3 ms·

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

by 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)
  - tptacek 11y ago
    If by "certain ideologies" you mean "pretty much all the ideologies", then yes. The belief that rent control policies inflict more costs than benefits in the market for housing is notorious as one of the few conclusions of economics held across the ideological spectrum, from conservative to liberal, statist to libertarian, Keynsian to Hayekian. Paul Krugman thinks it doesn't work. Brad DeLong thinks it doesn't work. Dean Baker thinks it doesn't work. Tyler Cowen and Russ Robers think it doesn't work. Kenneth Rogoff thinks it doesn't work. Counterexamples welcome. Can you find a prominent economist speaking out in favor of it, in any setting, in any real detail? Here's a starting point for the other side, written by two Nobel-winners: http://c457332.r32.cf2.rackcdn.com/pdf/books/Roofs_or_Ceilings.pdf http://c457332.r32.cf2.rackcdn.com/pdf/books/Roofs_or_Ceilin... Slightly later: This paper is a great read, by the way; as close to a long-form Reddit comment as you could expect from something written in 1946 --- and about San Francisco, no less! Friedman and Stigler take dead aim at the argument that a free market for housing somehow benefits the rich. The rich can already sidestep rent control: they simply purchase, instead of renting. Meanwhile, the perverse incentives of rent control coerce some people who would be better served by renting into buying, which then commits them to speculative investments in real estate, further exacerbating the problem.
    - timr 11y ago
      No, I meant what I wrote. "belief that rent control policies inflict more costs than benefits in the market for housing is notorious as one of the few conclusions of economics held across the ideological spectrum" Define your terms. What does "inflict more costs than benefits" mean? What specific policies are we debating? Stop arguing a straw man ("rent control") by referring to the authority of "economists agree", and you'll realize that there is an easy, clear argument for the other side here: social stability. The only thing that "economists agree" upon, is that price caps lead to shortages in efficient markets. That's it. They vehemently disagree when you start asking about policies that don't cap prices, but instead, aim to control the rate of increase in prices in order to reward long-term occupancy. Moreover, there are huge differences in circumstance that must be considered in order to have a productive debate: in a place like Houston, where land is cheap, the arguments for rent control are far weaker than in San Francisco, where Global Wealth has suddenly, spastically decided that this tiny, 47-square-mile city is where All the Monies belong, as of ~2010. (Great for Global Wealth, but bad for the people who lived here before the rich gained a new investment fetish!) I'll make this easy for you: your argument is that "rent control" is bad because economists say it's bad, and #{STANDARD_FREE_MARKET_ARGUMENT_GOES_HERE}. Fine. Mine is that the real world is more complicated than economic theory, and that while "the free market" may be better at allocating wealth efficiently (that is, indeed, all the free market does), there's a higher value: the moral right of occupancy is worth some economic inefficiency. We should provide incentives for long-term tenancy, because such tenancy produces social stability that is better for all of us in the long run. I don't automatically value the free market because someone told me that it's good in econ 101 -- in this case, I hold another value paramount.
crzwdjk 11y ago
Rent control did cause SF's housing shortage, but not necessarily in the way you (or economists) would think. New construction isn't rent-controlled, so it's not a huge disincentive to build: instead, SF's lengthy and ridiculously complicated permitting process manage to do that just fine on their own. This means less housing gets built, and housing prices go up, which is obviously good for those who own housing. Prop 13 helps them too, since they don't even have to pay any extra tax when that happens. But, in a city where a majority are renters, why would the population support policies that make their rent go up? This is where rent control/stabilization come in: these policies mean that restricting new housing has no impact on renters who already live there, either, at least not in the short term and only as long as they don't have to move. The job of rent control is thus to bring (some) renters into the "screw you, I got mine" coalition against housing. You speak of the tech bubble being an exacerbating factor, and you're not wrong, but imagine if SF managed to put all that money to good use by letting developers build new housing. Sure, it'll be full of techies, but the bubble will eventually pop, the techies will move out, and you'll have piles of now-affordable housing. Instead, all that VC money ends up getting funneled into the pockets of the landowning classes.
- patio11 11y ago
  The existence of rent control is a disincentive to build even non-rent controlled buildings, because when you make a building you have to have a good guess of what is going to happen over the next 20+ years. If your last 20+ years include "The evil landowning classes are soaking us! We should expropriate their unfair profits and redistribute them to hard-working social workers and artists! Except for the luxury apartments, those are totes cool." your expectation as a builder of luxury apartments will probably not be "I'll certainly have unimpeded ability to exploit this apartment in year 15 of its 30 year expected life."
  - khuey 11y ago
    In San Francisco that was mostly fixed by Sacramento with Costa-Hawkins. It would require changes to state law to rent control post-Costa-Hawkins properties.

