> The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand disciple, and, in the parlance of Silicon Valley, views himself a disrupter.
Making money by breaking regulations and lease terms is hardly the stuff of the heroic inventor. What other criminals count as "disrputers"? Insider traders? Identity thieves? Insurance fraudsters?
This guy is sociopath and I hope he ends up in prison.
> He considers himself a New York entrepreneur who wants to make a buck and doesn’t have much patience for what he views as arbitrary rules and regulations, such as those that govern renting apartments to Airbnb subscribers.
I don't see how this guy is any different from Airbnb itself (or other disruptive-and-dubiously-legal operations like the various digital gypsy cab companies).
airbnb is a bad actor? Come on. It's not nearly that simple.
The Helsinki Design Lab (HDL), a governmental agency originally created in 1968 to encourage design thinking in Finland, engaged in an interesting study. In Helsinki, there's an unofficial day where historically, citizens have essentially opened illegal restaurants for the day. They sell out of homes and apartments and open windows, or often just give it away for free. Obviously all of this is highly illegal, but it's an amazing cultural experience that is beloved.
HDL polled some of the people who created these pop-up restaurants, trying to figure out whether they had any interest in openning real restaurants. The answer was an overwhelming no.
So the lab set out to answer an interesting question: "Why is it that none of these people who open free restaurants for a day -- these entrepreneurs who clearly love the essence of serving and creating food -- why is it that they find it such a ridiculous proposition to open a business?"
It's a good question and worth asking.
Here was a result of that investigation (among other things, such as streamlining the bureaucracy around registering and managing the business):
You say AirBnb is a "bad actor" for breaking the law, and I say that that's incredibly unimaginative. Every single person on airbnb wants to open a hotel, but they frankly disengage from the formal process, likely for valid reasons. AirBnb is helping to identify that this is a problem that needs solving.
> Every single person on airbnb wants to open a hotel, but they frankly disengage from the formal process, likely for valid reasons.
I wouldn't say they guy in the article wants to run a hotel. Running a hotel is hard work with ordinary margins. HFT (in all likihood exaggerated day trading), illigaly importing iPads to France and running an illigal airbnb business all strike me as someone looking to get rich quick. Drug dealing would fit in better than running a legit hotel.
As someone who has started a business myself, let me say that there's a big difference between doing it for one day and doing it long term, and also a big difference between passionately wanting to do it and the day-to-day long-term reality. Not just because of obscure regulations. And if you've ever got food poisoning from a restaurant, you'd understand why we have some of those regulations.
Plenty of organizations in the US have bake sales to raise money. People donate baked goods and they are sold to the public for a profit.
These people don't want to open a hotel, they are doing it illegally because it is easy money without having to do all the hard parts. No pesky tax forms, no regulators sniffing around, no employees to have to pay payroll taxes to. I'm guessing he probably hires some illegals or homeless people under the table to clean the place and pays them in cash. That's like saying all drug dealer want to open a store, and would if drugs were legal.
This doesn't follow. AirBnB does what it does. The laws in each and every area do what they do. There is no need for them to overlap, nor does a legal entity taking a position against AirBnB's potential customers make them a 'bad actor'in the general sense.
You also have to also ask why it is that these arbitrage opportunities exist in the first place. It seems to me that the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry. Perhaps the government shouldn't be implementing arbitrary taxes to direct to the politically connected.
The fact there are arbitrage opportunities are precisely the reason the regulations exist.
The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it.
I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.
But the regulations cannot stop anything. They only introduce additional costs that distort the natural behavior of the market. And since everything in the market is connected, often in ways we do not understand, regulations produce odd behavior and unexpected consequences.
The rent is too danged high because the supply of rentals is too danged low with respect to market demand. If hotel demand is high enough to cut that far into regular rentals, that just means there aren't enough purpose-built hotels. The regulation chooses to protect long-term residents at the expense of visitors and owner-investors.
Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote. And does it even truly protect them?
People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
Attacking rogue AirBnB users may satisfy shortsighted political goals, but removing artificial barriers to new housing construction would be better for everyone in the long term.
That said, the guy from the article is a dick that engages in willful fraud on a daily basis. NYC is right to go after people like him, but not at the expense of solving the underlying problem that produces such people as a symptom.
Price is high because the cost to produce additional supply is high. Period.
> Why are they less valued people? Because NYC has a very high renter and owner-occupier population, and they vote.
Isn't that normal and just? People want something to happen, and they formalize this as law rather than applying mob violence, which is a Good Thing.
> People should be able to dispose of their own property as they see fit, without undue intrusion from uninterested third parties. This sort of liberty is sometimes inconvenient for other people, but when those people choose to restrict the ability of other people to enjoy the ownership of their property, they do the same to themselves. And all those petty infringements on freedom add up to undermine one's sense of control over his own life.
