4 ms·

"Rent control has been tried in so many different American cities and by and large is considered a failure in any city it is implemented" [citation needed] I

by timr 11y ago

"Rent control has been tried in so many different American cities and by and large is considered a failure in any city it is implemented" [citation needed] I think what you meant to say is that rent control is widely considered a failure by certain rich people who want to maximize their profit-seeking behavior without regard to societal cost, and economists of particular ideologies, who generally are unable prove their claims about real-world rent-control systems. Most other people like it, which is why it sticks around. The people who complain about rent control in San Francisco, for example, have yet to provide evidence that it's doing anything but lowering prices here. There's a lot of heat in this debate, but very little light.

mpyne 11y ago
> There's a lot of heat in this debate, but very little light. An ironic statement given the 3 paragraphs that preceded it...
tptacek 11y ago
Well, rich people and economists. Here, let's ask Paul Krugman: The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable. Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out -- what yesterday's article oddly described as ''free-market horror stories'' -- and constantly proliferating regulations designed to block those strategies? Predictable. http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-... But, of course: Paul Krugman. Rich dude maximizing profit-seeking behavior.
- timr 11y ago
  That's, as usual, a critique of something completely unrelated to real-world rent-control. Ignoring the fact that your counter-evidence is a survey, "a ceiling on rents" doesn't accurately describe any of the existing rent control schemes, which do allow rents to rise, and attempt to control only the rate of growth. So this is a straw man. Most economists, when asked about rent control, default back to the one thing they know: price caps are bad. That's obvious. They don't agree to nearly the same extent when you ask them about the policies that actually exist. The more ideological economists then try to assert that all price manipulation is bad...usually without evidence of any sort. Krugman's thinking is so sloppy here that it's a joke. He "didn't know anything" about SF housing until the day before he wrote the article, and it shows -- how can he plausibly claim that he knows that the rental bubble of the late 90s was due to rent control, when the region was the historic center of one of the largest economic bubbles of the 20th century? He couldn't know, and didn't know. The tech bubble popped, the money went away, and the rental crisis ended. This one will end the same way. The high-order bit here is the tidal wave of new money, not the rent-controlled tenants that are drowning in the flood.
  - tptacek 11y ago
    I'm sorry, I don't follow this comment at all. You told the commenter upthread that opposition to rent control was based on the desire of rich people to maximize profits from their real estate. I simply responded by demonstrating that opposition to rent control is taught in economics textbooks as a basic illustration of the power of the law of supply and demand. I'm not really following what San Francisco has done to repeal the law of supply and demand.
    - timr 11y ago
      I said that his assertion that rent control is "widely considered a failure everywhere it has been implemented" is wrong. It's "widely considered" a failure by rich people who seek more rent (duh), and by economists of certain ideologies. People who rent in rent-controlled cities are largely happy with the outcome, or rent control wouldn't exist. You posted a link that says that a whole bunch of polled economists don't like rent caps. That's unsurprising, but rent caps != rent control. I'm not aware of any city that has capped rents, because that would be stupid. San Francisco does not cap rents. "I'm not really following what San Francisco has done to repeal the law of supply and demand." https://en.wikipedia.org/wiki/Mu_(negative) https://en.wikipedia.org/wiki/Mu_(negative)
milesskorpen 11y ago
In SF, it's clear that people WITH rent control get lower rents. Rent control makes it very very expensive to change apartments (since you lose your locked in rate), and since causes even less supply (due to low liquidity of apartment stock), rents for apartments that are newly on the market are likely a lot higher. That does not necessarily change the city's average rent.
- pgeorgi 11y ago
  We already have that kind of rent control (where you're already living in an apartment) in all of Germany and it works reasonably well. The new rule is supposed to slow down rent increases in new contracts.
deleted 11y ago
[deleted]
crdb 11y ago
Different line of argument: think of that which is not seen [1]. Most of the arguments presented here take only the current residential population, and current time into account, but cities evolve over time and see large in- and outflows of residents (how many people on HN have lived in New York at some point in their life? how many New York residents aren't from New York?). Even the most solidly conservative areas of the world change - I grew up in London's South Kensington in the late 1990s and early 2000s, and recently visited again to find it had turned into a sparkling clean pedestrian area with hipster smoothie bars and back-to-back Ferraris... Rent control coupled with NIMBY planning restrictions benefit connected locals who are able to secure the resulting limited spots and hinder the ability of non-residents to move in. In the short term, this freezes the existing situation - you keep your historical streets, you avoid SF turning into Hong Kong or Singapore ([2]). In the long term, (relatively asset-) poor entrepreneurial people move elsewhere (New York, Chicago, Austin... even Houston). Of course, it takes a LOT to move a global hub. We might not see it in our lifetime (how long did it take for New York to dethrone London as the global financial HQ). The only way I'd move to SF would be if a company paid me a significantly larger amount of money, or once I retire to take advantage of the weather and food. So, do you as an SF resident see the city as a beautiful museum to be preserved, like Venice or EC2 in London, or is SF really about frontier spirit, which today looks more like Hong Kong than suburbia? A better way to deal with bubbles is to tax them, as many nations such as Norway do with natural resources. If there is an enormous inflow of Chinese money, who are taking advantage of the great rule of law and property rights afforded by the American taxpayer to anybody willing to pay for said property, tax the property holder for the privilege. The bases at Guam and Okinawa aren't paying for themselves... how about 5% of the assessed property value a year, if you aren't a citizen or tax resident. The foreign money will STILL come because they still derive value from owning foreign property in attractive places, the probability of it being politically seized being virtually zero (I guess property taxes on foreigners are a form of seizure, though). The people who made the neighbourhood what it is benefit from the increased tax revenue (e.g. in decreased taxes or better services). Singapore has a form of this - citizen can purchase HDB fresh builds (~80% of the market) at up to a 40% discount and without foreigners bidding for the first 4 years of the building's existence. (France also does, the ISF [3], but it applies to citizen and, due to rising property values, is chasing retired working class folks from their own homes as they do not have the liquidity to afford the tax.) [1] http://bastiat.org/en/twisatwins.html http://bastiat.org/en/twisatwins.html [2] http://scifanatic.wpengine.netdna-cdn.com/wp-content/uploads/2013/03/stid-t3-08.jpg http://scifanatic.wpengine.netdna-cdn.com/wp-content/uploads... [3] https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth

