Now, I have not read the paper, but I would have thought the free market combined with sky-high wages and demand, combined with a lack of inventory, was the cause.
Rent Control surely just prevents local families from being muscled out by the tech employees?
Rent control removes the incentive to build new apartments. There are second order effects that make it counterproductive. Even the socialist economists agree rent control is terrible.
So as to not remove the incentive to build new apartments, in San Francisco, rent control only applies to units built before 1978.
The SF rent control law (like the CA Prop 13) does allow rents to increase, but very slowly. It would be possible to have both without as strong of adverse consequences by changing the ceiling at which both are permitted to increase.
> So as to not remove the incentive to build new apartments, in San Francisco, rent control only applies to units built before 1978.
Indeed! It's also worth mentioning that this has had the perverse side-effect of encouraging people to find any and every way possible to block the removal of old buildings.
Which is to say that the incentive to build new apartments has been matches with tools designed to prevent exactly that.
Everyone who wasn’t gentrified out of their home agrees it’s great. An economist might foolishly brush off everyone being priced out of their neighborhoods as simply “externalities” but San Francisco’s politicians thankfully have a more nuanced view of the situation.
And, as ghouse indicates, new housing isn’t subject to rent control so developers make a killing if they get approval.
This addresses active developers who are looking to profit from renters. There are plenty of speculators in the Bay Area who purchase homes without renters or buy them out only to sit on the home and not rent it (since it decreases the value of the home). This isn't a rare thing, there many pre 1978 residences with nobody living in them owned by overseas investors.
This happens to a large degree even without rent control. Miami is full of properties owned by snowbirds who only visit for a few months in the winter or by rich investors who figure a penthouse on South Beach isn’t likely to lose value any time soon. This is especially true of investors from South America who are happy to own a stable investment in US dollars.
I’m not convinced it happens so much more in SF to cause the high rents. I think years of building almost nothing after the 208 crisis while jobs exploded is responsible.
Actually the opposite, by taxing land in high demand urban cores it would incentivize more efficient use of the land - i.e. building up to support more occupants or higher value economic activity. [1]
Deregulating the zoning restrictions would allow more buildings to be built. [2]
Here is a startling fact: in 2014 there were 142,417
housing starts in the city of Tokyo (population 13.3m, no
empty land), more than the 83,657 housing permits issued
in the state of California (population 38.7m), or the
137,010 houses started in the entire country of England
(population 54.3m).
Tokyo’s steady construction is linked to a still more
startling fact. In contrast to the enormous house price
booms that have distorted western cities — setting young
against old, redistributing wealth to the already wealthy,
and denying others the chance to move to where the good
jobs are — the cost of property in Japan’s capital has
hardly budged.
This is not the result of a falling population. Japan has
experienced the same “return to the city” wave as other
nations. In Minato ward — a desirable 20 sq km slice of
central Tokyo — the population is up 66 per cent over the
past 20 years, from 145,000 to 241,000, an increase of
about 100,000 residents.[3]
With artificially constrained supply from Prop 13, there's dozens of empty lots and empty units just doing nothing of value. It's surreal to hear about stories from baby boomers about moving across the country to NYC/SF/LA/etc and being able to easily find a job and affordable housing in a major city, often while attending school at the same time. The same generation has now pulled the ladder up behind them to spit down on future generations.
Not just Prop 13; I discussed with a contractor the possibility of building a new home here about a decade ago; estimate for cost of obtaining permits: $250k. The lot is still empty.
[edit]
Also due to house vs. lot-size restrictions the house would have been limited to just over 2000 square feet. This is regardless of the number of stories (i.e. a 2-storey house would need to have about a 1000 square foot footprint, but a ranch could have about 2000 square foot footprint).
>Actually the opposite, by taxing land in high demand urban cores it would incentivize more efficient use of the land
That's exactly what I was saying. The owners of inner city land pay very little cost for monopolizing land that could be put to better use. It's a store of value that is unlikely to go down in value. There is nothing to offset the instinct to hoard.
>The same generation has now pulled the ladder up behind them to spit down on future generations.
All of the "it was boomers what done it" is just the 1% playing identity politics as a means of scapegoating and divide and conquer.
At the end of the day, the 1% millenial children of 1% boomers are going to be the beneficiaries of this ladder pull-up.
But rent control manipulates the free market. With rent control, people who might otherwise move, don't. Further, people who might rent a vacant apartment while they're overseas don't. Or people who start a family and move to the suburbs keep their city place as a pied a tier. So supply is suppressed, but demand is not.
"With rent control, people who might otherwise move, don't."
I'm failing to see the problem. Unless those people would have moved for reasons other than soaring rent, them getting to keep their homes is a GOOD THING.
There are plenty of bad outcomes: say they no longer need a 3 bed apartment. But with rent controls, they might actually pay more if they moved to a 1 bed. Or they get a job in San Jose and are forced to commute instead of just moving because they are getting such a deal.
But the bigger issue is that is artificially raises demand. That prices up for everyone else, which does more harm. It's a subsidy for older people paid for by younger people.
If they truly didn't want to move out because of soaring rent then they would lobby for building more housing. Rent control and prop 13 prevent this from happening. Older residents are now actively fighting to keep their protections and prevent the construction of new housing at the cost of newer residents.
Instead of letting the bubble pop when it's harmless it's growing more and more and when it does pop it is going to be extremely painful.
> Rent Control surely just prevents local families from being muscled out by the tech employees?
Correct. And in the process of doing so, further contributes to the lack of inventory of market-rate rental units available to the influx of newcomers/tech employees.
As mentioned elsewhere in the comments here, this causes huge disparities for rents of similar units within a given building as landlords attempt to compensate for all the market-rate rent being missed from longtime tenants. E.g. I've known folks paying $4,000 while their neighbors pay $400. While I don't have numbers or a study to point to, my experience over the years with the SF housing market suggests the impact of this effect is nontrivial.
So what's the solution for addressing this problem, AND not having local families from being muscled out by tech employees? Because whatever is proposed, if it means that local families have to leave because the rent was increased astronomically underneath them, then it's a non-starter.
What in particular about incumbent renters justifies making policies that benefit that group above all others? Is there something inherently less worthy about families seeking to return to a city after having left it? About a daughter seeking to move out of her parents house?
It's not about favoring one group over another, it's about (trying to) reduce volatility, favoring less change over more change when it comes to housing because forced relocation can be tough. Also things like reducing class segregation, etc. Not saying it works.
The solution is for local families to be muscled out.
Hi, let me introduce myself. I am SF's housing crisis. So are many of my friends. We're those "local families" who have been living in SF for 15+ years in rent-controlled apartments. We're still here because the rent is cheap. If our rent went up even moderately, we'd probably move to the suburbs; by the time you hit your 40s, you get tired of stepping over panhandlers and human feces.
If you really want to get angry, let me tell you about the multiple times I've moved away for extended periods and kept the apartment unoccupied as a pied-a-terre. Rent control makes it affordable!
There are a lot of us, enough to occupy a significant chunk of the housing stock. Because we've taken this stock off the market, the available float is smaller than it would otherwise be, so everyone's bidding up what's left.
Would average rents go up without rent control? Certainly. But it would force a lot of us "local families" to make long-overdue decisions, freeing up housing, and driving down the average "new rent".
> Google or whatever doesn’t pay based on housing costs.
A number of companies have pay brackets that vary by location, to reflect cost-of-living differences in different locations. I can't tell you whether Google is one of those companies.
Rent control solves some problems. Creates other problems. Similar to almost any intervention in free markets. Sometimes the cost of intervention outweigh benefits, sometimes they don't.
Rent control allows people (wealthy or poor) to remain where they are without purchasing their residence. Unfortunately, to do accomplish this objective, it increases the price for new arrivals (be they wealthy or poor).
In California, Prop 13 does the same thing -- drives up the cost of housing for everyone other than the people who already own a home.
> Sometimes the cost of intervention outweigh benefits, sometimes they don't.
+ Sometimes it works for a short period, as the policy reflected the economy at the time of creation, then becomes irrelevant via technology/market reaction to policy/general progress... but yet stays a policy for decades.
The important point is that we rarely ever measures whether it does work or not, and policy tends to have an extremely long shelf-life.
My ideal state would have:
1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress.
2) require timeframes attached to most policies, forcing future reviews which must factor in measured results (likely from agency mentioned in 1) or face expiry
You would also need to define the metrics you are going to be using to measure success at the time you pass the legislation. You would also need some sort of control to measure against, and some way to discourage gaming the metric.
Heinlen in "The Moon is a Harsh Mistress" introduces the idea of a legislature with 2 chambers. One for creating laws and the other for getting rid of them. The threshold for creating them being higher.
The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments". Its usually much harder to undo things. It would be refreshing to have specialists in undoing things.
Under Icelandic Viking law, every year one man had to recite the law. (I believe this was given one day.) Anything he forgot to include was no longer the law.
* Around 2001, voters in British Columbia elected a government with a specific campaign promise to reduce "regulation" by 1/3.
* Initially this was accomplished by among other things setting a rule that for every new regulation introduced two existing ones had to be eliminated.
* Then the status quo was maintained by mandating a 1-for-1 rule (each new regulation requires elimination of a existing one).
* In 2015, the government of Canada introduced its own 1-for-1 rule.
There are obviously complications around what constitutes "one regulation", which neither my summary nor the linked article completely capture.
> The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments"
Repealing a law is doing something, and people frequently point to it as an accomplishment (or goal, if not yet done) if they think the law is unpopular with their constituency.
Just because it can be explained in that way does not make it so. Getting rid of things is much harder that adding things. We see this in systems all the time. Layers and layers and layers are added, but seldom taken away. We also see this in the law.
Probably the last politician who was proud of saying no was Calvin Coolidge. The vast majority of politicians are wired the other way.
IMO, there should be automatic sunset provision in every law passed in this country, like the one existed for the Patriotic Act, and reviewed, renewed or expired every 5 or 10 years.
Very much agree. It would be great if laws sunset after no more than 10 years if only a mere majority wanted the law. With a super majority, then the law could last, say 50 years.
This would allow for more experimentation and for consensus building. As it is now, the law is always in the context "and forevermore, it shall be this way". If the context was, let's try this for a few years and see what happens, it would be a less contentious thing. Without the imposed time limits, partisans grab as much as they can whenever they can.
Ancient Isrealite law had something similar with the jubilee. Every 50 years, debt was forgiven and many other things reset. This tended to keep things more balanced.
Texas has a form of this. Every state agency (with a handful of exceptions) will automatically be abolished every 5-10 years absent explicit action by the legislature.
Yes, and this resulted in a fairly unpleasant fiasco a few months ago in which the governor of Texas had to call an emergency session in order to renew the Texas Medical Board's existence because a senator had held it hostage in order to try and force through a bill banning trans women from using women's restrooms.
(A lot of the national press incorrectly portrayed this as the Texas governor calling an emergency session to ban trans women from women's restrooms. While that was debated as part of the emergency session, it wasn't the goal and the governor made allowing it or anything else to be debated conditional on passing the critical Texas Medical Board renewal - forcing the supporters of the bathroom bill to pass that first and give up their leverage in order to get a bathroom bill vote they would inevitably lose. The national media reporting on this was terrible.)
I hate the Patriot Act too, but beware unintended consequences.
How do you feel about laws like the Civil Rights Act of 1964?
I think that law continues to serve our society well. And I'm certain it would not be renewed by our current Federal government.
Ditto for regulations on water, sewage, pharma purity and many other laws that facilitate civilization. It's all very nice to say 'sunset every law', but we depend on many of them being in place.
Like removing redundant rivets on an aircraft. You can't be sure which ones are critical. The cost of discovering that can be quite high.
> How do you feel about laws like the Civil Rights Act of 1964? I think that law continues to serve our society well.
Maybe certain parts of it - yes. But I've read many articles talking about how housing segregation is far worse than it was even before the civil rights act.
The act explicitly cites this problem yet completely failed to address it.
Some acts can have obvious no-debate reenactment. But this deters broad sweeping legislation from being passed, if subsets are not well thought out or are pigeonholed in. Why not pin sections onto acts so you can easily repeat ones with strong data/political support, while ending other less effective parts?
That said, there should no doubt be a dichotomy between human rights and constitutional limitations (which are pre-emptive limitations on legislation) and the general type of policies passed by congress.
My primary focus is on economy law as well. Social law might be more socially evolutionary.
Think about how much pork and other dubious unrelated provisions get attached to bills now. Now imagine what would happen if politicians got a regular opportunity to hold the continuing existence of every single law currently on the books hostage, no matter how important, as a tactic for getting their way on other things they wanted.
While I don't disagree, I feel compelled to point out that in the same book he also introduces the idea of shoving people out of an airlock for being rude to you.
Personally I think that 1) is not attainable in a practical sense. It would require resources that are not available and would just add to the ridiculous overhead of running a government.
I used to believe in an ideal state as the one you describe. More recently, I think about what a system - i.e economic, political, social - that is stable (in some sense) looks like. For example, liberatarians believe that markets sort things out on their own.
I usually conclude that small societies are optimal for quality of living.
> I usually conclude that small societies are optimal for quality of living.
I came to the same conclusion. Sadly many 'libertarians' often gets dismissed as disliking all forms of government and regulation, which is not the case, rather preferring a limited one. But I guess intentional/unintentional misrepresentation is a savvy and common political tactic because it's effective.
