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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 de

by 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.

calambrac 18y ago
That's a fair point, though I disagree about the parallel to gas prices (housing isn't a commodity, and rent control only applies to existing tenants). I've been in the position of defending 'rent control' on this thread, but really all I'm committed to are the ideas that the op was a terrible article that proved nothing, and that not displacing people from their homes is a worthy societal goal. If there are better ways to accomplish that than rent control, I'm all for them.
- mmmurf 18y ago
  Fair enough. On a slightly tangential note, I think that the idea of "uprooting from homes" is a bit of an unfortunate cliche. In reality, it is home ownership that shackles people to jobs they hate, etc. If you rent, you can move whenever you want. If you own a home, you can't move if the job market declines or you find a better offer elsewhere unless you hire a Realtor and go through a major home sale project... and if the local economy is in decline, you're probably not the only person trying to sell your house and so you may end up selling it at a big loss (as was the case in post-industrial Flint, Michigan). I realize that landlords have been vilified in the past, but who is really benefited by suppressing the mobility of the population? It's businesses (whose workers can't leave), it's politicians (who don't have to worry as much about people packing up and leaving in response to bad policies, corruption, etc.), and it's banks -- most people pay at least the value of their home in mortgage interest, and are effectively enslaved to the bank, an unrelenting landlord who can inflict the equivalent of modern-day debtors prison in the form of foreclosure credit destruction and confiscation of any equity earned since purchase. How many people are tremendously afraid of losing their job because they might lose their house (their biggest investment)? How many people put up with unfulfilling, soul-sucking work just to make that house payment? Consider how this has all changed -- how many more debt slaves were created -- when the housing market tanked. Home ownership is not the American dream, nor is being part of a community for the long term, nor is having the same job for 30 years and then retiring with a gold watch and a pension. True freedom is in being able to take a better offer and being able to reinvent one's self whenever one wants. But our entire financial system, it seems, was based on the idea of encouraging long-term debt (mortgages) and the stasis that accompanies it. So I think the ideal that you are striving for with not uprooting people from their rental apartments is not only illusory but destructive. Price changes contain information, and preventing price changes simply hides information, keeps people in the dark, etc. Maybe being uprooted will (metaphorically) allow the plant to catch flight and land somewhere better... Maybe rental real-estate prices are so high because tons of rich people are moving in and they all plan on sending their kids to private school, leading to the destruction of the public schools -- this is the case in SF where most people with money would never send their kids to SF public schools even though it costs $2K/month to rent a dumpy 1BR apartment and so objectively it's a "rich" area.
  - calambrac 18y ago
    I agree with basically everything you've said here, except the conclusion that all this means allowing people to avoid being uprooted from their homes is destructive. This is mainly because I don't think that the argument that "rent control traps renters in their low-rent apartments" holds any water - the alternative would have been displacement from the increased rent, and the tenant still wouldn't have been able to find a place in the same area (this terrible articles assertions aside). Also - price changes contain information, sure, but how is that information being hidden in a rent-control environment? With increase-on-vacate and no rent-control on newly constructed units, it seems like it's pretty rare that rent-controlled units would be so highly concentrated in an area to mask the true market value.
    - mmmurf 18y ago
      I agree that the item you mention is not a particularly strong argument, but I wanted to mention some examples of how rent control blocks a price signal that might even be useful for the beneficiary of rent control. I think it's uncontroversial that it blocks the price signal to renovate the buildings and to build new affordable housing as discussed above. But if you agree on the major point that the social engineering geared at getting people to live/work in one place for a long time is on the wrong track, then our differences seem focused on rent control. I should mention that in my last building in SF there was a guy who had lived there in a rent controlled apartment since the 1970s. After the first year I lived there, a letter arrived in the mail informing me that rent would increase by exactly 1.5%, the maximum increase allowed by law, and that the landlord was pushing for "utility cost pass-through", a rent-control exception that allows slightly bigger increases in cases of utility price jumps. So I was a beneficiary of rent control. Back to the guy. His apartment had a view of the bay and golden gate bridge from every window, including the bathroom. It could probably be rented for $3500+/month because of the amazing views. He was a wealthy lawyer, arch-enemy of the landlord and heavily involved in the tenants union, and completely not in need of any help paying rent. With rent control he was probably paying under $1000/month for his apartment and had been for years. He will probably live there until the day he dies. I'd have been far less skeptical of rent control if there had been an immigrant family living in that apartment or someone who worked at the local Walgreens.