by timr 11y ago

mpyne 11y ago

> There's a lot of heat in this debate, but very little light. An ironic statement given the 3 paragraphs that preceded it...

tptacek 11y ago

Well, rich people and economists. Here, let's ask Paul Krugman: The analysis of rent control is among the best-understood issues in all of economics, and -- among economists, anyway -- one of the least controversial. In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand. Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable. Bitter relations between tenants and landlords, with an arms race between ever-more ingenious strategies to force tenants out -- what yesterday's article oddly described as ''free-market horror stories'' -- and constantly proliferating regulations designed to block those strategies? Predictable. http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-... But, of course: Paul Krugman. Rich dude maximizing profit-seeking behavior.

timr 11y ago
That's, as usual, a critique of something completely unrelated to real-world rent-control. Ignoring the fact that your counter-evidence is a survey, "a ceiling on rents" doesn't accurately describe any of the existing rent control schemes, which do allow rents to rise, and attempt to control only the rate of growth. So this is a straw man. Most economists, when asked about rent control, default back to the one thing they know: price caps are bad. That's obvious. They don't agree to nearly the same extent when you ask them about the policies that actually exist. The more ideological economists then try to assert that all price manipulation is bad...usually without evidence of any sort. Krugman's thinking is so sloppy here that it's a joke. He "didn't know anything" about SF housing until the day before he wrote the article, and it shows -- how can he plausibly claim that he knows that the rental bubble of the late 90s was due to rent control, when the region was the historic center of one of the largest economic bubbles of the 20th century? He couldn't know, and didn't know. The tech bubble popped, the money went away, and the rental crisis ended. This one will end the same way. The high-order bit here is the tidal wave of new money, not the rent-controlled tenants that are drowning in the flood.
- tptacek 11y ago
  I'm sorry, I don't follow this comment at all. You told the commenter upthread that opposition to rent control was based on the desire of rich people to maximize profits from their real estate. I simply responded by demonstrating that opposition to rent control is taught in economics textbooks as a basic illustration of the power of the law of supply and demand. I'm not really following what San Francisco has done to repeal the law of supply and demand.
  - timr 11y ago
    I said that his assertion that rent control is "widely considered a failure everywhere it has been implemented" is wrong. It's "widely considered" a failure by rich people who seek more rent (duh), and by economists of certain ideologies. People who rent in rent-controlled cities are largely happy with the outcome, or rent control wouldn't exist. You posted a link that says that a whole bunch of polled economists don't like rent caps. That's unsurprising, but rent caps != rent control. I'm not aware of any city that has capped rents, because that would be stupid. San Francisco does not cap rents. "I'm not really following what San Francisco has done to repeal the law of supply and demand." https://en.wikipedia.org/wiki/Mu_(negative) https://en.wikipedia.org/wiki/Mu_(negative)