My question to you is how do you achieve a limited/small government (without a revolution)? I believe controls like this are one way to achieve it. Much like how the strict policies of the Constitution (or Bill of Rights) have limited/stopped potentially hundreds of thousands of overreaching policies in the US alone over the last two centuries.
The constitution, aka strict pre-emptive limitations, are good. But I believe post-defacto limitations and reviews are also a necessity. Because as I said, some policy does seem rational at the time - which then becomes out-of-date or a bad idea with retrospect.
We currently have no good tools to deal with those outcomes...
I think that you can't, PERIOD. Catalonia was attempting to have a small local government and got shut down.
Also, revolutions don't benefit the masses, only a different small group of people. The american revolution displaced the english royalty with new american power.
The rebels become the new establishment.
I think the only way to guarantee that you don't government overreach is not have a sociaety where all member are active and responsible. Not in that they all vote. In that they all deal with issues in their community, rather than pawning it off to the government and also giving them the power they need.
I think that society that takes care of itself - instead of inventing institutions to do so - is feasable, but a real pain in the ass to maintain. And it's just easier to not. Sorry if i ranted a bit.
I thought it was a rich part of Spain didn't want to subsidize the poorer bits - like say the south east of the UK wanted to dump the poor parts of the north.
If the opposition is boycotting the referendum its sort of obvious the promoters of the referendum and a hidden objective
You can't fix political bias with more political bias.
The central problem isn't rent control, it's the fact that property is a very privileged asset class that allows owners to extract rent from those with less political and economic power.
Rent control is like pushing down on a balloon that's inflating. The inflation keeps happening whether you like it or not. The best you can do is minimise the effects in selected locations.
That doesn't mean rent control is causing the problems. The underlying problem is the inflation, and you can't make it go away with palliative measures.
In the US, you can't make it go away at all, because the economic system has been designed to privilege rent-seeking - at various levels of obviousness and abstraction - over other kinds of activity.
Rents in the Bay Area and the financial biases and traditions of VC and startup culture are both manifestations of the same underlying problem.
Small societies also mean small markets. That's one of the reasons why so few of the largest and most successful companies were founded in small countries; you need a certain critical mass to allow for growth and economies of scale.
Which is often the positive effects of restrictions on bureaucracy, such as timeframes and review agencies, creating limits on the size of government directly and indirectly.
The current costs of never-ending legislation and regulation is incredibly underrated IMO:
Pretty much the only limit on the scope and extent of legislation is the constitution, which affect a limited scope of the interests of society. We must as a society demand that the legislation being enacted is demonstrably effective and useful, beyond the era it was enacted.
These studies already are commissioned by the state. The problem is when they are ignored, like with ballot initiatives that implement rent control and tax control over the objections of nearly every working economist.
It'd be cool to have a system where a private citizen would be allowed to file a lawsuit if they thought the justifications didn't have evidence. So the case would look at the justifications, and if the state couldn't prove that self-pumping wasn't more dangerous, the case would immediately remove the law.
One justification for banning self-pumping gas is that it's a jobs program. Except that that reason was never included in the original policy. So under my "challenge the law" framework, that couldn't be used as a defense, unless the Oregon legislature actually amended it.
For the better part of 2 centuries, the legislative histories at the state and federal levels have included the justifications for the law, and the discussions wherein the evaluate different provisions. They keep these in different legislative records because they're significantly more voluminous than the laws themselves.
1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress.
I know this sounds like a good idea. It almost sounds like a good idea to me. But I don't think it will have the effects that you imagine.
Bureaucracies are always understaffed. That's because reality is always more complicated than they can model, so the task of rationalizing things so they can be apportioned, assessed, allotted, regulated or taxed can never end. If you put your plan into practice the immediate effect will be a need for a lot more bureaucrats. Before they just had the real world to worry about; but now, they will have to worry about reality plus an ongoing audit of the regulatory environment. And if they make stupid, unaccountable decisions, as bureaucrats sometimes do, some of them will involve stupidly and unaccountably repealing regulation that was serving a useful purpose. I'd be willing to bet that the problems caused when good law ceases to apply are worse than when bad laws are applied for too long.
I think it is flawed at an even more fundamental level: what does “multi-partisan” mean, and how do you achieve it?
It seems like the term was used simply to mean “fair and not favoring any particular political agenda,” but that is a huge hand-wave. Who decides the members of this agency? If we had a good method to establish this fair agency, we could just use that method to establish the entire government.
This proposal just pushes the entire problem of governance back one step. I see this a lot in discussions about improving government: proposing some oversight committee to keep the government (which we all agree has flaws and biases) in check. Even the entire idea of checks and balances between branches of government is based on this concept, and is flawed for the same reasons (although that’s a bigger discussion). If you can make the oversight committee fair and efficient and effective, just do that for the whole government!
Prop 13 was a pretty good temporary measure. But after passing a permanent solution should have been put in place.
Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in new, modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
> Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
It would be very easy to address that problem with a much smaller policy change than Prop 13. For one thing, the described problem doesn't justify any alteration to non-residential property taxes.
It's worth noting that while this is true, it has larger effects than those immediate. High cost of living is detracting from the city's ability to attract valuable workers and businesses. I think there are plenty of cities around the country which are primed to take advantage of SF's loss of competitive advantage in real estate.
> Creates other problems. Similar to almost any intervention in free markets. Sometimes the cost of intervention outweigh benefits, sometimes they don't.
Unless the intervention is addressed to a market failure (and rent control is not), the cost of intervention almost by definition outweighs the benefits. I.e. the value gained by cheaper rents for early residents is more than offset by higher rents for everyone + dead weight loss from distortion of economic incentives.
It solves the problem of landlords waiting until you're established in the rental property (or worse yet, waiting until some misfortune befalls you that prevents you from moving) and then jacking the rent up.
This is what leases are for. And I don't think this is a thing. I am a landlord, and a member of several landlord groups. Most landlords I know increases the price of rent slower than the market for good tenants(some follow market, none raise above market). This is because it costs just as much for a landlord to replace a tenant as vice versa. A landlord usually pays 1 months rent to find a new tenant. Plus any losses out on rent while it's not being rented(several weeks). Has to run through and do audit of the property. Replace locks, etc..
It can easily cost $1800 on a $1000 a month rental. And moving is usually cheaper than $1800.
but Prop 13 wasn't enacted alone. it was part of a comprehensive tax package that limited what the state government could spend. Prop 13 is just the most well known part.
However politicians got around the limitations decades after by just raising taxes in every other area of life. most of those directly impacted the poor.
Prop 13 likely needs to be revised along with a comprehensive land usage policy that prevents local politicians from playing favorites, similar how to many states established boards to monitor elections.
Rent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases.
Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss.
My mother-in-law is a land lord in Los Angeles (a very fair one at that), and is also about as bleeding heart liberal as you can get. She is a staunch opponent of rent control.
Having read up on some of the building purchases in my own neighborhood (East Village of NYC), it seems that rent control is bad for honest landlords and good for the slimey ones who are willing to "encourage" people to leave. And thanks to Coase's theorem the building sales are usually in that direction.
agreed, lived in apt in the East Village, and while my apt. was really nice, the common areas were in shambles and it looked like the managing company didn't care about its exterior either.
The reason was that almost half of the apt. in the building were rent controlled (grandfathered in).
I think a mix of limited rent control (i.e. 5 years, max) plus building more apt for people that can't afford it, is a better combo on keeping a stability and folks being able to afford and live closer to work.
The only way to build more affordable apartments, is to allow for building more market rate apartments as well. Right now this current older (baby boomer) generation is screwing hard the upcoming one.
The good landlords aren't pulling out every technically not illegal trick to make more money because they value things more than just being in the clear legally, but they do value being in the clear legally. The slimy landlords don't care about other effects, as long as they are legally in the clear. If you increase punishment/enforcement of the laws, you will hit both the good and the slimy landlords harder, with the slimy ones still taking a lead because they don't care about factors like a good reputation or having a clean conscious (yes, I'm somewhat stereotyping the good and slimy groups).
That the slimy ones know and practice working around the law may even mean that the good landlords get hit harder from a crackdown. In some way the government can't focus on the slimy landlords because by their very being they avoid government focus more than the good landlords.
It's not a question of blame, it's a question of the results of a particular policy. Rent control creates an incentive for landlords to bully their tenants. You can create another government agency to police this, but in reality that is extremely difficult because you can do a lot of bad things legally, and trying to police that will have negative unintended consequences in itself. It also causes bad behavior that would be impossible or incredibly undesirable to police, such as simply neglecting the state of the housing and shared spaces. We've already learned decades ago that rent controlled housing rapidly deteriorates.
Perhaps another example: the drug war. Making marihuana illegal creates criminal activity other than just selling it. You could say "okay, so just police that", but that's not so easy in the real world, and we've seen the negative consequences of attempting it.
A lot of problems would be solved if politicians thought less about the intentions of their policies and more about the incentives those policies create. Too many policies make bad behavior rational. Even worse is that once you do that it's not just that good people start behaving badly, but also that bad actors out compete the good ones. A good policy aligns self interest with the common interest.
You're going to have to help me. I don't know what you mean by "bad behavior that would be[...]undesirable to police." It seems very abstract, and because of that, is less than convincing. Please give me an explicit example of that.
For example, how does, "rent-control => neglect the state of housing" That happens already without rent-control.
It's true that there are many landlords who provide ill-managed, neglected housing even in areas without rent control. However, rent control exacerbates that problem, in my opinion, for two reasons:
1) It incentivizes the landlord to shorten the amount of time a particular tenant will inhabit the property, because it is only when a tenant leaves and a new one comes in that the landlord is free to jack up the rent to market rates.
2) It compels the landlord to lower his expenses in order to ensure that his investment stays profitable. Ordinarily, a landlord is constrained by a desire to keep a property that will attract and retain good tenants, but since that is no longer (as much of) a factor, he will avoid making repairs and enhancements except in emergency situations where the law requires him to.
Source: landlord (albeit one who has never worked in an area with rent control policies)
Better enforcement might help, but even if everyone is acting in good faith you'd still expect to see a higher incidence of condo conversations and Tenancy in Common simply due to Coase.
Agreed. I guess what I was getting at was, given her particularly less than favorable views on deregulation and hyper free-market views in other respects, I find her opinion on this interesting.
No offense, but I don't think it's especially surprising when people support one set of political views when it affects other people, but deviate from it when it affects their own bottom line. See for example the powerful in Silicon Valley, who are mostly "progressive" until it comes to economic issues that affect their personal finances.
I know several slumlords who have made a killing off of rent control. It rewards bad actors disproportionately more than bleeding hearts like GP's mother.
Because slumlords are better able to extract profits from rent controlled properties, they are willing to buy them for more than they are worth to bleeding hearts. All rent controlled properties will be managed by slumlords in the long run.
I'm a tenant in Los Angeles, and a staunch supporter of rent control. Knowing that my rent (which is already high) can only go up so much year-over-year provides some bit of stability as the tech industry devours eastward from Santa Monica.
I've been paying attention to what economists say fairly rigorously for the last ten years and they have some huge blind spots. One of them is they completely and utterly ignore the importance of income and social stability. Which is they see any expenditures needed to provide those as a unacceptable drag on society.
> they ignore the importance of income and social stability
They don't ignore it, they're just not ignorant about the costs of income and social stability.
For example: I grew up in a relatively modest house (3BR, 1,100 square feet) about 40 minutes outside of D.C. Growing up, there were quite a few young families in our neighborhood. Average household income was probably about $70k/year in today's money--relatively well off but not even what you'd call "upper middle class." Today, you'd need about $130k/year to afford to live in the same house. You're talking about a completely different class of people at those two income levels. It's two people with average jobs (maybe even without a four-year degree), versus two people with mid-level white-collar jobs (GS-11, since this is D.C.). It's people who had kids in their 20s versus people who put off having kids for 5-10 years to focus on their careers.
Today, the people I know starting families in the area are professionals making multiples of what my parents and our neighbors made at a similar stage in their lives. Instead of playing the housing bubble game, my wife and I commute in 60+ minutes each way. Partly because it enables us to raise our kids in a neighborhood with young families. But also just out of spite.
All this "stability" is a huge drag on young people that proponents of things like rent control ignore. That grandma living in her rent-controlled apartment is displacing some family that now has to live out further and end up seeing the kids they put off having for fewer hours each day.
> Instead of playing the housing bubble game, my wife and I commute in 60+ minutes each way. Partly because it enables us to raise our kids in a neighborhood with young families. But also just out of spite.
Who exactly is being spited here when you waste 10% of your life sitting in a car 'commuting' ?
Each buyer that refuses to bid on an inner-suburb house drives the market price down by some real, but infinitesimally small, amount. Symbolic, sure, but I can't in good conscience bid some split level in a 1950s Levittown development up to $600k.
The population has grown such that urban areas have far less acreage per person than they use to, so there's more competition for housing in that neighborhood.
Plus, income distributes follow a pareto distribution: in DC a 60th percentile family earns between ~35% more money than an 50th percentile family does, and a 70th percentile family earns ~35% more than a 60th family does, etc.
