rent control papers

Rent Control Rent Control PapersPapers

Some of your creative Some of your creative headlinesheadlines


There’s No Such Thing as a Free There’s No Such Thing as a Free LunchLunch



Out of (Rent) Control!Out of (Rent) Control!



Out of (Rent) Control!Out of (Rent) Control! No VacancyNo Vacancy



Out of (Rent) Control!Out of (Rent) Control! No VacancyNo Vacancy Much Less for Much MoreMuch Less for Much More

Prices and Prices and Markets: Markets: OverviewOverview

Remember Definition of Remember Definition of EconEcon

““Economics is a study of the cause-Economics is a study of the cause-and-effect relationships in an and-effect relationships in an economy. Its purpose is to discern economy. Its purpose is to discern the consequences of various ways of the consequences of various ways of allocating scarce resources that allocating scarce resources that have alternative uses.”have alternative uses.”

Remember Definition of Remember Definition of EconEcon

““Economics is a study of the cause-Economics is a study of the cause-and-effect relationships in an and-effect relationships in an economy. Its purpose is to discern economy. Its purpose is to discern the consequences of various ways of the consequences of various ways of allocating scarce resources that allocating scarce resources that have alternative uses.”have alternative uses.”

““It has nothing to say about social It has nothing to say about social philosophy or moral values…”philosophy or moral values…”

Systemic InteractionsSystemic Interactions


Involves complex, reciprocal Involves complex, reciprocal interactions rather than one-way interactions rather than one-way causationcausation



In turn, systemic interactions reduce In turn, systemic interactions reduce the role of individual intentionsthe role of individual intentions




Example: rising prices attributed to Example: rising prices attributed to “greed”“greed”




Example: rising prices attributed to Example: rising prices attributed to “greed”“greed”

Such explanation ignores the role of Such explanation ignores the role of pricesprices

Systemic Interactions: Systemic Interactions: Higher prices in poor Higher prices in poor

neighborhoodsneighborhoods


neighborhoodsneighborhoods Often blamed on “exploitation,” Often blamed on “exploitation,”

“greed,” “gouging” and “greed,” “gouging” and “discrimination”“discrimination”




Systemic interactions explain higher Systemic interactions explain higher pricesprices




Systemic interactions explain higher Systemic interactions explain higher pricesprices

Delivery costs, insurance costs, Delivery costs, insurance costs, security costs, vandalism costs, security costs, vandalism costs, smaller transactionssmaller transactions


neighborhoodsneighborhoods Often blamed on “exploitation,” “greed,” Often blamed on “exploitation,” “greed,”

“gouging” and “discrimination”“gouging” and “discrimination” Systemic interactions explain higher Systemic interactions explain higher

pricesprices Delivery costs, insurance costs, security Delivery costs, insurance costs, security

costs, vandalism costs, smaller costs, vandalism costs, smaller transactionstransactions

Profit margins often lower in poorer Profit margins often lower in poorer neighborhoods even with the higher neighborhoods even with the higher pricesprices

Systemic interactions: Systemic interactions: 20102010


Health care reform (aka Health care reform (aka ObamaCare) mandates changes to ObamaCare) mandates changes to private insurance policies... no private insurance policies... no lifetime max, kids can stay on lifetime max, kids can stay on parents’ policy until age 26, new parents’ policy until age 26, new benefits such as “free” preventive benefits such as “free” preventive carecare


Health care reform (aka ObamaCare) Health care reform (aka ObamaCare) mandates changes to private mandates changes to private insurance policies... no lifetime max, insurance policies... no lifetime max, kids can stay on parents’ policy until kids can stay on parents’ policy until age 26, new benefits such as “free” age 26, new benefits such as “free” preventive carepreventive care

No surprise: prices for private No surprise: prices for private policies rising sharply despite stated policies rising sharply despite stated intentions to lower costsintentions to lower costs


Health care reform (aka ObamaCare) Health care reform (aka ObamaCare) mandates changes to private insurance mandates changes to private insurance policies... no lifetime max, kids can stay on policies... no lifetime max, kids can stay on parents’ policy until age 26, new benefits parents’ policy until age 26, new benefits such as “free” preventive caresuch as “free” preventive care

No surprise: prices for private policies No surprise: prices for private policies rising sharply despite stated intentions to rising sharply despite stated intentions to lower costslower costs

No surprise: HHS Secretary Sebelius No surprise: HHS Secretary Sebelius blames increases on “greed”blames increases on “greed”

Why not understanding Why not understanding systemic interactions systemic interactions

causes problemscauses problems

““Rent control appears to be Rent control appears to be the most efficient the most efficient

technique presently known technique presently known to destroy a city – except to destroy a city – except

for bombing.”for bombing.”