by mmmurf 18y ago

calambrac 18y ago

That's a fair point, though I disagree about the parallel to gas prices (housing isn't a commodity, and rent control only applies to existing tenants). I've been in the position of defending 'rent control' on this thread, but really all I'm committed to are the ideas that the op was a terrible article that proved nothing, and that not displacing people from their homes is a worthy societal goal. If there are better ways to accomplish that than rent control, I'm all for them.

mmmurf 18y ago
Fair enough. On a slightly tangential note, I think that the idea of "uprooting from homes" is a bit of an unfortunate cliche. In reality, it is home ownership that shackles people to jobs they hate, etc. If you rent, you can move whenever you want. If you own a home, you can't move if the job market declines or you find a better offer elsewhere unless you hire a Realtor and go through a major home sale project... and if the local economy is in decline, you're probably not the only person trying to sell your house and so you may end up selling it at a big loss (as was the case in post-industrial Flint, Michigan). I realize that landlords have been vilified in the past, but who is really benefited by suppressing the mobility of the population? It's businesses (whose workers can't leave), it's politicians (who don't have to worry as much about people packing up and leaving in response to bad policies, corruption, etc.), and it's banks -- most people pay at least the value of their home in mortgage interest, and are effectively enslaved to the bank, an unrelenting landlord who can inflict the equivalent of modern-day debtors prison in the form of foreclosure credit destruction and confiscation of any equity earned since purchase. How many people are tremendously afraid of losing their job because they might lose their house (their biggest investment)? How many people put up with unfulfilling, soul-sucking work just to make that house payment? Consider how this has all changed -- how many more debt slaves were created -- when the housing market tanked. Home ownership is not the American dream, nor is being part of a community for the long term, nor is having the same job for 30 years and then retiring with a gold watch and a pension. True freedom is in being able to take a better offer and being able to reinvent one's self whenever one wants. But our entire financial system, it seems, was based on the idea of encouraging long-term debt (mortgages) and the stasis that accompanies it. So I think the ideal that you are striving for with not uprooting people from their rental apartments is not only illusory but destructive. Price changes contain information, and preventing price changes simply hides information, keeps people in the dark, etc. Maybe being uprooted will (metaphorically) allow the plant to catch flight and land somewhere better... Maybe rental real-estate prices are so high because tons of rich people are moving in and they all plan on sending their kids to private school, leading to the destruction of the public schools -- this is the case in SF where most people with money would never send their kids to SF public schools even though it costs $2K/month to rent a dumpy 1BR apartment and so objectively it's a "rich" area.
- calambrac 18y ago
  I agree with basically everything you've said here, except the conclusion that all this means allowing people to avoid being uprooted from their homes is destructive. This is mainly because I don't think that the argument that "rent control traps renters in their low-rent apartments" holds any water - the alternative would have been displacement from the increased rent, and the tenant still wouldn't have been able to find a place in the same area (this terrible articles assertions aside). Also - price changes contain information, sure, but how is that information being hidden in a rent-control environment? With increase-on-vacate and no rent-control on newly constructed units, it seems like it's pretty rare that rent-controlled units would be so highly concentrated in an area to mask the true market value.
  - mmmurf 18y ago
    I agree that the item you mention is not a particularly strong argument, but I wanted to mention some examples of how rent control blocks a price signal that might even be useful for the beneficiary of rent control. I think it's uncontroversial that it blocks the price signal to renovate the buildings and to build new affordable housing as discussed above. But if you agree on the major point that the social engineering geared at getting people to live/work in one place for a long time is on the wrong track, then our differences seem focused on rent control. I should mention that in my last building in SF there was a guy who had lived there in a rent controlled apartment since the 1970s. After the first year I lived there, a letter arrived in the mail informing me that rent would increase by exactly 1.5%, the maximum increase allowed by law, and that the landlord was pushing for "utility cost pass-through", a rent-control exception that allows slightly bigger increases in cases of utility price jumps. So I was a beneficiary of rent control. Back to the guy. His apartment had a view of the bay and golden gate bridge from every window, including the bathroom. It could probably be rented for $3500+/month because of the amazing views. He was a wealthy lawyer, arch-enemy of the landlord and heavily involved in the tenants union, and completely not in need of any help paying rent. With rent control he was probably paying under $1000/month for his apartment and had been for years. He will probably live there until the day he dies. I'd have been far less skeptical of rent control if there had been an immigrant family living in that apartment or someone who worked at the local Walgreens.