9 ms·

The effect is very very muted though, which is why the fastest rate of NYC homebuilding in the 1950s coincided with the strictest rent controls. Like raising t

by pydry 2y ago

The effect is very very muted though, which is why the fastest rate of NYC homebuilding in the 1950s coincided with the strictest rent controls. Like raising the minimum wage it is a very profit hostile policy though. Thats probably why marginal revolution despises both policies so much. Tyler Cowen takes koch money and the laws of supply and demand work the same way for the market for faux academic legitimacy in economics as they do for housing: if you have the cash, it can be bought.

Jensson 2y ago
> Like raising the minimum wage it is a very profit hostile policy though Does it really reduce profits, or does it increase prices? In general the economy balances out so ROI is the same everywhere so profits only decrease temporarily, so all costs comes from other sources long term, like reduces development or increased prices. If rent control only resulted in minimally less construction, then it just resulted in minimally less profits as the two are linked in the private sector.
- pydry 2y ago
  Increasing the minimum wage primarily reduces profits: https://warwick.ac.uk/fac/soc/economics/staff/mdraca/minwage_profits.pdf https://warwick.ac.uk/fac/soc/economics/staff/mdraca/minwage... >In general the economy balances out so ROI is the same everywhere so profits only decrease temporarily The only industry where is is "true" is small restaurants, where profit margin get hit short term but stay steady at 10% over the long term. This is because real restaurant profits are mostly consumed by their landlords, and it's their landlords who suck up the difference long term. This doesn't apply to big corporate restaurants like McDonalds because they have pricing power and often are their own landlords. Even so the SME restaurant industry hates the idea of raising the minimum wage more than most because it tends to lead to a wave of restaurant bankruptcies until rents adjust.

by pydry 2y ago

Jensson 2y ago

> Like raising the minimum wage it is a very profit hostile policy though Does it really reduce profits, or does it increase prices? In general the economy balances out so ROI is the same everywhere so profits only decrease temporarily, so all costs comes from other sources long term, like reduces development or increased prices. If rent control only resulted in minimally less construction, then it just resulted in minimally less profits as the two are linked in the private sector.

pydry 2y ago
Increasing the minimum wage primarily reduces profits: https://warwick.ac.uk/fac/soc/economics/staff/mdraca/minwage_profits.pdf https://warwick.ac.uk/fac/soc/economics/staff/mdraca/minwage... >In general the economy balances out so ROI is the same everywhere so profits only decrease temporarily The only industry where is is "true" is small restaurants, where profit margin get hit short term but stay steady at 10% over the long term. This is because real restaurant profits are mostly consumed by their landlords, and it's their landlords who suck up the difference long term. This doesn't apply to big corporate restaurants like McDonalds because they have pricing power and often are their own landlords. Even so the SME restaurant industry hates the idea of raising the minimum wage more than most because it tends to lead to a wave of restaurant bankruptcies until rents adjust.