Rent controls have split housing in Berlin into two distinct markets • Hacker News Board

Re: Rent controls have split housing in Berlin into two distinct markets

#121

Post by dnadler » Tue, Mar 02, 2021, 7:40 PM UTC

codeflo wrote: post #110

sokoloff wrote: post #94

Earlier quoted context omitted.

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories would restock sooner or later. In that situation, higher prices wouldn't have incentivized more production. Still, supermarkets could have temporarily raised prices 10x and still sold their inventory. Why didn't more of them do it? Presumably, they made the r…

I'm not sure on the specific timing but price gouging during an emergency is illegal, so there's one other reason why they didn't do it.

Re: Rent controls have split housing in Berlin into two distinct markets

#122

Post by [deleted] » Tue, Mar 02, 2021, 7:41 PM UTC

Mediterraneo10 wrote: post #102

sokoloff wrote: post #94

Earlier quoted context omitted.

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

> Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market. In some countries like Egypt, bread (or another basic staple) is heavily subsidized below the free market price, but that doesn’t seem to meaningfully impact the market’s supply: any consumer able to pay that artificially low price can still eat all the bread he or s…

[deleted]

Re: Rent controls have split housing in Berlin into two distinct markets

#123

Post by ridaj » Tue, Mar 02, 2021, 7:42 PM UTC

> The right answer to that shortage would be to increase supply — for instance, by cutting red tape in zoning and construction

Hmm but didn't they indeed provide incentives for increasing supply, by exempting new construction from rent regulation? In fact the later argument saying that prices started going up in the unregulated market would support the notion that the policy is indeed providing a powerful incentive to new buildings. Sure, the article also laments that there still isn't enough supply, but can one argue that giving more rent money to owners of old properties would help fix this?

How did new construction change in Berlin? What about homelessness? I don't know but find it shady that the numbers aren't shown.

Re: Rent controls have split housing in Berlin into two distinct markets

#124

Post by ChuckMcM » Tue, Mar 02, 2021, 7:42 PM UTC

sokoloff wrote: post #94

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

Rationing bread would increase the number of people who have some bread. Regulating the price to a point well below the free market supply/demand driven price causes a decrease in the amount of bread supplied to the market (and probably increase hoarding/decrease the breadth of distribution). Think back to toilet paper shortages last spring. Rationing was arguably the best move (and was what local markets around me d…

I think this is something that is often overlooked in progressive circles. Markets treat high prices as signal to increase supply. When supplies cannot be increased you get market inequities.

Rationing for goods like bread, paper, milk, gasoline, etc. Can be a stand-in while the problem that is preventing the market from responding by increasing supply is fixed.

Re: Rent controls have split housing in Berlin into two distinct markets

#125

Post by Kalium » Tue, Mar 02, 2021, 7:42 PM UTC

aphextron wrote: post #88

>In a food shortage, for example, regulating the price of bread only trades one expression of scarcity (high prices) for another (empty shelves). Well sure. But the total amount of people who have some bread is now greater, versus a select few wealthy people getting all the bread they want, as the wretched masses stare longingly. You can either increase total happiness, or concentrate it to the powerful. It's pretty…

> You can either increase total happiness, or concentrate it to the powerful.

The nasty, invisible catch with price caps is that this outcome you've described is an idealized one. It's possible to get neither as you make whatever you're trying to regulate functionally unavailable to anyone.

How much bread do you think bakers will produce if a loaf costs $1.20 to make, but politics dictates they cannot sell for above $1 each? In such a scenario nobody gets any bread except what the bakers make for themselves.

It's also possible to try to increase total happiness and actually just wind up concentrating it to the powerful. This is what rent control has done in San Francisco. It's dangerously easy to confuse goal and outcome in policy-making.

Re: Rent controls have split housing in Berlin into two distinct markets

#126

Post by compiler-guy » Tue, Mar 02, 2021, 7:44 PM UTC

Barrin92 wrote: post #37

I don't actually see the disaster at all. Prices are staying low for millions of people already living in the city. Yes it's a pain for people who move but it might very well be a worthwhile trade-off. However the real long term point is made at the end of the article. > "The biggest question is whether this episode of left-wing populism has damaged confidence in Berlin’s real-estate market permanently. If investors…

If there are 100 houses in Berlin, and 101 households want to live there, no amount of reclaiming the housing stock is going to create space for that additional household.

