The "Falacy falacy" strictly applies to logical falacy. Its pretty clear that the grandparent is using "fallacious" in the informal sense of "mistaken belief".
Even if you (loosely) interpret the usage of "fallacious" in the parent comment as "mistaken belief", he's still claiming that the rest of the article exhibits the "mistaken belief" that rent control is bad. His argument for why the article exhibits a mistaken belief is because the article has a wrong statement near the beginning (incomes are rising for low income people). This is still an example of the fallacy fallacy.
> The "Falacy falacy" strictly applies to logical falacy.
Are you claiming that the parent comment is not logical or not making a logical argument? What type of other acceptable argument is there?
Incomes are, on average, rising a little. Which is partly why the stock market is freaking out; Wall Street hates it when income goes up, because they view it as money coming out of their pocket. Cities like New York and Boston and SF are expensive because there's a lot of money going through them; this creates high demand and high incomes for some. But companies like Facebook and Google and Apple could certainly afford to pay everyone who works for them in any capacity enough so that no one would have to live in a car. But the investor class would have a shit if that happened.
Lowest incomes, even inflation adjusted, certainly have been rising. Here's historical Census Data [1], Table H-1. Income Limits for Each Fifth and Top 5 Percent.
Maybe you have some large scale data you'd like to share?
Yes, if you cherry pick all time highs (2001) then you can claim they've lost since then. Picking a second case (1979) and oddly comparing it to 2014 instead of 2016 is equally misleading.
Instead of cherry-picking dates to suit a narrative, looking at all data, the 2016 income was higher than any year back to 1966 except the 3 years 1999,2000,2001. So of the 50ish years in the data, 2016 ranks in the top 4, and is 96% of the all time high. The trend since the recession is increasing, and if not for the recession, would probably be at all time highs. I would not be surprised if once 2017 or 2018 numbers were in all time values will be reached.
So yes, wages are increasing.
One reason low end stays mostly flat is it includes all people just starting careers, who have no skills, so it's not unreasonable that the inflation adjusted value they provide is not tremendously increased. Looking at values over this time frame also needs demographics figured in for this reason, and as the workforce becomes younger, wages are expected to become lower, while each individual person at point X in a career still has higher wages. Census reports cover this.
Remember avg wages are static snapshots of a moving cohort.
The problem with your argument is the last 40+ years is +/- 10% of ~22,000. Yes there are highs and lows, but that's not progress that's just how well the economy is that year.
Basically take 22,000 * a function of unemployment rate and the data is flat over time.
PS: Looking at the highest income for a quintile also says very little about it as everyonone is making less than that. You really want the median of the quintile or the average of everyone within that range.
The mean is a bad metric for the reason I showed above. The median of the quintile is the decile which I was unable to find. However, if I chose the decile, you'd make the same complaint you're making now that it's the highest of that group, so somehow inadmissible as evidence..
As such, the quintile, which is also a median (of the bottom 40%), is a good measure. Plus I presented data for it - if you want another metric show the data.
Another quite relevant factor, as I showed above, is as boomers retire, the bottom gets pulled down by people that are not poor. Given that this demographic has swelled the ranks of the bottom quintile over the recent decades, that the pay has slightly increased means for the truly poor the pay has increased even more than listed in this number.
The evidence from the BLS I gave above shows that the mean income in the bottom quintile is ~$11K, but the mean expenditures are ~$25k. This is because of retirees, as can be found in Census and BLS reports with some digging.
So when I take the median wage by state table, there are 11 states with negative wage growth between 2009 and 2016 and another 16 states where the total inflation adjusted wage growth is less than 5% between those years. That's more than half the country that is either not feeling a recovery at all or is feeling a pretty damn slow one.
Edit:
Actually looking at this a little more, take the year 2000 (all inflation adjusted numbers.)
The lowest fifth of workers have seen wages fall 8.6%. The second fifth of workers have seen wages fall 2.42% in that time, the third fifth has seen wages only rise 0.45%. This is not what I would call a strong time period for workers.
Picking less than half the country population, ignoring the high end, treating small growth as insignificant, then complaining that the result is not the growth you wish it were, is terrible analysis.
Instead of picking 2 dates out of 50, look at all dates. 2016 was the highest avg for the lowest quintile for all years back though 1967 except 1999,2000,2001. So out of 50, its #46, at 96% of all time high, has been increasing since the recession, and is headed to record highs. The same trend is true of each quintile.
Now who's picking advantageous dates? Wages have been growing since the biggest downturn since the depression? Duh, but they've never caught up to where they were before.
>at 96% of all time high
It's at 99% of what it was way back in 1989, we can even move past the boom years in 2000/2001, in 2003 and 2004 wages were higher than they are now for this quintile. That's not really endearing to the idea of wage growth.
EDIT: I realize that no, we're not looking at the same data, you're looking at the maximum on the range that is included in the lowest quintile whereas I'm looking at the mean of the lowest quintile. Table H-3. I believe mean is obviously going to be a better measure than upper limit of the range.
>shows the bifurcation of outcomes, you can't just ignore that for half the people incomes haven't been rising
Yes, that's how averages work. You similarly cannot ignore that for more than half, wages rose, which is why the numbers have increased. And usually bifurcation means bimodal, which in this case is not likely.
>Now who's picking advantageous dates?
I listed multiple times now what happens when you use all data. The example that there has been recent growth counters your claim of picking two dates from 50 and making claims about the whole.
In fact, I suspect that since the last few years have seen median overall wages rising (2015 or so was the highest growth ever recorded for median wage), that once the numbers for the past two years are tallied, new records will be set.
>Are we looking at the same graph?
No. I quoted exactly what graph the Census data was in with my first post. You keep picking other ones.
>I believe mean is obviously going to be a better measure than upper limit of the range
Not likely since we're already taking the lower quintile of the range of all income. Mean loses a info due to skew, which is why most discussions about wages should focus on the median. Since we don't have the median (well, you can possibly find the decile cutoffs to get it), looking at cutoffs tells you that more income has flowed into the bottom than before, since the cutoff is higher.
