intervening - as it does with agricultural subsidies - should be part of the government and not private businesses at all.

Yes, either they should be part of the government, or they should have to actually compete on the free market without government protection.

I detest monopolies that are propped up and protected by government subsidies and regulations. The people who run such businesses are enriching themselves through rent-seeking behavior at the public's expense, and then taking bailouts when they can't make a profit, all under false pretenses like "stability," quality control, and regulatory compliance, which are really just protectionism. They enjoy this privilege because they have well-placed friends in the government, thanks to lobbying and campaign contributions. It is a form of corruption.

If a business is too big or too essential to fail, it should be a function of the government, so that there is public oversight/accountability and no rent-seeking at consumers' expense. Otherwise, it needs to be allowed to fail and be replaced by competitors, if it is not financially viable. If such a business is allowed to fail and is not replaced by a competitor, it was probably not that "essential" after all.

How can you justify all the State evils happening with, well, my neighbor can't run an SRO out of his apartment. You didn't mention your other neighbor who was a casualty of the drug war. The same people bringing you these supposed protections are also hurting quite a few other innocent people, but I guess that's OK as long as you feel safe.

> we have bigger problems, not the least of which is the question of why those big, successful companies get so much influence over the laws in the first place.

If those big, successful companies can have so much influence, how exactly are you safe? This doesn't exactly support the gist of your first paragraph.

You realize he was being satirical, right? He's not actually advocating those rules.