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Just addressing the on-topic portion of your comment (not that the rest wouldn't be worth commenting on, just not enough time or energy) - I really don't unders

Just addressing the on-topic portion of your comment (not that the rest wouldn't be worth commenting on, just not enough time or energy) - I really don't understand your criticism of rent control. "It causes higher prices for everyone not under rent-control." Yes, but that's almost the whole point of rent control - people aren't being displaced by the folks bidding up the price of all the other apartments to absurd levels. The article makes it sound like without rent control everything stabilizes into this beautiful bell curve with housing for everyone, but it doesn't actually provide any evidence for this (other than showing less populated and geographically confined cities without rent control). "Discourages improvement of existing properties" Because the properties are certainly more important than the people living in them, right? I mean, our goal as a society should be as many improved properties as possible. "Discourages building new properties" This one baffles me: new properties aren't subject to rent-control in the vast majority of cases. It seems like rent-control is almost a direct stimulus to build new properties. "I don't really feel sorry for someone getting a huge apartment for way below market price." What about feeling sorry for someone who has made their home somewhere for 20+ years and is now getting shoved out because they made a tv show that was set in the neighborhood and a bunch of young overpaid professionals want to play cool for a couple of years?

mmmurf 18y ago
The point is that rent control (over time) drives up the price of rental dwellings, a phenomenon which greatly harms the poor. Here's why: In many cities, new buildings are exempt from rent control if they are "luxury" buildings. So the supply of luxury housing increases. Meanwhile, the incentive to build non-luxury buildings is greatly diminished b/c those buildings fall under mandatory rent control. Also, there is a bigger incentive to turn buildings into condos, etc., to avoid having to deal with rent control. Not sure where you heard that new properties are exempt in most cases. This may be due to the fact that most are luxury buildings. So there is a finite amount of rent-controlled housing, and since it's such a great deal, the landlords have little incentive to improve the fixtures, furnishings, etc. They will rent the place without improvements, so there is no reason to spend the money on them. Thus the places deteriorate over time and begin to become more and more slumlike. Rent control also encourages over-consumption of housing space. My 3br apt example above explains one example. Without rent control, supply and demand can function properly. Maybe this means that cheaper housing is located a bit further from the highest rent area of a city. More likely, if there is demand for cheaper housing, someone will figure out a way to build it. The huge number of condemned buildings in major cities is evidence of the resources that have been completely wasted b/c nobody had the incentive to improve the places enough to make them liveable! If you rent, it's not a permanent home. This has many advantages -- if you get laid off you can easily move with a month's notice. You don't have to worry about long term upkeep, you don't have to worry about hiring a realtor or trying to recoup your investment if the market dips. The other side of the coin is that sometimes prices change to reflect other realities. An increasing price probably means that the area is thriving and (surprise) the space is actually worth more. Once you get into declaring that things should be priced by public officials rather than based on the market price (what they are actually worth to someone else who's willing to pay for them) you are stepping onto a very slippery slope.
- calambrac 18y ago
  New properties are exempt at least in NYC and SF, the main cities the article harps on. I don't know about elsewhere. A place deteriorating over time happens, but from the POV of the tenant whose alternative is getting booted to the curb, this seems like a reasonable tradeoff, doesn't it? The over-consumption of housing space is a pretty lame argument, and it's contradicted by the point that other people are making about a black-market rising up for illegal subletting & etc. "Supply and demand functioning properly" is a bit heartless in this context, don't you think? I mean, we don't exist so that some theoretical system can work in a way we can easily describe. When people get kicked out of the place they live, that has a cost - even if we haven't figured out how to put a price tag on it yet. I'm more than happy to say "screw the newcomers" in favor of the established citizenry. As for rent control being a slippery slope: this is bullshit (sorry). Despite free-market dogma to the contrary, reasonable government policy is not the enemy of the good. See: the recent credit crunch. What would something similar look like for a community? Let's see: an area of town becomes trendy, young folks with lots of disposable income bid up the prices like mad, all the old tenants leave, an economic downturn hits or the neighborhood loses its trendiness, all the young folks who have no real ties leave, and then...
  - mmmurf 18y ago
    I have no problem with a program designed to subsidize housing for people with tax dollars. If the democracy decides that people with attributes x, y, and z deserve a $2000/month housing subsidy, that's fine. It's no different than the subsidy given to mortgage debtors (tax breaks), parents (the child tax credit), electric car owners (tax credit), student loan debtors (student loan interest deduction), farmers (direct subsidy), etc., etc. But consider how paternalistic any of these programs are compared to simply giving the person cash to spend on whatever he/she wants. Also, the above programs are taxpayer subsidized so the burden is distributed across all taxpayers. Rent control, on the other hand, screws over the building owners only, effectively making a single building owner personally provide a $1000+ subsidy to a hundreds of people. Compared to a broad, taxpayer-subsidized program, this is equivalent to a 70% additional tax just on landlords, this is on top of that person's fair share of income and payroll tax already being paid! The biggest problem, though, is the distortion caused by rent control... which causes all of the problems in my above post. To make obvious the issue of price controls leading to shortages, consider this: During the 1970s when Nixon instituted price controls on gas at the pump, there were massive lines outside gas stations. This was not due to the "evil Arabs" withholding gas. It was due to the price controls: People who would have decided to carpool or walk if the price had been at market price decided to buy gas at Nixon's price. This led to huge lines.