The lowest income bracket contains a lot of retirees, who have no income, but have wealth. It also includes students, that have little income, but likely will have wealth in the future. These zeros and low values will pull the mean down, likely much lower than the median. So they count in this case as poor, but they are not. Since the boomers are retiring, this pulls the mean down, but is not representative of what those at the 20% mark of income earn, which is a better measure, since you're not seeing averaged effects. You see the exact measure at a fixed position in the queue.
Similarly, at the high end, taking the mean is nor representative because a few high income earners can skew the mean higher than the median. This is why the ends of the distribution are better served by median (which we don't have), or cutoffs (which is basically a median, but at 20% instead of 50%).
To demonstrate this quite conclusively, here's [1] BLS data on expenditures by quintile for 2016. The bottom quintile has a mean of $11k as in your numbers, but has mean annual expenditures of $25k, well over twice the mean income. Note the other 4 quntiles have mean expenditures more in line with the income.
This is why mean, especially at then ends, is pretty screwy. These people have low incomes, but are not poor.
There are various perspectives to take on income in which two people looking at the same data can come to two different conclusions. It goes much further than Simpsons paradox. Simply choosing your windows for comparison differently can cause this: one person chooses to compare 2014 with 2016, and the other chooses to compare 2001 with 2009.
One perspective that is almost universally true going back as far as we have data, is that incomes rise over the lifetime of the individual. Because the bottom 20% today are a completely different set of people as the bottom 20% of tomorrow. And because people strongly to earn more as they get older, the premises of the article hold up.
> The author thinks low-income people's incomes are rising and that is false.
The author doesn't specifically mention low-income people - she just says that 'incomes rise':
But then incomes rise, and rents don’t. People with higher incomes have more resources to pursue access to artificially cheap real estate: friends who work for management companies, “key fees” or simply incomes that promise landlords they won’t have to worry about collecting the rent.
Your observation that poor people's incomes are stagnant actually strengthens the authors point above, because a growing income gap gives rich people 'more resources to pursue access to artificially cheap real estate'.
> The rest of the article is fallacious because of this.
There are some points in the article that are not dependant on rising incomes. For example,
Meanwhile, price ceilings reduce the supply because they decrease the incentive to build, and can make it downright imperative to remove rental housing from the market and turn it to some other use -- condos, warehouses, anything that won’t trigger the rent controls.
>Serial experimentation with this policy has repeatedly shown the same result.
New York's two largest building booms took place during times of very strict rent controls - the 1920s and between 1947 and 1965.
>rent control looks like a victory for the poor over the landlord class. But the stifling of price signals leads to problems.
Except when it actually happened the price signals sent by the strictest rent controls still weren't enough to end the city's biggest housing booms.
Seriously, Megan McArdle telling you that price controls are "just going to hurt the poor" is a bit like Trump telling you that demolishing Mar a Lago will only hurt the immigrants.
Rent control is a dirty hack, for sure, but it's a dirty hack that shouldn't be removed until a proper fix is put in place - i.e. a land value tax.
I won't hold my breath for Megan McArdle to advocate for that.
Bloomberg should have her fired. She does absolutely no credit to their publication.
Except I'm not claiming that the rent controls stimulated the boom. Just that the correlation posited by Megan McArdle absent any supporting data is imagined.
I love the part where you started out with a correlation (which is very weak evidence, especially without any citation) and then proceeded to some assertions (also without evidence or citations), ending in an ad-hominem
You did notice that neither her link nor yours contains any data whatsoever right?
I gave two data points that strongly indicated that the effect rent control has on construction is either absent or very, very weak. You wouldn't exactly get the highest rate of construction coinciding with the strictest rent controls otherwise now would you?
You didn't give two data points, you gave four unsourced assertions (two for building booms, two for strictness of rent controls), devoid of any rigour (was the building boom even in housing? Or was it mostly commercial?) or control for any of the thousands of potential external factors.
But even if what you assert actually is true, it hardly is a rebuttal to the article. Her unsourced assertions actually do line up with a century of research and hundreds of empirical studies on the effect of rent control specifically, not to mention the much larger body of research on price controls in general. It isn't necessary for someone who is backed by scientific consensus to laboriously review an enormous body of research that supports their premise before making a policy recommendation. Only those who are speaking against the consensus benefit from an empirical review.
I'm actually in agreement with you on land value taxes. It's something that is long overdue. But even with land value taxes, land is only valued at the highest best use that is zoned and permitted to be built. And that's the true underlying problem.
You may get downvoted to hell for, er, speaking the truth?
I'm afraid you're right and Miss McArdle is really nothing much more than a libertarian hack.
Case in point: Her book review fo Piketty's "Capital in the Twenty-First Century". While opinions may certainly differ about the tome this is a bit rich for a book review:
I apologize in advance, because I am going to talk about a book that I have not yet read. To be clear, I intend to read Thomas Piketty’s “Capital in the Twenty-First Century.” It is sitting on my (virtual) bedside with a big stack of other (digital) books that I intend to read. But it’s far down in the queue, and I’m afraid that I can’t wait to weigh in—not on the book itself, but on its topic.
Reviews a book she hasn't read and needless to say completely trashes it in the process.
I actually agree: Bloomberg really should have her fired.
I link to the Baffler article[1] since the original review is apparently only available to subscribers.
Signaling that you haven't read it gives one a defensible position! You can't criticize my mischaracterization of the arguments of the book, I haven't read it! Her opinions can be her alternative facts known to none except her.
There is accidental fallacious logic, and then there is manufacturing bullshit.
Recently I was in SF for the first time. I was pretty shocked to see the endless rows of tiny one story + garage houses separated by impossibly wide streets. No wonder housing is so expensive. The city could easily double its density by building more apartment buildings.
That's a perfectly fair stance to take, but then people will simply have to accept that rents will be sky high in cities like SF in perpetuity. The high prices are fundamentally a supply issue; build enough housing and prices will inevitably fall.
In don't understand this. If you can get permission to knock down a two-storey house and build a six-storey apartment block, doesn't that increase the value of your house?
Why not? If my neighbor gets planning permission to do something, doesn't that increase the chance that I might also get such permission in future? If so, doesn't that increase the value of my house?
