3 ms·

Rent control is a bad policy no matter how you slice it. In general most price controls are counterproductive

Supermancho 3y ago
For many people, price gouging is conceptually palatable when it doesn't apply to them. A revision would make more sense, but treating it like a black and white issue is disingenuous.
beej71 3y ago
And yet people vote in politicians who back it. More basic issues clearly need to be addressed before politicians can repeal rent control and still get reelected.
sudosysgen 3y ago
That's really not true. Rent control has been shown multiple times to actually work in reducing prices, and when quantitative welfare analysis in whether the drop in mobility is worth the drop in prices are done, it's often found to be worth it. There are of course ways to do rent control that are better or worse, some of which may indeed be generally counterproductive, and everyone agrees that it can't solve the problem by itself. Economics is not even close to being sufficiently precise for you to be able to reason through any appreciable problem from first principles.
- wskinner 3y ago
  Rent control works for some people (e.g. those already living in rent controlled apartments). It also tends to suppress long term supply and improvement of existing supply, and that hurts other people in less visible ways (e.g. people who would have moved into new housing which was never built due to supply suppression, or residents of rent-controlled buildings which gradually fall into disrepair). In general, we should be skeptical of any policy where those helped are obvious and those harmed are non-obvious or distributed through time and space.
  - sudosysgen 3y ago
    See, that's what I mean about sensible applications of rent control. Having a small class of rent controlled appartements is silly and it's not something you ever want to do, it's only ever a terrible compromise between politicians and landlords that everyone knows is a bad idea. It doesn't suppress supply when building is already wildly profitable and is just being slowed down by permitting either. The negative impacts of rent control have been the subject of literally hundreds of empirical studies. It's a known quantity at this point and, when you quantify the impact, it's generally worth it, especially in our current zoning hell. It also helps with price stickiness once supply does increase : as you know, developpers only like to build upmarket appartements, which typically take a decade or more to trickle down to the average person. The main thing is not to do silly things like only apply rent control to a small portion of appartements, we know it doesn't work, and to allow rent to increase with any reasonably incurred costs. This way you actually incentivize landlords to repair their apartments, you reduce the mobility risk, etc...
orwin 3y ago
Non-market housing is basically rent controlled and very productive. I'd say it's the most productive rent control as if you get enough of it (30-40%), the market almost align to non-market housing and landlords have to compete on housing quality. Just have sf associations build non-market housing. En masse.

For many people, price gouging is conceptually palatable when it doesn't apply to them. A revision would make more sense, but treating it like a black and white issue is disingenuous.

beej71 3y ago

And yet people vote in politicians who back it. More basic issues clearly need to be addressed before politicians can repeal rent control and still get reelected.

sudosysgen 3y ago

That's really not true. Rent control has been shown multiple times to actually work in reducing prices, and when quantitative welfare analysis in whether the drop in mobility is worth the drop in prices are done, it's often found to be worth it. There are of course ways to do rent control that are better or worse, some of which may indeed be generally counterproductive, and everyone agrees that it can't solve the problem by itself. Economics is not even close to being sufficiently precise for you to be able to reason through any appreciable problem from first principles.

wskinner 3y ago
Rent control works for some people (e.g. those already living in rent controlled apartments). It also tends to suppress long term supply and improvement of existing supply, and that hurts other people in less visible ways (e.g. people who would have moved into new housing which was never built due to supply suppression, or residents of rent-controlled buildings which gradually fall into disrepair). In general, we should be skeptical of any policy where those helped are obvious and those harmed are non-obvious or distributed through time and space.
- sudosysgen 3y ago
  See, that's what I mean about sensible applications of rent control. Having a small class of rent controlled appartements is silly and it's not something you ever want to do, it's only ever a terrible compromise between politicians and landlords that everyone knows is a bad idea. It doesn't suppress supply when building is already wildly profitable and is just being slowed down by permitting either. The negative impacts of rent control have been the subject of literally hundreds of empirical studies. It's a known quantity at this point and, when you quantify the impact, it's generally worth it, especially in our current zoning hell. It also helps with price stickiness once supply does increase : as you know, developpers only like to build upmarket appartements, which typically take a decade or more to trickle down to the average person. The main thing is not to do silly things like only apply rent control to a small portion of appartements, we know it doesn't work, and to allow rent to increase with any reasonably incurred costs. This way you actually incentivize landlords to repair their apartments, you reduce the mobility risk, etc...

orwin 3y ago

Non-market housing is basically rent controlled and very productive. I'd say it's the most productive rent control as if you get enough of it (30-40%), the market almost align to non-market housing and landlords have to compete on housing quality. Just have sf associations build non-market housing. En masse.