- 23 Jun 2022 16:26
#15234638
There would have been no crisis if home prices hadn't gone down, despite the lack of regulation. Of course, assuming the price of an asset - any asset - will always go up is folly, and one would expect agents and the government will pass regulation as to make sure an unexpected price decrease will not lead to systemic risk.
Just that they'll build more to take advantage of the short term profits, which will help bring prices down.
Short-term thinking often dominates, be it under capitalism or socialism. Why do you think we keep polluting the environment? Why do some people refuse to go on diets or stop doing some drugs (legal or not) even if they know it's not healthy? Why do governments often spend beyond their means?
There's even a biological basis for preferring immediate over future rewards.
From?
Rent control suppresses residential investment (i.e. construction) so, yes, it does cause homelessness. At least some people who are homeless wouldn't be if housing was cheaper, and housing isn't cheaper because supply is being suppressed.
People who can't access rent-controlled property are clearly losing out, since their rents are showing the effects of suppressed construction and are higher than they would be without rent control. Let's not even get into the discussion of who's getting access to rent-controlled properties and who isn't, or which property owners are forced to charge lower rents and which ones are not, because selecting both by lottery need not happen in real life.
Yet for this residual population, governments can subsidize housing or even build it themselves (or both). This is the reformist approach that can be (and is) used, even in the US, yet governments won't do it if their own local zoning laws don't allow it.
Of course, governments will try to do this as cheaply as possible, like some private developers would. As such, this type of housing will often be subpar, but it's better than homelessness.
Here's an example from NYC:
@Pants-of-dog thinks that just because governments could do things differently, it means they will. No, it doesn't, just as for-profit developers will minimize costs so will governments, even honest governments will (corrupt ones will just pay inflated prices to well-connected for-profit developers who will, in turn, build them as cheaply as possible, quality be damned).
Just because he can cherry pick examples of governments building high quality properties at some point, which might have still been the cheapest option at the time, it doesn't mean that will always happen. Even worse, it's also far from clear such property will be properly maintained by the future governments either. It seems governments are far more enthusiastic about enforcing maintenance regulations on private landlords than on themselves although, to be fair, it would often come with a refusal to hike rents or wouldn't evict renters who don't actually pay rent which is obviously not something a private landlord would do.
You could then say it could be better for the governments to build the properties and sell them at cost, with subsidized mortgages for the homeless - but this would then open the questions of "what happens if the homeless person doesn't pay? Will the government evict him, which goes against solving homelessness? Will the government force this person to work to pay for rent?" I think the Soviet approach was, in fact, to charge these guys for parasitism and sentence them to hard labor. But then @Pants-of-dog would probably cry "slavery!!1!!one!"
Pants-of-dog wrote:@wat0n
1. I do not think that over abundance of homes caused the 2008 financial crisis. This seems like something you made up just now.
There would have been no crisis if home prices hadn't gone down, despite the lack of regulation. Of course, assuming the price of an asset - any asset - will always go up is folly, and one would expect agents and the government will pass regulation as to make sure an unexpected price decrease will not lead to systemic risk.
Pants-of-dog wrote:2. So you think builders will unintentionally start a new financial crisis or housing bubble that will bring down home prices?
Just that they'll build more to take advantage of the short term profits, which will help bring prices down.
Short-term thinking often dominates, be it under capitalism or socialism. Why do you think we keep polluting the environment? Why do some people refuse to go on diets or stop doing some drugs (legal or not) even if they know it's not healthy? Why do governments often spend beyond their means?
There's even a biological basis for preferring immediate over future rewards.
Pants-of-dog wrote:3. Quote the relevant text.
From?
Pants-of-dog wrote:I ignored the rest since it was loaded questions, refusal to support claims, or based on misunderstanding.
Pants-of-dog wrote:@wat0n seems to have gone from arguing that rent control causes homelessness to arguing.that increasing supply will lower prices if demand stays the same, and other basic mechanisms in economics.
This basic mechanism is the kernel of truth around which is wrapped the libertarian myth of rent control causing homelessness.
This is a classic libertarian debate tactic: identify a logical and accepted economic maxim and assume it is the only relevant factor..