Only 1/N homes would be converted to apartment complexes. If 1/N * (gain for selling home to build apartments) < (average loss in home values) it's a net loss for the community.
So, the real question is how much home density are you are adding. Further, density can get vastly higher as people would be adding 20 story buildings not just smaller apartments which means most homes would not be converted.
The rent is 2.5k * 12 = 30k a year. If someone makes $15/h * 2000 hours a year = 30k. 100% of income on a 1BR.
Is your fucking view worth the costs you impose on others?
Enjoy your artificial restrictions on supply, as everyone with even one grain of common sense moves to Texas or Washington.
P.S. Rich software morons can afford it, but just because they can doesn't mean they want to get ripped off by (30k rent) + (20k state taxes) a year. Location is sticky, but once they get the equivalent job literally ANYWHERE else, they will take it, or an internal transfer.
Paris is not something people should strive to replicate. Lack of green space, bad side walks, entirely walled off blocks. Perfect for young people with no kids and tourists but not much else.
I don't think you can see all that much from the first floor of one of those houses. Higher density doesn't have to be ugly. Compare this random small street in Berlin
I guess you can see why I thought the density in SF to be pretty ridiculous.
Low density wouldn't be so much of a problem, imho, if the zoning would be better. Why does a large fraction of the population have to commute downtown to the skyscrapers? Couldn't the offices be spread out a bit more? Why are supermarkets to far apart? I did a lot of walking while in SF and in many parts of the city I had the feeling that sidewalks were more decorative than meant for transportation, because there were no shops or small businesses for a kilometer or more around.
Berlin is half as population dense as SF, and has more surface area to spread out. SF is stuck in a single 49 mi^2 peninsula. That's not to say issues can't be solved in a variety of ways, it just doesn't seem like Berlin is a good point of comparison.
I don't like comparing cities' density numbers as given by Wikipedia because many cities, Berlin included, include large areas that have really low density. Berlin for example has more than 4000 hectares of forest inside its city limits where nobody lives. If you go by these numbers, SF is denser than Tokyo.
That seems like double-counting, then. The density numbers are based on the total area divided by the total residents. If the residents are squeezed into half the area, it should not be said that there is lower density and more space to spread out. The lower density is already because of the space.
I don't think so, the point there is that SF physically has no room for suburban sprawl because it's a single stranded peninsula. Berlin is both currently less dense, and also has further room to expand geographically. One might disagree but it makes sense that way to me
You know, you can design for green spaces with densely packed housing so the views are better - and you can build walking spaces with this. You can design buildings so they aren't plain block houses - facades exist. You don't have to make every apartment tiny.
You can also move to another city. Get another job. If your concern is your view or lack thereof, you are probably well off enough to do such a thing - which is a freaking luxury. Lots of folks are too poor to afford housing, let along going to another city. Can't get a proper bank account without an address. No drivers license in some states, nor proper ID instead. I'm not even sure if you can register a car if you are homeless. These things make you more mobile.
The whole rest of the country is out there and is exactly what you are looking for. Why should the nostalgia of a few be allowed to impede progress for a whole country? These decisions should be taken out of local, parochial hands and made at higher levels of government. That way they can be made for the benefit of all, instead for the benefit of a small group of incumbents.
As I understand it, that's how they do it in Japan. Zoning is done at the national level.
Yes, I'm inclined to believe that rent control is a symptom, not the cause. The cause appears to be ridiculous zoning and building restrictions. If more housing is available such that the price drops, then rent control isn't even needed.
100% agreed. There is no "by right" construction in San Francisco. If you want to build a building that fully within the intended zoning and use of the space as currently determined by the city, it is still subject to conditional approval and even environmental review. If someone in the neighborhood objects (100% odds of that happening), then they can tie you up for years, extracting concessions (often making the buildings smaller, and unfortunately often making them uglier).
I'm particularly excited about some of the new legislation that's just been passed that allows for by right construction if a city isn't meeting its housing needs, because it just may streamline the process of getting things built here.
I have rent control in Los Angeles but they're demolishing my place to make way for luxury condos, most likely for absentee owners. You can't find an apartment for under 2,000 a month in LA anymore but the way in which they demolish perhaps run down yet affordable apartments to make way for high end condos is a huge factor in the utter lack of affordable housing here. Not like people get rich in LA there is not even the income potential you have in SF and no stock options outside of Snap. I was born here so I have been treading water for life here but its getting harder and harder for people on salary to even afford to live here at all.
Ask a renter why rents are so high and they'll say a lack of rent control, because it brings their rent down.
Ask a property developer why rents are so high and they'll complain that ridiculous zoning and building restrictions are preventing them from building enough new supply (...and coincidentally reducing the amount of profit they will be making).
Ask a landlord why rents are so high and they'll complain that rent control is keeping the market from building enough housing (...and coincidentally reducing the amount of profit they will be making).
If you ask me, it's untaxed land - the costs of holding on to those tiny one story + garage houses were made artificially low - among other things, by prop 13. They impose a cost on others for monopolizing that land, but they aren't paying that cost, so the market signals that would fix the problem (getting them to sell up to somebody who would build denser housing to avoid a large tax bill) are severely restrained.
Prop 13 also means my parents can afford to retire, as outside forces have come and multipled property values many times, and the city has very high property taxes. Otherwise to pay 1+% on some of the worlds most expensive real estate without active income is insane.
I liked Cambridge, MA’s model... the first 250k of your property value is removed from property taxes. Doesn’t make a dent in big expensive houses, but makes property ownership more affordable on the lower end.
Keep in mind that property taxes are only soft linked to property value. If everyone's property doubles in value, and the city needs X revenue to run, it is still divided by the relative value of everyone's property. The only time increased property value causes taxes to go up is if there is a lot of other property that doesn't go up in value (or taxable value), which is what you have with Prop 13. Also, if one area becomes more affluent than another one (increasing its value), then they will pay more taxes.
>Prop 13 also means my parents can afford to retire, as outside forces have come and multipled property values many times
I'm all for older people being given hand outs so that they can afford a comfortable retirement.
In general I'd prefer hand outs to be allocated via need rather than a real estate driven lottery, but I can understand how winners of that real estate lottery could feel like it was a fair and just system.