Those two factors are behind the explosion in housing prices around the nation. The same number of people can afford to pay substantially more for housing than they could previously. When you were growing up, your parents were competing with median income families for housing. But today, you're competing with ~70th percentile families for the same housing (per your income assessment).
The solution is to tear down low-density suburbs and replace them with high density residencies. But there's no incentive to do this because people are more than willing to just spend more time commuting so they can have a yard to mow on the weekends.
> The solution is to tear down low-density suburbs and replace them with high density residencies. But there's no incentive to do this because people are more than willing to just spend more time commuting so they can have a yard to mow on the weekends.
It’s hard to tell what people actually want. The lots in my neighborhood, laid out in the 1930s, has a standard plot size of 1/15 of an acre. This is a suburb of detached single family homes. A few people have doubled up the lots, but for the most part people just deal with having no yard. Today, the minimum lot size is five times bigger, 1/3 of an acre! So is there no incentive to build denser because people are willing to commute more to have the space, or because it’s illegal to do anything other than build ultra low density housing?
>> One of them is they completely and utterly ignore the importance of income and social stability.
This is literally an entire field of focus of economists and one of the fastest growing ones in the field. Have you considered that maybe you are the one that is ignoring the second-order effects of being a proponent of rent control and how it helps a specific person over a population?
Or perhaps maybe you ignore that that unfettered capital and a flattened banking systems so beloved of economists is the actual root cause of these problems?
Fundamentally modern economics despises the use of any other type of social control and signaling other then capital. Solution's to all problems must be in the context of markets.
One can see the effect that has had on middle and lower income families. And on our political systems. Where families are starved of resources and politicians are fearful of exercising independent political power on behalf of the voters.
That's the system that economists insisted was going to work much better than the system we had before.
Would you rather have rent control, or just lower rents overall? For the sake of argument. Because that's the thesis: rent control is partially responsible for the out of control rents.
I would rather see rents controlled in an area by requiring that sufficient housing is built.
Address the issue with more supply.
(At a livable standard of living, including proper sound isolation and fresh air, and even a space for vehicle storage* because people need to leave the city some time... *: Having an in city goods and services transport layer in weather controlled environments that leads to peripheral IO structures such as mega parking garages is fine.)
I realize what you are trying to say (I think), but your phrasing is curious.
Shortages are almost always caused by government intervention in a market by increasing the burden for suppliers and/or capping prices. There is no need to mandate anything, but instead just let developers do what they already want to do, build. It is the prohibitions (zoning regulations) on development that are the problem, not disinterest by developers.
Actually construction wants to expend the least effort for the most profit. Given how critical the housing gap is in most areas* (that are near jobs) right now all that 'wants' to be built is the upper end of housing. If the market hadn't reached these levels that /would/ be fine, since then previous housing from that category would depreciate in to the lower income strata in an actual trickle down method. What will happen instead is that only enough housing will be built to maintain the current status of an unhealthy market.
In order to have an actual //correction// in current trends directed building must be several times beyond a normal build rate to make up for the decades of under-performance.
> Simple reliance on a profit model for housing is never going to adequately meet housing needs.
Can you give something to justify that statement, something more than just a bare assertion? To me, it looks like reliance on something other than the profit motive (that is, rent control) is what's causing the problems here.
A start would be the pervasiveness of homelessness throughout the history of the United States as contrasted with its abolition in the USSR and its dramatic return with post-soviet privatization.
Why don't you start a communist commune? You can do that in a capitalist system. You can't set up a capitalist commune in a communist system because they'll put you in the gulag.
Actually you should check out the long history of western capitalist supported right wing death squads that have been sent to break up communist governments.
And how does that answer jules' point? You sound like you're just looking for a chance to spew your talking points, rather than actually having a conversation with us.
My point is that Jules is wrong that capitalists will permit you to set up a communist society. Perhaps you should revisit the cold war. In addition, a commune within a capitalist society would still be reliant on the labor of an external, exploited proletarian class. Communism is internationalist. Ultimately this is the failure of first world social democratic programs that provide decent gains for their working classes but do so at the expense of oppressed peoples in the global south.
Referring to them as talking points without refuting them sounds a whole lot like trying to dismiss the argument without dealing with the contents. Don't get upset and fall back on procedural obfuscation if you're trying to have a conversation with me.
> My point is that Jules is wrong that capitalists will permit you to set up a communist society.
The non-communist countries tried to sabotage the communist ones, true. (And vice versa - a cold war is like that.) That is not at all the same as saying that, within a capitalist countries, the capitalists will not permit you to set up a commune. Your argument (and link) therefore do not actually address jules' point at all.
> In addition, a commune within a capitalist society would still be reliant on the labor of an external, exploited proletarian class.
How does that address jules' point (or even mine)?
> Communism is internationalist. Ultimately this is the failure of first world social democratic programs that provide decent gains for their working classes but do so at the expense of oppressed peoples in the global south.
How does that address jules' point (or even mine)? Starting a commune in the US doesn't exploit the oppressed in the global south whatsoever.
This is why I say it looks like you're just looking to spew talking points. You're saying a lot, but it's not relevant to the subject.
1. Then perhaps you'd be happier if I were to point you in the direction of The Black Panthers or MOVE or any of the leftist victims of the COINTELPRO operations.
2 & 3. What I'm trying to help you understand is that a commune within a capitalist state that doesn't challenge the structures of capitalist society is not a communist project.
Please calm down, it's clear you're getting upset. I'm trying to help you understand.
As the site guidelines make clear, you can't use HN primarily for ideological battle, regardless of ideology. Since that's clearly all you've been doing with this account, we've banned it. Please don't create accounts to break the site guidelines with.
Would you please refrain from doing ideological flamewar on HN? Surely you're aware it's the exact opposite of what we're trying to have here? I realize other people were doing just that, but that's all the more reason not to feed it.
At least in the USSR you were guaranteed housing as opposed to the United States where homelessness is largely criminalized while the homeless are offered little support and in fact regularly have their lives upended because they're considered an eyesore.
No, not exactly. In the scenario above, the landlord obviously has to keep the property vacant for some time at $5000/month, much longer than at $3000/month. But because it is a near-certainty the real price would go to $5000/month in 5 years - but he is unable to increase rent to that if he rents out today at $3000/month due to rent control (and this is critical) - he would rather keep it vacant until someone comes along and pays the higher amount.
If not for rent control, he would charge $3000/month now at market-clearing rates, get a tenant in there in 30 days, and increase rent by the standard market price every 12 months. But due to rent control undercutting profits, he can't do this, so he keeps it open at a higher price.
I was going to refute your (uncited) comment, but it appears that San Francisco's vacancy rate has increased from 4.9% to 8.3% over ten years, affirming your position.
There's really no citation available so to speak for my comment, unless you want citations in Economics texts. It's fairly rational activity by landlords (or anyone who has controlled supply of any good/service) to take. The vacancy rates aren't surprising to me but there are other effects that cause that number to rise/fall, not just rent control (though the arrow is in the expected direction based on policy).
It's unclear from those stats the reason for the vacancies, though. I've read about a lot of foreign investment that is buying up properties and then intentionally leaving them vacant, or are using them as vacation homes or vacation rentals.
In a place with higher supply and less demand, I'd absolutely agree with you, but in SF, that property will get snapped up within a week regardless of whether it's listed at $3k or $5k.
>and increase rent by the standard market price every 12 month
That's not what he would do. Tenants tend to value a property more as time goes on. Beyond increasing market rates.
Without rent control, your rent will increase faster than the average market increase would indicate unless you move very often. Rent control may not be the optimal way to combat this, but it is something many societies recognize as a problem.
What your response misses is the time component of vacancy.
If I have rent control, I will list at a higher price and let the property sit vacant for longer to find a tenant because the law says that I am limited in the ability to later adapt the rent to the market.
Without rent control, there is much less incentive to leave a property vacant, looking for a tenant willing to pay a higher price point.
Most microeconomics courses teach that markets don't have one price for a good, and one of the lessons will be in strategies, such as coupons, that owners of goods use to sell into the market at multiple prices. There isn't a single number that a landlord can rent a unit out for in a given market.
Keep adding obligations to landlords to the point no one wants to be one. Then, if you can't, for any reason, secure a mortgage your only alternative is homeless. Sounds like a good idea.
Real estate, by multiple measures, is the most profitable industry in the US private sector. It is heavily taxed and regulated because it is a money-printing machine. We are not in danger of there being no landlords.
Except that in SF, a landlord can get a tenant for nearly any price, because demand really is that high, and supply really is that low. On the occasion that a rent controlled apartment goes back into the market in SF, it's snapped up within a week, even if the listing price is set above market rate. A savvy renter (which you have to be, if you want to get a place in SF) will know that they're paying a higher price for a much more stable rent year over year.
"Rent control is a failed experiment. All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases."
Forces them? As if they wouldn't raise rents as much as they felt they could get away with anyway.
Or as if without rent control landlords would keep rents low, merely out of the goodness of their hearts.
This isn't as obvious as you make it sound. If all landlord realized they will have a future loss, they are looking for a way to recoup this. If they believe other landlords are going to do the same thing, they know they can raise prices without getting undercut because others know the same thing they do. Quips about the goodness of their hearts isn't as deep a thought as you think.
It is an economic certainty. If more of the housing supply is tied up by rent controlled tenants who won't move out, supply and demand places the equilibrium price for available units far higher than it would be without rent control.
When you institute rent control, you save existing teachers some money, but when they retire, good luck finding new teachers willing to work in the new market with much higher rents.
In commercial real estate there are two types of contracts.
I agree to rent this place for a year.
I agree to rent this place for a year, and I'm paying for the option to re-rent it at the same rate for the next 5 years.
You can imagine that in commercial real estate one of these contracts is more expensive per month than the other. Especially in markets with rising rents.
Basically rent control bans the first type of contract, and requires the second. And therefore increases rental rates.
Nothing against your MIL but it is extremely common for people to not walk the talk. It's much easier to talk in pure abstract models when it is someone else's life and money on the line.
I am sure most people here who claim that the likes of Google and Apple should not 'avoid' taxes take every possible tax deduction in their personal lives so as to minimize their tax liability.
There's a reason the young are such idealists. It's easy to preach in the abstract about how OTHER parents should raise THEIR kids. Or how OTHER landlords should manage THEIR property investments. When these people become parents and homeowners themselves is when the rubber hits the road, and most just regress to the mean.
The young are not going to become homeowners or start families if they can’t afford it. It’s not a wait your turn, stages of life kind of thing. There is no path for someone who is in their 20s now to ever own a $2m home. Indeed, household formation and fertility are low and declining compared to previous generations at the same point in their lives.
When the earthquake levels half the city and your mother in law is bankrupt because here tenants have no connection to the community and jet, I’m sure she will be very interested in government asssitance.
The real failed experiment is that of renting property in general. If nobody were allowed to own more homes than they could live in, or derive income from rentals, there'd be a much bigger supply of housing on the market for buyers, and a much more liquid market for buying and selling as people's jobs shifted.
>All it does is force land lords to massively increase rent amounts when someone moves out to account for multi-year market increases.
Depends on the scheme in place. There are a lot of places where the amount the landlord can raise the rent between tenants is capped.
There are two big problems with rent control: It results in a constriction of supply over time, and it causes degradation in housing stock quality. There's no reason to put one cent more into your rent controlled place than required by law.
Rent control is nothing but a populist political measure. It makes no economic sense what so ever.
If rent control worked why not set prices of everything else to low values ?
Any intervention in a free market system will benefit some people at the expense of others and that losing party would then be less willing to participate. What incentive will people have to maintain and increase housing when they might end up broke because of rent control ?
California needs high rises and denser dwelling units for that the zoning laws needs to change.
Rent control is only available in units built before 1980. So renters who were not lucky enough to find a rent controlled housing has an incentive to vote against rent control. Though, any politician who leans one way or the other will piss off the other group and could be a political suicide.
Aka people who lived there before the insane hikes in cost with rent control being the only thing keeping them from being forced out of their home due to greed-driven economic practices
As in, yes, people don't give up those leases. Instead they pass them on to friends, then friends of friends, etc long after they've left the city. Or worse use them as AirBnbs to make a killing
This is what new rent control regulations in Toronto are doing...
More than 1,000 planned purpose-built rental units have instead been converted to condominiums in the Greater Toronto Area since Premier Kathleen Wynne's government expanded rent control[1]
It's making the housing crisis worse, not better. For those who already have low rent locked in, it's the ultimate "fk you, I got mine."
Maybe we need something deeper than that, you have 3/4 of your country that are almost a wasteland and you insist on cram all the people in 4 or 5 cities.
Maybe we need to start to incentive moving people to other more empty places...
Environmental advocates I have spoken to are generally of the opinion that vertical building is better than sprawl and less number of cities are better than building in every nook and cranny of available space in the country. (of course we have to balance health, open space, happiness and other concerns)
It's not really a wasteland, though. My wife moved here from New York to Kansas City, and her old friends act like there are cows walking down the street or something.
If you're willing to live with diversity of political affiliation (it's a pretty even mix of Democrat and Republican around here, and I've heard people on HN say they'd be absolutely unwilling to live somewhere like that), you can get a 2200 square foot house in a nice neighborhood for around 250,000. We have an airport, IKEA, two art museums, and all sorts of interesting exhibits to see and things to do year round. I plan on having at least four kids, if I went to work for Google to have a house the same size would cost something like $2,800,000? (from a quick Zillow search of somewhere like Sunnyvale if I wanted a similar commute) So 11x more expensive? It seems like madness to me.