Rent control suppresses residential investment (i.e. construction) so, yes, it does cause homelessness. At least some people who are homeless wouldn't be if housing was cheaper, and housing isn't cheaper because supply is being suppressed.
People who can't access rent-controlled property are clearly losing out, since their rents are showing the effects of suppressed construction and are higher than they would be without rent control. Let's not even get into the discussion of who's getting access to rent-controlled properties and who isn't, or which property owners are forced to charge lower rents and which ones are not, because selecting both by lottery need not happen in real life.
Potemkin wrote:I don’t agree with it, and I don’t think that’s what @wat0n is saying. He is simply saying that if there is more profit to be made from building houses and condos, then they will build more of them. This seems uncontroversial to me. Capitalists will invest their money where they expect a good return on investment. Increase the profitability, and they will invest more money in it. More houses and condos will get built. Will this solve the problem of homelessness? No, because capitalism always prices some people out of the marketplace. This is an inevitable consequence of using the price mechanism to achieve equilibrium between supply and demand. I repeat: only socialism can solve the problem of homelessness.
Yet for this residual population, governments can subsidize housing or even build it themselves (or both). This is the reformist approach that can be (and is) used, even in the US, yet governments won't do it if their own local zoning laws don't allow it.
Of course, governments will try to do this as cheaply as possible, like some private developers would. As such, this type of housing will often be subpar, but it's better than homelessness.
Here's an example from NYC:
NBC NY wrote:NYCHA
NYCHA Needs $40 Billion in Extra Capital, New Boss Says
Greg Russ was appointed CEO last year to turn the housing authority around after a federal settlement
By Andrew Siff • Published January 14, 2020 • Updated on January 14, 2020 at 10:24 am
New York City's scandal-plagued housing authority needs $40 billion for an effective turnaround, new chairman Greg Russ says.
Russ became chairman and CEO of NYCHA last August, with a mandate to turn the authority around under the eye of a federal monitor. He made the comment at Crain's New York Business Breakfast Forum Tuesday.
That deal came after the city and federal housing officials settled a lawsuit in early 2019, one filed by the federal government on behalf of NYCHA's 400,000 residents.
The deal required the city to spend billions fixing chronic problems with lousy living conditions, lead paint and lack of heat -- but Russ seemed to indicate Tuesday that the fixes would cost orders of magnitude more.
In fact, he said, it would be the largest infusion of capital in a public housing system in U.S. history. His estimated figure would represent roughly $100,000 worth of repairs per resident of the country's largest public housing authority.
Tenants in the system have complained for decades about rodents, mold and heat and hot water outages. A past Authority chairwoman, Shola Olatoye, left in 2018 after an investigation revealed years of falsified reports about lead paint inspections.
In late 2018, U.S. District Judge William Pauley suggested the federal government should take over the authority. The 2019 deal was seen as a bid to avert that federal takeover.
@Pants-of-dog thinks that just because governments could do things differently, it means they will. No, it doesn't, just as for-profit developers will minimize costs so will governments, even honest governments will (corrupt ones will just pay inflated prices to well-connected for-profit developers who will, in turn, build them as cheaply as possible, quality be damned).
Just because he can cherry pick examples of governments building high quality properties at some point, which might have still been the cheapest option at the time, it doesn't mean that will always happen. Even worse, it's also far from clear such property will be properly maintained by the future governments either. It seems governments are far more enthusiastic about enforcing maintenance regulations on private landlords than on themselves although, to be fair, it would often come with a refusal to hike rents or wouldn't evict renters who don't actually pay rent which is obviously not something a private landlord would do.
You could then say it could be better for the governments to build the properties and sell them at cost, with subsidized mortgages for the homeless - but this would then open the questions of "what happens if the homeless person doesn't pay? Will the government evict him, which goes against solving homelessness? Will the government force this person to work to pay for rent?" I think the Soviet approach was, in fact, to charge these guys for parasitism and sentence them to hard labor. But then @Pants-of-dog would probably cry "slavery!!1!!one!"
- By annatar1914
- By Tainari88