In SF, the resistance to denser housing comes from the same people who are not paying enough tax for the land they are occupying. Ramp up the taxes and the incentive they have to fight the denser housing will dissolve. They'll just move somewhere cheaper (or into denser housing).
> In SF, the resistance to denser housing comes from the same people who are not paying enough tax for the land they are occupying.
You should be careful with "the same people" arguments. They're almost always fallacious.
> Ramp up the taxes and the incentive they have to fight the denser housing will dissolve.
Ramp up the taxes and the incentive they have to fight the taxes will increase proportionally. Why wouldn't they capture that just like they captured zoning?
The real problem behind zoning is jurisdictional. As long as it is done on a city-by-city level, cities only have to be held accountable to the residents, not the people that they displace across their arbitrary borders. A regional jurisdiction would force zoning decisions to take into account everyone in the region, containing all the suburban residents with terrible commutes that are made worse by NIMBY protections.
>Ramp up the taxes and the incentive they have to fight the taxes will increase proportionally.
Of course. The rich will fight tooth and nail to keep their entitlements. Always have done, always will.
>Why wouldn't they capture that just like they captured zoning?
They would. However, zoning is an easier process to derail because it's more localized and easier to come up with plausible sounding bullshit reasons why something shouldn't happen. In politics you shouldn't attack the shield, you should go for the jugular.
Also you could "fix zoning" and it would still be palliative at best if valuable land is ultimately still being hoarded.
Property developer profits would be higher though.
I have lived in Brooklyn for a few years, it's largely the same here.
A while back there was a proposal to build a large apartment building in my neighborhood, which at the time did not have any tall buildings. Locals tried to stop it, literally putting "No Towers" signs in their windows and on their doors.
Thankfully they were not successful, so the neighborhood will soon be able to support hundreds of more people.
It depends on the part of Brooklyn. Downtown, Williamsburg, and Greenpoint are all seeing significant new units added. After lagging behind for a long time, things are finally starting to happen in Brooklyn Heights. Park Slope is mostly stangnet, but out on fourth avenue (I guess that's called Gowanus?) new units are going up. There is still plenty of Brooklyn that is stagnant, it's a very large boro, but the overall picture is decent.
>So the promise of economic justice erodes over time, as lucky insiders come to dominate rent-controlled apartments, especially because having gotten their hands on an absurdly cheap apartment, said elites are loathe to move and free up space for others.
So Megan's response is just not to pursue economic justice at all? It doesn't make any sense, of course the powerful will try to erode justice for the powerless, that's just society, that doesn't mean we stop pursuing justice. It means we become even more vigilant about it.
I don't agree with the article, but I think your reasoning is dangerous. If a means is introduced to serve a noble purpose, but it does not serve that purpose, then the nobility of the purpose is not a defense of the means. Right now there's an article on the front page about the consequences of applying that reasoning to dubious forensic sciences that were introduced with the noble intention of ensuring justice but in fact undermine it.
If a means doesn't serve an end, then continuing to pursue it despite the perverse consequences doesn't prove your commitment to the to the desired result.
This statement right here is the entire philosophical disagreement between (liberal) YIMBYs and affordable housing activists: given that price controls (esp. affordability requirements for new construction) are well intentioned but don’t produce housing at a large enough scale to help, do we double down on them or back off?
One side is hammering on the noble purpose, saying that if price controls don’t work, we must take housing entirely out of the hands of the market. The other is hammering on the practicality and implementation detail of particular regulatory regimes, and we talk past each other for years.
I think you've left out the side that is incessantly, one-sidedly hammering on the "fact" that government restrictions never serve any constructive purpose, and the solution is always to remove or relax them, but with that addition, I would agree with you.
Explicit limits on density and construction are unambiguously responsible for too-low levels of density and housing construction. That’s not “government can’t do anything right” - that’s “government works.” When you design public policy around single family homes and car-dependence, that’s what you get.
> If politicians actually want to make sure everyone who needs a place to rest their head has one, there’s only one way to do it: Build more housing. Which means, in turn, loosening the legal restrictions and community veto points that make it so hard to add supply. Because there’s no way to escape the fundamental math: Unless you build enough housing to shelter the people who want to live in your city, a whole lot of people will be left out in the cold.
Plain and simple: The way to have economic justice is to build enough housing to satisfy demand.
London housing still has a fair number of long-settled subsidized tenants who no longer need subsidized housing, but "council-homes-for-life" is in place and confers huge advantages to incumbents, which hardly seems fair. Basing access on need, this is not.
I have lived in various parts of Central London in mixed social housing, always as a market rate tenant (I am fortunate enough to afford it as a software engineer) and sympathize with the laments of poorer tenants who are occasionally booted out of their homes due to some housing development or other, complaining about the breakups of their communities and their families. But what about people who HAVE to leave their communities and families in order to make the most of opportunities when they arise? Is there an easy answer?
We have a standardized bundle of rights that shields the person that possesses that bundle from many (but not all) price increases in a living space. It's called ownership.
If a city thinks that certain people should be protected in that way, it should buy the proprieties and give them to those favored people. Trying to unbundle ownership and tenancy to mix and match them, at a city level with only acquiescence as opposed to enthusiastic collaboration from state and federal governments, as well as quasi-governmental institutions, is not going to work well.
I live in a San Francisco rent-controlled apartment. I only moved to San Francisco because of rent control. Otherwise I would not have been able to afford a place at all. New apartments in cities without rent control always seem to be expensive, and I couldn't afford those either. Rents on old apartments seem to be skyrocketing, too. I, for one, welcome rent control.
That's not the only solution I think we should be implementing, though. We could subsidize housing for people that can't afford it in other ways - giving people money to pay for their apartment through social programs after considering their income, rent, and expenses to get a grip on their actual ability to pay for available housing. All without having a hard-line income cutoff for this stuff (which doesn't help when the numbers are out of balance with the local situation). Building housing will hopefully help folks so long as there is a shortage, but it isn't a cure-all either.
