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That's interesting, because the very first economics study material I read specifically used rent control of an example where government interference leads to a
by gareim 14y ago
That's interesting, because the very first economics study material I read specifically used rent control of an example where government interference leads to a less efficient market.
I'd love to hear the argument for rent control, though.
- deleted 14y ago[deleted]
- wilfra 14y agoYou read a study that said that artificially reducing prices leads to an inefficient market? What was the next paper written by that economist, that the sun coming out decreases the amount of clothes per inch people use to cover their bodies? I didn't say it made the market efficient, I said an argument could be made that it was a net positive. That's not the same thing. Example: efficient markets sometimes produce monopolies, who then abuse their monopoly power. That's a net negative - but it isn't an example of an inefficient market.
- smokeyj 14y ago> an argument could be made that it was a net positive Net positive? Sounds like some kind of value theory. Which "net positive" are you talking about? Can't argue something you don't understand..
- wilfra 14y agoI made $500 playing craps. I spent $200 on my hotel and another $200 on food and drinks. The trip to Vegas was a net positive. I made $100. In this instance it would mean that the sum total of the economic benefits to NYC that come from rent-controlled apartments outweigh the sum total of the negatives.
- smokeyj 14y agoThere's a word for profitability already. You're arguing price-control can be a profitable endeavor, but to who? Consumers? The cartels?
- wilfra 14y agoSociety.
- smokeyj 14y agoPrice control is profitable to society? Is there a formula you could show me (I'll buy it from you)? Maybe some underlying principles? Or you just have that 'gut feeling'..
- JonnieCache 14y agoThis is why we can't have nice things.
- grn 14y agoCorrect me if I'm wrong but binding price ceilings and floors always lead to surpluses and shortages respectively and cause a deadweight loss.
- DividesByZero 14y agoThere is no abstract measure of an 'efficient market'. The efficiency of markets can only be regarded in the context of the utility they create for their participants (direct and as externalities).
- WalterBright 14y agoThere aren't any historical examples of free market monopolies. There are only examples of government enforced monopolies.
- codehotter 14y agoThis is false. There are so called 'natural monopolies' where one large firm really is more efficient than multiple smaller ones. A popular example is google search. Of course, if that monopoly starts engaging in serious rent seeking behaviour, competition could become profitable again.
- guynamedloren 14y agoGive me a solid alternative and I'll stop using Google search. Until then, don't care if Google is a 'natural monopoly' - it does absolutely everything I want it to do and I occasionally click on advertisements from which they profit. It's a mutually beneficial relationship and I see no reason to switch. Net positive.
- freehunter 14y agoThis is a problem with monopolies, though. Their competitors can't gain marketshare by being better but not better enough. Take Microsoft's monopoly in the 90's. There were competitors and it could be argued they were better, but they weren't better enough to justify switching to them. Even being of the same quality, the monopoly will continue to gain marketshare not because of being better but because of being bigger.
- greiskul 14y agoMicrosoft is a natural monopoly because of the network effects between number of consumers of an OS and number of developers for an OS. What makes Google a natural monopoly?
- freehunter 14y ago
- nkoren 14y agoIt is true that there's a difference between an efficient market and a socially optimal market (if efficiencies are only measured in monetary terms, and exclude any accounting for non-monetary benefits and externalities). However rent control is quite a bad example. There is abundant evidence that rent controls produce serious under-supplies of housing, which is a socially negative outcome by any measure.
- shalmanese 14y agoHere's an argument for rent control: Mixed income neighborhoods are more vibrant and thriving compared to more homogenous neighborhoods. Living in the Mission, I definitely feel like the comfortable mixing of multiple cultures and socio-economic classes is what makes it such an exciting neighborhood compared with SOMA where it's either all yuppie apartments or run down slums with nothing in between.
- jquery 14y agoThe Mission is a shithole. I don't think it serves your point.
- damncabbage 14y agoAs someone who knows neither SoMa nor Mission, could you elaborate please?
- bitcrusher 14y agoSan Francisco hoods. SOMA is "South of Market" and is kind of industrial; It's being revamped with live/work lofts and lots of SMB / Shared office spaces. Mission is another neighborhood which is pretty much a shit-hole, but IS a cool place. There are lots of great places to eat and drink and there are festivals, parties and parades most every night. Usually when you hear about someone being shot, it's either in Oakland or the Mission.
- alxp 14y ago"shit hole" is extraordinarily relative, apparently, and reflects more on the person using the term than the place being described.
- jeremyt 14y agoUnfortunately, "exciting", "yuppie", and "vibrant" aren't economic terms. It sounds like you're justifying rent control on the basis of aesthetics.