Economists
who have ventured into the alleged real world often quote Princeton's
Alan Blinder, who has formulated what he calls ''Murphy's Law of
economic policy'': ''Economists have the least influence on policy where
they know the most and are most agreed; they have the most influence on
policy where they know the least and disagree most vehemently.'' It's
flip and cynical, but it's true.
Consider,
on one side, really tough issues -- where there are plausible arguments
on both sides, where nobody really knows how to measure the tradeoffs.
Should Microsoft be broken up and, if so, how? Should Britain adopt the
euro? Let's ask the economists! And those economists who are prepared to
express strong opinions on such inherently ambiguous questions command
rapt attention.
On
the other side, consider an article that appeared in yesterday's New
York Times, ''In San Francisco, Renters Are Supplicants.'' It was an
interesting piece, with its tales of would-be renters spending months
pounding the pavements, of dozens of desperate applicants arriving at a
newly offered apartment, trying to impress the landlord with their
credentials. And yet there was something crucial missing --
specifically, two words I knew had to be part of the story.
Not
that I have any special knowledge about San Francisco's housing market
-- in fact, as of yesterday morning I didn't know a thing about it. But
it was immediately obvious from the story what was going on. To an
economist, or for that matter a freshman who has taken Economics 101,
everything about that story fairly screamed those two words -- which
are, of course, ''rent control.''
After
all, the sort of landlord behavior described in the article --
demanding that prospective tenants supply resumes and credit reports,
that they dress nicely and act enthusiastic -- doesn't happen in
uncontrolled housing markets. Landlords don't want groveling -- they
would rather have money. In uncontrolled markets the question of who
gets an apartment is settled quickly by the question of who is able and
willing to pay the most. And so I had no doubts about what I would find
after a bit of checking -- namely, that San Francisco is a city where a
technology-fueled housing boom has collided with a draconian
rent-control law.
The
analysis of rent control is among the best-understood issues in all of
economics, and -- among economists, anyway -- one of the least
controversial. In 1992 a poll of the American Economic Association found
93 percent of its members agreeing that ''a ceiling on rents reduces
the quality and quantity of housing.'' Almost every freshman-level
textbook contains a case study on rent control, using its known adverse
side effects to illustrate the principles of supply and demand. Sky-high
rents on uncontrolled apartments, because desperate renters have
nowhere to go -- and the absence of new apartment construction, despite
those high rents, because landlords fear that controls will be extended?
Predictable. Bitter relations between tenants and landlords, with an
arms race between ever-more ingenious strategies to force tenants out --
what yesterday's article oddly described as ''free-market horror
stories'' -- and constantly proliferating regulations designed to block
those strategies? Predictable.
And
as for the way rent control sets people against one another -- the
executive director of San Francisco's Rent Stabilization and Arbitration
Board has remarked that ''there doesn't seem to be anyone in this town
who can trust anyone else in this town, including their own
grandparents'' -- that's predictable, too.
None
of this says that ending rent control is an easy decision. Still,
surely it is worth knowing that the pathologies of San Francisco's
housing market are right out of the textbook, that they are exactly what
supply-and-demand analysis predicts.
But
people literally don't want to know. A few months ago, when a San
Francisco official proposed a study of the city's housing crisis, there
was a firestorm of opposition from tenant-advocacy groups. They argued
that even to study the situation was a step on the road to ending rent
control -- and they may well have been right, because studying the issue
might lead to a recognition of the obvious.
So now you know why economists are useless: when they actually do understand something, people don't want to hear about it.
Posted by Steve Sinai
PS - a little something more recent -
Rent control? EconoMeter panel weights in
San Diego Union-Tribune
http://www.sandiegouniontribune.com/business/economy/sd-fi-econometer092516-htmlstory.html
PS - a little something more recent -
Rent control? EconoMeter panel weights in
San Diego Union-Tribune
http://www.sandiegouniontribune.com/business/economy/sd-fi-econometer092516-htmlstory.html
35 comments:
It's really interesting that those who want to have their cake and eat it too are not commenting on this post. They obviously read this blog since they busy posting away about how they have been mistreated by NEXTDOOR.
Who are "they?"
Sharon
Your a realtor, right?
I'm just curious. Who are you Anonymous?
12:35, you're a cowardly, anonymous NIMBY who follows that "flipped-on its lid" version of economics called NIMBYnomics, where supply and demand has no relationship to price, aren't you?
@12:35 NO but I actually have an understanding of the Supply and Demand concept. I'm also a homeowner and I know exactly how expensive real estate upkeep is. @11:49 I think you are well aware of who "they" are. I don't need to spell it for you.
Sharon
Ok I thought you were someone else.