Folks aren't generally getting rich from HUD: In Indiana, at least, lots won't accept HUD due to regulations and not paying on time. The last bit should be fixed, the first bit should just be standard for rentals. Landlords wouldn't necessarily know if they just let it be shown as regular income.
Besides, this does hinge on there being enough housing - including a few empty places. It is better to generally have empty units available just like you want a little unemployment to have a pool of employees to choose from.
How and who would you tax? Someone that just lost their house to the bank, for example... does the bank pay? The person that got sick and lost their job and home? Only empty rental units?
There is a little merit for the last one, so long as it is reasonable. You want some empty units on the market in most price ranges at all times, just like it is good to have some unemployment so folks can replace workers and have a pool to choose from. You don't really want rental units to sit empty for 6 to 12 months, though, and is probably a sign that there are many short-term rentals or the landlord is charging too much. Even this only works if the landlord can prove he's being prudent with pricing - a simple mortgage + average upkeep + fair set profit percentage would do, so long as it isn't obviously in the landlords favor.
If someone lost their house to the bank, the bank would be liable while they control the house. Main focus is on empty rental units or empty investment properties.
Presumably you'd need some window of exemption for normal transfers and typical moving times.
I'd probably implement as ~2x property tax on dwellings unoccupied for more than 3 months in the past calendar year. As you pointed out, this would have a downward pressure on rents, as landlords would be less able to leave an apartment empty while they wait for someone willing to pay the highest rate. Also, people who own multiple houses would be penalized for keeping some of those houses empty without renting them out.
Education is not housing, though, and has different goals. Education subsidies at higher levels is off. If we just paid most of the tuition and books, I think folks would care more that the schools are spending on sports instead of education. I'd certainly not do it with tax dollars and not allow colleges to charge students. Sports scholarships would be a thing of the past. I also think we could revamp degrees to have more pointed classes, insisting the "well rounded" education happen before college. It could probably actually make a masters be a 5 and sometimes 6 year program instead of 6-7 years, for example.
At the lower levels, some of our problem is funding by school district instead of distributing state-wide or country-wide. School are still segregated in many ways and the system has created wide disparities between schools because of funding. Sure, you need to adapt a little to the local level, but that's mostly for things like more special education students, more students not speaking english, and/or higher rates of poverty, which affects learning. The last case is some of what has made some of our schools bad, and the rest of us act like we don't care because it isn't our kids.
The real solution is both rent control And building more housing. Rent control allows the service class to actually live in the same place they work. This has great benefits, from lessening the amount of traffic, to increasing cultural and socioeconomic diversity, and enabling more alternative lifestyles.
You certainly did not pay less to move in than you would have in a city without rent control. In SF, rent-controlled rents start at rates comparable to non-rent-controlled apartments. One might think they'd start higher, given that the landlord is agreeing to grant what amounts to an annuity along with providing a place to live, but that doesn't seem to happen. If you think rent control makes the prevailing market rates for new tenants lower, where do you suppose the money comes from to give senior tenants discounts of up to 100%?
I propose a new law that people with my SSN don't have to pay taxes. It would help me out a lot.
Every policy helps some people at the expense of others. Concentrated benefits, diffuse costs. You need to weigh both sides, not just the benefits.
(edited)
Just so people understand where I'm coming from with what I'm about to say, my family has worked and existed in the construction business for a long time. Houses to rent out were considered the safest income producing retirement asset to invest money. Then rent control was introduced.
Fast forward 20yrs later and rent had stayed the same but taxes and municipal fees had increased to the point where they dwarfed the legally allowable income. Add to this new mandates which stipulated how electricity and water could be billed to tenants requiring installation of new equipment in the buildings every few years. Then throw in rising insurance rates coupled with rising maintenance expenses.
So, we took at look at the figures and decided the best course of action was to either bulldoze a set of perfectly livable buildings, let the lots sit for the required minimum time, then rebuild a non-rent controlled property --OR-- sell to someone who could afford to do the same. There was no legal way to earn a profit otherwise. Turning into slum lords was not something we wanted to do. Welcome to being a landlord with rent controlled property.
SF allows rent increases, CPI adjusted, usually 1.5-2.5% a year. SF county use taxes have been ~8% for a couple of decades. Prop 13 has been in effect since the 70s.
4 out of 6 units in my building have flipped in 5 years, allowing rent increases. Resulting in at least $70-80K additional income for the landlord (at Prop 13 tax rates). This is more the norm than an outlier - many of the new techies aren't mad at grandma stealing their freedom fries, they're mad at techies who beat them here in 2012.
I'm all for giving up rent control when landlords give up Prop 13.
"Rent control is one of the most effective ways to destroy a city’s housing stock."
The concept of 'housing stock' is generally a foreign one to the bay area. Residents mostly care about their own home value, rather than how having ample supply regionally benefits everyone.
103 comments
[ 95.6 ms ] story [ 461 ms ] thread> The "Falacy falacy" strictly applies to logical falacy.
Are you claiming that the parent comment is not logical or not making a logical argument? What type of other acceptable argument is there?
Maybe you have some large scale data you'd like to share?
[1] https://www.census.gov/data/tables/time-series/demo/income-p...
Instead of cherry-picking dates to suit a narrative, looking at all data, the 2016 income was higher than any year back to 1966 except the 3 years 1999,2000,2001. So of the 50ish years in the data, 2016 ranks in the top 4, and is 96% of the all time high. The trend since the recession is increasing, and if not for the recession, would probably be at all time highs. I would not be surprised if once 2017 or 2018 numbers were in all time values will be reached.
So yes, wages are increasing.
One reason low end stays mostly flat is it includes all people just starting careers, who have no skills, so it's not unreasonable that the inflation adjusted value they provide is not tremendously increased. Looking at values over this time frame also needs demographics figured in for this reason, and as the workforce becomes younger, wages are expected to become lower, while each individual person at point X in a career still has higher wages. Census reports cover this.
Remember avg wages are static snapshots of a moving cohort.
Basically take 22,000 * a function of unemployment rate and the data is flat over time.
PS: Looking at the highest income for a quintile also says very little about it as everyonone is making less than that. You really want the median of the quintile or the average of everyone within that range.
As such, the quintile, which is also a median (of the bottom 40%), is a good measure. Plus I presented data for it - if you want another metric show the data.