What you do with your property affects those around you; there's no god-given fundamental right to use your building for whatever you want to. We have things like zoning regulations for a reason - because we voted for them, because we wanted them.
> removing artificial barriers to new housing construction would be better for everyone in the long term.
I think everyone is in favour of new housing construction, but there's only so much Manhattan to go around. The choice is not between new houses and no new houses, or hotels and no hotels; it's between residential housing and hotels, and it's right that that choice be made democraticly.
Manhattan is extremely construction-friendly. There are, however, limits. It's already an extremely developed city, so there's no real empty space left. Any construction will involve buying out existing owners/tenants, demolition, and replacement.
This is happening, but naturally is not fast. There are reasons why you wouldn't someone to demolish a skyscraper in the middle of Manhattan without oversight.
Adding to this problem is the state of infrastructure. Manhattan streets are packed, and most subway lines also. There is currently a proposal to up-zone the area directly around Grand Central and raise the height limits. This is a great thing, except all subway lines feeding Grand Central are already operating past peak capacity. Creating this extra space is pointless (and in fact detrimental) unless there is infrastructure ready to support it.
There are already infrastructure projects in place to alleviate this, but digging tunnels through bedrock is understandably not a fast affair. The East Side Access project will connect Penn Station and Grand Central, and alleviate some of the traffic at both. Adding to the complexity here is that Manhattan's underground is already filled with tunnels of all varieties, forcing new projects to tunnel ever deeper, with requisite cost and slowness.
The world is complicated, city planning is complicated. This isn't software where we can just deploy a new server - apartments, offices, subway lines, streets, sewers, power plants, cannot be willed into existence at a whim.
Do you live here? Because there are lots of empty lots and there are tons of under-developed areas. I don't know why you believe "Manhattan is extremely construction-friendly"; it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options. Some crazy number of housing units are under either rent control or rent stabilization. The housing dynamic here is insane.
I do live here. I know of exactly one substantial empty lot in Manhattan - just south of the UN building. I still wonder what the plan is there.
Hell, the biggest development project going on right now involves building on top of a train yard. This does not suggest an availability of actual empty land.
> "and there are tons of under-developed areas"
And yes, that's precisely what I referring to when I mentioned that any new development would have to involve demolition and replacement. Replacing a 15-story apartment complex with a 45-story apartment complex may be a good idea, but first you'd have to buy out all the owners in the building.
That sort of thing is neither simple nor fast.
The infrastructure problem exists still also. Spanish Harlem can be argued to be underdeveloped - and we can surely replace those buildings with tall apartment complexes... except the 4/5/6 subway is already massively oversubscribed. You can build apartments there, but said residents won't be able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this pressure, but we all know how fast that is going.
Same goes for basically all of Upper Manhattan - there are plenty of opportunities to replace buildings, but not enough infrastructure to move people around. Transportation (like most cities) is the biggest developmental bottleneck.
> " it's certainly not 'construction-friendly' enough so that there are numerous affordable housing options."
You've missed the entire point of my post. "Construction friendliness" is not Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent in building replacement (read: buying out existing stakeholders) are. For all intents and purposes, Manhattan is "friendly enough".
There is a building that's finally going up near me in the Lower East Side - a replacement of an old walkup. The owners in the old building resisted sale for a long time, as it would involve displacing them, plus they (rightly) speculated that their property value would continue to increase. The solution at the end of the day is to offer existing owners a brand new (albeit small) apartment in the new building. Not only did it cost the builders money to demolish and erect the new building, but also to buy out the old owners and give them part of the new property for free. Things like this are why Manhattan is replacing buildings so slowly, not because Manhattan is somehow opposed to development.
Please, visit Istanbul sometime. It follows those rules pretty closely. But don't just visit the historical districts -- visit the neighborhoods where there's a random skyscraper in the middle of otherwise low-rise residential. Nearly everyone gave up on building attractive buildings.
There is a character to a city, and it is easy to destroy the things that make them worth living in.
Manhattan could re-zone to permit a great deal more construction, but it is unlikely to happen.
First, residents strongly oppose it.
Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
What is the zoning like in Manhattan? I see intermingled residential/office/commercial spaces everywhere I go (heck, my last office was in the same building as apartments, with a store-turned-restaurant on the ground floor), so I didn't realize there were zoning restrictions in that sense.
there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood
environmental impact studies (weirdly) can be used against projects
local "community boards" have a lot of power
and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
Or if new construction is impossible, they could also encourage companies and residents to relocate somewhere else, thus reducing the congestion burdens on those who remain.
But what city with taxing authority would ever do this? As long as cities can take revenue from everyone regardless of their satisfaction with the city, there is a perverse incentive to oversubscribe city services. Since they are a monopoly over their whole territory, it is the same pressure as upon telecoms to add more customers without building out infrastructure.
