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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 mi

by 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.

calambrac 18y ago
Maybe I should have been more clear. I agree that social constructs designed to chain people to a given location are bad; I disagree that rent control is one of these constructs. It might be true that people tend to hang on to apartments that they otherwise wouldn't because they're getting a great deal, but this is a voluntary choice, not the company store. The bit about "allow[ing] the plant to catch flight and land somewhere better" seem like a little bit of movie logic. Many people do derive real value from being established in a community, and would be hurt by being forced to move. Why does the debate always veer back to renovation of the buildings? Do you really think that adding stainless-steel appliances to an apartment is a more desirable goal than not displacing established residents? As for your personal experience with the wealthy lawyer, here's the balancing anecdote: I live in the Mission, a part of town where rents are rapidly increasing (I'm sure I'm guilty of driving up prices). There are plenty of people down here who can only afford to stay in their homes because of rent control, and stories of tenant intimidation are plentiful.
- mmmurf 18y ago
  For renovation, it's not just stainless steel appliances, it's little things over time. In 1 or 2 years it's not really noticeable but over 5-10 years it starts to take a toll. Even the building I used to live in used a large tarp on the roof rather than fixing some leaks that would drip through the ceiling of my apartment and cause bubbles in the drywall when we had heavy rain. In the mission, I would prefer if a subsidy was just given to the poor via tax dollars. Say it's a $200 per household subsidy. Maybe it makes sense for that family to pay it to the landlord, but maybe it makes sense to find a cheaper apartment and spend it on a TV. If it turns out that the TV was the chosen decision, that helps drive down the price of rent b/c maybe the landlord will have a slightly harder time raising rent prices. If, on the other hand, the tenant chooses to allocate the money to housing, it will help drive up housing prices. The upside of driving up housing prices is that it now becomes more worthwhile for someone to convert their house into apartments, which in turn increases supply and would tend to help keep prices affordable.
  - calambrac 18y ago
    Of course it's not just stainless steel appliances - the thrust of the argument is that it's silly to think of buildings as more important than the people inside them. Direct payment like you're advocating is a political non-starter. As paternalistic as it is, taxpayers don't like the idea that their money could be spent on anything, they want it to go only to the things they approve of.
    - DabAsteroid 18y ago
      Direct payment like you're advocating is a political non-starter. It is the only non-distorting form of wefare possible. http://en.wikipedia.org/wiki/Basic_Income http://en.wikipedia.org/wiki/Basic_Income . taxpayers don't like the idea that their money could be spent on [just] anything What if no one paid or owed discrete taxes? In other words, what if there were no taxes on income or consumption? . http://www.econlib.org/library/Enc/ConsumptionTax.html http://www.econlib.org/library/Enc/ConsumptionTax.html The political wrangling obscured the real issues underlying a question that has occupied economists and tax experts for many years—whether individuals should pay any taxes at all on capital income. Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. . http://www.irefeurope.org/col_docs/doc_26_fr.pdf http://www.irefeurope.org/col_docs/doc_26_fr.pdf Several studies even demonstrate that, from the point of view of maximizing economic growth, the long-run optimal taxation is zero. Milesi-Ferretti and Roubini (1994), for instance, show that under very general assumptions the optimal tax burden on labour and capital income is zero. Jones, Manuelli and Rossi (1993b) and Bull (1993) add that even consumption taxes ought to be equal to zero ... no such thing as a progressive tax system should be allowed to exist. More precisely, as Sir Mirrlees (1971) showed, the marginal tax rate at the highest level of income should be zero. And finally, in our eyes, there should be no capital income tax.

by mmmurf 18y ago

calambrac 18y ago

Maybe I should have been more clear. I agree that social constructs designed to chain people to a given location are bad; I disagree that rent control is one of these constructs. It might be true that people tend to hang on to apartments that they otherwise wouldn't because they're getting a great deal, but this is a voluntary choice, not the company store. The bit about "allow[ing] the plant to catch flight and land somewhere better" seem like a little bit of movie logic. Many people do derive real value from being established in a community, and would be hurt by being forced to move. Why does the debate always veer back to renovation of the buildings? Do you really think that adding stainless-steel appliances to an apartment is a more desirable goal than not displacing established residents? As for your personal experience with the wealthy lawyer, here's the balancing anecdote: I live in the Mission, a part of town where rents are rapidly increasing (I'm sure I'm guilty of driving up prices). There are plenty of people down here who can only afford to stay in their homes because of rent control, and stories of tenant intimidation are plentiful.

mmmurf 18y ago
For renovation, it's not just stainless steel appliances, it's little things over time. In 1 or 2 years it's not really noticeable but over 5-10 years it starts to take a toll. Even the building I used to live in used a large tarp on the roof rather than fixing some leaks that would drip through the ceiling of my apartment and cause bubbles in the drywall when we had heavy rain. In the mission, I would prefer if a subsidy was just given to the poor via tax dollars. Say it's a $200 per household subsidy. Maybe it makes sense for that family to pay it to the landlord, but maybe it makes sense to find a cheaper apartment and spend it on a TV. If it turns out that the TV was the chosen decision, that helps drive down the price of rent b/c maybe the landlord will have a slightly harder time raising rent prices. If, on the other hand, the tenant chooses to allocate the money to housing, it will help drive up housing prices. The upside of driving up housing prices is that it now becomes more worthwhile for someone to convert their house into apartments, which in turn increases supply and would tend to help keep prices affordable.
- calambrac 18y ago
  Of course it's not just stainless steel appliances - the thrust of the argument is that it's silly to think of buildings as more important than the people inside them. Direct payment like you're advocating is a political non-starter. As paternalistic as it is, taxpayers don't like the idea that their money could be spent on anything, they want it to go only to the things they approve of.
  - DabAsteroid 18y ago
    Direct payment like you're advocating is a political non-starter. It is the only non-distorting form of wefare possible. http://en.wikipedia.org/wiki/Basic_Income http://en.wikipedia.org/wiki/Basic_Income . taxpayers don't like the idea that their money could be spent on [just] anything What if no one paid or owed discrete taxes? In other words, what if there were no taxes on income or consumption? . http://www.econlib.org/library/Enc/ConsumptionTax.html http://www.econlib.org/library/Enc/ConsumptionTax.html The political wrangling obscured the real issues underlying a question that has occupied economists and tax experts for many years—whether individuals should pay any taxes at all on capital income. Strange as it may sound, most economists would agree that having zero taxes on capital income is theoretically the best thing to do. . http://www.irefeurope.org/col_docs/doc_26_fr.pdf http://www.irefeurope.org/col_docs/doc_26_fr.pdf Several studies even demonstrate that, from the point of view of maximizing economic growth, the long-run optimal taxation is zero. Milesi-Ferretti and Roubini (1994), for instance, show that under very general assumptions the optimal tax burden on labour and capital income is zero. Jones, Manuelli and Rossi (1993b) and Bull (1993) add that even consumption taxes ought to be equal to zero ... no such thing as a progressive tax system should be allowed to exist. More precisely, as Sir Mirrlees (1971) showed, the marginal tax rate at the highest level of income should be zero. And finally, in our eyes, there should be no capital income tax.