Under the current conditions, landlords are truly lords. they can do basically whatever they like, and tenants will not complain for fear of a no fault eviction.
Tenants need protection from no fault evictions and exorbitant rent increases. It's our lives and living situation that you landlords could give a damn about. You just want to jeep your power and make a killing on the tight rental market. To me that makes you inhuman scum.
Joe, you should be blaming the NIMBYS who don't allow new housing to be built. The way our economic system works is when prices increase, it encourages new supply to increase. The NIMBYS aren't allowing supply to increase, thus housing costs skyrocket.
Joe Hill...
The faux enviro cult in Pacifica has blocked every attempt to build any and all housing in this town. Senior housing, workforce housing, affordable housing, luxury housing, high density housing, absolutely any kind of housing you can imagine. They will keep doing it to protect their "I got mine, screw everybody else" mantra. They are now using diversion and vilification of a minuscule percentile of Pacificans to blame their inhumane selfishness on. Unfortunately it works on naive and purposely low info people like you.
Deirdre is a landlord. She is pandering and sucking the puppet masters who put her in office illegitimately. This very evil gang of people are really fucking Pacifica over.
Sinai
I blame the yessie's who can't even find a decent candidate. The so called business groups, the super PAC's and the rest of the time wasters.
Sinai
Housing has skyrocketed in San Francisco and the whole SF Bay Area.
SF has added 90,000 units in the last 5 years, prices still skyrocketed.
....and 40,000 units are sitting empty and the number is climbing because the owners don't want any more money stolen from them by the Rent Control racket and their predator attorneys.
Pacifica ain't seen nothing yet. The faux-enviro commies that stole Pacifica's last election will not stop until our town is washed out to sea. Then they will scurry away like the rats that they are.
"I blame the yessie's who can't even find a decent candidate."
It doesn't matter how good your candidate is when one of the other candidates (Martin) games the election rules to guarantee themself a seat on council.
"SF has added 90,000 units in the last 5 years, prices still skyrocketed."
Rental prices in San Francisco are coming down because new units have been added.
Bay Area rents fall, with San Francisco down 9% since last year
I lived and worked in San Francisco before rent control and government micro-managing every bit of our lives. I was a banker full time and worked weekends in a beautiful high end boutique, for the clothes. I made a lot of money for a young woman and had a beautiful one bedroom apartment with dining room, living room and small kitchen in Pacific Heights for $600.00 a month. And laundry room. I lived in the days where a person like me was always asked to stay. In my jobs and homes. I caused zero problems. Now I have millennial children who all work with fabulous jobs but can't afford to live on their own around here, so they left. Government is too big and always hungry so they create front groups, like the "tenant rights" groups. So here we are. It is not just one thing it is many different things that are causing; joblessness, homelessness and lack of housing and it all comes from government overreach. I speak from experience only. I have no degrees. No one ever helped me. I don't follow the herd. I do what I want and when I am not wanted I leave, Like many have. So you are left with followers, weak, needy population. The kind that government loves to manipulate and threaten. Good luck.
10:38 New construction is except from Rent Control.
Come back and spew more bullshit any time.
12:22
But they have risen 100% in the last 4 years.
1:47, 100% sounds exaggerated. Got a source? Willing to put your name behind your statement?
San Francisco has rent control. Wasn't that supposed to keep rents affordable?
I want to live in Pacifica but the rent is outrageous. I demand they lower their rents so I can live there. They are SO GREEDY!!!
I want to live in Beverly Hills but the rent is outrageous. I demand they lower their rents so I can live there. They are SO GREEDY!!!
I want to buy a house on the beach in Hawaii but the cost of housing is outrageous. I demand they lower their home prices so I can live there. They are SO GREEDY!!!
I need a car to get to work, but the cost of a Mercedes is outrageous. I demand they lower their prices so I can lease one. They are SO GREEDY!!!
Sinai's way of thinking. If someone knows more than he does. Put a name on it.
Sinai, Are you in real estate sales or a real estate investor?
5:02, if you're going to quote a statistic, having your name on it gives it credibility. Otherwise, it sounds like you're making it up.
I have nothing to do with the real estate biz. My only real estate investment is my house.
For the person who keeps posting anonymously, I won't post your comments when you include personal insults in them.
If you can make your point without the insults, your comments will be posted.
Here's you SF rent proof
https://medium.com/@mccannatron/1979-to-2015-average-rent-in-san-francisco-33aaea22de0e
Housing will get worse once the Oroville dam breaks.
10:51
The State awarded the contract and work is underway. The spillway and emergency spillway will be good to go by November 1.
Read up on the news before you post that way you won't look like a moron.