He's violating contracts he signed, not only government regulations. These contracts are in place specifically because the market demands them. Most people don't want to live in a condo building that also includes DIY hotel rooms. Taking this into account, condo developers usually include clauses in the sales contract where your more or less agree not to turn your condo into a hotel room. This allows them to reassure prospective purchasers that such a scenario won't happen.
That's why the person in this story not only needs to avoid the government, but also private-sector contract enforcement. Hence, he's looking for buildings with no doorman and no live-in super, since those would be more likely to notice his illicit activity. I don't see how that's libertarian or even Randian. Rand's view was that violating a contract is an act of indirect violence, essentially theft.
>>"These contracts are in place specifically because the market demands them."
The devil's advocate here would say, "These contracts are in place because the market is rigged here by powerful, entrenched, rent-seeking interests that are colluding."
The FREEEDOM!!! argument only works for landlords who own the whole building and are running a hotel without following the hotel laws.
People who are subletting in violation of thier lease terms or co-op/condo agreement are not only breaking the law but also willfully breaching contracts they have freely agreed to. I thought that libertarians considered negotiated contracts a key mechanism of ordering a society?
I'm not a libertarian, so I can't speak on OP's argument, but in NYC the ability for renters to sublet their apartments is enshrined by law, and technically any contract that doesn't allow subletting is breaking said law (which, if I remember correctly (and IANAL), makes that clause of the contract void, but not the rest of the contract).
Subletting is well regulated too... yes, renters have the right to sublet, but they also have a set of restrictions on the process. For example, you can't sublet for less than 30 days, which would make the entire thing unusable for AirBnB. And if the apartment is rent controlled, then you have another set of regulations.
You can also take advantage of the arbitrage opportunities created by the regulations against selling cigarettes and beer to minors and make a tidy profit. A similar opportunity exists for all sorts of waste disposal, if you ignore all the pesky environmental regulations.
the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry
The "inefficiency" you've spotted is that a business which ignores all rules, regulations and taxes will have a huge competitive advantage over those who comply. That's true in any industry, not just housing.
By that argument, tax evasion of any kind is a symptom of "inefficiencies in the government regulation of income". Just because someone has a financial incentive to violate the law, doesn't mean that the law is bad.
> This guy is sociopath and I hope he ends up in prison.
Woah, that escalated quickly. This type of comment is more what I would expect from a sociopath then the mostly harmless individual described in this article. Don't you have any empathy for him? Have you considered that the author might not have depicted him in an accurate way? Don't you think prison would be a disproportionate punishment for his alleged crimes? Geez, the world is not black and white.
I think you're conflating morality and legality. How does breaking regulations make him a sociopath? Who is he harming?
In what world is renting an apartment, albeit against regulation and terms of the lease, an offense ANYWHERE NEAR insider trading, identity theft, or insurance fraud?
* He is defrauding his landlords. They rented him property on the understanding that it was a legal and low-risk engagement.
* He is hurting the neighbors to the properties he re-rents. They arranged to live in residential neighborhoods adjacent to other semi-permanent residents, not an illegal hotel. Hotels are not found in charming residential neighborhoods for a reason: nobody wants to live next to them.
* He is evading taxes that are used to improve new yorkers' quality of life at little/no expense to local residents.
* Insurance fraud is a probable consequence of his business. Since it's hard to get commercial insurance for your illegal venture, if he has ANY insurance, it would be a renter's policy and maybe a personal umbrella policy. Any claims he made would be fraudulent.
if a 15% hotel tax is what steers you away from one of the world's preeminent tourist destinations, I'm not sure that you were going to add much to the local economy.
(To be a little less snarky, the microeconomics of the situation indicate it's probably not that damaging. Your hotel stay is probably less than half of your costs of visiting, so a 15% markup on that component alone doesn't raise the overall price of a trip very much.)
It's not like there's a shortage of people who want to go to new york and can spare the extra 15% though, is it? The city was packed to the rafters long before Air BnB came along to 'disrupt' everything.
Heh, I'm surprised there have been no New Yorkers yet chiming in to say "good riddance". Most New Yorkers -- in my experience -- seem to share the sentiment that there are too many tourists already.
I think comparing it to identity theft or insurance fraud is a bit extreme, but the harm is real. There are many reasons why certain buildings are not allowed to operate as hotels - just a few off my head:
- Bedbugs. They're at pandemic levels in NYC, and the more volume of people moving in/out of a place the more likely you are to get them. Hotels are required to mitigate the bedbug threat with a level of thoroughness that simply is impossible unless the building owner is aware that there's a hotel operating under their roof. I would be mighty pissed if I found a AirBnb in my building, as that dramatically raises everyone's risk of infestation.
