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  • Trent0405
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    --> @Nemiroff

    Im sure the experts explained how rent controls negatively impacted availability and prices. Having you summarize those explanations would be helpful for the clarity of my response.

    Okay, it appears that rent controls have a negative impact on investment in housing. This is because investing becomes less viable and lucrative, leading to reduction in housing quality, supply, and price. This lack of investment resulted in 30,000 lost apartments in New York every year over 11 years in New york as a result of rent controls according to William Tucker

    Assuming im seeing the same expert opinions, over the *long term*, rent controls do hurt prices, availability, and quality of housing. I will conceed that. However, i will argue that they were put in place to resolve a short term problem that required a solution. The consequences of ignoring that problem were far higher than the consequences of rent controls.

    This is just me spitballing, but if rent controls lower quality and affordability in the long term, then wouldn’t the problem still be present and worsened ultimately?    If the problem can be remedied for a brief moment, but the aftermath worsens the situation then I see little utility in rent controls. 

    Do you think the free market could have adjusted to that problem? Do you suggest better alternatives?

    I am unsure, it seems like government regulation that restricts housing supply is a big factor in increasing housing prices, but federal housing programs have also found success. A pure laissez faire solution will most likely be unsuccessful. Maybe kickback regulation but still maintain some government intervention.

  • Nemiroff
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    --> @Trent0405
    This lack of investment resulted in 30,000 lost apartments in New York every year over 11 years in New york as a result of rent controls according to William Tucker
    Yes, but the referenced rent regulations are decades old (as the negative effects are slower to kick in). In the meantime, the city has maintained a necessary low wage workforce it requires for functionality.

    Without the workforce these cities may collapse and lose far more jobs, housing, and population. Im pretty sure at least our two examples are growing quite well and the 30k lost is a drop in the bucket for what was gained thanks to the availability of local and relatively cheap labor.

    This is just me spitballing, but if rent controls lower quality and affordability in the long term, then wouldn’t the problem still be present and worsened ultimately?
    I was considering an infinitely cumulative cost would certainly undermine any benefit no matter how small it costs, but these effects are not permanent. Even if someone leaves and their friend commits fraud, it will ultimately end when the person dies. The apartment resets to market rate, but then increases are again limited. Renters can't pass on their apartments. The aftermath seems to be far better than the consequences of inaction.

    I am unsure, it seems like government regulation that restricts housing supply is a big factor in increasing housing prices, but federal housing programs have also found success. A pure laissez faire solution will most likely be unsuccessful. Maybe kickback regulation but still maintain some government intervention.
    The government isnt restricting supply, it is inadvertently disincentiving more building through a complex chain of events. It's a stretch to consider that intentional. Some localities are providing tax subsidies to encourage building, that is one way to counter balance the negative. Is that what you meant by "kickback regulations?"

    Another solution would be to increase transportation speed so they can live farther away but not increase commute times. Something like maglev trains, but that's not really a repeatable solution.

    In conclusion 
    I think inaction would have been disaster and rent control was most certainly better than no action.
  • Trent0405
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    --> @Nemiroff
    Yes, but the referenced rent regulations are decades old (as the negative effects are slower to kick in). In the meantime, the city has maintained a necessary low wage workforce it requires for functionality.

    Without the workforce these cities may collapse and lose far more jobs, housing, and population. Im pretty sure at least our two examples are growing quite well and the 30k lost is a drop in the bucket for what was gained thanks to the availability of local and relatively cheap labor.


    But it is actually harming the workforce from the research I’ve found. In SanDiego rent controls resulted in an increase of unemployed people by 40.9% in just 4 months(Page 666). So rent controls are contributing to the problem, not solving it.
    Also, despite a very very small increase in the number of employed people, this is most likely because of an increase in population.
     Also, it was 30,000 per year, so it was actually 330,000‬ lost apartments lost as a result of rent control.

    The government isnt restricting supply, it is inadvertently disincentiving more building through a complex chain of events. It's a stretch to consider that intentional. 

    I don’t think the government passes rent control expecting it to cause housing shortages(15% reduction in rental housing) and increase unemployment, but that is what the end result is, and the end result is really all that matters to me. 

    Some localities are providing tax subsidies to encourage building, that is one way to counter balance the negative. Is that what you meant by "kickback regulations?"

    Well the source I sent stated that green belt, open space, and urban growth boundary regulations were playing a significant role in the increasing price of housing, so maybe roll those back.  Also, just to make things clear, kickback regulation means shrink the amount regulation, at least in some ways.

    In short, I can only agree with the consensus of economists, “Rent control creates many more problems than it solves.”

  • Nemiroff
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    But it is actually harming the workforce from the research I’ve found. In SanDiego rent controls resulted in an increase of unemployed people by 40.9% in just 4 months(Page 666). So rent controls are contributing to the problem, not solving it.
    What i meant to say is that with rent control you do have housing inefficiency.
    But without rent controls you lose a fundamental part of a city's workforce and the whole thing will lead to instability and possibly economic collapse. 

    I'll take some inefficiency over instability any day. 
  • Trent0405
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    --> @Nemiroff
    What i meant to say is that with rent control you do have housing inefficiency.
    What is housing inefficiency? I looked online and found nothing.

