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Maybe a more workable and less authoritarian tack would be that the government plays in the market as a limited profit entity, thereby ensuring that a cartel ca

by evilos 3y ago

Maybe a more workable and less authoritarian tack would be that the government plays in the market as a limited profit entity, thereby ensuring that a cartel cannot fully capture the market and endlessly drive prices upwards. Limited profit (capped at some percentage over revenue) is allowed in order to let the entity invest in expansions so that they don't simply end up being 1% of the market that can be ignored by their competitors.

AnthonyMouse 3y ago
Landlords aren't a cartel in that sense. The way they get together and "fix prices" is by having the government restrict housing density to increase scarcity. A non-profit that has to follow the same zoning rules can't fix that. Whereas if prices are high and you don't prohibit lower density housing from being replaced with higher density housing, there is money in doing that and the market takes care of it for you.
- evilos 3y ago
  I mean my preferred solution would be zoning reform first, yes. I was just proposing an amendment to OPs policy, I don't think it's politically viable in the US. In my large US city, a lot of apartments are held by various corporations that collude via third party software to raise and keep prices high. The local building managers have no say in lease pricing. Maybe a small percentage of people are lucky enough to find mom/pop landlords but many are stuck paying whatever the large complexes charge.
  - AnthonyMouse 3y ago
    Software can't defeat supply and demand unless you have a monopoly. Suppose the amount rents have to hit before it's profitable to build a new building is $1000/month and right now rents are at $990/month. A cartel representing 70% of the landlords in the city collude to raise rents to $2500/month. If they're allowed to, builders will keep building new housing until rents are back below $1000, because until that point they can keep making money by doing it. Even if they have to increase the housing stock in the city by the entire 70% and leave the cartel with a bunch of empty buildings. But if they're not allowed to build, prices go up. And some entity with a profit cap can't do anything about it because they have no path to supplying enough housing to lower the market price.
    - evilos 3y ago
      The supply here is highly constrained, hence my desire (in general) for zoning reform. Of course, there's a lot of opposition to building more housing from the usual suspects. Build more housing, that's the only way.
eganist 3y ago
A public option, then? In the current climate, I'd prefer public options be not-for-profit (well, I'd prefer they exist at all, but of course it was sniped dead during negotiations for the ACA in the case of healthcare), but fair enough. Honestly I'd be fine with the government profiting if it could be tied back to a mechanism that directly reduces a taxpayer's burden, basically "your tax share is reduced by x because total profit from government-run institutions was y" It might even work to incentivize lawmakers to legislate in favor of the profit of such institutions in that they could then tell their constituents that they were responsible for their lower tax burden in a given year.

by evilos 3y ago

AnthonyMouse 3y ago

Landlords aren't a cartel in that sense. The way they get together and "fix prices" is by having the government restrict housing density to increase scarcity. A non-profit that has to follow the same zoning rules can't fix that. Whereas if prices are high and you don't prohibit lower density housing from being replaced with higher density housing, there is money in doing that and the market takes care of it for you.

evilos 3y ago
I mean my preferred solution would be zoning reform first, yes. I was just proposing an amendment to OPs policy, I don't think it's politically viable in the US. In my large US city, a lot of apartments are held by various corporations that collude via third party software to raise and keep prices high. The local building managers have no say in lease pricing. Maybe a small percentage of people are lucky enough to find mom/pop landlords but many are stuck paying whatever the large complexes charge.
- AnthonyMouse 3y ago
  Software can't defeat supply and demand unless you have a monopoly. Suppose the amount rents have to hit before it's profitable to build a new building is $1000/month and right now rents are at $990/month. A cartel representing 70% of the landlords in the city collude to raise rents to $2500/month. If they're allowed to, builders will keep building new housing until rents are back below $1000, because until that point they can keep making money by doing it. Even if they have to increase the housing stock in the city by the entire 70% and leave the cartel with a bunch of empty buildings. But if they're not allowed to build, prices go up. And some entity with a profit cap can't do anything about it because they have no path to supplying enough housing to lower the market price.
  - evilos 3y ago
    The supply here is highly constrained, hence my desire (in general) for zoning reform. Of course, there's a lot of opposition to building more housing from the usual suspects. Build more housing, that's the only way.

eganist 3y ago

A public option, then? In the current climate, I'd prefer public options be not-for-profit (well, I'd prefer they exist at all, but of course it was sniped dead during negotiations for the ACA in the case of healthcare), but fair enough. Honestly I'd be fine with the government profiting if it could be tied back to a mechanism that directly reduces a taxpayer's burden, basically "your tax share is reduced by x because total profit from government-run institutions was y" It might even work to incentivize lawmakers to legislate in favor of the profit of such institutions in that they could then tell their constituents that they were responsible for their lower tax burden in a given year.