Markets interpret social engineering as damage and route around it.
I agree, assuming it is a reasonably efficient market where everyone has access to the relevant information.
How Rent Control Drives Out Affordable Housing
11–20 of 189 posts
Re: How Rent Control Drives Out Affordable Housing
#12"Although rent controls are widely believed to lower rents, data I have collected from eighteen North American cities show that the advertised rents of available apartments in rent-regulated cities are dramatically higher than they are in cities without rent control."
Uh... no shit? Why would a city with low rents have any impetus to impose rent control?
"There can be no doubt that rent control creates housing shortages. For almost 20 years, national vacancy rates have been at or above 7 percent--a figure generally considered normal. Cities such as Dallas, Houston, and Phoenix, where development is welcomed, have often had vacancy rates above 15 percent."
Yes, but these are also sprawling shitholes. And: ridiculously high vacancy rates are a good thing now?
"Young people who migrate to New York or San Francisco usually must settle for paying $600 a month to share a two-bedroom apartment with several other people or commuting from a nearby city. Crowding is a manifestation of rent control."
It has nothing to do with NYC being an island and SF being a peninsula. And we'll ignore that if you consider an area the size of Houston around both of these cities, you start seeing affordable housing again - commuting 5 miles from another city is a bad thing, but commuting 20 miles from the same city is awesome.
"The goal in getting rid of rent control should be to allow the curve of housing prices to return to the elegant symmetry of the free market."
Ah, so it's an aesthetic concern.
This is just a ridiculous article. There are 3 cities cited as suffering from the supposed ill-effects of rent control, New York, San Francisco, and San Jose (and Boston has "overtones of the rent-control effect at the upper end", whatever that means). The data that illustrates the supposed terrible effects of rent control is the price of apartments on the market on one weekend, completely ignoring the entire point of rent control, which is to allow people to stay in their homes (which the article perversely tries to twist into people becoming "prisoners of their own apartment" - because people in great locations in NYC and SF would otherwise really want to move if only their apartments weren't so damn cheap). There's never any attempt to prove that rent control actually drives out affordable housing, there's only the "no shit, that's the point" observation that newcomers to an in-demand city with rent control pay more.
I moved to San Francisco last February, and I'm moving to New York in a month, so I'm not exactly a fan of rent control - I know my price is much higher than my neighbor's because of it. At the same time, though, I recognize that it's really shitty that I could take my programmer's salary and use it like a club against the people who were already living in the city. Why do I want to move to these places? Don't the people who were living there before me get some credit for making it desirable enough that I want to move there? Maybe I should be okay with subsidizing them.
Re: How Rent Control Drives Out Affordable Housing
#13Markets interpret social engineering as damage and route around it.
Many government policies could be seen as "social engineering", be they farm subsidies, tariffs on imports, spending on things like highways, subsidized communication networks like the postal system, education for people other than those born wealthy, meals for poor kids so that they have something in their stomachs at school and can actually try and think, and so on.
And, yes, some of them get 'routed around'. Other policies, whether you agree with them or not, affect the market more than the other way around. For an extreme example, see Cuba, where social engineering routed the market, with results that are disastrous in many ways. Other social engineering experiments, such as universal education up to a certain age in most western countries, seem to have been a net positive for society, even if they are imperfect.
Also, I think that some "social engineering", such as keeping people from starving to death, and ensuring they don't freeze to death for want of a warm place to sleep, at a minimum, should not be routed around.
Re: How Rent Control Drives Out Affordable Housing
#14Rent control is one of the many well-intentioned Government projects that doesn't achieve its goals.
Government needs to focus more on 'social technology' (Karl Popper's term) -- on how to achieve the goals it aims for -- and less on arguing what the goal should be and then assuming that making it happen will be the easy part.
To those who disagree, I would appreciate to hear why.
Re: How Rent Control Drives Out Affordable Housing
#15"Although rent controls are widely believed to lower rents, data I have collected from eighteen North American cities show that the advertised rents of available apartments in rent-regulated cities are dramatically higher than they are in cities without rent control." Uh... no shit? Why would a city with low rents have any impetus to impose rent control? "There can be no doubt that rent control creates housing shorta…
Great points. I love how people think that because they heard of someone abusing rent control, that that's the norm. There is no system that isn't gamed in some way -- sure it's unfair, but is the net effect better?
Since CATO can obviously afford to do a proper study of the effects of rent control -- I can only assume that they know it won't support their idealogical position.
Re: How Rent Control Drives Out Affordable Housing
#16I'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.
The problem is that economics turns into politics, and that attracts a wide range of people who are not hackers, and don't really care about it. And of course, yes, it's a system, but it's a big, hairy complex one that is also impossible to do repeatable experiments with in many situations. Even lots of good economics blogs, by real, serious, respectable economists are full of stuff like "my view is that... " or "I feel that ..." or "I think...".
I'd really like pg to comment on this in a definitive way, though. I'll start posting my own economics articles if it's deemed to be ok, and we'll see what happens.
Re: How Rent Control Drives Out Affordable Housing
#17As 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…
Aside from anecdotes, do you have access to any data that substantiates the claim that "The rent controlled units went to people with high incomes and political power" -- can you put a figure on it (50%, 60%, higher?).
My grandparents lived in rent controlled apartments in NYC that they could not have afforded to stay in -- moved there in the 30's in neighborhoods that filled with gang violence -- but gentrified around them and became very expensive. There are anecdotes both ways.
Re: How Rent Control Drives Out Affordable Housing
#18As 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…
Here's the Phoenix coming out against rent control: http://thebostonphoenix.com/boston/news_features/editorial/d...
It's not at all an endorsement of the naked free market like Cato would want to see.
Re: How Rent Control Drives Out Affordable Housing
#19Earlier quoted context omitted.
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.
The problem is that economics turns into politics, and that attracts a wide range of people who are not hackers, and don't really care about it. And of course, yes, it's a system, but it's a big, hairy complex one that is also impossible to do repeatable experiments with in many situations. Even lots of good economics blogs, by real, serious, respectable economists are full of stuff like "my view is that... " or "I f…
I think that if it doesn't involve political parties or politicians, it might work.
I mean, it's going to be hard to have a board about startups without talking about market theories, techniques of persuasion, economic trends, role of government in the creation of wealth, distribution of wealth, rational versus irrational buyers, etc. All of these are both economics and politics. We have to be able to talk theory, or the board is just going to be technical fluff, like who's got the best SCM system or what famous author X says about Facebook.
I'm really interested in why things work (or don't).
Re: How Rent Control Drives Out Affordable Housing
#20Markets interpret social engineering as damage and route around it.
I think this applies if the definition of "markets" includes dishonest and corrupt behavior, which may well be a something you cannot remove easily. In the case of rent control, corruption occurs in both the market and the social engineering.