I know a guy who lives here but works for a big company on the coast, and he lives in a mansion in one of the nicest neighborhoods around, and even the local mid level tech jobs easily pay 6 figures.
I mean, I guess the weather is nice, but other than that I don't really get it.
I think I understand this perception to be the product of youngish, upwardly-mobile, well-educated people who are able to build enormous, fluid, flexible social/friendship/dating networks throughout their 20s living in L.A. or NYC that they couldn't build in St. Louis or Kansas City.
They're actually mostly right about that. [0]
The problem is that the perception remains well beyond its usefulness. Mid-sized Midwestern and Southern cities have everything a married couple in their 30s with (or without) a couple kids could possibly want -- all the stuff you mention and a lot more, really. And they provide it with a COL-tradeoff that can't be ignored.
I have a fairly good idea what people in New York think of my hometown and other cities like it and, frankly, they're wrong far beyond otherwise reasonable differences of opinion (as in they hold what are inarguably factually incorrect views (about, say, the size of Midwestern economies, the availability of jobs, the number of cultural institutions, the experiences of people of color and homosexuals (in urban centers, admittedly), the prevalence of ethnic restaurants, and on and on).
[0] I think it's exaggerated (especially in the sense that it's not for everybody), but real.
I recently looked at jobs in the Bay Area. I currently live in Southern California, so it's not cheap where I live. To have a sub 20 minute commute (current commute: 7 minutes) to any of the jobs I was looking at would have added about $40k per year in costs. I probably could have been able to get an offer at $40k more per year, but it would be moving the whole family to break even financially.
If I could talk my wife into living somewhere with winters, then we'd probably move to Cincinnati, since we have friends there. At my current pay we could probably retire there when the kids are in HS.
Cramming people into cities is more efficient from an energy and environmental footprint standpoint, and if there's enough vertical construction, it can be plenty comfortable.
So maybe more should be done to incentivize vertical construction. From what I understand about San Francisco, though, it's actually kind of discouraged because of historical preservation stuff. I can also imagine established landlords without the capital to do large construction projects would still oppose measures to incentivize it, as well.
Why would I build new supply if I'm going to be stuck renting it out under rent control? If I already own a property, how can I build more if I can't raise rents on my current properties to market rates so I can afford to build new buildings at market rates?
Rent control causes supply issues. Look at the City of Berkeley. Their supply increased massively right after rent control was lifted in 1997.
New supply is NOT subject to rent control in any way shape or form. Only non-single family housing that was built before 1979 (or maybe 1980) has rent control. Nothing built after that is rent controlled at all.
This is sort of true, but in practice (in the bay area) new construction only happens at the whims of neighbors. Since rent controlled tenants are totally insulated from supply and demand, it's common for tenants to only evaluate their annoyance with new construction, and not the beneficial effects on the rental market. Renters can only be NIMBYs even they're locked in by rent control.
Another point which is usually not well-discussed, the houses/apts in SF are really bad in terms of quality, amenities and features. With new housing, this is starting to change a little bit. But, overall, rent control results in really bad maintenance. Landlords do the absolute bare minimum to not get sued/fined. For the rent people in SF pay, the value they derive is almost a joke.
> Landlords do the absolute bare minimum to not get sued/fined.
IME, this is a pretty universal statement.
Hop across the bridge to cities without rent control and you'll see the same thing. The problem isn't any specific policy, it's the power balance between landlord and tenant created by a market with limited supply and ever-growing demand.
Those are typically cities with lower demand. I'm on the other side of the bay as well and my building was recently renovated and upscaled quite a bit to take advantage of the new demand.
I've never lived in SF, but the apartments here in Dallas are luxurious and much cheaper. It was the exact opposite in Chicago, where every place I stayed at was a dump
That's the real kicker in SF. Ok, housing is expensive and I need a $800K mortgage. If your income is high enough you can swing that.
But then you look at what $1.5M gets you! It's bottom of the barrel housing most other cities. You need to move up to $3M to get something modern that has things like double-paned windows and a decent kitchen.
The thing that baffles me, though, is that you can take a $1.5M house and update it for much, much less than another $1.5M. Sure, it's annoying: it takes time, and you either have to pay for two residences or live with the dust and noise while the renovation is in progress. And finding reliable contractors in the bay area has been getting harder and harder given the level of demand there as well, but it seems crazy to ignore the ability to do even some simple, targeted renovation when you purchase a new home.
Is renovation that affordable in SF? I had a friend do relatively major renovations (add another floor) and I was shocked when he told me it cost him $800k.
Is he adding more than $800k to the value of his home? Probably, but it's not as much as one would expect.
It's certainly not cheap, but if you're doing things like replacing appliances, countertops, sinks, and windows, I can't imagine it costing anywhere near as much as what your friend experienced.
But I'm just getting this from talking to friends who have done it; no first-hand experience here yet.
I really wish the submitter of this story did a better job than repeating the clickbait title at Curbed. Because this article is actually a fairly good summary of an interesting paper which has a lot to say about the mixed results of rent control as a long-term strategy.
But no, instead we get this, "Rent Control Is Uniformly Bad" title which is designed to split the demo and bring in people who want to argue.
Happy to change it, but I couldn't think of a better one. Actually we briefly changed the URL to https://www.mercurynews.com/2017/11/02/rent-control-policy-l..., which has the title "Rent-control policy `likely fueled the gentrification of San Francisco,’ study finds" — is that better?
(We changed the URL back because it's not clear that that article has more information in it.)
Another second-order effect of rent control is increased traffic. Suppose you have two residents with significantly below-market-rate housing at the same quality level, one in downtown SF and another in Mountain View. The former starts a new job at Google in Mountain View, the latter starts a new job at a trendy start-up in downtown SF. Since they're paying significantly below market rate, they're unable to trade apartments with each other without paying a significant amount of money.
So, because you cannot trade apartments without spending significantly more money, there's a couple of hour-long commutes instead. This is part of a general pattern - messing with prices doesn't help, since the market still has to clear. You just start paying in things other than money. Paying for things with money is great in general, since then someone else has the money. Paying for things with a longer commute is terrible, since there's no beneficiary.
Is this a well known problem? It has never occured to me that this could happen but it makes a lot of intuitive sense. Do you know if anyone has measures this effect? Very curious how much this contributes to the Bay Area traffic problems.
Second-order effects are difficult to study in general. My comment was driven entirely by fundamental economic modeling: price controls generate harms by forbidding beneficial trades, and people move to reduce their commute. There are other reasons why people move, and I expect to find these situations as well. For instance, people tend to downsize their housing after their children move out, but who would downsize when the smaller apartment is more expensive?
But rent control only benefits the renters already in place. It hurts new renters to the area, by driving up costs.
You've got to address a moral judgement you've implicitly made: What makes the current renters of a city more deserving than the future renters who might move to the city?
Let's apply that same logic to refugees (red-lining, migrant workers, or really any topic of im/e/migration). Current citizens have votes and decide that refugees aren't welcome, refugees don't have votes and so cannot be welcomed.
I feel this response is confusing right with might. Just because some group has the political might to make laws that benefit them does not make those laws right, does it?
Right and wrong are almost entirely subjective on issues like this. What is the right level of political boundaries for people to have a vote in these decisions? Should residents of San Diego be able to influence housing policy in San Francisco? How about residents of Chicago, or Madrid, or Karachi?
I don't like the idea of residents of far-away cities having a say in housing policy in my city. But I'd also support a federal-level ban on rent control policies, based on the idea that it's a net-good if we encourage people to move to more efficiently allocate housing.
But I totally see how this is kind of hypocritical. I just want things my way, everywhere. :-] idk!
I suppose that the next-best thing is to have local control with freedom of movement. The United States and cities are kind of like this--- it allows for states and cities to try out different policies, and compete based on policy.
They are already making the city a valuable place to live. I've heard it called the 'schoolteacher paradox'. A brilliant schoolteacher moves to a new area and begins working at a school. Her effect on grades drives the school up through the rankings. This attracts interest in moving into the area, which drives demand for housing and voila, she just drove up her own rent. Her landlord gets to extract more wealth from her.
The high value of property in San Francisco is a lot to do with its proximity to amenities and services provided for by the very people suffering because of continually rising property prices. This is a highly parasitic dynamic.
If moral judgements are really your primary concern why are you advocating for eliminating a policy that allows a tiny bit of clawback from the pre-existing titanic wealth transfer that goes from renter to landlord?
Moreover, it's a policy that by and large keeps people who do necessary work.
There's a fair, economically efficient solution to all of this, of course: the 100% land value tax.
Rent control is merely a hack that offsets some of the gargantuan harm done by leeches extracting value from the communities surrounding them via untaxed land. I'd be fine with seeing it go... after implementing a 100% land value tax.
There is a lot of stickiness and inelasticity when it comes to housing, especially when other factors such as kids and schools and spouse's commute and all come up.
The major issue is that the market is NOT free. This market can't ever be free. There are building codes, zoning, planning, approvals, etc. All of that red tape related to building the level and quality of housing that an area needs already distorts the market.
Thus the underlying issue is that there has not been proper correction and guidance from the governance structures established by the people in the area; mostly because the rising home prices and status-quo of neighborhoods generally benefit those people.
It's going to take state or federal level correction to fix this issue and the "best" way of doing that would be to sour the use of housing as an investment.
Address what? A vague reference to "stickiness and inelasticity when it comes to housing?" I suspect you're misunderstanding what the "swap houses" example means. It's not actually about two people who might want to swap their houses. It's just a "bottom up" way of showing how housing restrictions create inefficiencies by limiting choice.
It might help to think of it in a "top down" fashion. Imagine laying out housing for everyone in a metro area as an optimization problem, where you're trying to maximize a value function over things like amount of space, proximate to peoples' workplaces, quality of schools, affordability, etc.
Housing restrictions add additional constraints that make the solutions worse for everyone. E.g. say some group of people with kids are willing to live in a duplex on 1/8 of an acre rather than a detached home on 1/4 of an acre in order to reduce their commutes and see their kids more often. But they're not willing to live in a city apartment with their kids and pets. Housing restrictions basically eliminate that part of the solution space by making it illegal to construct such housing. That group of people get punted to their less-preferred alternatives, and the resulting solutions are worse for everyone.
There's nothing to dispute here–the are obviously factors other than costs that make (some) people prefer to stay put: local family, friends, or even plain old laziness.
That doesn't exclude the cost scenario outline further up, and the relative strength of these effects vary from person to person.
And no argument will "win" such debates for either side. These are complex issues, and even if everyone can agree on the mechanisms at work, you'll get widely different results based on differing importance for the conflicting goals you're trying to optimise for.
Rent control, as shown above, might legitimately add to traffic. But it's also cruel to force elderly people to leave their remaining friends, and their familiar neighbourhood, just because they can no longer afford rent.
Anyone claiming "it's so easy: just..." is invariably wrong. California's legislators aren't stupid. The main contributor to housing problems happens to be the unparalleled economic success of the state, plus a few geographic quirks.
Simplifying to the tired old "free market" vs "regulation" debate is only exchanging one set of problems for another. The US happens to have other locales that dabbled in an ideology-driven "free market" approach. The result are the suburban hell-holes that are Atlanta, or parts of Houston: Low-density clone cities totally reliant on cars, with much longer commutes and huge environmental footprints, almost devoid of street life.
What's usually needed is neither more nor less regulation, but smarter: encourage high-density mixed zoning, create public transport that can compete with cars, encourage companies to adopt telecommuting, flexible hours, distributed workplaces instead of central campus etc...
that dabbled in an ideology-driven "free market" approach. The result are the suburban hell-holes that are Atlanta, or parts of Houston: Low-density clone cities totally reliant on cars, with much longer commutes and huge environmental footprints, almost devoid of street life.
I assume because that's what people want?
HNers seem to think a downtown core existence is the best and apparently aren't aware there is a big group of people who don't want that.
Yes and no: Given the choice, people will prefer a single-family home with a large garden, to the same home without a garden, or a smaller apartment.
But rephrase it and the answer changes: People prefer to life in (nice) apartments if others do so as well, and the resulting increase in density cuts a 60min car commute into 15min on a bike, or even 30 in public transportation.
In any case, I would consider mixed zoning more important than density. It's not just metropolitan city centres that provide higher quality of life than the suburbs. Another winning model is that of the classic "Small Town USA".
It's perfectly possible to have suburban-style homes with gardens clustered around a city centre providing everything you need in a typical week, plus schools/medical care/sports/you kids' friends all within a radius of about 3 miles, making it easily accessible by bike, and even on foot.
That's a really great insight. The fact that such good intentions often lead to bigger problems is what concerns me about UBI - it will surely have huge second-order effects. I'm not sure what they will be, but rent control in a city is tiny compared to the effect a universal change like UBI would introduce.
It sounds scary when put like that but it just means people free to interact, while secure from other social actors in their person and property. By the nature of voluntary configuration, interactions have a tendency toward being mutually beneficial, and there are corrective feedback loops that naturally exist in a voluntary society to reduce those that aren't (e.g. scammy operators increasingly excluded by increasing consumer vigilance and growing reputation markets).
