Berlin approves 5-year rent freeze

https://www.diw.de/de/diw_01.c.535261.de/themen_nachrichten/...

I don't think you fully understand the issue. You focus on one specific case: richer renters displacing poorer renters because they're willing to pay more. But there is so much more to the housing market, and to people moving from one home to another than that.

Maybe I got children, and I want a bigger apartment. Maybe my children moved out, and I now want a smaller one. Maybe I changed jobs, and I want to move to a different part of the city closer to work. Maybe I want to move to a different city where I got offered a job. And so on.

In a "normal" housing market, you can do all of these things. I can get an apartment in any part of the city within a week, because people move around all the time and leave empty apartments. I don't have to be richer than them, I will pay the same price they used to pay. In a normal housing market, people move around, which means other people can also move around. In a housing market that gives special privileges to current renters, people get "entrenched" in their apartment and don't want to leave for any reason. So these apartments never appear on the market.

In my city, there are rent controls for certain apartments (fortunately very small percentage). I know a few people who live in such apartments, and most of them never intend to move for any reason (unless the rent controls are revoked, which might happen). It is not because they consider this apartment the best possible place for them to be. It's because they don't want to lose their privileges. A renter in a rent-controlled home has an extremely strong artificial incentive to stay exactly where they are. This is inefficient, because as a result, people can't move around.

Now you do have a point, in the sense that it might cause people with lower incomes to be "pushed out". I am not familiar with Berlin, I know my city is fully mixed usage and there is not some huge dropoff in rent as you move away from the center (in fact, some parts further away are more expensive than some nearer). Also jobs are not concentrated in the center, so it's not like most people are commuting into the city center every day. There is pretty much everything everywhere.

Cities have high property prices because they are extremely desirable. Lots of people would like to live there, but there is limited land, and not everyone can afford to live there. There must be a way of determining who has the right to occupy the scarce resource that is land, and the market is the solution to that problem in most countries.

Although not everyone might be able to afford to buy property in the most desirable cities on earth, such as Berlin, most people can certainly afford to buy property somewhere else. For example, a house that costs $1 million in San Francisco might cost $20k-$50k in Detroit. The further you move away from cities, the cheaper property gets.

I think it is reasonable that not everyone can afford to buy property in literally the most desirable, high-demand places in the world, like Berlin or London. People can still afford to buy property elsewhere.

Sure. As a voter, if my region was experiencing a shortage of public sector workers, and that shortage was affecting my quality of life, or the life of people that I care about, then I would certainly be willing to vote in favor of a pay raise.

> The logic of the market is to drive wages to the bottom and replace workers when they break.

No, this is not true. Markets exhibit emergent behavior. They don't have any logic per se, although we can reason about how we expect them to behave. If markets have any "logic", then their logic is to reach an equilibrium price.

This does not necessarily mean that wages are driven to the bottom. What happens to wages is a function of supply and demand. If very few people are capable of performing a job in some area, and that job is in high demand, then the result of supply/demand dynamics will be a very high wage. On the other hand, if lots of people are capable of performing a job, and/or the job is in low demand, then the result might be a low wage.

It is certainly the case that everyone wants to pay the lowest price that they can for acceptable quality goods and services. Who wants to pay more at the grocery store, or the dentist, or the doctor's office? The cost of labor is a dominant cost in the price of all goods and services that we consume. The fact that automation is replacing labor in many industries has directly lead to the phenomenally low prices for many goods in the modern world.

For example, before the Industrial Revolution, clothing was exceptionally expensive. Clothing required a massive amount of human labor, and so a single shirt might have cost the equivalent of $3,500 modern dollars. As a result of this, poor people could afford very little clothing - resulting the trope of peasants wearing rags to tatters. Most of our fabrics and clothing are produced by machines now, and so the cost of clothing has come down by orders of magnitude. The result is now that even fairly poor people across the globe can afford adequate clothing.

https://www.sleuthsayers.org/2013/06/the-3500-shirt-history-...

Automation in most cases results in an increase of quality, not a reduction in quality. For another perspective on this, examine how the cost of lighting has decreased over time: https://ourworldindata.org/light#price-of-light-over-the-lon...

It is a good thing for everyone that the costs of goods and services comes down over time (or equivalently: the quality of goods and services increases while the price remains steady). This directly leads to a better quality of life for everyone -- this is exactly the way in which economic growth leads to an improved standard of living: the same dollar can buy more than it could before, either a greater amount of goods, or goods of greater quality.