mmmurf 18y ago

The point is that rent control (over time) drives up the price of rental dwellings, a phenomenon which greatly harms the poor. Here's why: In many cities, new buildings are exempt from rent control if they are "luxury" buildings. So the supply of luxury housing increases. Meanwhile, the incentive to build non-luxury buildings is greatly diminished b/c those buildings fall under mandatory rent control. Also, there is a bigger incentive to turn buildings into condos, etc., to avoid having to deal with rent control. Not sure where you heard that new properties are exempt in most cases. This may be due to the fact that most are luxury buildings. So there is a finite amount of rent-controlled housing, and since it's such a great deal, the landlords have little incentive to improve the fixtures, furnishings, etc. They will rent the place without improvements, so there is no reason to spend the money on them. Thus the places deteriorate over time and begin to become more and more slumlike. Rent control also encourages over-consumption of housing space. My 3br apt example above explains one example. Without rent control, supply and demand can function properly. Maybe this means that cheaper housing is located a bit further from the highest rent area of a city. More likely, if there is demand for cheaper housing, someone will figure out a way to build it. The huge number of condemned buildings in major cities is evidence of the resources that have been completely wasted b/c nobody had the incentive to improve the places enough to make them liveable! If you rent, it's not a permanent home. This has many advantages -- if you get laid off you can easily move with a month's notice. You don't have to worry about long term upkeep, you don't have to worry about hiring a realtor or trying to recoup your investment if the market dips. The other side of the coin is that sometimes prices change to reflect other realities. An increasing price probably means that the area is thriving and (surprise) the space is actually worth more. Once you get into declaring that things should be priced by public officials rather than based on the market price (what they are actually worth to someone else who's willing to pay for them) you are stepping onto a very slippery slope.

calambrac 18y ago
New properties are exempt at least in NYC and SF, the main cities the article harps on. I don't know about elsewhere. A place deteriorating over time happens, but from the POV of the tenant whose alternative is getting booted to the curb, this seems like a reasonable tradeoff, doesn't it? The over-consumption of housing space is a pretty lame argument, and it's contradicted by the point that other people are making about a black-market rising up for illegal subletting & etc. "Supply and demand functioning properly" is a bit heartless in this context, don't you think? I mean, we don't exist so that some theoretical system can work in a way we can easily describe. When people get kicked out of the place they live, that has a cost - even if we haven't figured out how to put a price tag on it yet. I'm more than happy to say "screw the newcomers" in favor of the established citizenry. As for rent control being a slippery slope: this is bullshit (sorry). Despite free-market dogma to the contrary, reasonable government policy is not the enemy of the good. See: the recent credit crunch. What would something similar look like for a community? Let's see: an area of town becomes trendy, young folks with lots of disposable income bid up the prices like mad, all the old tenants leave, an economic downturn hits or the neighborhood loses its trendiness, all the young folks who have no real ties leave, and then...
- mmmurf 18y ago
  I have no problem with a program designed to subsidize housing for people with tax dollars. If the democracy decides that people with attributes x, y, and z deserve a $2000/month housing subsidy, that's fine. It's no different than the subsidy given to mortgage debtors (tax breaks), parents (the child tax credit), electric car owners (tax credit), student loan debtors (student loan interest deduction), farmers (direct subsidy), etc., etc. But consider how paternalistic any of these programs are compared to simply giving the person cash to spend on whatever he/she wants. Also, the above programs are taxpayer subsidized so the burden is distributed across all taxpayers. Rent control, on the other hand, screws over the building owners only, effectively making a single building owner personally provide a $1000+ subsidy to a hundreds of people. Compared to a broad, taxpayer-subsidized program, this is equivalent to a 70% additional tax just on landlords, this is on top of that person's fair share of income and payroll tax already being paid! The biggest problem, though, is the distortion caused by rent control... which causes all of the problems in my above post. To make obvious the issue of price controls leading to shortages, consider this: During the 1970s when Nixon instituted price controls on gas at the pump, there were massive lines outside gas stations. This was not due to the "evil Arabs" withholding gas. It was due to the price controls: People who would have decided to carpool or walk if the price had been at market price decided to buy gas at Nixon's price. This led to huge lines.