And you can still have governments provisioning economic resources that qualify as public goods, like basic research, public information resources, policing and national defense, in such a setting, so there is no fundamental deficiency in unrestrained capitalism, aka an absolute free market.
> so there is no fundamental deficiency in unrestrained capitalism
Except a tendency toward consolidation and monopolies. And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
> it just means people free to interact, while secure from other social actors in their person and property
It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo", whatever you choose to label it.
>>Except a tendency toward consolidation and monopolies.
That assumes no government provisioning of public goods that can counteract capture of natural monopolies, but there's nothing inherent to a free market to prevent such government intervention.
>>And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
The term here is "unrestrained capitalism", meaning people in possession of their right to contract and secure in their person/property, not "unrestrained society". An absolute free market doesn't mean anarchy. It doesn't preclude checks within the electoral and political process itself to prevent corruption. It doesn't prevent laws from being passed to place restrictions on those in public office, like, to give an extreme example, a lifetime ban on receiving any compensation from the private sector.
>>It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo"
Fair enough. I just take issue with the connotations of "unrestrained capitalism", where it implies malevolent behavior is legalized. A less biased term would be "free market".
In an ideal world you'd run the experiment and see how it goes. In the real world you'll probably be stuck with it regardless of the outcome, because there will be a concentrated group who will be strongly against ending it, whereas the negative consequences will be diffuse.
That rent control is bad is not exactly a new finding. This has been known to economists across the political spectrum for decades.
The price of basic necessities is limited by the cost of production, not some fundamental scarcity. We could produce as much food, clothing etc. as anyone could want without increasing the cost. (In fact, the cost should decrease slightly due to economies of scale.)
The price of basic necessities is based on what people will pay for it (or what merchants can charge for it). If everyone has $10 today to buy groceries and all of a sudden, tomorrow everyone has $100 to buy groceries, what do you think is going to happen to the price of groceries?
If UBI is paid for with inflation than prices will go up to capture an equivalent in value. If UBI is paid for by increased taxes then all businesses will need to raise prices.
Yes. Costs are determined by the sale price, not the other way around. For example, if the sale price of a product increases, the demand for its components raises, which raises their cost.
If a would-be producer cannot source materials that would cost him less than the sale price, he just won't build the product.
It's not that simple though. On the one hand, UBI will make people less willing to accept work, but on the other hand it will also make them able to have a higher quality of life with a lower wage.
If someone is currently on $25k and gets a $10k basic income, their employer can lower their salary to $20k and they'll still be getting $5k more than they were before. (This won't happen immediately because people will be reluctant to take pay cuts, but I think it will in the longer term.)
Exactly how much of this difference the employee and employer capture in the longer term is a concern, but I think giving people the option to quit without starving will go a long way towards empowering them to insist on fair pay. I also think a result would be an increase job quality, because I think a lot of people would take a pay cut to work somewhere less awful if they could afford it.
Of course that money comes from taxes, so there's still a cost somewhere, but I'm not as convinced progressive taxes on the wealthy will have quite as big an impact on the costs to produce basic goods.
Interesting. But it would be good to have some data showing whether this effect on traffic is real and, if yes, what magnitude it has. However, even if the data supports the idea, the conclusion that rent control in general is bad is not really supported because rent control could be implemented in different ways that do not hinder mobility. Germany recently introduced a new rent control law the goal of which is precisely that.
Another second order effect is the reduced supply of family sized units. Many 3+ bedroom units are occupied by older couples and single people who raised their kids there and no longer need the space but would find it much more expensive to downsize. This drives families out of the city (among other things). Prop. 13 solves this by allowing people older than 55 to transfer their property tax break to a smaller house.
Prop. 13 also creates problems with housing supply for people who haven't yet been able to transition to home ownership. It's difficult to strike a good balance here.
I live in San Jose, I commute to SF 3 days a week (super thankful for the chance to work remote 2x a week). My current apartment (a 1BR I live in by myself) costs a bit less than 1k a month and is rent-controlled. The equivalent in SJ is probably worth 2-2.5x as much per month, and in SF (or somewhere in-between) it can be worth anywhere from 2.5-4x as much.
I've been hunting for an apartment more on the peninsula since I don't necessarily need or want to live right in the city, just closer (especially in case I switch jobs eventually), but I definitely want to halve the commute time at least (Caltrain plus door to door is nearly 1.75hrs each way).
But why would I want to leave my rent-controlled steal and be spending over half my monthly income for the equivalent? It's ridiculous.
So now it's a matter of figuring out the cost analysis of moving into a better area that's closer to work, and therefore an increased quality of life, or stay where I'm at where I can save much more money and have a rather crappy quality of life (I don't care for where I live now strictly other than the cheap price of the rent).
Not particularly. I've had that experience before and much prefer being on my own now. I find my community elsewhere. I prefer to think of my apartment as my own space, whereas a house (or shared multi-room apartment) would require having a communal kitchen/living room.
And here we see nerfhammer@ point being made. Your question is good. And that shows that the laws discourage people from seeking work far from where they currently live.
I'm relatively fresh out of school (just over a year full-time at my current job) so I don't know that it'd be as easy to just switch now without looking like I hop job to job.
You should use the long commute as leverage, i.e. you need to either work one more day a week from home or start looking for something closer to SJ. You won't come off as looking disloyal to the company because everyone understands how brutal that commute is.
Moving jobs after a year is very common in tech. If you have any co-workers who left, asking them for referral (if they like the new gig) is a great way to go about it. Lots of companies pay referral bonuses so your old co-worker will be happy about it too. I'm on my third job after graduating and have more than doubled my income in 3.5 years.
You're asking: what's the advantage of being willing to look farther afield to find your perfect job? That's what people in this thread are talking about when they say "labor mobility".
In case you want me to answer, there are myriad advantages: the chance to work with your most preferred tools, on a product that's more interesting you, with maximally compatible coworkers, etc. All the normal reasons people go somewhere besides where they were born for a job.
Sure, but in the counterfactual non-rent-control world, staying in SJ at $1000 isn’t even an option. Maybe efficiencies bring down prevailing rents a little bit, but enough to matter?
The more interesting question is, why are the 50 miles between SF and SJ reserved for sparsely packed single family homes and one story strip malls?
That’s changing. They’re building higher up in Redwood City, South SF, and the surrounding areas. It’s costly to replace the older model of American development from the 50’s. They waited until the last minute to start working on the issue.
Redwood City has been interesting to watch. I hope they get more diverse retail with the added increased density. Right now it is a lot of restaurants and bars, which while nice to have, means that it misses out on a lot of the foot traffic and such that other Peninsula cities like neighboring San Carlos, or Mountain View, etc. have.
Redwood City is also nicely positioned as a mid-point between SF and South Bay.
Beyond that, it seems the entire El Camino corridor is being heavily developed with retail and high-density condos and apartments.
Many complexes along El Camino on the peninsula seem to be increasing rent wherever possible. They "renovate" (add stainless appliances basically) and it lets them increase rent for a unit by a few hundred dollars at least. They also charge 200-300 more for a parking spot (I've spoken with complexes before where one unit without parking was 200-300 less than another with one spot, or a unit with an extra/second spot).
Some of these areas (Redwood City in this case) are next to major Caltrain stations with Baby Bullet stops. But they're also convenient (technically speaking) for going on 101S/N to work, etc.
They may have more square footage, pools, warmer climate during summer, more parks for children/pets, better schools in some areas as mentioned.
That's part of why I'd prefer living on the peninsula than in downtown SF. Weather is consistently better in the summer months. More space/less people (except for rush hour traffic). More parks for recreation. Pools aren't necessarily a deal breaker for me, but it's a nice extra.
A shiny high-rise is nice but unless you can afford a penthouse or similar you're probably looking at a small unit. Less space, fewer parks, more people everywhere (tourists, homeless, etc.)
The schools in RWC are not great (although hopefully that will change with the influx of reset Prop 13 tax dollars from new residents.
The downtown has a solid layout though and lots of room for growth. The RWC downtown has the potential for offering a lot more than some neighboring downtowns that are less dense and could be a nice hybrid between SF and more "suburban" Peninsula cities.
Found a small, privately-owned 8 or so unit apartment building that a coworker of mine was living at back when I was in school. She recommended me to the apartment manager/owner, who then gave me a good deal on a unit that needed things re-done (carpet, paint, etc.) by not renovating it as planned. Since it's rent-controlled they've only increased my rent by a small amount twice in my 5 years living there.
My unit is rent-controlled. However, the owner of the building has only increased rent twice, both being the max they could under the rent control limit. They just haven't continually increased it on an annual basis because apparently they haven't needed to.
Instead of increasing commute times, more typically it involves simply not taking jobs that are further away.
Restricting labor mobility is really bad for obvious reasons: people not being able to move where the jobs are means jobs not being filled even as unemployment increases. There is overwhelming evidence that labor mobility has gotten drastically worse in recent decades, and local NIMBYism is one of the major causes: http://neighborhoodeffects.mercatus.org/2017/01/26/why-the-l...
Compare this to China, which has had tens of millions of people flock to brand new megacities for the new job opportunities there.
China is a bad example with its hukou system in place. Sure you can migrate to the city for a better job but you have to leave your kids behind (no public school without hukou). Labor mobility but at great costs.
China is a bad example of a place getting policy right to favour labour mobility.
It is an extreme example of a place where labour mobility is so valuable it happens in spite of restraints. In fact it is so extreme that it is hard to draw lessons for modern western countries (although it has obvious resemblances to urbanisation in Europe a few centuries ago).
Arguably, immigration controls are also similar to the movement controls of Apartheid. They're just more socially acceptable because pretty much every country does it.
ah but in china not every one is allowed to move to the cities so you get an underclass who work in eh black/grey economy and are paid less because their employer can have them deported
> So, because you cannot trade apartments without spending significantly more money, there's a couple of hour-long commutes instead.
Here is where the analysis should happen. All of the "significantly more money" aspect boils down to transactional costs. Transactional costs in rentals will always, always be higher than transactional costs of ownership. Ownership's transactional costs get offset, (to only a small extent in the Bay area, but it is not nothing), by the equity the owner has accumulated.
Renters never accumulate equity to offset their transactional cost of "trading". The paper (and all of the anti rent control camp) constantly misconstrues lower-than-market rent as "savings". It is not savings; it's merely delaying the inevitable transactional cost of "trading".
Did anyone read the excerpts in the article and not come to the conclusion that rent control caused this? It sounds to me to like greedy landlords being greedy.
It feels like the title and the thesis of the news piece is either incorrect or at least misleading.
Your comment doesn't really address my point. The argument the article presents has less to do with free market fundamentalism than it does with landlords trying to get tenants of rent controlled units to leave in order to get market rates. That seems like the issue. Blaming rent control sounds a lot to me like blaming the victim for the crime.
>>landlords trying to get tenants of rent controlled units to leave in order to get market rates. That seems like the issue.
This is a simple incentive. To expect landlords not to act in this manner is to ignore Economics 101. If you design policies and laws in such a manner that rational actors will... act rationally... and this is bad, then the problem is how you designed the laws, not the rational actors - no matter how "greedy" you think they are.
Let's teach our daughters not to wear short skirts, because that increases the chances they'll be raped. Sounds like a similar argument.
With less hyperbole, you can use this argument regarding externalities involved in capitalism from the exploitation of workers to pollution of rivers. The way you change incentives is you add regulation.
Regardless, this thread is floating away from my point. No one is addressing the actual article here, which is really discouraging and fits with the trend of discourse on HN for the last year or so.
It's not the same argument in the least; it's just shock value nonsense you're pedaling in hopes of coming up with relevancy.
>>which is really discouraging and fits with the trend of discourse on HN for the last year or so.
Yeah, the guy who is posting terrible rape analogies is the guy I trust to judge what is or isn't discouraging with regards to the value of discourse on this website.
How is it not the similar? In both instances, people explain away the terrible deeds of a person by saying they are incentivized to do x,y,z instead of talking about whether it is right to do so and focusing on the pain it inflicts on people.
Trying to force anyone out of a home so you can make a buck puts their livelihood and safety at risk. You can't just excuse terrible behavior because people are greedy.
Note: Everyone (in the economics world, anyhow) has known that rent control does this for a long time. There's no controversy here; left, right, socialist, Chicago-school, heterodox, mainstream: It's a known thing.
This study is interesting primarily because it tries to put some hard numbers on how much it drives up the cost of housing.
Rent control is just one of the ways that people who are in a place benefit themselves at the expense of the people who are not yet there (and thus don’t get to vote).
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[ 4.9 ms ] story [ 272 ms ] threadYou can always trust them to keep digging.
Rent Control surely just prevents local families from being muscled out by the tech employees?
The SF rent control law (like the CA Prop 13) does allow rents to increase, but very slowly. It would be possible to have both without as strong of adverse consequences by changing the ceiling at which both are permitted to increase.
Indeed! It's also worth mentioning that this has had the perverse side-effect of encouraging people to find any and every way possible to block the removal of old buildings.
Which is to say that the incentive to build new apartments has been matches with tools designed to prevent exactly that.
And, as ghouse indicates, new housing isn’t subject to rent control so developers make a killing if they get approval.