- Noise. Particularly in neighborhoods like mine that are restaurant and bar districts, where a large part of the attraction of the location is the ability to stumble home directly from an innumerable number of bars. Temporary residents have no incentive to keep things reasonable. Whenever this point is brought up you get a few anecdotal stories about "the British family that was sooooo quiet", but no mention of the rest of the time where we'd have to put up with the noise.
- Security. I live in a small pre-war building with 20 units. I've met literally every one of my neighbors. This building isn't Fort Knox - once you're inside the main door it doesn't take Harry Houdini to break into any one apartment. Real hotels have security cameras, personnel on-site, and much more elaborate locks on doors... we do not.
These are real risks and real harm happening to neighbors of guys like this. His actions have a negative impact. While calling him a sociopath might be a tad extreme, it certainly isn't completely without merit.
None of these problems are unsolvable - but they are unsolvable unless the hoteling party is operating in the open. If we're going to allow people rent out their apartments in a pseudo-hotel manner, then the neighbors, the building owner, and the city needs to know about it in order to mitigate all of the above.
If he has the attitude that "the law applies to other people, but not to me", he might very well be a sociopath.
And if you think that insider trading is a serious crime, why shouldn't tax evasion (he doesn't pay NYC hotel tax), which deprives needy people of city services or causes law-abiding people to pay higher taxes, be a real crime?
Yeah, I hate the fact that his actions will have for consequence to even increase the rents and real estate prices in New York, which, from what I heard, are already expensive enough.
It might be of benefit to neighbors he is bothering, and by extension anyone else who will be forced to bear the brunt of externalities he similarly ignores in the future.
If it is externalities that you are worried about, the externalities from him being in prison are likely to be far higher than the externalities of him trying to rent out a few apartments.
I don't agree with the guy, but I also suspect he may have a point about some of the regulations being over prescriptive.
Also, I think that believing that this guy should be in prison for these actions is far more sociopathic than anything this article claims that this guy is doing.
The costs of punishment almost always exceed the cost of the individual action. The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement.
Having said that, I am extremely sympathetic to the notion that NYC markets may be over-regulated, and have mixed feelings about the notion that evasion is an appropriate way to deal with that. I don't necessarily think this guy should be in prison; I was narrowly answering your question: "[W]hat possible benefit would prison be here?"
The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement.
And therein lies the rub. Sociopaths are not deterred by any but the most credible of threats. They will always find new avenues of exploit down at the bottom. To make an extreme effort to try and wipe out all sociopaths, parasites, free riders (or whatever else you want to call them) would impose enormous, crippling costs on our society.
Yes. But at the same time there are clearly cases where the costs imposed do exceed the cost of enforcement. I don't pretend to know whether that is the case here; I weakly expect that it isn't. Again, my post was a response to a question: "[W]hat possible benefit would prison be here?" Deterrence and prevention of behaviours with harmful externalities is the possible benefit.
It's a complicated and difficult problem to solve. At the same time as we're finding and closing these loopholes, more of these people are infiltrating the highest levels of government and seeking to create more loopholes. Society ceases to function if enough people succeed at violating the social contract.
Right. Most of the interesting questions are complicated, because most of the genuinely simple things we all just agree on the right answer quickly and stop talking about it...
Why is is that some people have such a hard-on for other people's misery? It seems that every news story about a minor infraction is met with snivelling cretins vomiting sadistic fantasies of prison life for the subject of the story.
I think you've answered your own question. It's just this kind of story makes it socially acceptable to express it (and in this particular case the subject's marked lack of empathy seems to excuse us taking the same view).
That's pretty much as far from "libertarian Ayn Rand disciple" as you can get. This Man That Does Not Exist sounds more like a Libertarian Straw Man, serving the purposes of a writer with an authoritarian streak.
Plenty of "disciples" cling to a few soundbites from their idols that enable them to rationalize their behavior, without ever seeking to understand their idols' broader points.
The guy doesn't exist. The whole article is a work of fiction. Pando must be desperate for traffic.
> After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing.
Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms?
> Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms?
No kidding. Not to mention, if he indeed 'made a killing' in the finance industry, why would he be hustling trying to resell iPads and now Air-bnb suites? Seems something programming-related or becoming an ex-pat in a tropical country with nice beaches would be more suitable for someone in their 20's that hates their job and has a lot of money...
I was surprised by that as well, but there may be some explanation. For example, he was a teenage hacker and had connections - through his family or other. So maybe he knew someone at a high frequency trading hedge fund who saw that the guy could code, and gave him a chance.
I agree that it's a bit far fetched, but IMHO it's plausible and I wouldn't be surprised if more than one person had already landed a lucrative job in the financial sector that way.
Making money by breaking regulations and lease terms is hardly the stuff of the heroic inventor. What other criminals count as "disrputers"? Insider traders? Identity thieves? Insurance fraudsters?
This guy is sociopath and I hope he ends up in prison.