Another quite relevant factor, as I showed above, is as boomers retire, the bottom gets pulled down by people that are not poor. Given that this demographic has swelled the ranks of the bottom quintile over the recent decades, that the pay has slightly increased means for the truly poor the pay has increased even more than listed in this number.
The evidence from the BLS I gave above shows that the mean income in the bottom quintile is ~$11K, but the mean expenditures are ~$25k. This is because of retirees, as can be found in Census and BLS reports with some digging.
Factor that in :)
Edit:
Actually looking at this a little more, take the year 2000 (all inflation adjusted numbers.)
The lowest fifth of workers have seen wages fall 8.6%. The second fifth of workers have seen wages fall 2.42% in that time, the third fifth has seen wages only rise 0.45%. This is not what I would call a strong time period for workers.
Picking less than half the country population, ignoring the high end, treating small growth as insignificant, then complaining that the result is not the growth you wish it were, is terrible analysis.
Instead of picking 2 dates out of 50, look at all dates. 2016 was the highest avg for the lowest quintile for all years back though 1967 except 1999,2000,2001. So out of 50, its #46, at 96% of all time high, has been increasing since the recession, and is headed to record highs. The same trend is true of each quintile.
shows the bifurcation of outcomes, you can't just ignore that for half the people incomes haven't been rising
>ignoring the high end
This is literally how your previous comment begins: "Lowest incomes, even inflation adjusted, certainly have been rising"
All I'm doing is demonstrating that no, they haven't really.
>treating small growth as insignificant
I'm literally giving examples of negative growth...
>2016 was the highest avg for the lowest quintile for all years back though 1967 except 1999,2000,2001.
Are we looking at the same graph? I see 2016 as being 12,943 for the lowest quintile. These years all beat that:
So out of 50, it's what? #35, 34?>has been increasing since the recession
Now who's picking advantageous dates? Wages have been growing since the biggest downturn since the depression? Duh, but they've never caught up to where they were before.
>at 96% of all time high
It's at 99% of what it was way back in 1989, we can even move past the boom years in 2000/2001, in 2003 and 2004 wages were higher than they are now for this quintile. That's not really endearing to the idea of wage growth.
EDIT: I realize that no, we're not looking at the same data, you're looking at the maximum on the range that is included in the lowest quintile whereas I'm looking at the mean of the lowest quintile. Table H-3. I believe mean is obviously going to be a better measure than upper limit of the range.
Yes, that's how averages work. You similarly cannot ignore that for more than half, wages rose, which is why the numbers have increased. And usually bifurcation means bimodal, which in this case is not likely.
>Now who's picking advantageous dates?
I listed multiple times now what happens when you use all data. The example that there has been recent growth counters your claim of picking two dates from 50 and making claims about the whole.
In fact, I suspect that since the last few years have seen median overall wages rising (2015 or so was the highest growth ever recorded for median wage), that once the numbers for the past two years are tallied, new records will be set.
>Are we looking at the same graph?
No. I quoted exactly what graph the Census data was in with my first post. You keep picking other ones.
>I believe mean is obviously going to be a better measure than upper limit of the range
Not likely since we're already taking the lower quintile of the range of all income. Mean loses a info due to skew, which is why most discussions about wages should focus on the median. Since we don't have the median (well, you can possibly find the decile cutoffs to get it), looking at cutoffs tells you that more income has flowed into the bottom than before, since the cutoff is higher.
The lowest income bracket contains a lot of retirees, who have no income, but have wealth. It also includes students, that have little income, but likely will have wealth in the future. These zeros and low values will pull the mean down, likely much lower than the median. So they count in this case as poor, but they are not. Since the boomers are retiring, this pulls the mean down, but is not representative of what those at the 20% mark of income earn, which is a better measure, since you're not seeing averaged effects. You see the exact measure at a fixed position in the queue.
Similarly, at the high end, taking the mean is nor representative because a few high income earners can skew the mean higher than the median. This is why the ends of the distribution are better served by median (which we don't have), or cutoffs (which is basically a median, but at 20% instead of 50%).
To demonstrate this quite conclusively, here's [1] BLS data on expenditures by quintile for 2016. The bottom quintile has a mean of $11k as in your numbers, but has mean annual expenditures of $25k, well over twice the mean income. Note the other 4 quntiles have mean expenditures more in line with the income.
This is why mean, especially at then ends, is pretty screwy. These people have low incomes, but are not poor.
[1] https://www.bls.gov/cex/2016/combined/quintile.pdf
One perspective that is almost universally true going back as far as we have data, is that incomes rise over the lifetime of the individual. Because the bottom 20% today are a completely different set of people as the bottom 20% of tomorrow. And because people strongly to earn more as they get older, the premises of the article hold up.
The author doesn't specifically mention low-income people - she just says that 'incomes rise':
But then incomes rise, and rents don’t. People with higher incomes have more resources to pursue access to artificially cheap real estate: friends who work for management companies, “key fees” or simply incomes that promise landlords they won’t have to worry about collecting the rent.
Your observation that poor people's incomes are stagnant actually strengthens the authors point above, because a growing income gap gives rich people 'more resources to pursue access to artificially cheap real estate'.
> The rest of the article is fallacious because of this.
There are some points in the article that are not dependant on rising incomes. For example,
Meanwhile, price ceilings reduce the supply because they decrease the incentive to build, and can make it downright imperative to remove rental housing from the market and turn it to some other use -- condos, warehouses, anything that won’t trigger the rent controls.
New York's two largest building booms took place during times of very strict rent controls - the 1920s and between 1947 and 1965.
>rent control looks like a victory for the poor over the landlord class. But the stifling of price signals leads to problems.
Except when it actually happened the price signals sent by the strictest rent controls still weren't enough to end the city's biggest housing booms.
Seriously, Megan McArdle telling you that price controls are "just going to hurt the poor" is a bit like Trump telling you that demolishing Mar a Lago will only hurt the immigrants.
Rent control is a dirty hack, for sure, but it's a dirty hack that shouldn't be removed until a proper fix is put in place - i.e. a land value tax.
