Why is that a valid assumption? The Internet is full of sleazy companies utterly undeserving of anyone's trust.
Where the stakes matter, community self-protection can now ramp up faster, make fairer distinctions, and preserve flexibility better than (often-incumbent-captured) regulatory agencies.
The assumption is that any business that's not deserving of trust is very easy to detect and kill in the internet era, solely through the distributed actions of consumers with good access to information.
And this distributed form of regulation is significantly less corruptible than centralized, political regulation.
1) The author works at Union Square Ventures, which has a vested interest in '2.0' regulation. A quick search shows that although it might not be directly related to Uber, it is certainly in the ride-sharing space to the tune of $30 million [0]. I am sorry, but whenever someone (not the author personally, but still...) has that much money on the table, it's hard not to take what they say with a grain of salt.
2) What exactly is meant by the "real world"? Just because the Internet is not a thing we can touch or see, that does not make it "not real" and thus things that apply to the real world equally apply to things that are on the Internet and vis a vice (which is a nice point the author does make).
In either case, I do agree that something needs to be changed and there is something obviously foul with some of the things I have read recently such as that NYC had has gone from 10,000 to ~13,500 Taxi medallions over the past 30 years, which is just bupkis. Throw that in with the fact that American-born taxi drivers are a rare thing, the average taxi driver makes less than minimum wage and the owners of the medallions make a killing imply something is wrong. Please let me know if you'd like sources for what I just said, I'm sure I read most of this on HN though.
[0] http://techcrunch.com/2012/12/24/uber-rival-hailo-reportedly...
I remember a friend once opened up a bakery and sent out an email to friends and family to review it on Yelp. So within a week of opening, there were 100+ 4-5 star reviews. I've stopped using Yelp since then and have found a great new review since then that I hope businesses don't discover, and so far they haven't, and so far the reviews are spot on.
The role of government (in theory) is to serve the people and it will not make any extra profit (aside from bribery, which again, leads to job loss) and in fact lose their "elected" jobs if their regulations fail to protect people.
Uber and other companies have a monetary incentive to squelch and play down bad reviews. In a pure capitalistic system, one should simply follow the money and realize that '1.0 regulation' doesn't sound so bad compared to '2.0' regulation by companies that have a vested interest in manipulating it to their means.
The internet is the real world. Period.