Is Your Home Your Castle? You Wish.

Suppose your best friend is down on her luck. Magnanimously, you give her a spare room in your house, on a temporary basis, and when she starts earning some income, you let her pay rent -- say, $100 a week.

You would think that just about everybody would applaud you. After all, your act of charity has prevented one more person from becoming homeless. But not everybody is happy with that result. The hotel industry doesn't like it for selfish reasons. Progressive politicians don't like it because .... well, it's not always clear why progressives think the way they do.

All of this came to a head this week in a fight over a ballot proposition in San Francisco, a city with two interesting distinctions. With an average-priced home costing $1.1 million, it's the most expensive place to live in America. And, itâ€™s home to Airbnb, a company that came into existence to solve the housing shortage crisis by connecting homeowners who are willing to rent out a room with strangers who need a place to stay. In fact, Airbnb has been so successful in meeting previously unmet needs all over the world that its market value exceeds that of the hotel giant Marriott International.

Let's pause for a sidebar on the economics behind all of this. At any one time, there are millions of opportunities for mutually beneficial exchanges that never get consummated. I have a room I would be willing to rent and someone else would be willing to rent it, but we don't know of each other's existence. When I am not driving my car, I would be willing to rent it to someone else and someone else would like to rent it. I would be willing to pay someone to bring me a takeout hamburger and there is someone who would be willing to do that. But, again, we don't know each other. Modern technology is eliminating all those barriers to mutually profitable exchanges.

But standing between all those willing buyers and willing sellers are a raft of special interests who like things just as they are or were. Just as Yellow Cab and their friends at City Hall have been trying to shut down Uber in every city in the country, in San Francisco the hotel industry, with local politicians in tow, has been trying to stop homeowners from renting out their rooms.

Proposition F, which was soundly defeated in last Tuesday's election would have limited a homeowner's ability to rent out a room to only 75 days. The proponents, including Sen. Dianne Feinstein (who along with her husband has $25 million stake in a San Francisco hotel) even had the audacity to claim that regulating homeowners would actually help solve the city's housing shortage.

It's worth noting that virtually all of California's housing problems especially those in San Francisco are the result of unwise public policies. At e21, Jared Meyer and James Delmore explain:

San Francisco, where rents for a one bedroom apartment frequently exceed $4,000 per month, has the most serious housing shortage in America. Over the past 20 years, San Francisco only permitted the construction of an annual average of 1,500 housing units. Over that time, San Francisco's population grew by 97,000. From 2010 to 2013 it grew by 32,000.

According to a Trulia study that examined housing production from 1990 to 2013, San Francisco had the highest median prices per square foot and the lowest rate of new construction permits among America's ten largest tech hubs.

Nearly 80 percent of San Francisco's housing is occupied by rent-controlled tenants or homeowners. This leaves only one in five housing units available for other renters, artificially driving up rents.

One thing the Proposition F proponents didn't count on was that the companies who service the "gig economy" have the email addresses of lots of voters.

Leading up to the election, Airbnb was only too happy to remind the 138,000 San Franciscans who have used its app that the company was helping to solve the very problem that city government had created. It didn't hurt that the number of app users was greater than the number who actually voted on Tuesday. In New York City, Uber contacted its 2 million app users to help defeat onerous restrictions backed by the taxi cab industry. That's more than the number of people who voted for Mayor Bill de Blasio in the last election.

In both cases the app companies are making the pitch that they, not the politicians, are defending the middle class. Who could argue with that?

I read the article, too. I'm still trying to figure out how Airbnb has any relevance to addressing a "housing shortage." I don't think the author has a clue what he's talking about on this subject.

Why is this so hard to understand? The guys who started AirBnB came up with the idea after having trouble finding affordable places to rent in San Francisco, and had to rent out one of the rooms in their loft as a mock "bed and breakfast" in order to make ends meet. They trialed their idea during big conferences in SF where conference attendees couldn't find hotel rooms and didn't have a mechanism for finding potential properties to rent.