Berlin's population has been growing by leaps and bounds. The only way for everyone to have enough housing is to create enough housing for everyone to live there, or to make it sufficiently unattractive to live in that people leave.

Re: Rent controls have split housing in Berlin into two distinct markets

#127

Post by codeflo » Tue, Mar 02, 2021, 7:45 PM UTC

kuschku wrote: post #101

xvedejas wrote: post #93

Earlier quoted context omitted.

In the short term, I'm in agreement without caveat, but in the long term letting the prices rise supports industrial growth. The wealthy buying all the bread they want funds the expansion of the farming industry, allows them to invest in more intensive farming practices, and even better encourages price discrimination, whereby the wealthy actually get the same amount of bread as everyone else but pay extra for the "a…

The issue is, there's only a limited supply (Berlin can't grow forever), and as result there's already many apartments left empty today to artificially increase the prices of apartments, as they're treated as investments in a bubble, with the intention to profit from increasing value, not from rent. Not regulating the price was tried for 30 years, and led to many families unable to afford housing, or spending 80%+ of…

> Berlin can't grow forever

That's not self-evident to me. Why not?

Re: Rent controls have split housing in Berlin into two distinct markets

#128

Post by Kalium » Tue, Mar 02, 2021, 7:46 PM UTC

davidw wrote: post #119

codeflo wrote: post #110

Earlier quoted context omitted.

I agree, although the toilet paper situation was a bit different IMO because the shortage wasn't in the supply chain -- it was absolutely clear that inventories would restock sooner or later. In that situation, higher prices wouldn't have incentivized more production. Still, supermarkets could have temporarily raised prices 10x and still sold their inventory. Why didn't more of them do it? Presumably, they made the r…

I think this is part of the nuance: we've gotten ourselves into such a bind with housing in so many places that it feels like we need the short term, crisis relief that rent control provides. For some people, it absolutely means not being kicked out into the streets. Go tell that mom and her kids about 'the market'. Yet at the same time, markets, supply and demand are real, and we need to bring them back into balance…

The political complication is that it's very easy for people to be convinced that the short-term answer is the only one that will ever be needed. Addressing long-term problems often involves painful choices that people would rather not face.

Re: Rent controls have split housing in Berlin into two distinct markets

#129

Post by brmgb » Tue, Mar 02, 2021, 7:47 PM UTC

gruez wrote: post #99

tom_mellior wrote: post #82

Earlier quoted context omitted.

> If there are more units then there are renters, prices have to fall to meet demand. Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. It's not exactly the same, but around here there is a huge oversupply of spaces for shops/restaurants. Owners prefer to keep them empty rather than have someone give them…

>Not if it's so cheap to keep empty apartments around that you would rather not make money now, in the hope that you will be able to make more money in the future. Ironically rent control laws that cause this. Accepting a lower rent now would mean locking in a lower monthly rate for the future, whereas if you left it empty you can hope that the rental market will recover and charge high rents in the future.

If only the state could heavily tax empty apartments and cap resell price to counter that. But wait, it actually can.

Pushing renters and speculators out of the housing markets in favor of people who actually want to settle in the city is probably the best you can do as a municipality.

Re: Rent controls have split housing in Berlin into two distinct markets

#130

Post by anoncake » Tue, Mar 02, 2021, 7:47 PM UTC

robertlagrant wrote: post #12

ahoy wrote: post #9

This is an opinion piece in bloomberg, a pro-business, pro-wealthy publication. Is there any surprise that they dislike rent controls?

This is true. Same logic goes for anti-vaxxers and doctors. Of COURSE doctors recommend going to doctors. They WOULD say that.

What do all businesspeople have in common? They are trying to make money – and that's all they have in common. So we can expect a pro-business publication to advocate for policies that funnel wealth to businesses, without much regard for anything else.

In contrast, the one thing all doctors have in common is that they try to keep people healthy. So we can expect the medical community to advocate for policies that accomplish that. Of course there are doctors who could potentially have a conflict of interest between getting more business and doing their job correctly. But then we can still expect both factors to play a role, i.e. very few doctors would focus purely on getting business. And many doctors don't even have that conflict, e.g. employed ones whose job is secure.

If vaccines harmed people's health while benefitting doctors' bottom lines, we'd see a split between employed or ethical doctors vs unethical self-employed ones. It's inconceivable that there's a consensus among doctors for a policy they believe is harmful.

Anyway, I doubt vaccines even do increase demand for doctors. Administering them is cheap (~5 minutes of a nurse's time), treating the diseases they prevent is not.