I won't hold my breath for Megan McArdle to advocate for that.
Bloomberg should have her fired. She does absolutely no credit to their publication.
The entire US economy was booming after the war. So numbers from that period don't tell you much about what things would have been like in peace time.
I don't think calling for everyone you disagree with to be fired is the right way forward.
I don't think conflating a specific person with everyone is a fair reading of the OP's statement.
https://fee.org/articles/the-case-against-rent-control/
I gave two data points that strongly indicated that the effect rent control has on construction is either absent or very, very weak. You wouldn't exactly get the highest rate of construction coinciding with the strictest rent controls otherwise now would you?
But even if what you assert actually is true, it hardly is a rebuttal to the article. Her unsourced assertions actually do line up with a century of research and hundreds of empirical studies on the effect of rent control specifically, not to mention the much larger body of research on price controls in general. It isn't necessary for someone who is backed by scientific consensus to laboriously review an enormous body of research that supports their premise before making a policy recommendation. Only those who are speaking against the consensus benefit from an empirical review.
I'm actually in agreement with you on land value taxes. It's something that is long overdue. But even with land value taxes, land is only valued at the highest best use that is zoned and permitted to be built. And that's the true underlying problem.
I'm afraid you're right and Miss McArdle is really nothing much more than a libertarian hack.
Case in point: Her book review fo Piketty's "Capital in the Twenty-First Century". While opinions may certainly differ about the tome this is a bit rich for a book review:
Reviews a book she hasn't read and needless to say completely trashes it in the process.I actually agree: Bloomberg really should have her fired.
I link to the Baffler article[1] since the original review is apparently only available to subscribers.
[1] https://thebaffler.com/latest/what-pikettys-conservative-cri...
https://www.theguardian.com/books/2008/jan/06/fiction.societ...
Signaling that you haven't read it gives one a defensible position! You can't criticize my mischaracterization of the arguments of the book, I haven't read it! Her opinions can be her alternative facts known to none except her.
There is accidental fallacious logic, and then there is manufacturing bullshit.
https://inversesquare.wordpress.com/tag/mcardle/
The lesson is, glibertarians always fail up.
So, the real question is how much home density are you are adding. Further, density can get vastly higher as people would be adding 20 story buildings not just smaller apartments which means most homes would not be converted.
The rent is 2.5k * 12 = 30k a year. If someone makes $15/h * 2000 hours a year = 30k. 100% of income on a 1BR. Is your fucking view worth the costs you impose on others?
Enjoy your artificial restrictions on supply, as everyone with even one grain of common sense moves to Texas or Washington.
P.S. Rich software morons can afford it, but just because they can doesn't mean they want to get ripped off by (30k rent) + (20k state taxes) a year. Location is sticky, but once they get the equivalent job literally ANYWHERE else, they will take it, or an internal transfer.
https://goo.gl/maps/hvkzDG4u9Tp
with this random "small" street in SF
https://goo.gl/maps/dJzn86V9ers
It's even more stark when you compare larger streets. Berlin:
https://goo.gl/maps/hBg7aMA2Feu
SF:
https://goo.gl/maps/YFcVLSWHPzS2
I guess you can see why I thought the density in SF to be pretty ridiculous.
Low density wouldn't be so much of a problem, imho, if the zoning would be better. Why does a large fraction of the population have to commute downtown to the skyscrapers? Couldn't the offices be spread out a bit more? Why are supermarkets to far apart? I did a lot of walking while in SF and in many parts of the city I had the feeling that sidewalks were more decorative than meant for transportation, because there were no shops or small businesses for a kilometer or more around.
https://www.google.de/maps/@52.5351488,13.4089075,266a,35y,2...
This sort of layout in Berlin is something common in Europe that I kinda of wish existed in US cities. (Barcelona is similar too?)
You can also move to another city. Get another job. If your concern is your view or lack thereof, you are probably well off enough to do such a thing - which is a freaking luxury. Lots of folks are too poor to afford housing, let along going to another city. Can't get a proper bank account without an address. No drivers license in some states, nor proper ID instead. I'm not even sure if you can register a car if you are homeless. These things make you more mobile.
As I understand it, that's how they do it in Japan. Zoning is done at the national level.
http://conference.nber.org/confer/2017/PEf17/Diamond_McQuade...
I'm particularly excited about some of the new legislation that's just been passed that allows for by right construction if a city isn't meeting its housing needs, because it just may streamline the process of getting things built here.
Ask a property developer why rents are so high and they'll complain that ridiculous zoning and building restrictions are preventing them from building enough new supply (...and coincidentally reducing the amount of profit they will be making).
Ask a landlord why rents are so high and they'll complain that rent control is keeping the market from building enough housing (...and coincidentally reducing the amount of profit they will be making).
If you ask me, it's untaxed land - the costs of holding on to those tiny one story + garage houses were made artificially low - among other things, by prop 13. They impose a cost on others for monopolizing that land, but they aren't paying that cost, so the market signals that would fix the problem (getting them to sell up to somebody who would build denser housing to avoid a large tax bill) are severely restrained.
I liked Cambridge, MA’s model... the first 250k of your property value is removed from property taxes. Doesn’t make a dent in big expensive houses, but makes property ownership more affordable on the lower end.
I'm all for older people being given hand outs so that they can afford a comfortable retirement.
In general I'd prefer hand outs to be allocated via need rather than a real estate driven lottery, but I can understand how winners of that real estate lottery could feel like it was a fair and just system.
You should be careful with "the same people" arguments. They're almost always fallacious.
> Ramp up the taxes and the incentive they have to fight the denser housing will dissolve.
Ramp up the taxes and the incentive they have to fight the taxes will increase proportionally. Why wouldn't they capture that just like they captured zoning?
The real problem behind zoning is jurisdictional. As long as it is done on a city-by-city level, cities only have to be held accountable to the residents, not the people that they displace across their arbitrary borders. A regional jurisdiction would force zoning decisions to take into account everyone in the region, containing all the suburban residents with terrible commutes that are made worse by NIMBY protections.
Of course. The rich will fight tooth and nail to keep their entitlements. Always have done, always will.
>Why wouldn't they capture that just like they captured zoning?
