At best you'll produce consumer surplus for lucky renters, and you'll produce sad outsiders who'd be willing to to pay even more but can't get in. Everyone knows this is an issue with insufficient supply (of housing or of nice alternative places to live) but it is popular to put a ban on symptoms.
Berlin approves 5-year rent freeze
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Re: Berlin approves 5-year rent freeze
#12Well, at the very least, will be an interesting economic experiment.
Isn't this similar to rent control in the states already, or other incentives that disincentive moving (ex, locking in property tax amount at time of buying)?
Re: Berlin approves 5-year rent freeze
#13As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
Genuinely curious: what do you think would be a better response?
Address the issues that are limiting the supply.
Re: Berlin approves 5-year rent freeze
#14As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
Genuinely curious: what do you think would be a better response?
I am not the OP, but based on the point of view perhaps the OP would say: encourage more housing development to lower prices?
Re: Berlin approves 5-year rent freeze
#15As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
Genuinely curious: what do you think would be a better response?
If the market isn't the most efficient way to allocate resources, even allocating them centrally according to clear rules makes more sense than just commanding prices to stop rising, as if a price is merely an arbitrary number dreamed up by a seller instead of a description of a market reality that the economy will contort itself to move towards.
Re: Berlin approves 5-year rent freeze
#16Re: Berlin approves 5-year rent freeze
#17As a person born and raised in Soviet Union, I strongly believe that whoever thinks that a proper economic response to raising prices is literally to order them to stop raising , is a lunatic.
Government intervention always work! ;) I am surprised these measured tried again when we know already the outcome. This is the definition of insanity.
Re: Berlin approves 5-year rent freeze
#18I'm so ashamed of german politics of late. We're becoming the country where Homeopathy is GAINING popularity, where policy is increasingly symbolic in the good case, outright ideological in the worst case. It's really at the point where I don't want my kids growing up here anymore, problem is, where else?
> Homeopathy is GAINING popularity
Citation please.
Re: Berlin approves 5-year rent freeze
#19Symptom: rents are too high Cause: insufficient housing supply Solution: disincentivize new construction?
This would only be true if rent wasn't already (relatively) way above the cost of new construction and if the freeze applied to new buildings too.
Why aren't you asking why cost of new construction is this inflated?
Why aren't we trying to fix the supply problems, instead of trying to... what are we trying? I don't understand the whole ideology that sees any reasoning that could lead to this.
Re: Berlin approves 5-year rent freeze
#20Earlier quoted context omitted.
Genuinely curious: what do you think would be a better response?
Raising prices = Demand > Supply. You can either try to curb the demand (by e.g. creating incentives for companies to build offices elsewhere, move government bureaucracy somewhere else, etc.) or improve the supply by facilitating new construction, which in most places on earth is limited by, again, local government restrictions. edits: grammar
What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed?
[Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that price goes down when supply goes up, but this seems to only be because suppliers can no longer get away with a higher price, because their competition is now selling it at a lower price. So I think it's far more ethical for a government to limit those kind of price hikes, which mainly just hurt the consumer, than to allow these abuses to continue in the name of "freedom".