
The New Innovation Battlegrounds Are City Hall And The State House - pg
http://www.forbes.com/sites/ciocentral/2013/08/06/the-new-innovation-battlegrounds-are-city-hall-and-the-state-house/
======
sdrinf
A thought experiment, at the risk of being downvoted to oblivion:

Imagine a new online service, which allows people to rent out their existing
accounts at various other SAAS services to tenants, in exchange for a cut
(specifically eg. you can share your seomoz account with 2 other people,
tossing the $99 + cut inbetween them, each tenant taking one of the slots).

Consumers benefit from radically lowered prices, enabled by "more fine grained
transaction in property".

Would you accomodate this sort of usage on your own sites? If not, what
specific principle would you suggest, which still allows for AirBNB?

~~~
quanticle
"Imagine a new online service, which allows people to rent out their existing
accounts at various other SAAS services to tenants, in exchange for a cut
(specifically eg. you can share your seomoz account with 2 other people,
tossing the $99 + cut inbetween them, each tenant taking one of the slots)."

Isn't that analogous to a sublet arrangement at an apartment? You take a,
let's say, 3 bedroom apartment and sublet two of the bedrooms to room-mates.
Many landlords allows and welcome subletting, as it allows them to more
quickly find tenants for their larger units. At the same time, other landlords
don't see the hassle and potential drama of subletting as worth the cost and
prohibit the practice.

In the same way, I can see SAAS providers going two ways on this. Some might
welcome your "sublet as a service" and explicitly take advantage of it as a
way to broaden the market that they serve. Others might view it as a way to
exploit their service and explicitly write anti-subletting terms into their
terms of use.

------
cgshaw
Much of this has to do with the systemic aging of our elected officials.

Look at the federal level, where the average age of a Rep is 59 and Sen is 63.
These are folks who not only don't empathize with modern technology, they've
got established connections to big industries that are threatened by
innovation.

I'm not meaning to come off like a ideologue, it's just economics and
incentives. Until younger folks get more involved, it likely won't improve
much. (like SOPA/PIPA, but more consistent in advocacy and running for
office).

Clinton ran for congress in his 20's, lost, but was elected Governor in his
early 30's. Joe Biden was a U.S. Senator at the age of 30. People in their
late 20's and early 30's just aren't positioned to run for office in our
generation. Debt, schooling, careers, etc prevent many from being able to do
it, even if they wanted to.

~~~
nostromo
Sounds like a good theory, but I'm not sure the data backs you up. Obama is
the 5th youngest president at 47. Clinton was the 3rd at 46.

Take a look at the average age of...

Republican congressmen in 1949: 54.9

Republican congressmen in 2011: 54.9

Democratic congressmen in 1949: 50.4

Democratic congressmen in 2011: 60.2

The democrats have gotten older, but not by much more than the general
population. The senate has gotten older, but not dramatically so.

[http://online.wsj.com/public/resources/documents/info-
CONGRE...](http://online.wsj.com/public/resources/documents/info-
CONGRESS_AGES_1009.html)

~~~
saraid216
I am honestly a little shocked that the two numbers for Republicans are
_identical_ to 3 significant digits.

Also, your numbers are for House Representatives, not congressmen.

~~~
nostromo
I'm not trying to be overly pedantic, but I was curious if I was misusing the
term. Wikipedia says that in the US, "the term Member of Congress applies to
members of both houses, the terms Congressman and Congresswoman usually refer
only to members of the House of Representatives."

[https://en.wikipedia.org/wiki/Member_of_Congress](https://en.wikipedia.org/wiki/Member_of_Congress)

~~~
saraid216
I have heard that, but I've never really noticed it. Your usage is probably
more correct.

------
microcolonel
Does anyone pick up on how fundamentally insane this whole deal is? Why
exactly do we have to submit to this nonsense?

A world where it's possible for people to ambiguously decide whether or not
it's okay to simply organize taxi rides, or share a room you own and operate,
because some government-sanctioned oligopoly doesn't like it… How did we get
here?

I'd love it if people would venture to refute me on this rather than simply
downvoting my posts.

~~~
woofyman
If you live in a Condo, you've agreed to the by laws of the association.

If you lease, you've signed a contract with your landlord.

~~~
microcolonel
Voluntarily at that, isn't that great?

Your landlords should not be encouraged to peek into my apartment.

