Total Posts:40|Showing Posts:1-30|Last Page
Jump to topic:

Why is rent control bad?

blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:19:25 AM
Posted: 3 years ago
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.
wrichcirw
Posts: 11,196
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:39:30 AM
Posted: 3 years ago
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

http://www.debate.org...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:42:47 AM
Posted: 3 years ago
At 8/14/2013 11:39:30 AM, wrichcirw wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

http://www.debate.org...

Aw that is not nice. Challenge someone to a debate over a topic they know nothing about.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:44:28 AM
Posted: 3 years ago
At 8/14/2013 11:42:47 AM, DanT wrote:
At 8/14/2013 11:39:30 AM, wrichcirw wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

http://www.debate.org...

Aw that is not nice. Challenge someone to a debate over a topic they know nothing about.

Why not? Am I an expert on rent control myself?

As the OP stated though, he's looking to take CON on his position. So why not just throw it into a debate? They tend to be more civil anyhow...I've noticed forum discussions have a tendency towards peevishness.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:47:07 AM
Posted: 3 years ago
At 8/14/2013 11:44:28 AM, wrichcirw wrote:
At 8/14/2013 11:42:47 AM, DanT wrote:
At 8/14/2013 11:39:30 AM, wrichcirw wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

http://www.debate.org...

Aw that is not nice. Challenge someone to a debate over a topic they know nothing about.

Why not? Am I an expert on rent control myself?

As the OP stated though, he's looking to take CON on his position. So why not just throw it into a debate? They tend to be more civil anyhow...I've noticed forum discussions have a tendency towards peevishness.

I was kidding. It was playful humor.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
wrichcirw
Posts: 11,196
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:48:02 AM
Posted: 3 years ago
At 8/14/2013 11:47:07 AM, DanT wrote:
At 8/14/2013 11:44:28 AM, wrichcirw wrote:
At 8/14/2013 11:42:47 AM, DanT wrote:
At 8/14/2013 11:39:30 AM, wrichcirw wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

http://www.debate.org...

Aw that is not nice. Challenge someone to a debate over a topic they know nothing about.

Why not? Am I an expert on rent control myself?

As the OP stated though, he's looking to take CON on his position. So why not just throw it into a debate? They tend to be more civil anyhow...I've noticed forum discussions have a tendency towards peevishness.

I was kidding. It was playful humor.

Well, you might be right though, lol. It wasn't exactly the nicest way to resolve the issue. =)
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 11:49:21 AM
Posted: 3 years ago
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 8:26:18 PM
Posted: 3 years ago
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 9:06:36 PM
Posted: 3 years ago
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/14/2013 9:22:55 PM
Posted: 3 years ago
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

http://www.debate.org...
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/15/2013 2:07:45 AM
Posted: 3 years ago
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

1) Rent control is always time-defined. So if houses 6-10 = 200$ per month in 1980, and you set a rent control at 1980 at 200$, then we know the landlord can cover costs.

But to offer some alternatives (I'm not sure if rent control does this now), we can just design rent control as to follow natural inflation. This way the landlord will always be able to make cost as he did in 1980. So thus he still has the ability to rent out houses 6-10.
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/15/2013 11:00:28 AM
Posted: 3 years ago
At 8/15/2013 2:07:45 AM, blueberry_crepe wrote:
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

1) Rent control is always time-defined. So if houses 6-10 = 200$ per month in 1980, and you set a rent control at 1980 at 200$, then we know the landlord can cover costs.

But to offer some alternatives (I'm not sure if rent control does this now), we can just design rent control as to follow natural inflation. This way the landlord will always be able to make cost as he did in 1980. So thus he still has the ability to rent out houses 6-10.

Iflation has to do with the output of the entire economy. Changes in housing output is not necessarily proportional to changes in the aggregate output.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/15/2013 12:32:39 PM
Posted: 3 years ago
At 8/15/2013 11:00:28 AM, DanT wrote:
At 8/15/2013 2:07:45 AM, blueberry_crepe wrote:
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

1) Rent control is always time-defined. So if houses 6-10 = 200$ per month in 1980, and you set a rent control at 1980 at 200$, then we know the landlord can cover costs.

