The Santa Monica City Council (SMCC) is banning residents from sharing their homes using the popular sharing-economy website Airbnb, unless the host has received official licensing and permission from city regulators and pays hotel taxes.
Airbnb hosts will be required to remit the city’s 14 percent hotel tax.
SMCC announced it plans to hire a team of full-time investigators to enforce the regulations, monitor Airbnb listings, and investigate potential illegal sharing-economy activity in Santa Monica.
Bootleggers and Baptists
Art Carden, a research fellow for the Independent Institute and a Samford University associate professor of economics, says Santa Monica’s new regulations don’t help consumers.
“This smells like a ‘bootleggers and Baptists’ story,” Carden said. “There are three ways people are thinking about this: two public-spirited and wrong and the other devious and wrong. The public-spirited supporters of the ban want to protect consumers from unscrupulous people on Airbnb. Airbnb solves this problem with transparency and verification.”
“Other public-spirited supporters of the ban might want to protect the jobs of hotel workers and the like who would be threatened by Airbnb, but as Frederic Bastiat pointed out in a classic essay, the same logic suggests that we would be better off if we blocked off the Sun to protect candle-makers,” Carden said.
Protecting Hotels from Competition
“The devious interpretation is that hoteliers and others are working to block Airbnb and protect themselves from competition through political channels,” Carden said. “In all three cases, people who want to rent out their places on Airbnb are hurt, and there are unconsummated transactions that would have created wealth but aren’t allowed because of the ban.”
Heritage Foundation Senior Research Fellow James Gattuso says the Santa Monica City Council is presuming to know consumers’ best interests better than the individuals themselves.
“Many have expressed an interest in sharing their homes with visitors for a fee under Airbnb’s platform,” said Gattuso. “The city government said no, apparently believing they know what’s best for them.”
By preventing residents from using their private property as they wish, the Santa Monica City Council is making the city a less attractive place to live and visit, Gattuso says.
“It will certainly limit Santa Monica tourism, but the city government seems happy to limit tourist visits,” Gattuso said.
Ashley Herzog ([email protected]) writes from Avon Lake, Ohio.