    But without rent controls you lose a fundamental part of a city's workforce and the whole thing will lead to instability and possibly economic collapse. 
    Well rent control does keep people in particular parts of a city because rent control disincentivises moving. But when it comes to the workforce, it had negative effects, a 40.9% increase in unemployment, but only a >1 % in the employed doesn't look good. I know my source doesn't look specifically at low wage and low skill labourers, but I think I can assume that some of that 40.9% is comprised of low skill low wage labour.
  • Nemiroff
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    --> @Trent0405
    What is housing inefficiency?
    Housing inefficiency are all the housing problems these experts found with rent control. 

    But when it comes to the workforce, it had negative effects
    In the long term yes, but rent controls were put in place to deal with the immediate housing shortage for low wage workers. If, without rent control, these workers get priced farther and farther from the heart of the city that needs them, what would happen to the economy of the city? 
  • Trent0405
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    --> @Nemiroff
    Housing inefficiency are all the housing problems these experts found with rent control. 
    okay.

    In the long term yes, but rent controls were put in place to deal with the immediate housing shortage for low wage workers. If, without rent control, these workers get priced farther and farther from the heart of the city that needs them, what would happen to the economy of the city? 
    But it wasn't the long term, my source looked at the first 4 months of the policies implementation. So even right after implementation, it had significant negative impacts on the labour force. So low wage workers might just be better off without rent control.
  • Nemiroff
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    --> @Trent0405
    But it wasn't the long term, my source looked at the first 4 months of the policies implementation. So even right after implementation, it had significant negative impacts on the labour force.
    "Significant negative effect" relative to past numbers. This assumes there is no initial problem which has its own consequences. How would the situation unfold if no rent controls are implemented? in your opinion.

    Furthermore, did any of the many other big cities experience this? Or is this a freak exception?
  • Trent0405
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    --> @Nemiroff
    Furthermore, did any of the many other big cities experience this? Or is this a freak exception?
    It was in San Diego.

    "Significant negative effect" relative to past numbers. This assumes there is no initial problem which has its own consequences.
    I'm confused here, of course we will compare it to past numbers to see the state of the city before and after the policy. What is the "initial problem" in this instance?

    How would the situation unfold if no rent controls are implemented? in your opinion.
    We would have a more labourers employed and working according to my source.
  • Trent0405
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    Furthermore, did any of the many other big cities experience this? Or is this a freak exception?
    I misread this. I don't think it was an exception seeing how the overall attitude is incredibly negative amongst economists, and I think there is a reason for that.
  • Marko
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    --> @Trent0405
    Trent0405: Okay, it appears that rent controls have a negative impact on investment in housing. This is because investing becomes less viable and lucrative, leading to reduction in housing quality, supply, and price. This lack of investment resulted in 30,000 lost apartments in New York every year over 11 years in New york as a result of rent controls according to William Tucker
    __________________________________________________________________________________________________________________

    Ok. I finally have a little time on my hands, and I’ll maybe slowly slide into the discussion  again. 

    I couldn’t quite understand the reason for the link regarding the 30,000 apartments lost in New York every year, or the credentials of a man called ‘William Tucker’. However, what I did observe was that.....’Although hard statistics on abandonments are not available, William Tucker estimates that about 30,000 New York apartments were abandoned annually from 1972 to 1982’. 
    So where does this 30,000 figure come from? Additionally, and let’s suspend disbelief and assume his estimations are accurate, this still doesn’t prove that ‘abandonments’ are the result of rent controls. A myriad of other factors might be at play here. 

    Secondly, William Tucker’s credentials can speak for themselves. ‘Mr. Tucker’s clients have included estate and trust beneficiaries, personal representatives, trustees, financial institutions, shareholders, partnerships, corporations, real estate developers and investors, real estate brokers, and other business entities’. 
    I couldn’t make up a more vested interest than this one. But anyway.....

    ____________________________________________________________________________________________________________________

    Trent0405: This is just me spitballing, but if rent controls lower quality and affordability in the long term, then wouldn’t the problem still be present and worsened ultimately?    If the problem can be remedied for a brief moment, but the aftermath worsens the situation then I see little utility in rent controls.......
    I am unsure, it seems like government regulation that restricts housing supply is a big factor in increasing housing prices, but federal housing programs have also found success. A pure laissez faire solution will most likely be unsuccessful. Maybe kickback regulation but still maintain some government intervention.
    ______________________________________________________________________________________________________________________

    Rent controls have to be moulded and designed for a given environment, to meet the needs and demands of a specific environment. It certainly can’t be a case of one size fits all, and continuous tweaking and evolving should take place. 

    At least, contrary to many economists, you’re not entirely sure whether applying the free market system to the rental sector would work. But in actual reality, economists are also in favour of tax benefits, incentives and subsidies for the real estate sector, which really doesn’t sound like the magical ‘laissez faire, free market’ solution. For them it’s a case of increased deregulation of prices while also lobbying for increased subsidies and tax incentives for owners. 
  • Marko
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    --> @Trent0405
    Trent0405: But it is actually harming the workforce from the research I’ve found. In SanDiego rent controls resulted in an increase of unemployed people by 40.9% in just 4 months(Page 666). So rent controls are contributing to the problem, not solving it.
    Also, despite a very very small increase in the number of employed people, this is most likely because of an increase in population.
     Also, it was 30,000 per year, so it was actually 330,000‬ lost apartments lost as a result of rent control.
    _________________________________________________________________________________________________________________

    Its important you research references more, including the factual reasons why specific ups and downs take place, instead of making false correlations.
    Read the Postwar prelude 1945-1949 (page 11)....From the book ‘The 1950s’.

    As stated before, a myriad of other factors take place simultaneously—in this particular case, the end of a war, and the industrial and economic ramifications of post-war in a particular region (San Diego).