But to offer some alternatives (I'm not sure if rent control does this now), we can just design rent control as to follow natural inflation. This way the landlord will always be able to make cost as he did in 1980. So thus he still has the ability to rent out houses 6-10.

Iflation has to do with the output of the entire economy. Changes in housing output is not necessarily proportional to changes in the aggregate output.

Rajun: Only relevant posts please. No trolling.

I'm not sure why explaining inflation is relevant to me. I know how inflation works, but that doesn't contradict what I said. The inflation-adjusting rent control adjusts for national inflation to account for rising cost. For example, if water utility cost increases, that would increase the cost the landlord has to pay. To account for that so that the landlord can still meet cost, rent control will adjust. But since it is national inflation, it won't evict poor inner-city tenants since their salary will rise with the inflation as well (considering Obama's new min wage bill).

But the inflation part wasn't the main part of my argument. What do you think about my time-stamped rent control argument in which we know the landlord will make costs the same as he did in 1980?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/15/2013 1:00:31 PM
Posted: 3 years ago
At 8/15/2013 12:32:39 PM, blueberry_crepe wrote:
At 8/15/2013 11:00:28 AM, DanT wrote:
At 8/15/2013 2:07:45 AM, blueberry_crepe wrote:
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

1) Rent control is always time-defined. So if houses 6-10 = 200$ per month in 1980, and you set a rent control at 1980 at 200$, then we know the landlord can cover costs.

But to offer some alternatives (I'm not sure if rent control does this now), we can just design rent control as to follow natural inflation. This way the landlord will always be able to make cost as he did in 1980. So thus he still has the ability to rent out houses 6-10.

Iflation has to do with the output of the entire economy. Changes in housing output is not necessarily proportional to changes in the aggregate output.

Rajun: Only relevant posts please. No trolling.

I'm not sure why explaining inflation is relevant to me. I know how inflation works, but that doesn't contradict what I said. The inflation-adjusting rent control adjusts for national inflation to account for rising cost. For example, if water utility cost increases, that would increase the cost the landlord has to pay. To account for that so that the landlord can still meet cost, rent control will adjust. But since it is national inflation, it won't evict poor inner-city tenants since their salary will rise with the inflation as well (considering Obama's new min wage bill).

But the inflation part wasn't the main part of my argument. What do you think about my time-stamped rent control argument in which we know the landlord will make costs the same as he did in 1980?

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 12:09:40 AM
Posted: 3 years ago
At 8/15/2013 1:00:31 PM, DanT wrote:
At 8/15/2013 12:32:39 PM, blueberry_crepe wrote:
At 8/15/2013 11:00:28 AM, DanT wrote:
At 8/15/2013 2:07:45 AM, blueberry_crepe wrote:
At 8/14/2013 9:06:36 PM, DanT wrote:
At 8/14/2013 8:26:18 PM, blueberry_crepe wrote:
At 8/14/2013 11:49:21 AM, DanT wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

Rent control i.e. price controls, create market inefficiencies. They throw the market out of equilibrium. A rent ceiling creates a housing shortage, where the demand exceeds the supply. A rent floor creates a housing surplus, where the supply exceeds the demand.

I would prefer to use the forum since a debate is more than "finding the truth," but is also about winning. Debate also employs rhetoric, while I merely want a logos-based argument. I also don't know why a debate would be more "civil," but I'm new to this site. I will do a debate I suppose, if you assure me you don't care about winning and will not try to argue things that you don't personally believe in order to "win." And you will concede if you failed a point or changed your mind, as will I.

As for my Econ knowledge, I have introduction to micro and macro under my belt. But that is it.

Arguments:

1) A rent ceiling (which is what rent control is) creates a housing shortage, where the demand exceeds supply.