by timr 11y ago

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)
- tptacek 11y ago
  If by "certain ideologies" you mean "pretty much all the ideologies", then yes. The belief that rent control policies inflict more costs than benefits in the market for housing is notorious as one of the few conclusions of economics held across the ideological spectrum, from conservative to liberal, statist to libertarian, Keynsian to Hayekian. Paul Krugman thinks it doesn't work. Brad DeLong thinks it doesn't work. Dean Baker thinks it doesn't work. Tyler Cowen and Russ Robers think it doesn't work. Kenneth Rogoff thinks it doesn't work. Counterexamples welcome. Can you find a prominent economist speaking out in favor of it, in any setting, in any real detail? Here's a starting point for the other side, written by two Nobel-winners: http://c457332.r32.cf2.rackcdn.com/pdf/books/Roofs_or_Ceilings.pdf http://c457332.r32.cf2.rackcdn.com/pdf/books/Roofs_or_Ceilin... Slightly later: This paper is a great read, by the way; as close to a long-form Reddit comment as you could expect from something written in 1946 --- and about San Francisco, no less! Friedman and Stigler take dead aim at the argument that a free market for housing somehow benefits the rich. The rich can already sidestep rent control: they simply purchase, instead of renting. Meanwhile, the perverse incentives of rent control coerce some people who would be better served by renting into buying, which then commits them to speculative investments in real estate, further exacerbating the problem.
  - timr 11y ago
    No, I meant what I wrote. "belief that rent control policies inflict more costs than benefits in the market for housing is notorious as one of the few conclusions of economics held across the ideological spectrum" Define your terms. What does "inflict more costs than benefits" mean? What specific policies are we debating? Stop arguing a straw man ("rent control") by referring to the authority of "economists agree", and you'll realize that there is an easy, clear argument for the other side here: social stability. The only thing that "economists agree" upon, is that price caps lead to shortages in efficient markets. That's it. They vehemently disagree when you start asking about policies that don't cap prices, but instead, aim to control the rate of increase in prices in order to reward long-term occupancy. Moreover, there are huge differences in circumstance that must be considered in order to have a productive debate: in a place like Houston, where land is cheap, the arguments for rent control are far weaker than in San Francisco, where Global Wealth has suddenly, spastically decided that this tiny, 47-square-mile city is where All the Monies belong, as of ~2010. (Great for Global Wealth, but bad for the people who lived here before the rich gained a new investment fetish!) I'll make this easy for you: your argument is that "rent control" is bad because economists say it's bad, and #{STANDARD_FREE_MARKET_ARGUMENT_GOES_HERE}. Fine. Mine is that the real world is more complicated than economic theory, and that while "the free market" may be better at allocating wealth efficiently (that is, indeed, all the free market does), there's a higher value: the moral right of occupancy is worth some economic inefficiency. We should provide incentives for long-term tenancy, because such tenancy produces social stability that is better for all of us in the long run. I don't automatically value the free market because someone told me that it's good in econ 101 -- in this case, I hold another value paramount.

crzwdjk 11y ago

Rent control did cause SF's housing shortage, but not necessarily in the way you (or economists) would think. New construction isn't rent-controlled, so it's not a huge disincentive to build: instead, SF's lengthy and ridiculously complicated permitting process manage to do that just fine on their own. This means less housing gets built, and housing prices go up, which is obviously good for those who own housing. Prop 13 helps them too, since they don't even have to pay any extra tax when that happens. But, in a city where a majority are renters, why would the population support policies that make their rent go up? This is where rent control/stabilization come in: these policies mean that restricting new housing has no impact on renters who already live there, either, at least not in the short term and only as long as they don't have to move. The job of rent control is thus to bring (some) renters into the "screw you, I got mine" coalition against housing. You speak of the tech bubble being an exacerbating factor, and you're not wrong, but imagine if SF managed to put all that money to good use by letting developers build new housing. Sure, it'll be full of techies, but the bubble will eventually pop, the techies will move out, and you'll have piles of now-affordable housing. Instead, all that VC money ends up getting funneled into the pockets of the landowning classes.

patio11 11y ago
The existence of rent control is a disincentive to build even non-rent controlled buildings, because when you make a building you have to have a good guess of what is going to happen over the next 20+ years. If your last 20+ years include "The evil landowning classes are soaking us! We should expropriate their unfair profits and redistribute them to hard-working social workers and artists! Except for the luxury apartments, those are totes cool." your expectation as a builder of luxury apartments will probably not be "I'll certainly have unimpeded ability to exploit this apartment in year 15 of its 30 year expected life."
- khuey 11y ago
  In San Francisco that was mostly fixed by Sacramento with Costa-Hawkins. It would require changes to state law to rent control post-Costa-Hawkins properties.