Is it true that during the May 8 council meeting, Cynthia Kaufman said that it was the pro-development people in Pacifica who killed Jim Vreeland?
Cynthia Kaufman was the campaign manager for Deirdre Martin.
She was the mastermind behind the public manipulation and ouster of Mary Anne Nihart from the race.
She was the leading mis-informant creating post election plausible deniability for her puppet Deirdre for this stolen election.
This amoral card carrying member of the local faux-enviro cult has re-hijacked Pacific.
These evil people will do and say absolutely ANYTHING to stay in power and destroy Pacifica for every one else as long as "they've got theirs".
Yes it really happened: Cynthia Kaufman got up during oral communications to plead for respect and less divisiveness while in the same breath accusing the "right wing" in Pacifica of killing Jim Vreeland.
In my opinion, Cynthia Kaufman is the single most divisive person in Pacifica and the city is worse off for her efforts. There's a level of bitterness that wasn't here until the shenanigans of the Martin campaign kicked things into high gear.
She managed Martin's campaign and didn't do a single thing to stop Martin supporters and donors from posting comments online such as "Nihart is breaking the law" and filing complaint after complain after complaint to get Nihart removed from the ballot on a technicality of their own creation. To the extent Kaufman was personally involved in this effort, we'll probably never know, but we certainly do know that she never publicly disavowed any of these activities and lies put forward on behalf of the candidate she was working for.
Voter disenfranchisement from a self-styled progressive is pretty rich.
Cynthia Kaufman continues to stir up this us verses them dynamic in Pacifica with regular Pacifica Progressive Alliance updates which demonize and demean her Pacifica neighbors who may hold a different viewpoint on things. She demands respect but refuses to offer any of her own and everything she's done has only served to reinforce a split in this community. She needs to recognize that other people have the same right as she does to hold a different opinion and that they're just as valid.
Cynthia, you need to take a long, hard look in the mirror and examine your behavior and hostile rhetoric before you can call yourself a progressive.
I haven't seen Pacifica this toxic...ever. Neighbor pitted against neighbor not only in city council, but on supposed community sites like Next Door.
It's an...interesting...way of promoting an agenda. I don't think it's ever worked though. You usually want to expand your base and try to appeal to more people, not to dig in and pit yourself against everyone else in take no prisoners cage match.
Pacifica truly has become PATHETICA. Congrats, all.
People like Cynthia Kaufman look in the mirror and only see their self righteous superiority over the rest of the commoners they benevolently pardon. She is the quintessential manifestation of the hypocracy that is destroying America. This horrible person and her equally horrendous lying cohort, Deirdre Martin, are literally tearing Pacifica apart. Keener is a schemer and Digre can't overcome her own stupidity and dishonesty about where she lives. These three stooges are the useful idiots of the completely self absorbed lunatics who have re-taken the majority council vote so they can complete the job they started, DESTROY PACIFICA for everyone outside of their cult and then divide the spoils among themselves.
Cynthia Kaufmann's book "Getting Past Capitalism" available on Amazon.
https://www.amazon.com/Getting-Past-Capitalism-History-Critical/dp/0739190652
Purchases via this link will not benefit FixPacifica.
@ May 9, 7 am: "Housing growth has not kept up with job growth since the end of the recession. Since 2010, the county as a whole has added over 54,000 new jobs while at the same time adding only 2,148 new housing units." quoted from Closing the Gap Task Force by 21 Elements, Joshua Abrams, Baird + Driskell Community Planning published on Date: January 23, 2016.
Regarding Cynthia's book, I have not read it but I did visit Russia before the end of communism, they didn't have any street sweeping machines - the babushkas did it. Also, how has communism worked out for Cuba and Venezuela, just to mention a few.
Vreeland was a liar through and through. He brought his own mental illness, complete lack of ethics and ultimate demise on himself all by himself. Karma demands payment.
Pacifica has had an unusually high number of people like Vreeland in positions of power over the years. The latest and perhapes most toxic of all is Deirdre Martin. She is a true snake, in it only for herself. Once again the NIMBY's have their evil useful idiot in place and have no problem whatsoever providing a pass to their rotten torch bearer.
Karma demands payment. This is why Pacifica is sooooo.... fucked up and dying.
8:17 don't be a tool. The damn is breaking. We all know Gov. Brown wants it to break. Engineers are in the know not trolls. Trinity in looking bad. Pfft. No one cares. Aquaducts are empty and San Joaquin is caving. Water was sucked out on purpose and sold to the highest bidder, not you. Your rates just get raised. All you asshats that have run this beautiful state into the ground by allowing commies in government will be the first to be hung.
http://www.sacbee.com/news/state/california/water-and-drought/article135838103.html
2:47
Time to get back on your meds.
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