Could you clarify this position? I understand supply-demand curves, and I know on the graph, it shows a shortage. But I don't fully trust neoliberal econ graphs on faith (I think housing differs than just simple goods like pencils), so perhaps you could explain it to me more clearly. How does rent control create a deficit. This is the way I see it:


The supply curve is determined by the marginal cost of housing. Marginal cost = Change in total cost / Change in total quantity. Total cost is maximized when Marginal Cost = 0.

The demand curve is determined by the marginal utility of housing. Marginal utility = change in total utility / change in total quantity. Total utility is maximized when Marginal Utility = 0.

The demand for housing drives up the price, because tenants compete with each other for the lease (or the purchase in the case of homeowners). This is represented when the demand curve shifts to the right.
The supply for housing drives down the price, because landlords compete with each other for tenants (or the salein the case of homeowners). This is represented when the supply curve shifts to the right.

The demand is a negative function of the price, which means as the price increases the demand will decrease.

The supply is a positive function of the price, which means as the price increases the supply will increase.

A price ceiling will prevent prices above a certain point, thereby eliminating a portion of the market. All it does is prevent voluntary contracts from forming. The price ceiling creates a deadweight loss the to economy, by placing a limit on the utility of housing.

Lets say a city has 10 people. There are 10 houses with rent control. All these people have their houses, and so supply meets demand. But then 10 new people move into the city, so demand increases. Why wouldn't real estate just build more houses to fill that demand? i.e. why would they build more houses to fill the demand when there is no rent control, but they wouldn't if there is?

Now say those 10 people have a different price range, and those 10 houses have different values.

House 1-5 = $100-$200 per month
House 6-10 = $201-$500 per month.

Tenants 1-5 = $0-$200 per month.
Tenants 6-10 = $0-$800 per month.

Now let's say the price ceiling is set at $200. That eliminates House 6-10 from the market, because the landlords would lose money if they rented it out for $200.

There is now 5 homes for the 10 tenants.

1) Rent control is always time-defined. So if houses 6-10 = 200$ per month in 1980, and you set a rent control at 1980 at 200$, then we know the landlord can cover costs.

But to offer some alternatives (I'm not sure if rent control does this now), we can just design rent control as to follow natural inflation. This way the landlord will always be able to make cost as he did in 1980. So thus he still has the ability to rent out houses 6-10.

Iflation has to do with the output of the entire economy. Changes in housing output is not necessarily proportional to changes in the aggregate output.

Rajun: Only relevant posts please. No trolling.

I'm not sure why explaining inflation is relevant to me. I know how inflation works, but that doesn't contradict what I said. The inflation-adjusting rent control adjusts for national inflation to account for rising cost. For example, if water utility cost increases, that would increase the cost the landlord has to pay. To account for that so that the landlord can still meet cost, rent control will adjust. But since it is national inflation, it won't evict poor inner-city tenants since their salary will rise with the inflation as well (considering Obama's new min wage bill).

But the inflation part wasn't the main part of my argument. What do you think about my time-stamped rent control argument in which we know the landlord will make costs the same as he did in 1980?

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 2:47:17 AM
Posted: 3 years ago
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.

As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (400/200)
"Chemical weapons are no different than any other types of weapons."~Lordknukle
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 2:49:13 AM
Posted: 3 years ago
At 8/16/2013 2:47:17 AM, DanT wrote:
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.



As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (200/200)

Sorry my iPhone changed the 200/200 to 400/200 because it memorized the 400/200
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 1:09:01 PM
Posted: 3 years ago
At 8/16/2013 2:49:13 AM, DanT wrote:
At 8/16/2013 2:47:17 AM, DanT wrote:
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.