I’m not convinced it happens so much more in SF to cause the high rents. I think years of building almost nothing after the 208 crisis while jobs exploded is responsible.
https://twitter.com/enf/status/764614550750494721
Not even 1% as much as untaxing land and property does.
Deregulating the zoning restrictions would allow more buildings to be built. [2]
With artificially constrained supply from Prop 13, there's dozens of empty lots and empty units just doing nothing of value. It's surreal to hear about stories from baby boomers about moving across the country to NYC/SF/LA/etc and being able to easily find a job and affordable housing in a major city, often while attending school at the same time. The same generation has now pulled the ladder up behind them to spit down on future generations.[1] https://en.wikipedia.org/wiki/Land_value_tax#Efficiency
[2] http://urbankchoze.blogspot.ca/2014/04/japanese-zoning.html
[3] https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...
https://www.japantimes.co.jp/community/2014/03/31/how-tos/ja...
You'd really want some kind of net housing units measure, rather than housing starts, to compensate this when comparing Tokyo to other cities.
[edit]
Also due to house vs. lot-size restrictions the house would have been limited to just over 2000 square feet. This is regardless of the number of stories (i.e. a 2-storey house would need to have about a 1000 square foot footprint, but a ranch could have about 2000 square foot footprint).
That's exactly what I was saying. The owners of inner city land pay very little cost for monopolizing land that could be put to better use. It's a store of value that is unlikely to go down in value. There is nothing to offset the instinct to hoard.
>The same generation has now pulled the ladder up behind them to spit down on future generations.
All of the "it was boomers what done it" is just the 1% playing identity politics as a means of scapegoating and divide and conquer.
At the end of the day, the 1% millenial children of 1% boomers are going to be the beneficiaries of this ladder pull-up.
But rent control manipulates the free market. With rent control, people who might otherwise be priced out and forced to move away, aren't.
I'm failing to see the problem. Unless those people would have moved for reasons other than soaring rent, them getting to keep their homes is a GOOD THING.
But the bigger issue is that is artificially raises demand. That prices up for everyone else, which does more harm. It's a subsidy for older people paid for by younger people.
Instead of letting the bubble pop when it's harmless it's growing more and more and when it does pop it is going to be extremely painful.
Correct. And in the process of doing so, further contributes to the lack of inventory of market-rate rental units available to the influx of newcomers/tech employees.
As mentioned elsewhere in the comments here, this causes huge disparities for rents of similar units within a given building as landlords attempt to compensate for all the market-rate rent being missed from longtime tenants. E.g. I've known folks paying $4,000 while their neighbors pay $400. While I don't have numbers or a study to point to, my experience over the years with the SF housing market suggests the impact of this effect is nontrivial.
Hi, let me introduce myself. I am SF's housing crisis. So are many of my friends. We're those "local families" who have been living in SF for 15+ years in rent-controlled apartments. We're still here because the rent is cheap. If our rent went up even moderately, we'd probably move to the suburbs; by the time you hit your 40s, you get tired of stepping over panhandlers and human feces.
If you really want to get angry, let me tell you about the multiple times I've moved away for extended periods and kept the apartment unoccupied as a pied-a-terre. Rent control makes it affordable!
There are a lot of us, enough to occupy a significant chunk of the housing stock. Because we've taken this stock off the market, the available float is smaller than it would otherwise be, so everyone's bidding up what's left.
Would average rents go up without rent control? Certainly. But it would force a lot of us "local families" to make long-overdue decisions, freeing up housing, and driving down the average "new rent".
No, it absolutely is not.
Google or whatever doesn’t pay based on housing costs. They pay based on business value.
A number of companies have pay brackets that vary by location, to reflect cost-of-living differences in different locations. I can't tell you whether Google is one of those companies.
Rent control allows people (wealthy or poor) to remain where they are without purchasing their residence. Unfortunately, to do accomplish this objective, it increases the price for new arrivals (be they wealthy or poor).
In California, Prop 13 does the same thing -- drives up the cost of housing for everyone other than the people who already own a home.
+ Sometimes it works for a short period, as the policy reflected the economy at the time of creation, then becomes irrelevant via technology/market reaction to policy/general progress... but yet stays a policy for decades.
The important point is that we rarely ever measures whether it does work or not, and policy tends to have an extremely long shelf-life.
My ideal state would have:
1) a well-staffed multi-partisan agency entirely dedicated to reviewing policy, with a mandate of removing any policy having a net-detrimental effect on society. By launching scientific studies of the effects with subpoena power over other agencies, making policy recommendations, and potentially the power to temporarily suspend regulations until reviewed by congress.
2) require timeframes attached to most policies, forcing future reviews which must factor in measured results (likely from agency mentioned in 1) or face expiry
The way it is now, everything is geared towards "doing" things, and credit is received for "accomplishments". Its usually much harder to undo things. It would be refreshing to have specialists in undoing things.
Different system, but some thematic similarities.
* Around 2001, voters in British Columbia elected a government with a specific campaign promise to reduce "regulation" by 1/3.
* Initially this was accomplished by among other things setting a rule that for every new regulation introduced two existing ones had to be eliminated.
* Then the status quo was maintained by mandating a 1-for-1 rule (each new regulation requires elimination of a existing one).
* In 2015, the government of Canada introduced its own 1-for-1 rule.
There are obviously complications around what constitutes "one regulation", which neither my summary nor the linked article completely capture.
Repealing a law is doing something, and people frequently point to it as an accomplishment (or goal, if not yet done) if they think the law is unpopular with their constituency.
Probably the last politician who was proud of saying no was Calvin Coolidge. The vast majority of politicians are wired the other way.
Much like the constitution there should be a baseline and non-aggression seems like an obvious first law.
This would allow for more experimentation and for consensus building. As it is now, the law is always in the context "and forevermore, it shall be this way". If the context was, let's try this for a few years and see what happens, it would be a less contentious thing. Without the imposed time limits, partisans grab as much as they can whenever they can.
Ancient Isrealite law had something similar with the jubilee. Every 50 years, debt was forgiven and many other things reset. This tended to keep things more balanced.
(A lot of the national press incorrectly portrayed this as the Texas governor calling an emergency session to ban trans women from women's restrooms. While that was debated as part of the emergency session, it wasn't the goal and the governor made allowing it or anything else to be debated conditional on passing the critical Texas Medical Board renewal - forcing the supporters of the bathroom bill to pass that first and give up their leverage in order to get a bathroom bill vote they would inevitably lose. The national media reporting on this was terrible.)
How do you feel about laws like the Civil Rights Act of 1964?
I think that law continues to serve our society well. And I'm certain it would not be renewed by our current Federal government.
Ditto for regulations on water, sewage, pharma purity and many other laws that facilitate civilization. It's all very nice to say 'sunset every law', but we depend on many of them being in place.
Like removing redundant rivets on an aircraft. You can't be sure which ones are critical. The cost of discovering that can be quite high.
Maybe certain parts of it - yes. But I've read many articles talking about how housing segregation is far worse than it was even before the civil rights act.
The act explicitly cites this problem yet completely failed to address it.
Some acts can have obvious no-debate reenactment. But this deters broad sweeping legislation from being passed, if subsets are not well thought out or are pigeonholed in. Why not pin sections onto acts so you can easily repeat ones with strong data/political support, while ending other less effective parts?
That said, there should no doubt be a dichotomy between human rights and constitutional limitations (which are pre-emptive limitations on legislation) and the general type of policies passed by congress.
My primary focus is on economy law as well. Social law might be more socially evolutionary.
Imagine the equivalent of constant miniature government shutdowns every time a law expired and congress couldn't come to a consensus.
I used to believe in an ideal state as the one you describe. More recently, I think about what a system - i.e economic, political, social - that is stable (in some sense) looks like. For example, liberatarians believe that markets sort things out on their own. I usually conclude that small societies are optimal for quality of living.
I came to the same conclusion. Sadly many 'libertarians' often gets dismissed as disliking all forms of government and regulation, which is not the case, rather preferring a limited one. But I guess intentional/unintentional misrepresentation is a savvy and common political tactic because it's effective.
My question to you is how do you achieve a limited/small government (without a revolution)? I believe controls like this are one way to achieve it. Much like how the strict policies of the Constitution (or Bill of Rights) have limited/stopped potentially hundreds of thousands of overreaching policies in the US alone over the last two centuries.
The constitution, aka strict pre-emptive limitations, are good. But I believe post-defacto limitations and reviews are also a necessity. Because as I said, some policy does seem rational at the time - which then becomes out-of-date or a bad idea with retrospect.
We currently have no good tools to deal with those outcomes...
I think the only way to guarantee that you don't government overreach is not have a sociaety where all member are active and responsible. Not in that they all vote. In that they all deal with issues in their community, rather than pawning it off to the government and also giving them the power they need.
I think that society that takes care of itself - instead of inventing institutions to do so - is feasable, but a real pain in the ass to maintain. And it's just easier to not. Sorry if i ranted a bit.
If the opposition is boycotting the referendum its sort of obvious the promoters of the referendum and a hidden objective
The central problem isn't rent control, it's the fact that property is a very privileged asset class that allows owners to extract rent from those with less political and economic power.
Rent control is like pushing down on a balloon that's inflating. The inflation keeps happening whether you like it or not. The best you can do is minimise the effects in selected locations.
That doesn't mean rent control is causing the problems. The underlying problem is the inflation, and you can't make it go away with palliative measures.
In the US, you can't make it go away at all, because the economic system has been designed to privilege rent-seeking - at various levels of obviousness and abstraction - over other kinds of activity.
Rents in the Bay Area and the financial biases and traditions of VC and startup culture are both manifestations of the same underlying problem.
The current costs of never-ending legislation and regulation is incredibly underrated IMO:
https://imgur.com/a/zagcH (please excuse the non-log axis, but the point remains)
Pretty much the only limit on the scope and extent of legislation is the constitution, which affect a limited scope of the interests of society. We must as a society demand that the legislation being enacted is demonstrably effective and useful, beyond the era it was enacted.
Like-- let's take on Oregon's statute banning self-pumping. Most of the reasons are safety related: https://www.oregonlaws.org/ors/480.315
It'd be cool to have a system where a private citizen would be allowed to file a lawsuit if they thought the justifications didn't have evidence. So the case would look at the justifications, and if the state couldn't prove that self-pumping wasn't more dangerous, the case would immediately remove the law.
One justification for banning self-pumping gas is that it's a jobs program. Except that that reason was never included in the original policy. So under my "challenge the law" framework, that couldn't be used as a defense, unless the Oregon legislature actually amended it.
I know this sounds like a good idea. It almost sounds like a good idea to me. But I don't think it will have the effects that you imagine.
Bureaucracies are always understaffed. That's because reality is always more complicated than they can model, so the task of rationalizing things so they can be apportioned, assessed, allotted, regulated or taxed can never end. If you put your plan into practice the immediate effect will be a need for a lot more bureaucrats. Before they just had the real world to worry about; but now, they will have to worry about reality plus an ongoing audit of the regulatory environment. And if they make stupid, unaccountable decisions, as bureaucrats sometimes do, some of them will involve stupidly and unaccountably repealing regulation that was serving a useful purpose. I'd be willing to bet that the problems caused when good law ceases to apply are worse than when bad laws are applied for too long.
It seems like the term was used simply to mean “fair and not favoring any particular political agenda,” but that is a huge hand-wave. Who decides the members of this agency? If we had a good method to establish this fair agency, we could just use that method to establish the entire government.
This proposal just pushes the entire problem of governance back one step. I see this a lot in discussions about improving government: proposing some oversight committee to keep the government (which we all agree has flaws and biases) in check. Even the entire idea of checks and balances between branches of government is based on this concept, and is flawed for the same reasons (although that’s a bigger discussion). If you can make the oversight committee fair and efficient and effective, just do that for the whole government!
Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in new, modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
No, it wasn't.
> Housing prices in California increased a crapload in the years before prop 13 was enacted. Real people with good jobs in modest houses they recently bought - not just granny in her 50 year old home - were in danger of being driven from their homes due to increases in property taxes.
It would be very easy to address that problem with a much smaller policy change than Prop 13. For one thing, the described problem doesn't justify any alteration to non-residential property taxes.
Unless the intervention is addressed to a market failure (and rent control is not), the cost of intervention almost by definition outweighs the benefits. I.e. the value gained by cheaper rents for early residents is more than offset by higher rents for everyone + dead weight loss from distortion of economic incentives.
EDIT: But I like the observation that prop 13 is to ownership as rent control is to rent.
It can easily cost $1800 on a $1000 a month rental. And moving is usually cheaper than $1800.
However politicians got around the limitations decades after by just raising taxes in every other area of life. most of those directly impacted the poor.
Prop 13 likely needs to be revised along with a comprehensive land usage policy that prevents local politicians from playing favorites, similar how to many states established boards to monitor elections.
Another solution by the government interfering with the free market and having the opposite effect as intended.
Who would have guessed /s
Basically, if the real market price of an apartment is ~$3,000/mo, but in 5 years it realistically would be $5,000, they will simply list it for $5,000 now, to mitigate the loss.
My mother-in-law is a land lord in Los Angeles (a very fair one at that), and is also about as bleeding heart liberal as you can get. She is a staunch opponent of rent control.
Is this supposed to be surprising...? Regardless of whether it works for tenants, obviously rent control isn't there for the landlord's benefit.
