My wife and I recently rented a home via AirBnB for a family vacation.  We had a lovely experience, and saved several hundred dollars compared to the price of a hotel that would accommodate us.

We did have one little mishap.  My daughter was exploring the house and tried (probably too aggressively) to open one of the shades when it broke, and fell to the floor.  It was an inexpensive shade, and probably not well secured to begin with.  We could have done nothing about it, especially since we’ll never see the owner again.  But we decided to tell the owner and offer to pay for a replacement.

We didn’t do this just because we’re (hopefully) good people.  We also did because it was our first AirBnB experience, and we want good ratings so that we can use the service more in the future.  If we left the place worse than we found it without a mention, it might reflect poorly on us.  The owner told us it was no problem, and he wouldn’t take any payment for it.  From a pure short-term bottom-line standpoint, he should have taken some money to cover the replacement cost.  After all, we damaged his property and he knows we’re not likely to rent again from him in the future anyway.  But just like us, he knows his ability to keep profiting from AirBnB depends in large part on how we rate him.  Both parties acted in the most civil, polite way imaginable, despite every opportunity to be stingy with the other.

Contrast this interaction to stories my Uber driver told me earlier this summer.  He said he removed his Uber logo because he was tired of being harassed, flipped off, honked at, threatened, and even dangerously cut off in traffic by angry cab drivers.  In fact, when we got in our Uber a nearby cabbie shot us an angry glare and shouted something.  I’m sure the cab drivers are decent people – no better or worse than the average person, or our AirBnB host.  Yet unlike the Uber driver or AirBnB landlord, the structure of the taxi industry incentivizes (or at least doesn’t much punish) aggressive, impolite behavior, rather than courtesy.

Their business relies on government granted monopolies.  When upstarts like Uber or Lyft threaten the cartel, the drivers use the only means they’ve grown accustomed to (as all politically dependent industries do), force and intimidation.   It’s the same thing that drives unionized workers to threaten violence, or government employees to march on capitol buildings.  In their line of work, treating customers better or innovating don’t bring profits.  Laws and decrees and the favor of politicians do, so they learn to do those things.  Likewise, being rude to customers or competitors doesn’t cost them because they are protected from competition.  They lose their civility and can easily descend to more brutish forms of interaction.  If and when the market opens up, they’re not prepared to beat out the competition the old fashioned and dignified way.

Imagine an employee of Publix harassing and intimidating an employee of Harris Teeter.  Seems absurd.  These employees and their companies don’t rely on government mandate to provide customers and revenues, so they rightly see even competitors as nothing more than additional opportunities for potential employment, and certainly not worth abusing.  Free and open markets incentivise good manners, while cartelized, political cronyism breeds the opposite.

Whatever policymakers may do, there is a good lesson here for entrepreneurs and business owners.  If your business model doesn’t punish you for being rude to your customers, you might be doing something wrong.  Many non-profits suffer from this, because funding and services to customers are separate.  Find a way to align the incentives.  Even if you can get away with rudeness to customers in the short term, as markets shift and open up, you’ll probably lose out to kinder counterparts.

Remember what happened to Metallica when they started suing and badmouthing their most devoted fans for downloading their music?  They probably should have observed market trends and sought a business model that didn’t pit them against their customers.

Being nice ought to lead to doing well and vice versa.  If it doesn’t, something’s probably amiss and long term success is dubious.