They would. However, zoning is an easier process to derail because it's more localized and easier to come up with plausible sounding bullshit reasons why something shouldn't happen. In politics you shouldn't attack the shield, you should go for the jugular.
Also you could "fix zoning" and it would still be palliative at best if valuable land is ultimately still being hoarded.
Property developer profits would be higher though.
A while back there was a proposal to build a large apartment building in my neighborhood, which at the time did not have any tall buildings. Locals tried to stop it, literally putting "No Towers" signs in their windows and on their doors.
Thankfully they were not successful, so the neighborhood will soon be able to support hundreds of more people.
So Megan's response is just not to pursue economic justice at all? It doesn't make any sense, of course the powerful will try to erode justice for the powerless, that's just society, that doesn't mean we stop pursuing justice. It means we become even more vigilant about it.
I think the argument here is more "not pursue short-term economic justice at the expense of long-term economic justice"
If a means doesn't serve an end, then continuing to pursue it despite the perverse consequences doesn't prove your commitment to the to the desired result.
One side is hammering on the noble purpose, saying that if price controls don’t work, we must take housing entirely out of the hands of the market. The other is hammering on the practicality and implementation detail of particular regulatory regimes, and we talk past each other for years.
Plain and simple: The way to have economic justice is to build enough housing to satisfy demand.
I have lived in various parts of Central London in mixed social housing, always as a market rate tenant (I am fortunate enough to afford it as a software engineer) and sympathize with the laments of poorer tenants who are occasionally booted out of their homes due to some housing development or other, complaining about the breakups of their communities and their families. But what about people who HAVE to leave their communities and families in order to make the most of opportunities when they arise? Is there an easy answer?
If a city thinks that certain people should be protected in that way, it should buy the proprieties and give them to those favored people. Trying to unbundle ownership and tenancy to mix and match them, at a city level with only acquiescence as opposed to enthusiastic collaboration from state and federal governments, as well as quasi-governmental institutions, is not going to work well.
The real solution is building more housing. (I think)
Besides, this does hinge on there being enough housing - including a few empty places. It is better to generally have empty units available just like you want a little unemployment to have a pool of employees to choose from.
That's pretty weird, since if HUD assists you with rent, they pay the landlord directly.
There is a little merit for the last one, so long as it is reasonable. You want some empty units on the market in most price ranges at all times, just like it is good to have some unemployment so folks can replace workers and have a pool to choose from. You don't really want rental units to sit empty for 6 to 12 months, though, and is probably a sign that there are many short-term rentals or the landlord is charging too much. Even this only works if the landlord can prove he's being prudent with pricing - a simple mortgage + average upkeep + fair set profit percentage would do, so long as it isn't obviously in the landlords favor.
Presumably you'd need some window of exemption for normal transfers and typical moving times.
I'd probably implement as ~2x property tax on dwellings unoccupied for more than 3 months in the past calendar year. As you pointed out, this would have a downward pressure on rents, as landlords would be less able to leave an apartment empty while they wait for someone willing to pay the highest rate. Also, people who own multiple houses would be penalized for keeping some of those houses empty without renting them out.
At the lower levels, some of our problem is funding by school district instead of distributing state-wide or country-wide. School are still segregated in many ways and the system has created wide disparities between schools because of funding. Sure, you need to adapt a little to the local level, but that's mostly for things like more special education students, more students not speaking english, and/or higher rates of poverty, which affects learning. The last case is some of what has made some of our schools bad, and the rest of us act like we don't care because it isn't our kids.
What downstream effects that might have, who knows, but rent control isn't the only solution.
Every policy helps some people at the expense of others. Concentrated benefits, diffuse costs. You need to weigh both sides, not just the benefits. (edited)
Fast forward 20yrs later and rent had stayed the same but taxes and municipal fees had increased to the point where they dwarfed the legally allowable income. Add to this new mandates which stipulated how electricity and water could be billed to tenants requiring installation of new equipment in the buildings every few years. Then throw in rising insurance rates coupled with rising maintenance expenses.
So, we took at look at the figures and decided the best course of action was to either bulldoze a set of perfectly livable buildings, let the lots sit for the required minimum time, then rebuild a non-rent controlled property --OR-- sell to someone who could afford to do the same. There was no legal way to earn a profit otherwise. Turning into slum lords was not something we wanted to do. Welcome to being a landlord with rent controlled property.
SF allows rent increases, CPI adjusted, usually 1.5-2.5% a year. SF county use taxes have been ~8% for a couple of decades. Prop 13 has been in effect since the 70s.
4 out of 6 units in my building have flipped in 5 years, allowing rent increases. Resulting in at least $70-80K additional income for the landlord (at Prop 13 tax rates). This is more the norm than an outlier - many of the new techies aren't mad at grandma stealing their freedom fries, they're mad at techies who beat them here in 2012.
I'm all for giving up rent control when landlords give up Prop 13.
The concept of 'housing stock' is generally a foreign one to the bay area. Residents mostly care about their own home value, rather than how having ample supply regionally benefits everyone.
https://theoutline.com/post/2303/megan-mcardle-has-a-lot-of-...
http://exiledonline.com/megan-mcardles-hypocrisy-exposed-por...
https://twitter.com/asymmetricinfo/status/960546413582192641
https://www.splicetoday.com/politics-and-media/megan-mcardle...
https://www.bloomberg.com/amp/view/articles/2018-01-30/megan...
https://www.bloomberg.com/view/articles/2017-10-23/we-libert...
https://www.bloomberg.com/view/articles/2017-06-16/beware-of...
https://www.bloomberg.com/amp/view/articles/2017-09-18/we-di...
http://www.oregonlive.com/opinion/index.ssf/2017/06/why_not_...
https://twitter.com/asymmetricinfo/status/859101074501890048
http://web.archive.org/web/20120314140221/http://www.janegal...
https://www.theatlantic.com/business/archive/2007/10/defendi...
http://prospect.org/article/atlantics-mcardle-problem
http://firemeganmcardle.blogspot.com/2008/03/everybody-has-t...
http://nymag.com/daily/intelligencer/2012/12/newsweek-wins-w...