The reason was that almost half of the apt. in the building were rent controlled (grandfathered in).
I think a mix of limited rent control (i.e. 5 years, max) plus building more apt for people that can't afford it, is a better combo on keeping a stability and folks being able to afford and live closer to work.
The only way to build more affordable apartments, is to allow for building more market rate apartments as well. Right now this current older (baby boomer) generation is screwing hard the upcoming one.
It sounds like blaming the game rather than striking out against those who abuse it.
The good landlords aren't pulling out every technically not illegal trick to make more money because they value things more than just being in the clear legally, but they do value being in the clear legally. The slimy landlords don't care about other effects, as long as they are legally in the clear. If you increase punishment/enforcement of the laws, you will hit both the good and the slimy landlords harder, with the slimy ones still taking a lead because they don't care about factors like a good reputation or having a clean conscious (yes, I'm somewhat stereotyping the good and slimy groups).
That the slimy ones know and practice working around the law may even mean that the good landlords get hit harder from a crackdown. In some way the government can't focus on the slimy landlords because by their very being they avoid government focus more than the good landlords.
Perhaps another example: the drug war. Making marihuana illegal creates criminal activity other than just selling it. You could say "okay, so just police that", but that's not so easy in the real world, and we've seen the negative consequences of attempting it.
A lot of problems would be solved if politicians thought less about the intentions of their policies and more about the incentives those policies create. Too many policies make bad behavior rational. Even worse is that once you do that it's not just that good people start behaving badly, but also that bad actors out compete the good ones. A good policy aligns self interest with the common interest.
For example, how does, "rent-control => neglect the state of housing" That happens already without rent-control.
1) It incentivizes the landlord to shorten the amount of time a particular tenant will inhabit the property, because it is only when a tenant leaves and a new one comes in that the landlord is free to jack up the rent to market rates.
2) It compels the landlord to lower his expenses in order to ensure that his investment stays profitable. Ordinarily, a landlord is constrained by a desire to keep a property that will attract and retain good tenants, but since that is no longer (as much of) a factor, he will avoid making repairs and enhancements except in emergency situations where the law requires him to.
Source: landlord (albeit one who has never worked in an area with rent control policies)
Because slumlords are better able to extract profits from rent controlled properties, they are willing to buy them for more than they are worth to bleeding hearts. All rent controlled properties will be managed by slumlords in the long run.
I'm a tenant in Los Angeles, and a staunch supporter of rent control. Knowing that my rent (which is already high) can only go up so much year-over-year provides some bit of stability as the tech industry devours eastward from Santa Monica.
They don't ignore it, they're just not ignorant about the costs of income and social stability.
For example: I grew up in a relatively modest house (3BR, 1,100 square feet) about 40 minutes outside of D.C. Growing up, there were quite a few young families in our neighborhood. Average household income was probably about $70k/year in today's money--relatively well off but not even what you'd call "upper middle class." Today, you'd need about $130k/year to afford to live in the same house. You're talking about a completely different class of people at those two income levels. It's two people with average jobs (maybe even without a four-year degree), versus two people with mid-level white-collar jobs (GS-11, since this is D.C.). It's people who had kids in their 20s versus people who put off having kids for 5-10 years to focus on their careers.
Today, the people I know starting families in the area are professionals making multiples of what my parents and our neighbors made at a similar stage in their lives. Instead of playing the housing bubble game, my wife and I commute in 60+ minutes each way. Partly because it enables us to raise our kids in a neighborhood with young families. But also just out of spite.
All this "stability" is a huge drag on young people that proponents of things like rent control ignore. That grandma living in her rent-controlled apartment is displacing some family that now has to live out further and end up seeing the kids they put off having for fewer hours each day.
Who exactly is being spited here when you waste 10% of your life sitting in a car 'commuting' ?
Plus, income distributes follow a pareto distribution: in DC a 60th percentile family earns between ~35% more money than an 50th percentile family does, and a 70th percentile family earns ~35% more than a 60th family does, etc.
Those two factors are behind the explosion in housing prices around the nation. The same number of people can afford to pay substantially more for housing than they could previously. When you were growing up, your parents were competing with median income families for housing. But today, you're competing with ~70th percentile families for the same housing (per your income assessment).
The solution is to tear down low-density suburbs and replace them with high density residencies. But there's no incentive to do this because people are more than willing to just spend more time commuting so they can have a yard to mow on the weekends.
It’s hard to tell what people actually want. The lots in my neighborhood, laid out in the 1930s, has a standard plot size of 1/15 of an acre. This is a suburb of detached single family homes. A few people have doubled up the lots, but for the most part people just deal with having no yard. Today, the minimum lot size is five times bigger, 1/3 of an acre! So is there no incentive to build denser because people are willing to commute more to have the space, or because it’s illegal to do anything other than build ultra low density housing?
This is literally an entire field of focus of economists and one of the fastest growing ones in the field. Have you considered that maybe you are the one that is ignoring the second-order effects of being a proponent of rent control and how it helps a specific person over a population?
Fundamentally modern economics despises the use of any other type of social control and signaling other then capital. Solution's to all problems must be in the context of markets.
One can see the effect that has had on middle and lower income families. And on our political systems. Where families are starved of resources and politicians are fearful of exercising independent political power on behalf of the voters.
That's the system that economists insisted was going to work much better than the system we had before.
Address the issue with more supply.
(At a livable standard of living, including proper sound isolation and fresh air, and even a space for vehicle storage* because people need to leave the city some time... *: Having an in city goods and services transport layer in weather controlled environments that leads to peripheral IO structures such as mega parking garages is fine.)
I realize what you are trying to say (I think), but your phrasing is curious.
Shortages are almost always caused by government intervention in a market by increasing the burden for suppliers and/or capping prices. There is no need to mandate anything, but instead just let developers do what they already want to do, build. It is the prohibitions (zoning regulations) on development that are the problem, not disinterest by developers.
In order to have an actual //correction// in current trends directed building must be several times beyond a normal build rate to make up for the decades of under-performance.
Ah yes, the landlords are forced to massively raise rents, unlike the tenants, who are allowed to choose whatever price they want.
Simple reliance on a profit model for housing is never going to adequately meet housing needs.
Can you give something to justify that statement, something more than just a bare assertion? To me, it looks like reliance on something other than the profit motive (that is, rent control) is what's causing the problems here.
https://www.globalresearch.ca/a-timeline-of-cia-atrocities/5...
Referring to them as talking points without refuting them sounds a whole lot like trying to dismiss the argument without dealing with the contents. Don't get upset and fall back on procedural obfuscation if you're trying to have a conversation with me.
The non-communist countries tried to sabotage the communist ones, true. (And vice versa - a cold war is like that.) That is not at all the same as saying that, within a capitalist countries, the capitalists will not permit you to set up a commune. Your argument (and link) therefore do not actually address jules' point at all.
> In addition, a commune within a capitalist society would still be reliant on the labor of an external, exploited proletarian class.
How does that address jules' point (or even mine)?
> Communism is internationalist. Ultimately this is the failure of first world social democratic programs that provide decent gains for their working classes but do so at the expense of oppressed peoples in the global south.
How does that address jules' point (or even mine)? Starting a commune in the US doesn't exploit the oppressed in the global south whatsoever.
This is why I say it looks like you're just looking to spew talking points. You're saying a lot, but it's not relevant to the subject.
2 & 3. What I'm trying to help you understand is that a commune within a capitalist state that doesn't challenge the structures of capitalist society is not a communist project.
Please calm down, it's clear you're getting upset. I'm trying to help you understand.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
https://www.nlchp.org/documents/No_Safe_Place
If not for rent control, he would charge $3000/month now at market-clearing rates, get a tenant in there in 30 days, and increase rent by the standard market price every 12 months. But due to rent control undercutting profits, he can't do this, so he keeps it open at a higher price.
http://www.bayareacensus.ca.gov/counties/SanFranciscoCounty....
That's not what he would do. Tenants tend to value a property more as time goes on. Beyond increasing market rates.
Without rent control, your rent will increase faster than the average market increase would indicate unless you move very often. Rent control may not be the optimal way to combat this, but it is something many societies recognize as a problem.
If I have rent control, I will list at a higher price and let the property sit vacant for longer to find a tenant because the law says that I am limited in the ability to later adapt the rent to the market.
Without rent control, there is much less incentive to leave a property vacant, looking for a tenant willing to pay a higher price point.
Most microeconomics courses teach that markets don't have one price for a good, and one of the lessons will be in strategies, such as coupons, that owners of goods use to sell into the market at multiple prices. There isn't a single number that a landlord can rent a unit out for in a given market.
[1] https://ftalphaville.ft.com/2016/03/29/2157698/ranking-ameri...
I've know plenty of people who winced at the rent they paid, but told themselves that in 5 years it'll be worth it as the rent will be below market.
That makes it the market rate for the apt though. You'd be above market rate if it didn't get rented out in a normal timeframe.
Forces them? As if they wouldn't raise rents as much as they felt they could get away with anyway.
Or as if without rent control landlords would keep rents low, merely out of the goodness of their hearts.
When you institute rent control, you save existing teachers some money, but when they retire, good luck finding new teachers willing to work in the new market with much higher rents.
I agree to rent this place for a year.
I agree to rent this place for a year, and I'm paying for the option to re-rent it at the same rate for the next 5 years.
You can imagine that in commercial real estate one of these contracts is more expensive per month than the other. Especially in markets with rising rents.
Basically rent control bans the first type of contract, and requires the second. And therefore increases rental rates.
I am sure most people here who claim that the likes of Google and Apple should not 'avoid' taxes take every possible tax deduction in their personal lives so as to minimize their tax liability.
There's a reason the young are such idealists. It's easy to preach in the abstract about how OTHER parents should raise THEIR kids. Or how OTHER landlords should manage THEIR property investments. When these people become parents and homeowners themselves is when the rubber hits the road, and most just regress to the mean.
Depends on the scheme in place. There are a lot of places where the amount the landlord can raise the rent between tenants is capped.
There are two big problems with rent control: It results in a constriction of supply over time, and it causes degradation in housing stock quality. There's no reason to put one cent more into your rent controlled place than required by law.
If rent control worked why not set prices of everything else to low values ?
Any intervention in a free market system will benefit some people at the expense of others and that losing party would then be less willing to participate. What incentive will people have to maintain and increase housing when they might end up broke because of rent control ?
California needs high rises and denser dwelling units for that the zoning laws needs to change.
AKA market rates.
More than 1,000 planned purpose-built rental units have instead been converted to condominiums in the Greater Toronto Area since Premier Kathleen Wynne's government expanded rent control[1]
It's making the housing crisis worse, not better. For those who already have low rent locked in, it's the ultimate "fk you, I got mine."
[1]https://www.theglobeandmail.com/news/national/report-finds-1...
*according to the landlord lobbying group based on unknown data that even the report says they cannot guarantee the accuracy of.
If you're willing to live with diversity of political affiliation (it's a pretty even mix of Democrat and Republican around here, and I've heard people on HN say they'd be absolutely unwilling to live somewhere like that), you can get a 2200 square foot house in a nice neighborhood for around 250,000. We have an airport, IKEA, two art museums, and all sorts of interesting exhibits to see and things to do year round. I plan on having at least four kids, if I went to work for Google to have a house the same size would cost something like $2,800,000? (from a quick Zillow search of somewhere like Sunnyvale if I wanted a similar commute) So 11x more expensive? It seems like madness to me.
I know a guy who lives here but works for a big company on the coast, and he lives in a mansion in one of the nicest neighborhoods around, and even the local mid level tech jobs easily pay 6 figures.
I mean, I guess the weather is nice, but other than that I don't really get it.
They're actually mostly right about that. [0]
The problem is that the perception remains well beyond its usefulness. Mid-sized Midwestern and Southern cities have everything a married couple in their 30s with (or without) a couple kids could possibly want -- all the stuff you mention and a lot more, really. And they provide it with a COL-tradeoff that can't be ignored.
I have a fairly good idea what people in New York think of my hometown and other cities like it and, frankly, they're wrong far beyond otherwise reasonable differences of opinion (as in they hold what are inarguably factually incorrect views (about, say, the size of Midwestern economies, the availability of jobs, the number of cultural institutions, the experiences of people of color and homosexuals (in urban centers, admittedly), the prevalence of ethnic restaurants, and on and on).
[0] I think it's exaggerated (especially in the sense that it's not for everybody), but real.
If I could talk my wife into living somewhere with winters, then we'd probably move to Cincinnati, since we have friends there. At my current pay we could probably retire there when the kids are in HS.
Rent control causes supply issues. Look at the City of Berkeley. Their supply increased massively right after rent control was lifted in 1997.
https://alamedasun.com/news/appeal-costa-hawkins-rent-contro...
IME, this is a pretty universal statement.
Hop across the bridge to cities without rent control and you'll see the same thing. The problem isn't any specific policy, it's the power balance between landlord and tenant created by a market with limited supply and ever-growing demand.
But then you look at what $1.5M gets you! It's bottom of the barrel housing most other cities. You need to move up to $3M to get something modern that has things like double-paned windows and a decent kitchen.
Is he adding more than $800k to the value of his home? Probably, but it's not as much as one would expect.
But I'm just getting this from talking to friends who have done it; no first-hand experience here yet.