milesskorpen 11y ago

In SF, it's clear that people WITH rent control get lower rents. Rent control makes it very very expensive to change apartments (since you lose your locked in rate), and since causes even less supply (due to low liquidity of apartment stock), rents for apartments that are newly on the market are likely a lot higher. That does not necessarily change the city's average rent.

pgeorgi 11y ago
We already have that kind of rent control (where you're already living in an apartment) in all of Germany and it works reasonably well. The new rule is supposed to slow down rent increases in new contracts.

deleted 11y ago

[deleted]

crdb 11y ago

Different line of argument: think of that which is not seen [1]. Most of the arguments presented here take only the current residential population, and current time into account, but cities evolve over time and see large in- and outflows of residents (how many people on HN have lived in New York at some point in their life? how many New York residents aren't from New York?). Even the most solidly conservative areas of the world change - I grew up in London's South Kensington in the late 1990s and early 2000s, and recently visited again to find it had turned into a sparkling clean pedestrian area with hipster smoothie bars and back-to-back Ferraris... Rent control coupled with NIMBY planning restrictions benefit connected locals who are able to secure the resulting limited spots and hinder the ability of non-residents to move in. In the short term, this freezes the existing situation - you keep your historical streets, you avoid SF turning into Hong Kong or Singapore ([2]). In the long term, (relatively asset-) poor entrepreneurial people move elsewhere (New York, Chicago, Austin... even Houston). Of course, it takes a LOT to move a global hub. We might not see it in our lifetime (how long did it take for New York to dethrone London as the global financial HQ). The only way I'd move to SF would be if a company paid me a significantly larger amount of money, or once I retire to take advantage of the weather and food. So, do you as an SF resident see the city as a beautiful museum to be preserved, like Venice or EC2 in London, or is SF really about frontier spirit, which today looks more like Hong Kong than suburbia? A better way to deal with bubbles is to tax them, as many nations such as Norway do with natural resources. If there is an enormous inflow of Chinese money, who are taking advantage of the great rule of law and property rights afforded by the American taxpayer to anybody willing to pay for said property, tax the property holder for the privilege. The bases at Guam and Okinawa aren't paying for themselves... how about 5% of the assessed property value a year, if you aren't a citizen or tax resident. The foreign money will STILL come because they still derive value from owning foreign property in attractive places, the probability of it being politically seized being virtually zero (I guess property taxes on foreigners are a form of seizure, though). The people who made the neighbourhood what it is benefit from the increased tax revenue (e.g. in decreased taxes or better services). Singapore has a form of this - citizen can purchase HDB fresh builds (~80% of the market) at up to a 40% discount and without foreigners bidding for the first 4 years of the building's existence. (France also does, the ISF [3], but it applies to citizen and, due to rising property values, is chasing retired working class folks from their own homes as they do not have the liquidity to afford the tax.) [1] http://bastiat.org/en/twisatwins.html http://bastiat.org/en/twisatwins.html [2] http://scifanatic.wpengine.netdna-cdn.com/wp-content/uploads/2013/03/stid-t3-08.jpg http://scifanatic.wpengine.netdna-cdn.com/wp-content/uploads... [3] https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth https://en.wikipedia.org/wiki/Solidarity_tax_on_wealth