Basic Economic Principle Basic Economic Principle DepartmentDepartment

““Incentives matter because Incentives matter because most people will usually most people will usually do more for their own do more for their own

benefit than the benefit of benefit than the benefit of others”others”

Scarcity and CompetitionScarcity and Competition


One option to distribute SRTHAU: One option to distribute SRTHAU: Those who hold political power Those who hold political power decide how resources should be decide how resources should be allocated to different uses and the allocated to different uses and the resulting productsresulting products


One option to distribute SRTHAU: One option to distribute SRTHAU: Those who hold political power Those who hold political power decide how resources should be decide how resources should be allocated to different uses and the allocated to different uses and the resulting productsresulting products

Happens in socialist, communist and Happens in socialist, communist and even in free market economieseven in free market economies


One option to distribute SRTHAU: One option to distribute SRTHAU: Those who hold political power decide Those who hold political power decide how resources should be allocated to how resources should be allocated to different uses and the resulting different uses and the resulting productsproducts


Political decision making tends toward Political decision making tends toward ‘categorical priorities’ – making one ‘categorical priorities’ – making one thing more important than anotherthing more important than another

Scarcity and CompetitionScarcity and Competition One option to distribute SRTHAU: Those One option to distribute SRTHAU: Those

who hold political power decide how who hold political power decide how resources should be allocated to different resources should be allocated to different uses and the resulting productsuses and the resulting products


Political decision making tends toward Political decision making tends toward ‘categorical priorities’ – making one thing ‘categorical priorities’ – making one thing more important than anothermore important than another

Examples?Examples?

Subsidies and TaxesSubsidies and Taxes


Competition is distorted when Competition is distorted when special taxes are put on some special taxes are put on some products or resources but not on products or resources but not on othersothers


Competition is distorted when Competition is distorted when special taxes are put on some special taxes are put on some products or resources but not on products or resources but not on othersothers

Also distorted when some products Also distorted when some products are subsidized while others are notare subsidized while others are not

Strange but trueStrange but true

Ostrich feed, tickets to the ballet, Ostrich feed, tickets to the ballet, bottled water, bait for crab traps, bottled water, bait for crab traps, skybox rentals, deep sea charters skybox rentals, deep sea charters and 240 more items/services are and 240 more items/services are exempt from Florida sales taxexempt from Florida sales tax

Remember our Remember our politicians…politicians…


However, politicians to win votes do However, politicians to win votes do special favors for special interests by special favors for special interests by putting taxes on whomever or putting taxes on whomever or whatever might be unpopular at the whatever might be unpopular at the moment… and removing taxes on moment… and removing taxes on buddiesbuddies


However, politicians to win votes do However, politicians to win votes do special favors for special interests by special favors for special interests by putting taxes on whomever or putting taxes on whomever or whatever might be unpopular at the whatever might be unpopular at the moment… and removing taxes on moment… and removing taxes on buddiesbuddies

There are more ill-conceived There are more ill-conceived economic policies based on treating economic policies based on treating prices as just nuisancesprices as just nuisances

Basic Economic Principle Basic Economic Principle DeptDept

Making anything artificially Making anything artificially cheap usually means that cheap usually means that

it will be wasted, it will be wasted, whatever that thing might whatever that thing might be and wherever it might be and wherever it might

be locatedbe located


Option 2: Let individuals compete Option 2: Let individuals compete for scarce resources… a price-for scarce resources… a price-coordinated economycoordinated economy



Such self-rationing means less social Such self-rationing means less social and political friction and more and political friction and more economic efficiencyeconomic efficiency



Such self-rationing means less social Such self-rationing means less social and political friction and more and political friction and more economic efficiencyeconomic efficiency

Incremental substitution: oranges Incremental substitution: oranges and tangerinesand tangerines


Option 2: Let individuals compete for Option 2: Let individuals compete for scarce resources… a price-coordinated scarce resources… a price-coordinated economyeconomy

Such self-rationing means less social and Such self-rationing means less social and political friction and more economic political friction and more economic efficiencyefficiency

Incremental substitution: oranges and Incremental substitution: oranges and tangerinestangerines

Under a price system, people ration Under a price system, people ration themselvesthemselves

Margaret ThatcherismMargaret Thatcherism

““The problem with The problem with socialism is you socialism is you

eventually run out eventually run out of other people’s of other people’s

money”money”

Assignment for Assignment for September 28September 28

Pick up one section Pick up one section Wall Street Wall Street JournalJournal



Select one article for analysis: make Select one article for analysis: make it a juicy one!it a juicy one!



Select one article for analysis: make Select one article for analysis: make it a juicy one!it a juicy one!

Write a 250-paper analyzing the Write a 250-paper analyzing the story in terms of what we’ve learned story in terms of what we’ve learned so far about economics. so far about economics. Clip out Clip out your article and attach your article and attach to your to your paper.paper.


Pick up one section Pick up one section Wall Street JournalWall Street Journal Select one article for analysis: make it a juicy Select one article for analysis: make it a juicy

one!one! Write a 250-paper analyzing the story in Write a 250-paper analyzing the story in

terms of what we’ve learned so far about terms of what we’ve learned so far about economics. economics. Clip out your article and attach Clip out your article and attach to to your paper.your paper.

Look for prices, government policies, Look for prices, government policies, unintended consequences, “greed,” business unintended consequences, “greed,” business failures, people acting for their own benefit, failures, people acting for their own benefit, etc.etc.

rent control papers

Documents

reciprocal interactions

higher pricesdelivery

insurance costs

rising prices

vandalism costs

security costs

poor neighborhoodsoften

creative headlinestheres