~~~
woofyman
Why do you feel you can ignore the terms of a contract you voluntarily signed
?

~~~
JoshTriplett
The root comment of this thread was talking about government regulation. You
responded with a comment about contracts with landlords or condo associations,
to which the response was that those are voluntary agreements (by contrast
with government regulation). Nothing in that is talking about ignoring the
terms of a voluntary contract; the point is that the government regulations
that affect businesses like Uber and AirBnB are _not_ voluntary contracts.

~~~
_delirium
> the point is that the government regulations that affect businesses like
> Uber and AirBnB are not voluntary contracts.

In the AirBnB case, I don't think of it as much different. Homeowner's
associations are the way you'd arrange land-use regulations for a large area
through contract law, and are becoming the more common way of doing it in
places like Texas. In other areas it's done by municipal governments, the more
traditional method. But the impact on freedom is more or less than same: by
buying property in the jurisdiction of one of these entities, you agree to use
the property in accordance with [long list of rules], plus any future rules
that may be made in accordance with [procedure]. And the way to avoid it if
you don't like the rules, is to buy property not within the homeowner's
association or municipality whose land-use regulations you don't like. This
happens through both private-sector and public-sector mechanisms pretty
similarly, just the private-sector ones are developing more recently.

There are other important differences between homeowners' associations and
municipalities, such as general police power. But this particular one, whether
you can turn your home into a hotel in a particular area, is one where
municipal governments are basically equivalent to a standardized bundle of
contract law, as evidenced by the fact that in some areas the same regulations
are literally being implemented as a standardized bundle of contract law.

~~~
microcolonel
But who would buy a house, with a non-negotiable contract preventing them from
using it to house some people temporarily for some minor profit?

If your road maintenance company doesn't care, and you own the land, what's to
stop you other than a voluntarily win-win association?

------
larsonf
I read this and kept thinking whether the hotel lobby is really the reason why
Airbnb runs into trouble. Or, for that matter, even whether the Taxi Lobby is
what is really hitting Uber.

Yes, hotel owners and taxi drivers are not exactly pleased about the
disruption. And, yes, they have lobbyists to further their causes. But don't
think for one second that these people wanted the regulation to begin with.
Absolutely not. The regulators wanted to protect the public and put in zoning,
licensing, etc. The initial regulation had very little, if anything, to do
with turn-of-the-century lobbyists.

For the most part it seems these new companies are facing not some nuanced
part of the law, but like basic, prehistoric regulation that is practically
universal in the Western world, designed to protect people from surpassingly
likely horrible practices--like getting kidnapped by an unlicensed driver.
Something not that unimaginable -- at least according to London public service
posters everywhere. Some laws have very murky reasoning, I'll give you that.
But zoning and licensing in these cases do not. So to say that Cities are
stifling innovation by enforcing some of the most basic laws of the modern
state, then it's a bit glib.

Incumbents are mad because they are following the rules and some of these new
firms are clearly not. But the incumbents aren't the biggest problem, which
the article more or less hints as the culprit. No, the problem for
'innovation' is convincing people why they should let the other half of their
duplex run a youth hostel without a license. And no, saying your K-nearest
neighbor algorithm's got it covered is not going to be enough.

Some might compare this to copyright. And this is where they'd be right. It's
not very obvious who copyright protects. No one has ever had a GB of songs
cause them to wonder whether their neighborhood is safe anymore. You might
even make the same case for fin services. Why regulate those? Well, I'd grant
you there too. How many people died from the fin crisis again? Perhaps we are
pushing it. Either way, in the land of the physical universe, the universe
where Uber and Airbnb are so clearly inhabiting, the reasoning behind the laws
is remarkably obvious.

~~~
temphn
> And no, saying your K-nearest neighbor algorithm's got it covered is not
> going to be enough.

This is sheer assertion. What do you think is better? Uber - where you can see
your driver's name and photo, know that he has a five star rating with 47/50
positive recommendations, and know that a third party is tracking your GPS
location at all times...or the city government's antiquated taxi medallion
service? Ditto for Airbnb.

