When rent is “too damn high,” people move. Yet many cities still impose rotating rent controls, in a misguided attempt to make housing more affordable.
Governments can hardly be credited with behaving as rational actors. Still, for those of you with a lingering sense that maybe rent control-mongers might have a point, here’s a nonexhaustive list of why rent control is such bad policy:
- Rent control reduces landlords’ incentives to rent out apartments. This means that rent control in a city keeps apartments available for rent scarce.
- Demand skyrockets for the few available apartments. Unable to respond to rising demand in the logical way–raising price–landlords impose conditions on renters, or stop responding immediately to renters’ complaints because, after all, with such low vacancy levels renters have nowhere to go. This keeps relations between landlords and tenants tense and aggressive–hardly the friendly neighborhood model community-minded rent control-ers had in mind…!
- Landlords paying more for apartments than they’re able to collect in rent cannot afford to maintain or repair units. Apartments stay in disrepair for the duration of rent-controlled tenancy, until landlords can collect market prices and therefore pay plumbers, caulkers, repairmen, etc.
- Rent-controlled apartments cause stagnation. Tenants paying below-market prices for apartments are unlikely to move, even for higher wages or better jobs. This suppresses long-term economic growth, marginally disincentivizes the rent-controlled tenant’s instinct to find any work when unemployed, and depresses neighborhoods’ development overall.
- Landlords afraid of statistically-inevitable squatters will rationally prefer shorter-term renters, inadvertently discriminating against just the people rent control is ostensibly designed to help, like retirees or families with young children.
- Like any price control, restriction begets more restriction. If rent increases are only allowed between leases, rational landlords will not hesitate to evict bad tenants, even where under market price landlords would have more compassion for the same bad tenants. This translates to demand for further government interference on behalf of tenants, i.e., into deeper bureaucracy, more policing, and ever-more-developed landlords’ search for loopholes.
Richard Morrison and Marc Scribner welcome very special guest Katherine Mangu-Ward to Episode 103 of the LibertyWeek podcast. We discuss the Pentagon’s brownie recipe, the organic food police, the war on online classrooms and Katherine’s chapter in the recently released book from Templeton Press, New Threats to Freedom.
With a notice from the Defense Department that it is selling $122 million of equipment to Great Britain, the 2010 Federal Register passed 30,000 pages.
After 103 working days, the total page count is 30,265. Assuming 250 working days in a year, this year’s Federal Register is on pace for 73,459 pages.
The average count during the Bush administration was 73,416 pages.
Like most of President Obama’s policies, this represents less than a one percent change from the Bush years.
Here’s an excerpt from an early 1980s Office of Management and Budget report:
An agency subject to the provisions of the Federal Reports Act may enter into an arrangement with an organization not subject to the Act whereby the organization not subject to the Act collects information on behalf of the agency subject to the Act. The reverse also occurs.
If you work for the Department of Energy’s Federal Energy Regulatory Commission, a regulation requires you to keep records of your off-the-record communications.
Which means off-the-record communications aren’t really off the record.
In fact, 18 CFR 385.2201(b) requires FERC to post a notice in the Federal Register whenever this happens. There was one today, for example. It’s public!
Which brings up the following conundrum: if FERC policy is that off-the-record communications are actually on the record, then there are no off-the-record communications. Therefore, regulations applying to off-the-record communications are at best redundant , because there are no off-the-record comments.
Oh, never mind.
Innovations are risky. Entrepreneurs are willing to walk those paths because they hope to profit. They devote time, money and energies which may fail. Since the allocation of the “seed corn” of society is important, it is critical that the allocation decisions of the entrepreneurs are adequately disciplined.
There are two polar ways of achieving this discipline: the competitive disciplines of the market, and the bureaucratic disciplines of political regulation. In the first, the entrepreneur profits if she succeeds, and loses if she fails.
The political response is often to subsidize failure – to bail out failed ventures. The outcry that results often creates demands for tighter control over innovation. The results can be fatal for innovation as the creativity of the market is held down to “bureaucracy speed.”
Is this wise?
The 2010 Federal Register passed the 10,000 page mark this morning. It hit the milestone with a State Department request for grant proposals for a “One-time Competitive Grants Program – Competition A – Academic Programs.” $8,000,000 of grants are available if you’re interested.
I noted earlier that it only took 4 working days to top 1,000 pages. Now, after 42 working days, the grand total is 10,158. That’s an average of 242 new pages of rules and notices every working day.
Assuming 250 working days this year, the 2010 Federal Register is on pace to reach 60,464 pages. This would be substantially lower than last year’s figure of 68,598. Part of the slowdown is likely due to the four-day federal shutdown from last month’s snow storms. Another factor is a relative lack of major legislation (so far), as often happens in election years.
Did you know that the federal government has a Gastrointestinal Drugs Advisory Committee? It’s true. If you don’t believe me, you can attend their upcoming meeting on February 23. The topic of the day will be a new drug application to treat hepatic encephalopathy.
Hopefully some hepatic encephalopathy sufferers will be there. They can ask the Committee why the FDA takes as long as a decade (and as much as $800 million!) to approve medications that could be helping people and saving lives right now.
Remember the raw oyster ban from a recent Regulation of the Day? I am happy to report a partial victory (hat tip to Jacob Grier).
The ban, due to take effect in 2011, has not been repealed outright. But, in response to public outcry, it has been delayed:
The FDA announced it would commission a study to explore alternatives to reducing the illness vibrio vulnificus, and also do an economic analysis of how the ban would impact the oyster industry.
“Before proceeding, we will conduct an independent study to assess how post-harvest processing or other equivalent controls can be feasibly implemented in the Gulf Coast in the fastest, safest and most economical way,” according to an FDA news release.
[youtube:http://www.youtube.com/watch?v=zS7phV9-0WA 285 234]
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