How Rent Control Drives Out Affordable Housing
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Re: How Rent Control Drives Out Affordable Housing
#2Please read http://ycombinator.com/newsguidelines.html
Re: How Rent Control Drives Out Affordable Housing
#3I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing:
Re: How Rent Control Drives Out Affordable Housing
#4I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing: http://www.tenant.net/Community/history/hist-toc.html
Routinely discredited? Right-wing? Cato is clearly libertarian. I suppose that tends to the right, but it's not "right wing" in the traditional sense.
Re: How Rent Control Drives Out Affordable Housing
#5I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing: http://www.tenant.net/Community/history/hist-toc.html
socially liberal & fiscally conservative != right wing
Re: How Rent Control Drives Out Affordable Housing
#6I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing: http://www.tenant.net/Community/history/hist-toc.html
Examples of how Cato has been discredited?
Re: How Rent Control Drives Out Affordable Housing
#7As someone in Boston, I can tell you that rent control was terrible here. The rent controlled units went to people with high incomes and political power (including mayors and those sitting on the Supreme Judicial Court). Most rent controlled units were simply taken off the market in one way or another. If you're getting well below market rent, you tend to look for other ways to use the property and some just allowed relatives or friends to use it rather than bothering with renting, but a lot converted them into condos. The effect was the same - people had to move.
Even the Boston Phoenix (the leftist alternative paper akin to New York's Village Voice) came out against it.
The fact is that when you put price controls in place, who gets something is determined by factors other than what you're willing to pay for it. In housing, that means:
1. Will you bribe people? Will you bribe the landlord renting the apartment with, say, an extra $200 per month? Will you bribe the current resident of the apartment with $2,000 to vacate and give it to you all the time claiming to the landlord that they haven't left?
2. Are you willing to live in a slum? Landlords don't improve properties when they can't charge more for those improvements. Unsanitary conditions? Screw you! They can rent it to plenty of other people willing to live in that squalor. Properties just deteriorate until they are uninhabitable (or barely habitable) and it removes more properties from the market. With tenancy at will, landlords are able to evict anyone without reason with 30 days notice. Should you complain, you're out and unlikely to find another place.
3. Will you even be able to find a place? No one is willing to move because they won't be able to find another place. People hang on for dear life.
Price caps create shortages. The remaining people get to fight like shoppers at a Best Buy at Christmas for one of those Nintendo Wiis.
The first thing to go is anyone renting a room in their house because, for the limited rent they could get, they could use it better for themselves as a guest room or something. Next is anything that can be converted to condos. Remaining rental places are kept abysmally and many eventually become uninhabitable. Any little brightness in this situation is hoarded by a lucky few who tend to be those with political or economic power (doctors, lawyers, mayors, and judges) and you can't even pry those places from their cold dead hands.
Economics finds an interesting balance a lot of the time. If you force landlords to rent for pennies, they don't maintain their property until it's in a state that wouldn't command more than pennies in rent. If you are forcing tenants to not pay more than $x in rent per month, they'll give under the table for anyplace that's nice.
The easiest way to drive down housing prices is to increase the amount of housing. Landlords don't want vacancies and lower their prices to fill. The problem is that, in some cities, there are more people who want to live in them than there are housing units available. So, prices rise until some of those people decide they'd rather spend less and live in a less desirable area.
Other than price, what else should determine who gets in and who doesn't?
Re: How Rent Control Drives Out Affordable Housing
#8I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing: http://www.tenant.net/Community/history/hist-toc.html
I'm a liberal and don't fully agree with the argument that rent-control is necessarily and uniformly bad-- although New York's 1940s rent control system sucks-- but I thought it was a well-written and interesting article.
I think economic articles on HN are fine, because economies are systems, and hackers have an innate interest in systems that are not always silicon-based.
Re: How Rent Control Drives Out Affordable Housing
#9I'm not real clear on why a 1997 article from a routinely discredited right-wing think-tank on this issue is Hacker News....but since we seem to be playing "cite old biased articles", here's the sordid history of how unregulated landlord greed drives out affordable housing: http://www.tenant.net/Community/history/hist-toc.html
Examples of how Cato has been discredited?
Cato tends to be a little simplistic in their models. For example, with immigration they say it has no ill effects. Well, in the long-run I'd probably agree with them (save for the fact that natural resources are being split among more people which I think would be made up for in other ways that they cite). In the short term, it takes time for economies to adapt to changing tastes, changing spending patterns, essentially the changing makeup of the marketplace. And that does cause friction in the short term.
Likewise, as much as I defended the abolition of rent control in MA in my earlier comment, it caused a lot of short-term friction that was really chaotic. A better plan would have been to phase market rent in. Landlords had been under rent control for so long that when it was lifted, prices could double or triple. BAD! If you, however, say for the next 10 years you can raise prices by up to 15% per year and then in the 11th year you can charge whatever you want, you avoid the friction that occurs when sudden changes happen.
I'm not someone who thinks we should defend dying industries or mess with pricing a lot, but market economies don't do well with instability. Instability randomly reallocates money from some to others. For example, if you lend me money at a 20-year fixed rate of 7%, the future could randomly reallocate money between us. If interest rates drop, you get lots of money. If interest rates rise, I save a lot of money. Heck, if inflation reaches 9%, you're loosing tons of money! Random reallocation is a bad thing and stability ensures that random reallocations are kept to a minimum.
I dislike the American auto industry, but I'd like to see its death be a lot slower than those who are strictly libertarian. What do you do with a million workers? Well, plenty, but you don't do it fast. However, if the number is in the thousands of workers per year, its easier to find ways to employ them as new industries get created. Heck, even other companies might want to buy pieces of the American auto industry, but can't afford the whole thing. Honda and Toyota might see this as an opportunity to get a new plant or two. Tesla motors might be able to raise the capital in a few years to do more. But an all-at-once situation just creates friction and chaos.
Maybe Cato is right and I'm wrong, but I appreciate stability. I appreciate knowing that everything isn't coming to an end even if I'm loosing out on 5% for that stability. Discredited (as the original author claimed) is harsh, but I think economics is a little more nuanced than any pure philosophy.
Re: How Rent Control Drives Out Affordable Housing
#10Markets interpret social engineering as damage and route around it.