As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (200/200)


Sorry my iPhone changed the 200/200 to 400/200 because it memorized the 400/200

Thanks, but I still don't fully understand. However, it looks like you want to carry this out in debate, so I'll comply. But could you make your argument with less math, or explain the math conceptually since I am bad at math =P.
wrichcirw
Posts: 11,196
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 1:11:08 PM
Posted: 3 years ago
At 8/16/2013 1:09:01 PM, blueberry_crepe wrote:
At 8/16/2013 2:49:13 AM, DanT wrote:

Thanks, but I still don't fully understand. However, it looks like you want to carry this out in debate, so I'll comply. But could you make your argument with less math, or explain the math conceptually since I am bad at math =P.

lol wait a moment. Did you want to debate DanT about this? Because now WE are debating this resolution, and I had nearly forgotten I issued the challenge. =)
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 5:08:18 PM
Posted: 3 years ago
At 8/16/2013 1:09:01 PM, blueberry_crepe wrote:
At 8/16/2013 2:49:13 AM, DanT wrote:
At 8/16/2013 2:47:17 AM, DanT wrote:
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.



As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (200/200)


Sorry my iPhone changed the 200/200 to 400/200 because it memorized the 400/200

Thanks, but I still don't fully understand. However, it looks like you want to carry this out in debate, so I'll comply. But could you make your argument with less math, or explain the math conceptually since I am bad at math =P.

Just because the aggregate price increases, does not mean the price of individual products will increase. Let's say the aggregate price inflated from $5 to $10. This does not mean the price of bread will double; in fact the price of bread could decline despite inflation. A calculator is much cheaper than it was in the 1970's, despite inflation. This is known as the fallacy of division; just because something is true of a thing, does not mean it is true of all its parts.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/16/2013 10:52:01 PM
Posted: 3 years ago
At 8/16/2013 5:08:18 PM, DanT wrote:
At 8/16/2013 1:09:01 PM, blueberry_crepe wrote:
At 8/16/2013 2:49:13 AM, DanT wrote:
At 8/16/2013 2:47:17 AM, DanT wrote:
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.



As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (200/200)


Sorry my iPhone changed the 200/200 to 400/200 because it memorized the 400/200

Thanks, but I still don't fully understand. However, it looks like you want to carry this out in debate, so I'll comply. But could you make your argument with less math, or explain the math conceptually since I am bad at math =P.

Just because the aggregate price increases, does not mean the price of individual products will increase. Let's say the aggregate price inflated from $5 to $10. This does not mean the price of bread will double; in fact the price of bread could decline despite inflation. A calculator is much cheaper than it was in the 1970's, despite inflation. This is known as the fallacy of division; just because something is true of a thing, does not mean it is true of all its parts.

Ok, I understand. You were pointing out that following inflation doesn't mean you have the same standard of living since, for example, food can decrease in price despite inflation. Still following inflation is needed in order to have the same purchasing power, so at the very least it should follow inflation.

Also, I think we are caught up in my confusion on technical terms. Ignoring that, I'll just say rent control will increase so that the landlord can still maintain cost and purchasing power, but does not increase his profit. That way, he does not exploit tenants when there is enough demand for that apartment.

Also, wrich, sorry but I thought you were DanT lol. We can still argue if you want, or I can continue arguing with DanT on the forum. It doesn't matter to me. Rent control has just been in my mind for a long time and I just want to understand it before I form as strong (as opposed to my current weak) position. Full disclosure, I have a feeling the rent control is bad argument is based on a certain set of neoclassical assumptions that is fundamentally opposed to my assumptions that ethics>efficiency and that GDP growth is not a normative good (as the Ecological Economics school argues). I'm not sure, and for all I know rent control is still bad under my personal assumptions, but we will see. Thanks.
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/17/2013 8:25:32 AM
Posted: 3 years ago
At 8/16/2013 10:52:01 PM, blueberry_crepe wrote:
At 8/16/2013 5:08:18 PM, DanT wrote:
At 8/16/2013 1:09:01 PM, blueberry_crepe wrote:
At 8/16/2013 2:49:13 AM, DanT wrote:
At 8/16/2013 2:47:17 AM, DanT wrote:
At 8/16/2013 12:09:40 AM, blueberry_crepe wrote:
At 8/15/2013 1:00:31 PM, DanT wrote:

Inflation = % change in aggregate price = % change in monetary supply + % change in the Velocity of money (which is constant) - % change in aggregate output.

