The 1 Percent’s Increasingly Popular Way of Buying Whatever They Want Before We Can—Online Scalping
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Maybe we’re just easily annoyed in Northern California. The froth of our rage over Monkey Parking — an app that auctions off public parking spots — had barely begun to subside and then along came ReservationHop, an outfit that makes phony reservations at “hot” restaurants and then sells them at a premium to the general public. And we got all worked up, all over again.
Yep, the fact that there’s now an app for scalping restaurant bookings rubbed some people the wrong way. Of course, it could be that the critics were just jittery and irritable from too many days of wondering whether an eviction letter was about to arrive in the mail, but still: Even such a normally Silicon Valley-friendly tech press outfit as TechCrunch was impelled to decry the rise of the new “JerkTech.” When TechCrunch tells you to “go disrupt yourself,” it’s probably time for bleeding edge entrepreneurs to take a long hard look in the mirror.
That does not mean, however, that the new wave of scalping apps lacks for defenders. Cato Institute policy analyst Matthew Feeney took me personally to task for attacking Monkey Parking, lamenting that “it’s a shame that he doesn’t appreciate that the price system is extremely efficient at communicating information to producers and customers …” (Feeney also found my reference to “classic transnational neocolonialist libertarian arrogance” “worrying” and “frightening.” What can I say? Libertarians almost never get my jokes.)
ReservationHop also won the dubious honor of being declared not “as loathsome as it seems” in a smart San Francisco magazine article by Scott Lucas and Ian Eck. Their argument: ReservationHop is doing basically the same thing as StubHub — finding a market clearing price for an artificially undervalued commodity.
The backlash against anti-scalper fury is provocative. Because contrary to Cato’s assumption, I have a keen appreciation for how effective the price mechanism is for communication information. Properly regulated, it’s a marvelous way to allocate resources and get things done. But at the same time, at a gut level, I am pretty sure I don’t want to live in a society where every possible interaction with my fellow human being is up for auction at the right price point.
So the interesting question is where do we draw the line? Why has this latest wave of apps raised so many hackles?
I have a theory: One reason why the cornucopia of new services made possible by the Internet and smartphones has proven so seductive is their facility for cutting out the middleman. We call it “disintermediation” and we love it. Making your own airline reservations! Not having to go to Best Buy to get a computer peripheral! What you want, when you want it! Our new infrastructure connects us directly to the objects of our desire.
But in a weird, unexpected way, these new scalping apps are introducing a new middleman into the social equation. In the name of market-clearing efficiency, they’re getting between us and what we want, and cutting out a slice of action for themselves. They feel like interlopers. Even when they are solving a problem, there’s a whiff of parasitism. What was once clear becomes muddy. When the answer to the question of why we can’t find a reservation available at our favorite restaurant is because someone entirely unaffiliated with that restaurant has figured out a way to profit from our demand, that just feels yucky.
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The most obvious reason why Monkey Parking and ReservationHop get some of us riled up has to do with the brutal realities of economics. The problem — a lack of a parking space, or inability to get a reservation — is solved by raising the price. Therefore, the affluent are more likely to find the parking spot or land the reservation that they want. Don’t have the cash to buy a hot parking spot — well, maybe you better just walk or take the bus.