How Rent Control Drives Out Affordable Housing

Agreeing to not displace people to cash in on temporary market swings seems like a better tax shelter than some others I've heard of.

"Sky high rents come from current demand. Rent control provides a disincentive to long term investments like new construction or major renovations to rental buildings."

This doesn't make any sense. Without the current rent-control laws, the incentive would be to keep the housing supply low and spike rental rates. New construction would still be difficult (because it's NYC), plus current owners would spend their political capital on preventing it from happening to keep their incomes up.

"Incidentally, neither of the 'things that bother you about the free market religion' are actually part of the free market ideology. 1) only applies to efficient markets (like the rental market, with many buyers and sellers, and good information) and 2) is closer to the Clinton/Bush/Dodd/Obama ideology that ownership is something to encourage."

Maybe I should be more clear, my fault. My first point has less to do with pricing efficiency than with the basic idea that certain things with value can be priced at all (a person's contribution to the appeal of a neighborhood, for instance). My second point was that there are other kinds of risk (living in a bad neighborhood for its cheap rent) that should be rewarded by society over ownership (the windfall that the owner of a slum stumbles into as the neighborhood appreciates in value).

"In some cases the people are completely unrelated."

Of course, I never implied otherwise. My next sentence after the one you quoted was that I wouldn't claim such a thing. As for Harlem, I was almost going to use that to illustrate my point. Prices there are a lot cheaper there right now than the location would suggest they should be, and (despite your experience) tons of people are starting to look that way. Assuming living in the city stays cool, do you really think it's going to be as cheap as it is today in five years? And everyone who's moving there right now, who are going to make it that super-desirable place to live? They'll be priced out (see: SoHo, parts of Brooklyn, Hell's Kitchen, etc., etc).

"As far as who "deserves" to live on some place, it's a wash. So lets not favor any particular group over the other."

I disagree, let's favor the particular group that was already there, that's already established the place as their home.

"As far as emotional appeals go, I'm not casting any group of people as assholes."

Really? I've got some rental agencies to introduce you to.

Unlike other industries, getting service is often a literal life or death issue, you have to pay or you might die; morally this makes health care very different from other industries.

Rent Control: Rent control causes higher prices for everyone except those who happen to have a rent-controlled apartment, because it discourages improvement of existing properties and discourages building new properties. It also encourages over-buying. Someone may pay $2000/month for a 3 bedroom apartment that has been rent controlled since the 1970s, but only use 1 of the bedrooms. That person could find a 1BR apartment within budget w/o rent control, and someone (maybe 3 room-mates paying $1500 each) could share the 3BR place. Overall this is a more efficient distribution of resources, the benefit of which occurs immediately. I don't really feel sorry for someone getting a huge apartment for way below market price.

Interest Rates: I'm not sure I understand what you mean, since interest rates vary based on unpredictable Fed action and unpredictable market forces all the time. Banks (lenders) hedge against this by buying/selling instruments to even out their Fed risk and by buying insurance to hedge against many of the other risks.

American Auto Industry: What makes you think there would be a chaotic "all at once" situation? That is part of the fearmongering on the part of the firms seeking rents (and the politicians they have bought). Recall how Dubya told everyone that if the US didn't invade Iraq there was an "imminent threat to US national security"? The automakers used that exact strategy to obtain a bailout.

Stability is an interesting concept. It's the essence of "conservatism", wanting to preserve the status quo. Marx warned about this in his manifesto. Anyone who has managed to get a leg up will fight to preserve it at the expense of productive change.

In today's world, this includes the people who thought they were investment geniuses because the value of their home increased 40% the year after they bought it, it includes the overpaid workers who convince themselves that a hard working person immigrating to the US is somehow unamerican, it also includes the politicians who enjoy the huge donations they have been getting from the financial services industry and don't want to see endangered.

So if you put aside the "I want to keep my small advantage at all cost" conservatism, and you do away with the Bush-style fearmongering about imminent threats to "stability", what you find is that the world really isn't all that scary, and often times the meddling that is done to try to prevent "instability" actually does far more harm than good. The Iraq war is a case in point.

Note that "stability in the middle east" is the motto of those who want to go and turn it upside down with bombs and nation building! The same applies to domestic policy.

Only if there were a monopolistic housing provider. Absent rent control, the incentive for any individual housing supplier would be to build more houses and cash in.

By your logic, dell should (in the absence of computer-price control laws) cut back on computer production to spike prices. Of course, that's ridiculous; HP, Asus, Everex and others will pick up the slack and Dell will lose money.

As for other landlords engaging in rent seeking, that's a problem, but a separate one.

"My second point was that there are other kinds of risk (living in a bad neighborhood for its cheap rent) that should be rewarded by society over ownership (the windfall that the owner of a slum stumbles into as the neighborhood appreciates in value)."

Living in a bad neighborhood is rewarded; the reward is cheap rent.

"Prices there are a lot cheaper there right now than the location would suggest they should be, and (despite your experience) tons of people are starting to look that way."

Prices are a lot cheaper than they should be precisely because newcomers don't want to live near Harlem natives. High prices elsewhere are driving people here, but the locals are not helping things. As an example of the issues, several of my female visitors have been hassled on their way home. So if you argue for subsidizing hip locals who make a neighborhood attractive, do you also want to penalize disagreeable locals? If not, why not?