> designed to protect people

Let's be real here, city government regulations "protect people" in the same
way the TSA "protects people". Which is to say they don't and pretend that
they do. You're responsible for protecting yourself. The police can't protect
you from wandering into a bad neighborhood or even stop you from getting
mugged; they can only clean up the mess after the fact. And no cab driver
license will replace exercising your judgment before you enter a cab.
Moreover, to be "kidnapped by a cabby" is a rare event. It's like soiling our
pants over the threat from terrorists, which we've done quite a lot of over
the last decade. Enough already.

~~~
_delirium
I trust the city government to keep the neighboring landlord from turning his
apartment buiding into a ghetto hotel without the proper noise-mitigation
measures, more than I trust AirBnB to do it.

In many areas AirBnB isn't a problem, mainly when it's being used as a way for
regular people to rent out spare rooms or their apartment. But in NYC and
London, people are starting to run larger-scale traditional hotel operations,
only without following any of the regulations for traditional hotels. There,
AirBnB's failure to implement any kind of replacement for municipal regulation
is most noticeable, especially in its impact on other people's property.

~~~
temphn
> I trust the city government to keep the neighboring landlord from turning
> his apartment buiding into a ghetto hotel without the proper noise-
> mitigation measures, more than I trust AirBnB to do it.

You do? Section 8 ring a bell? Many more landlords and governments agencies
have turned apartments into ghetto hotels than individual Airbnb hosts. And
the result has been a spike in the murder rate:

[http://www.theatlantic.com/magazine/archive/2008/07/american...](http://www.theatlantic.com/magazine/archive/2008/07/american-
murder-mystery/306872/)

So USG is using tax dollars to move in murderers next door, and landlords are
taking those dollars. Yet one trusts USG to "protect" you from a ghetto hotel?

------
soneca
I agree with the author in all points he made. But his advices sound to me
like he is "preaching to the converted". I don't see a judge or a regulator
reading this and considering it a new point of view that may change his
analysis of future cases.

I imagine that these regulators already have "the focus on customers". And if
they don't, it is not because they don't know they should have. Give the
"benefit of the doubt" to innovation? Why? "Keep an open mind"? "Use the
service"? I don't see any of these arguments as particularly relevant to
anyone in power to regulate these markets.

I think we (those who stand with innovation) should pay more attention and
think harder on our arguments in order to win those battelgrounds.

------
rayiner
I don't like the phrase "sharing economy" because I think that's a
misdescription of what's actually happening. There is no sharing, in the sense
of concurrent use. What's happening, instead, is that technology is enabling
more fine grained transactions in property. If you imagine a set of property
rights as a multi-dimensional space, technology lowers the transaction costs
involved in splitting up and transacting in sub-spaces of the larger set, and
so makes such transactions practical. See: Coase's "The Nature of the Firm."

Sharing is something different. Sharing involves concurrent use of resources
mediated by tort-like systems, rather than property-like systems. A real
"sharing economy" in cars might be what you end up when cars become self-
driving. You won't own a car, but will use whichever car is nearby, and the
law will punish various relevant anti-social behaviors instead of violations
of property rights.

This distinction is very relevant to things like Uber or AirBnB, because the
regulatory challenges there are various issues attached to property rights
(e.g. zoning restrictions attached to houses, monopoly privileges attached to
taxi medallions).

I agree with Genachowski that state and local governments are a battleground
for innovation, but he makes it seem simpler than it is. It's not just a
matter of preventing local governments from enacting laws that restrict
innovation. It's more basic: renegotiating various privileges that have been
negotiated into and priced into property rights. E.g. for better or worse,
those who own cab medallions bargained for the monopoly they have, and gave up
certain things in the process. Municipalities bargained to create telephone
monopolies to serve rural areas instead of building infrastructure themselves.
People who bought houses in residential neighborhoods did so pricing in the
fact that those neighborhoods would not host hotels. Everyone thought these
were reasonable policies at the time. Upsetting those settled expectations in
property rights is going to be a very complicated process.

E.g. my personal regulatory interest is in spectrum sharing technology
([http://en.wikipedia.org/wiki/Open_spectrum](http://en.wikipedia.org/wiki/Open_spectrum)).
Technology is getting close to the point where real "sharing" should be
possible in radio spectrum. Not just fine-grained subdivision of property
rights, but concurrent use mediated by tort-like mechanisms of enforcing
"sociable" behavior. I think that technology needs to be rolled out all over
the TV bands and the cellular bands. But it's not just a simple matter of
flipping a switch. Verizon and AT&T paid billions for their spectrum, under
the assumption that there would be nobody else playing in it. You have to kind
of see their point of view in opposition to measures to enable sharing on
their property. Same for all of the TV companies. They didn't pay for their
spectrum, but they made tremendous investments based on certain assumptions,
and they've got a right to question changes to those settled expectations.

