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Freakonmics had a podcast the other week “Why Rent Control Doesn’t Work”: http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-con

Freakonmics had a podcast the other week “Why Rent Control Doesn’t Work”: http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/. The reasoning why it doesn’t work probably won’t surprise anyone here. But in it they talk about how the very wealthy Nat Sherman was able to pay $355/month for a rarely used 6br apartment. That’s quite an efficiency problem.

paulcole 8y ago
Remember that Freakonomics is first and foremost entertainment. They know what their audience wants to hear and create the narrative that's most entertaining and fits the story arc they know listeners expect. It's the podcast version of Penn & Teller's Bullshit.
- baron816 8y ago
  Oh, it’s not as one sided a piece as I and the title make it out to be. They do talk to several competent proponents of rent control. But I think the case against it pretty clear and compelling: it’s good for the people on the inside, and really bad for everyone else. Edit: The opinions of Dubner et al are not anywhere near as clear as Penn and Teller. I’ve been listening for years and I don’t think I could tell you which way he votes usually.
  - njepa 8y ago
    Seems to be pretty much disinformation though. There is a section about Sweden at the end, but it is ignoring everything that has happened in the last 20 years. Of course rent control 'doesn't work' when you are converting government owned apartments to co-ops at below market rate, subsidizing co-ops and issuing 100 year mortgages. Rent control has to be combined with active building policies if you want more housing, in which case it actually keeps down the value of land. That is the big problem in most cities today, builders simply can't get land at a price to build affordable housing.
    - bkohlmann 8y ago
      Why would you need rent control if you had active building policies that ensured supply kept up with demand? The price of housing wouldn’t change, so there would be no need to mandate a specific below market price.
      - njepa 8y ago
        You still want to even out the swings. Supply won't necessarily keep up in any given time or area. You aren't necessarily going to be able to supply enough housing in the most popular spot were construction is hard and land expensive. Instead you want create equivalent areas fast enough. But without rent control all the affluent people quickly ends up in the same space, which is hard to make an equivalent of with affordable housing.
Spooky23 8y ago
They probably didn’t talk my elderly aunt, who paid a similar sum with her $1,100/mo social security and was able to stay in her community, parish and close to loved ones.
- mikeash 8y ago
  There must be better ways to accomplish this that don’t result in valuable apartments sitting empty.
  - eecc 8y ago
    Valuable? To whom, and for what reasons?
    - mikeash 8y ago
      Valuable to people who want a place to live. The reason is that people need shelter.
      - coldtea 8y ago
        People also need their shelter to be cheap once they've found it, and rent control allows for that. Without rent control you just have the market force people into musical chairs for highest bidders, for the benefits of the landlords.
        mikeash 8y ago
        And we’re back to my original comment: there must be a better way to accomplish this.
        njepa 8y ago
        If we conclude that people should have affordable and predictable rent it is hard to make rent control the problem. While not adjusting rent for inflation and upkeep seems counterproductive, someone occupying an apartment at a low margin is only really a problem if we can't produce more apartments, or more opportunities, at the same price. The housing market cannot increase forever. You either end up with massive inflation or massive inequality. The few good ideas seem to essentially be to treat housing as infrastructure. Of course building infrastructure is a problem in itself for many countries.
true_tuna 8y ago
They also concluded that getting rid of rent control makes it worse. The conclusion was “instituting tent control doesn’t work, but if you already have rent control getting rid of it doesn’t work either”. It’s almost like a supply and demand problem again.
- dgzl 8y ago
  Sounds more like an addiction problem with nasty withdraws.
- Qasaur 8y ago
  "Doesn't work either" is a subjective opinion. It "won't work" as prices would likely skyrocket the day after such controls were abolished, but I'm not so sure it would be the same after 5 years. In the long-run people are likely better off.
- baron816 8y ago
  If you spend years disincentivizing housing development with rent control, of course lifting the regulation is going to cause rents to increase.
CrowFly 8y ago
This woman in the article wasn't wealthy, and the apartment wasn't really "habitable" (no head, for example) if they turned it over. She wasn't "getting away" with anything.

paulcole 8y ago

Remember that Freakonomics is first and foremost entertainment. They know what their audience wants to hear and create the narrative that's most entertaining and fits the story arc they know listeners expect. It's the podcast version of Penn & Teller's Bullshit.

baron816 8y ago
Oh, it’s not as one sided a piece as I and the title make it out to be. They do talk to several competent proponents of rent control. But I think the case against it pretty clear and compelling: it’s good for the people on the inside, and really bad for everyone else. Edit: The opinions of Dubner et al are not anywhere near as clear as Penn and Teller. I’ve been listening for years and I don’t think I could tell you which way he votes usually.
- njepa 8y ago
  Seems to be pretty much disinformation though. There is a section about Sweden at the end, but it is ignoring everything that has happened in the last 20 years. Of course rent control 'doesn't work' when you are converting government owned apartments to co-ops at below market rate, subsidizing co-ops and issuing 100 year mortgages. Rent control has to be combined with active building policies if you want more housing, in which case it actually keeps down the value of land. That is the big problem in most cities today, builders simply can't get land at a price to build affordable housing.
  - bkohlmann 8y ago
    Why would you need rent control if you had active building policies that ensured supply kept up with demand? The price of housing wouldn’t change, so there would be no need to mandate a specific below market price.
    - njepa 8y ago
      You still want to even out the swings. Supply won't necessarily keep up in any given time or area. You aren't necessarily going to be able to supply enough housing in the most popular spot were construction is hard and land expensive. Instead you want create equivalent areas fast enough. But without rent control all the affluent people quickly ends up in the same space, which is hard to make an equivalent of with affordable housing.

Spooky23 8y ago

They probably didn’t talk my elderly aunt, who paid a similar sum with her $1,100/mo social security and was able to stay in her community, parish and close to loved ones.

mikeash 8y ago
There must be better ways to accomplish this that don’t result in valuable apartments sitting empty.
- eecc 8y ago
  Valuable? To whom, and for what reasons?
  - mikeash 8y ago
    Valuable to people who want a place to live. The reason is that people need shelter.
    - coldtea 8y ago
      People also need their shelter to be cheap once they've found it, and rent control allows for that. Without rent control you just have the market force people into musical chairs for highest bidders, for the benefits of the landlords.
      - mikeash 8y ago
        And we’re back to my original comment: there must be a better way to accomplish this.
        njepa 8y ago
        If we conclude that people should have affordable and predictable rent it is hard to make rent control the problem. While not adjusting rent for inflation and upkeep seems counterproductive, someone occupying an apartment at a low margin is only really a problem if we can't produce more apartments, or more opportunities, at the same price. The housing market cannot increase forever. You either end up with massive inflation or massive inequality. The few good ideas seem to essentially be to treat housing as infrastructure. Of course building infrastructure is a problem in itself for many countries.

true_tuna 8y ago

They also concluded that getting rid of rent control makes it worse. The conclusion was “instituting tent control doesn’t work, but if you already have rent control getting rid of it doesn’t work either”. It’s almost like a supply and demand problem again.

dgzl 8y ago
Sounds more like an addiction problem with nasty withdraws.
Qasaur 8y ago
"Doesn't work either" is a subjective opinion. It "won't work" as prices would likely skyrocket the day after such controls were abolished, but I'm not so sure it would be the same after 5 years. In the long-run people are likely better off.
baron816 8y ago
If you spend years disincentivizing housing development with rent control, of course lifting the regulation is going to cause rents to increase.

CrowFly 8y ago

This woman in the article wasn't wealthy, and the apartment wasn't really "habitable" (no head, for example) if they turned it over. She wasn't "getting away" with anything.