This has nothing to do with zoning issues and everything to do with crony politicians bought and paid for by the hotel industry getting beaten by the voters.

This is a great development for crying out loud. Uber in San Antonio and AirBnB in San Francisco have proven you can fight city hall, and WIN. There's no reason for a pro-market, pro-liberty person to bitch.

That still doesn't make any sense. Maybe Airbnb helps offset the high cost of housing in some of these places, but it doesn't add a single housing unit anywhere on the planet (as far as I know). So it hardly does anything to address a housing shortage.

I have a whole different take on Uber. Personally, I think their business model is eventually going to fall apart for a number of reasons. And I'm familiar enough with their dealings in New York City to know that there's nothing "pro-market, pro-liberty" about the company, at the end of the day.

So it hardly does anything to address a housing shortage.

A housing shortage makes it difficult for prospective tenants and renters to find affordable places to live. AirBnB makes it easier for those looking to find those who are offering. I have no idea why this doesn't make sense to you, but it makes perfect sense to everyone else.

I have a whole different take on Uber.

Well, with no evidence to back up your claims, I'll take your prediction of their downfall as a meritless statement and nothing more.

I think their business model is likely to be copied, not fall apart. And yes, they're using the market to fight back against the taxi cartels and their government enablers.

You must not travel that often. I used Uber in San Francisco three weeks ago, and every other car that pulled up to the upper deck terminal was an Uber or Lyft driver. I used it in New York City two months ago and it has changed the way I get about the city when I have to go there.

Pro-market people love when new products change the way people experience travel. You must be the other type.

It really comes down to one simple question: If I build a 400-room hotel, have I done anything to address a housing shortage? If Airbnb is connecting travelers with informal lodging arrangements, then it really isn't addressing a housing shortage at all, is it?

Well, with no evidence to back up your claims, I'll take your prediction of their downfall as a meritless statement and nothing more.

Take a look at Uber's situation in New York City. It's illuminating in two important respects:

1. For routes that have fixed prices, it's probably the only place where Uber is more expensive than regular taxi cabs.

2. Uber is working with the NYC Taxi & Limousine Commission to shut down the operations of Lyft in the city. So much for a "pro-market" approach to doing business.

Ride-sharing services like Uber and Lyft have slowly lost their competitive edge as economic realities (i.e., market forces) come into play. The beauty of the companies' business model is that they generate lots of revenue with little or no risk at all. That is slowly changing as more and more drivers wise up to the fact that the entire business model is built on people working for very little pay. There's nothing wrong with that if everybody involved is an adult capable of making their own decisions, but that business model isn't likely to stand up over time. If your company platform is basically an app for gypsy cabs, then you're always going to lose out to bottom-feeders who are willing to work for less.

This is why I've felt all along that Uber isn't really interested in the ride-sharing business in the long term. Instead, it is mainly interested in doing business the way it does where it has acceded to local government regulations (mainly in Asia). In these cities, it works in partnership with taxi companies and basically just sells licensing rights to their app. In these scenarios, Uber suddenly turns from a "pro-market" champion to a supporter of government oversight ... because this only works if they have exclusive licensing deals that prohibit taxi cabs from using other competing apps.

As for zoning, there is no place in local governance that is more rife with corruption than zoning. There are places in the US that donâ€™t have zoning such as Houston. Theyâ€™ve managed to survive. Deed restrictions prevent rendering plants from being put next to daycare centers.

Zoning -- or something equivalent -- is pretty much a necessity in any jurisdiction where government is expected to provide public services or maintain public infrastructure. Protecting people from nuisances next door is one of the objectives of a zoning code. The other role of a zoning code is to ensure that land use is compatible with limitations of public utilities and infrastructure. If a municipality has a sewage treatment plant, for example, the capacity of the plant will be tied to the types and intensities of land uses in that jurisdiction. Building a 400-unit apartment building on a parcel of land that was originally planned for a half-dozen single-family homes may be disastrous for a town and all of its residents.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.