Incidentally, this is not a new problem. The whole point of property rights is
to settle expectations. When the situation changes dramatically, either
because of technological or sociological changes, it is a political challenge
to accommodate that change without trampling over those settled expectations.

~~~
VladRussian2
>People who bought houses in residential neighborhoods did so pricing in the
fact that those neighborhoods would not host hotels.

but they didn't price in the risk of technological innovation like AirBNB.

the corner stone in your logic (and in modern economy) is property rights.
With my background (USSR), i'm used to think of property rights not of as
something God given, instead as of something that was invented at some point
and has been very useful so far in the development of our civilization. The
property rights itself has evolved, from slavery societies to the modern day,
from people as a property to ideas and RF spectrum being considered as
property. The property rights will continue to evolve, and probably, God
forbid - my townhouse is well over-water now, real estate rights disappear,
while rights for DNA or human soul(mental footprint, dreams, etc..), something
like this will come, or one day property rights, as exclusive license on
something, will just stop being useful for human civilization at all.

~~~
wavefunction
>>but they didn't price in the risk of technological innovation like AirBNB

Actually that's what they did, since residential usage like AirBNB is
generally against zoning in these areas.

And you're focused on the selfish aspects of property rights without
considering the benefits towards the commons they can confer, like keeping
quiet residential areas quiet residential areas rather than high-traffic
transient areas just because someone threw up a website.

~~~
VladRussian2
>Actually that's what they did, since residential usage like AirBNB is
generally against zoning in these areas.

you're missing my point that property rights and laws(zoning) change with (in
response, forced by) technological development and innovation.

>And you're focused on the selfish aspects of property rights without
considering the benefits towards the commons they can confer

again, my point was that specific property rights have their time when they
are actually helping advancing the civilization, yet they are meaningless
before their time and delay progress after.

As AirBNB helps more fully utilize buildings, it seems it is a plus for
civilization and the laws/zoning preventing effective use of resources start
to become obstacles in the way of progress.

~~~
euroclydon
Your comment didn't provide any support for the notion that property rights
evolve in response to innovation. Ending slavery is more of a moral awakening.
In fact, Wikipedia claims that the cotton gin, invented in 1793, actually led
to more slavery in the South.

------
codex
This article claims that some regulations exist to protect certain industries.
The proof is the fact that these regulations are harmful to various new
startups but not to existing industry. But that's not proof: that's
correlation without causation. It is just as likely, if not _more_ likely,
that certain regulations were instituted to protect the public or to perform a
public good, and the current industries have evolved, like an organism, to
coexist with the regulations. Just because an industry has adapted to work
within the law does not mean that the law was put in place to protect that
industry.

For example, NYC regs which are harmful to AirBnB exist to protect other
tenants from the insecurities that stem from a revolving door of transients in
their buildings. Simliarly, taxi cab medallions restrict supply in order to
prevent a tragedy of the commons whereby too many cabs fight for fares in
congested city cores, taking up all available road space.

In this respect, these startups are not innovative--just stupid enough to
operate extra-legally. Just because something can be done more easily with
technology does not mean it should be done.

------
ojbyrne
So essentially the "New Innovation Battlegrounds" can also be described as
"Lobbying."

Which sounds more like the last gasping death throes of innovation. None of
these businesses involve any kind of technological breakthrough that could
really disrupt anything, they're basically my business model is better than
your business model. Which leads to the obvious question - better for who?

~~~
JoshTriplett
That's exactly the point. When two businesses come up against each other, the
correct response from government is to step back and let them fight it out,
not to favor one over the other. Lobbying to curry favor for your business is
abominable; lobbying to eliminate favors given to your competitor and level
the playing field is completely reasonable.

------
ballard
A shining counter-example to this article's core argument is the city of SF.
They release tons-and-tons of data in hopes more people make cool new apps
with it in ways they didn't think of. [http://sfpark.org/how-it-works/open-
data-page/](http://sfpark.org/how-it-works/open-data-page/)
[https://data.sfgov.org/](https://data.sfgov.org/)

In general though, NYC especially appears to leading an ultimately bankrupt,
economically-ignorant policy of pandering to monopolies. Killing innovation
hurts the economy and makes cities like NY less desirable. Disruption is
competition, and these monopolies better adapt or die.

