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The whole debate about rent control drives me nuts. It's framed as callous libertarians vs compassionate progressives. But the debate conflates means and ends i
by emtel 8y ago
The whole debate about rent control drives me nuts. It's framed as callous libertarians vs compassionate progressives. But the debate conflates means and ends in an obvious way that no one ever seems to notice.
If you are concerned about the ability of lower-income people to afford housing, then give them a rent subsidy! As a mechanism, this is superior in just about every way. It doesn't suppress housing supply, and it can be means-tested so that high income people aren't occupying rent-controlled apartments (which happens all the time now). It also gives low income people the freedom to move without losing their rent controlled status.
- gwright 8y agoSubsidies just increase the market price of the properties. The subsidy will be sucked up by the landlord, which of course leads to rent control. Which provides disincentives on capital improvements. This is similar to the way that student loans have resulted in higher tuition/housing that once again just gets sucked up by the institutions. The recent appeal for "free college" funded by the taxpayer will almost certainly result in increased tuition. If only we had a simple mechanism that balanced supply and demand. I think there are areas where government regulation is necessary and appropriate (safety, fraud avoidance, pollution, health, etc.) but regulating prices is almost always a failure that leads to an ever expanding Rube Goldberg collection of incentives, subsidies, rules, tax loopholes, and so on that are much worse than just letting prices float naturally.
- emtel 8y agoThere are numerous examples of subsidies in the real world that haven't led to price controls. And yes, subsidies distort the market. I'm pretty sure 99% of economists will agree that subsidies are less distortionary than price controls though.