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This is what so many "free market" hawks tend to misunderstand. The market is not an acyclic network, but is still strongly ordered in its power imbalance. 'Th

This is what so many "free market" hawks tend to misunderstand. The market is not an acyclic network, but is still strongly ordered in its power imbalance. 'The world is in greater peril from those who tolerate or encourage evil than from those who actually commit it.' -Albert Einstein

anigbrowl 4y ago
Most of them understand it just fine. They just don't care as long as it benefits them in the short term. Sure, you could talk about the long term unsustainability, but they quite reasonably figure that they'll be better positioned over the long term by virtue of having a lot more money.
thunky 4y ago
If the "free market" isn't good enough for you here, what are you suggesting is the solution? Banning software that analyzes market data if the output may result in pricing adjustments?
- acdha 4y ago
  There isn’t a single “free market” and this one isn’t particularly free since there’s hefty information asymmetry and buyers typically have much lower negotiating power (you must have somewhere to live this month; a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option). Mainstream economic consensus for ages has been that markets need some regulation to work most effectively and that’s especially true for a basic human need like housing which controls how healthy the overall community is. Some obvious things to regulate here could be mandatory disclosure of sources used to justify increases, annual rate caps, requiring amounts over a certain threshold to be itemized and temporary (i.e. if the building includes heat & oil costs spiked require the owner to show that the price they actually paid went up & don’t raise the rent permanently since it’ll come back down).
  - baggy_trough 4y ago
    Mainstream economic consensus would be that your proposals are very bad ideas.
    - richbell 4y ago
      Why?
      - baggy_trough 4y ago
        Because they add deadweight loss to the economy by interfering with price signals and raising transaction costs.
  - thunky 4y ago
    > a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. And remember it works both ways. It doesn't seem like it now, but sometimes, in some markets, it's hard for landlords to attract tenants. I have serious doubts that regulation or any other form of intervention on pricing would have anything but unintended consequences, in some cases leading to the exact problem you're trying to prevent: https://www.americanexperiment.org/new-york-landlords-are-keeping-apartments-off-the-market-due-to-rent-control/ https://www.americanexperiment.org/new-york-landlords-are-ke...
    - acdha 4y ago
      > I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. Oh, sure but the point is just that the market dynamics favor sellers pretty strongly. For example, how much does the hassle of moving or leaving a neighborhood deter the kind of negotiation which would normally be key to keeping a market stable? Note also that regulation doesn’t need to directly control pricing to make a difference. Since information asymmetry is a lot of the problem here, increased transparency could help improve the situation and give people better negotiating positions (e.g. if a building owner is profitable at 30% less than asking for all of the current leases, you can probably negotiate better with that information than if you don’t have it)

anigbrowl 4y ago

Most of them understand it just fine. They just don't care as long as it benefits them in the short term. Sure, you could talk about the long term unsustainability, but they quite reasonably figure that they'll be better positioned over the long term by virtue of having a lot more money.

thunky 4y ago

If the "free market" isn't good enough for you here, what are you suggesting is the solution? Banning software that analyzes market data if the output may result in pricing adjustments?

acdha 4y ago
There isn’t a single “free market” and this one isn’t particularly free since there’s hefty information asymmetry and buyers typically have much lower negotiating power (you must have somewhere to live this month; a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option). Mainstream economic consensus for ages has been that markets need some regulation to work most effectively and that’s especially true for a basic human need like housing which controls how healthy the overall community is. Some obvious things to regulate here could be mandatory disclosure of sources used to justify increases, annual rate caps, requiring amounts over a certain threshold to be itemized and temporary (i.e. if the building includes heat & oil costs spiked require the owner to show that the price they actually paid went up & don’t raise the rent permanently since it’ll come back down).
- baggy_trough 4y ago
  Mainstream economic consensus would be that your proposals are very bad ideas.
  - richbell 4y ago
    Why?
    - baggy_trough 4y ago
      Because they add deadweight loss to the economy by interfering with price signals and raising transaction costs.
- thunky 4y ago
  > a landlord can often leave a place idle for months holding out for a higher offer, especially if AirBnB is an option I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. And remember it works both ways. It doesn't seem like it now, but sometimes, in some markets, it's hard for landlords to attract tenants. I have serious doubts that regulation or any other form of intervention on pricing would have anything but unintended consequences, in some cases leading to the exact problem you're trying to prevent: https://www.americanexperiment.org/new-york-landlords-are-keeping-apartments-off-the-market-due-to-rent-control/ https://www.americanexperiment.org/new-york-landlords-are-ke...
  - acdha 4y ago
    > I guess they can, but they are running a business and their goal is to make money, so they'll eventually take what they can get. Oh, sure but the point is just that the market dynamics favor sellers pretty strongly. For example, how much does the hassle of moving or leaving a neighborhood deter the kind of negotiation which would normally be key to keeping a market stable? Note also that regulation doesn’t need to directly control pricing to make a difference. Since information asymmetry is a lot of the problem here, increased transparency could help improve the situation and give people better negotiating positions (e.g. if a building owner is profitable at 30% less than asking for all of the current leases, you can probably negotiate better with that information than if you don’t have it)