Will restricting housing options for the wealthy benefit the poor? Is more regulation the solution to problems created by past regulations? And how can we avoid the interventionist cycle that Ludwig von Mises warned us about?
Critics of Airbnb are not asking these questions. In California, they have proposed stringent regulations to reign in the Internet-based, home-sharing business.
One of the marvels of the unhampered market is the way it aligns the interests of buyers and sellers. If the price is too high, a potential buyer is better off keeping her money; if the price is too low, a potential seller is better off keeping his product. When the price is right, trade happens because both expect it to make them better off.
Even when economists note possible exceptions to this harmony of interests — such as market power, asymmetric information, externalities, or behavioral “irrationalities” — most recognize that entrepreneurial competition in a free market will limit or even eliminate their negative effects over time.
A win-at-all-costs attitude in political debate is not conducive to rational and civil discourse.
In this case, which would be better? Having the government regulate the behavior you disapprove of, or getting rid of the bad rules that prevent people’s own choices from regulating it? When there is public outcry over certain entrepreneurial practices, the political reaction is to compel an outcome that…