But no, instead we get this, "Rent Control Is Uniformly Bad" title which is designed to split the demo and bring in people who want to argue.
Surely we can do better!
(We changed the URL back because it's not clear that that article has more information in it.)
So, because you cannot trade apartments without spending significantly more money, there's a couple of hour-long commutes instead. This is part of a general pattern - messing with prices doesn't help, since the market still has to clear. You just start paying in things other than money. Paying for things with money is great in general, since then someone else has the money. Paying for things with a longer commute is terrible, since there's no beneficiary.
End of the day, short term leases make rents float at the cost of making renters second class citizens who cannot stay in any one place or area.
Rent control is a way to deal with that. It exists because voters care deeply about it.
You've got to address a moral judgement you've implicitly made: What makes the current renters of a city more deserving than the future renters who might move to the city?
But I totally see how this is kind of hypocritical. I just want things my way, everywhere. :-] idk!
I suppose that the next-best thing is to have local control with freedom of movement. The United States and cities are kind of like this--- it allows for states and cities to try out different policies, and compete based on policy.
The high value of property in San Francisco is a lot to do with its proximity to amenities and services provided for by the very people suffering because of continually rising property prices. This is a highly parasitic dynamic.
If moral judgements are really your primary concern why are you advocating for eliminating a policy that allows a tiny bit of clawback from the pre-existing titanic wealth transfer that goes from renter to landlord?
Moreover, it's a policy that by and large keeps people who do necessary work.
There's a fair, economically efficient solution to all of this, of course: the 100% land value tax.
Rent control is merely a hack that offsets some of the gargantuan harm done by leeches extracting value from the communities surrounding them via untaxed land. I'd be fine with seeing it go... after implementing a 100% land value tax.
It's starting to feel like articles and posts like this aren't driven by discussion or curiosity but just political fights.
Thus the underlying issue is that there has not been proper correction and guidance from the governance structures established by the people in the area; mostly because the rising home prices and status-quo of neighborhoods generally benefit those people.
It's going to take state or federal level correction to fix this issue and the "best" way of doing that would be to sour the use of housing as an investment.
It might help to think of it in a "top down" fashion. Imagine laying out housing for everyone in a metro area as an optimization problem, where you're trying to maximize a value function over things like amount of space, proximate to peoples' workplaces, quality of schools, affordability, etc.
Housing restrictions add additional constraints that make the solutions worse for everyone. E.g. say some group of people with kids are willing to live in a duplex on 1/8 of an acre rather than a detached home on 1/4 of an acre in order to reduce their commutes and see their kids more often. But they're not willing to live in a city apartment with their kids and pets. Housing restrictions basically eliminate that part of the solution space by making it illegal to construct such housing. That group of people get punted to their less-preferred alternatives, and the resulting solutions are worse for everyone.
That doesn't exclude the cost scenario outline further up, and the relative strength of these effects vary from person to person.
And no argument will "win" such debates for either side. These are complex issues, and even if everyone can agree on the mechanisms at work, you'll get widely different results based on differing importance for the conflicting goals you're trying to optimise for.
Rent control, as shown above, might legitimately add to traffic. But it's also cruel to force elderly people to leave their remaining friends, and their familiar neighbourhood, just because they can no longer afford rent.
Anyone claiming "it's so easy: just..." is invariably wrong. California's legislators aren't stupid. The main contributor to housing problems happens to be the unparalleled economic success of the state, plus a few geographic quirks.
Simplifying to the tired old "free market" vs "regulation" debate is only exchanging one set of problems for another. The US happens to have other locales that dabbled in an ideology-driven "free market" approach. The result are the suburban hell-holes that are Atlanta, or parts of Houston: Low-density clone cities totally reliant on cars, with much longer commutes and huge environmental footprints, almost devoid of street life.
What's usually needed is neither more nor less regulation, but smarter: encourage high-density mixed zoning, create public transport that can compete with cars, encourage companies to adopt telecommuting, flexible hours, distributed workplaces instead of central campus etc...
I assume because that's what people want?
HNers seem to think a downtown core existence is the best and apparently aren't aware there is a big group of people who don't want that.
https://www.strongtowns.org/journal/2013/1/14/its-so-much-mo...
Yes and no: Given the choice, people will prefer a single-family home with a large garden, to the same home without a garden, or a smaller apartment.
But rephrase it and the answer changes: People prefer to life in (nice) apartments if others do so as well, and the resulting increase in density cuts a 60min car commute into 15min on a bike, or even 30 in public transportation.
In any case, I would consider mixed zoning more important than density. It's not just metropolitan city centres that provide higher quality of life than the suburbs. Another winning model is that of the classic "Small Town USA".
It's perfectly possible to have suburban-style homes with gardens clustered around a city centre providing everything you need in a typical week, plus schools/medical care/sports/you kids' friends all within a radius of about 3 miles, making it easily accessible by bike, and even on foot.
And yet in those places there are no housing shortages and normal people can actually buy a house without waiting for the equity fairy.
I absolutely agree, and I think these justifiable and yet ill-defined concerns are shared by a lot of UBI opponents.
I just hope anyone trying to come to an informed decision remembers to include unrestrained capitalism's second-order effects on the pro/con list.
It sounds scary when put like that but it just means people free to interact, while secure from other social actors in their person and property. By the nature of voluntary configuration, interactions have a tendency toward being mutually beneficial, and there are corrective feedback loops that naturally exist in a voluntary society to reduce those that aren't (e.g. scammy operators increasingly excluded by increasing consumer vigilance and growing reputation markets).
And you can still have governments provisioning economic resources that qualify as public goods, like basic research, public information resources, policing and national defense, in such a setting, so there is no fundamental deficiency in unrestrained capitalism, aka an absolute free market.
Except a tendency toward consolidation and monopolies. And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
> it just means people free to interact, while secure from other social actors in their person and property
It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo", whatever you choose to label it.
That assumes no government provisioning of public goods that can counteract capture of natural monopolies, but there's nothing inherent to a free market to prevent such government intervention.
>>And, inherent in the word "unrestrained", a tendency to use corporate money to unduly influence politics to benefit the corporation at the expense of the public interest.
The term here is "unrestrained capitalism", meaning people in possession of their right to contract and secure in their person/property, not "unrestrained society". An absolute free market doesn't mean anarchy. It doesn't preclude checks within the electoral and political process itself to prevent corruption. It doesn't prevent laws from being passed to place restrictions on those in public office, like, to give an extreme example, a lifetime ban on receiving any compensation from the private sector.
>>It's kind of irrelevant anyway, all I really meant was UBI should be evaluated in comparison to "the status quo"
Fair enough. I just take issue with the connotations of "unrestrained capitalism", where it implies malevolent behavior is legalized. A less biased term would be "free market".
That rent control is bad is not exactly a new finding. This has been known to economists across the political spectrum for decades.
This is basic economics. (Seriously, this is in the easy stuff like Hazlitt.)
For an example, see joe's response.
If a would-be producer cannot source materials that would cost him less than the sale price, he just won't build the product.
[1] has more details on the subject.
[1] https://mises.org/library/whats-cost-got-do-it-0
If someone is currently on $25k and gets a $10k basic income, their employer can lower their salary to $20k and they'll still be getting $5k more than they were before. (This won't happen immediately because people will be reluctant to take pay cuts, but I think it will in the longer term.)
Exactly how much of this difference the employee and employer capture in the longer term is a concern, but I think giving people the option to quit without starving will go a long way towards empowering them to insist on fair pay. I also think a result would be an increase job quality, because I think a lot of people would take a pay cut to work somewhere less awful if they could afford it.
Of course that money comes from taxes, so there's still a cost somewhere, but I'm not as convinced progressive taxes on the wealthy will have quite as big an impact on the costs to produce basic goods.
I live in San Jose, I commute to SF 3 days a week (super thankful for the chance to work remote 2x a week). My current apartment (a 1BR I live in by myself) costs a bit less than 1k a month and is rent-controlled. The equivalent in SJ is probably worth 2-2.5x as much per month, and in SF (or somewhere in-between) it can be worth anywhere from 2.5-4x as much.
I've been hunting for an apartment more on the peninsula since I don't necessarily need or want to live right in the city, just closer (especially in case I switch jobs eventually), but I definitely want to halve the commute time at least (Caltrain plus door to door is nearly 1.75hrs each way).
But why would I want to leave my rent-controlled steal and be spending over half my monthly income for the equivalent? It's ridiculous.
So now it's a matter of figuring out the cost analysis of moving into a better area that's closer to work, and therefore an increased quality of life, or stay where I'm at where I can save much more money and have a rather crappy quality of life (I don't care for where I live now strictly other than the cheap price of the rent).
That's the only way you're going to come anywhere near your current rent. As a bonus you'll get more space generally and some community.
In case you want me to answer, there are myriad advantages: the chance to work with your most preferred tools, on a product that's more interesting you, with maximally compatible coworkers, etc. All the normal reasons people go somewhere besides where they were born for a job.
The more interesting question is, why are the 50 miles between SF and SJ reserved for sparsely packed single family homes and one story strip malls?
Redwood City is also nicely positioned as a mid-point between SF and South Bay.
Beyond that, it seems the entire El Camino corridor is being heavily developed with retail and high-density condos and apartments.
Some of these areas (Redwood City in this case) are next to major Caltrain stations with Baby Bullet stops. But they're also convenient (technically speaking) for going on 101S/N to work, etc.
That's part of why I'd prefer living on the peninsula than in downtown SF. Weather is consistently better in the summer months. More space/less people (except for rush hour traffic). More parks for recreation. Pools aren't necessarily a deal breaker for me, but it's a nice extra.
A shiny high-rise is nice but unless you can afford a penthouse or similar you're probably looking at a small unit. Less space, fewer parks, more people everywhere (tourists, homeless, etc.)
The downtown has a solid layout though and lots of room for growth. The RWC downtown has the potential for offering a lot more than some neighboring downtowns that are less dense and could be a nice hybrid between SF and more "suburban" Peninsula cities.
My unit is rent-controlled. However, the owner of the building has only increased rent twice, both being the max they could under the rent control limit. They just haven't continually increased it on an annual basis because apparently they haven't needed to.
still, an annualized 8% is quite a bit (over 5 years it would be 46%)
Instead of increasing commute times, more typically it involves simply not taking jobs that are further away.
Restricting labor mobility is really bad for obvious reasons: people not being able to move where the jobs are means jobs not being filled even as unemployment increases. There is overwhelming evidence that labor mobility has gotten drastically worse in recent decades, and local NIMBYism is one of the major causes: http://neighborhoodeffects.mercatus.org/2017/01/26/why-the-l...
Compare this to China, which has had tens of millions of people flock to brand new megacities for the new job opportunities there.
It is an extreme example of a place where labour mobility is so valuable it happens in spite of restraints. In fact it is so extreme that it is hard to draw lessons for modern western countries (although it has obvious resemblances to urbanisation in Europe a few centuries ago).
Many American state universities discriminate against students based on where their parents live (e.g. charging in-state vs out-of-state tuition).
B. Yes, but you easily get residence by living there for less than a year. Also,public K12 schools can’t discriminate like they do in china.
i.e. I'm comparing the lower labour cost of the west in general vs the west before the 70s. https://www.epi.org/productivity-pay-gap/
If you want to deep dive into a present county per county labour cost specifically, then I'd argue yes as well http://projects.sfchronicle.com/2016/teacher-pay/
Anaheim teachers make ~50% more than SF teachers and spend 4 times less proportion of their income on rent.
Here is where the analysis should happen. All of the "significantly more money" aspect boils down to transactional costs. Transactional costs in rentals will always, always be higher than transactional costs of ownership. Ownership's transactional costs get offset, (to only a small extent in the Bay area, but it is not nothing), by the equity the owner has accumulated.
Renters never accumulate equity to offset their transactional cost of "trading". The paper (and all of the anti rent control camp) constantly misconstrues lower-than-market rent as "savings". It is not savings; it's merely delaying the inevitable transactional cost of "trading".
Not sure if anyone pointed this out, but this problem of labor mobility exists for all of those who own their home as well.
So does:
* good quality schools, rather commute long distances than change schools;
* a really good city with a nice downtown;
* a spouse's job location;
* friends' location;
* ... point is there are many reasons for someone to not want move closer to the current job.
It feels like the title and the thesis of the news piece is either incorrect or at least misleading.
This is a simple incentive. To expect landlords not to act in this manner is to ignore Economics 101. If you design policies and laws in such a manner that rational actors will... act rationally... and this is bad, then the problem is how you designed the laws, not the rational actors - no matter how "greedy" you think they are.
With less hyperbole, you can use this argument regarding externalities involved in capitalism from the exploitation of workers to pollution of rivers. The way you change incentives is you add regulation.
Regardless, this thread is floating away from my point. No one is addressing the actual article here, which is really discouraging and fits with the trend of discourse on HN for the last year or so.
>>which is really discouraging and fits with the trend of discourse on HN for the last year or so.
Yeah, the guy who is posting terrible rape analogies is the guy I trust to judge what is or isn't discouraging with regards to the value of discourse on this website.
Trying to force anyone out of a home so you can make a buck puts their livelihood and safety at risk. You can't just excuse terrible behavior because people are greedy.
This study is interesting primarily because it tries to put some hard numbers on how much it drives up the cost of housing.