Due to velocity being constant Inflation = % change in monetary supply - % change in aggregate output.

Now let's assume there are only 2 industries; Housing and Food.

The money supply at time A = $400
The price of housing at time A = $200 per month
The output of housing at time A = 200
The price of food at time A = $200 per month
The output of food at time A = 200
The aggregate price at time A = $200 per month

The money supply at time B = $800
The output of housing at time B = 200
The output of food at time B = 400

As a result;
The aggregate price at time B = $300 per month
The price of food at time B = $400 per month
The price of housing at time B = $200 per month

If rent was adjusted according to inflation, it would throw the price out of equilibrium.

I'm not sure what you just said. Please clarify. Is "output" the amount of houses at the time? Is "money supply" the amount of money at that time? and how did you calculate "aggregate price?"

Output is the quantity. The aggregate output is the GNP. The money supply = cash + deposits.

Price = Money Supply x velocity / Aggregate output

% Change in Price = Price B / Price A
% Change in Money Supply = Money Supply B / Money Supply A
% Change in Velocity = Velocity B / Velocity A
% Change in Output = Output B / Output A

% Change in Price = % Change in Monetary Supply + % Change in Velocity - % Change in Output

Price B = Price A x (Monetary Supply B/Monetary Supply A) + (velocity B/velocity A) - (output B/Output A)

$400 = $200 x ($800/$400) + (200/200) - (600/400)

Looks like I made a mistake, but I was being rushed out the door when I was trying to calculate the price.



As a result;
The aggregate price at time B = $400 per month
The price of food at time B = $333.33 per month
The price of housing at time B = $266.67 per month

$333.33 = $200 x ($533.33/$200) + 1 - (400/200)

$266.67 = $200 x ($266.67/$200) + 1 - (200/200)


Sorry my iPhone changed the 200/200 to 400/200 because it memorized the 400/200

Thanks, but I still don't fully understand. However, it looks like you want to carry this out in debate, so I'll comply. But could you make your argument with less math, or explain the math conceptually since I am bad at math =P.

Just because the aggregate price increases, does not mean the price of individual products will increase. Let's say the aggregate price inflated from $5 to $10. This does not mean the price of bread will double; in fact the price of bread could decline despite inflation. A calculator is much cheaper than it was in the 1970's, despite inflation. This is known as the fallacy of division; just because something is true of a thing, does not mean it is true of all its parts.

Ok, I understand. You were pointing out that following inflation doesn't mean you have the same standard of living since, for example, food can decrease in price despite inflation. Still following inflation is needed in order to have the same purchasing power, so at the very least it should follow inflation.

Unless all other prices in the economy are also adjusted for inflation, it could actually hurt the purchasing power. Adjusting for inflation could cause the nominal price to rise above the real price, thereby reducing the purchasing power.

Also, I think we are caught up in my confusion on technical terms. Ignoring that, I'll just say rent control will increase so that the landlord can still maintain cost and purchasing power, but does not increase his profit. That way, he does not exploit tenants when there is enough demand for that apartment.

Rent control is sticky, for the same reason rent is sticky. Rent is specified in a contractual agreement, based on the expected price levels. When prices are higher or lower than expected it throws the market out of equilibrium. Rent control is even more sticky than rent, because it is set by legislation, which is harder to change, predict, or adjust. The only time price ceilings are beneficial is when the nominal price is above the actual price, and the price ceiling is at equilibrium; this is extremely rare.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
Jake-migkillertwo
Posts: 67
Add as Friend
Challenge to a Debate
Send a Message
8/17/2013 1:31:40 PM
Posted: 3 years ago
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

The economics are really simple. There is only so much housing that landlords are willing to provide at a certain price, and only so much housing that customers are willing to buy at a certain price. Under free markets, these two prices equal eachother and the amount of housing that people are willing to buy matches the amount that landlords are willing to sell.

Under a price ceiling below the market clearing rate, renters want to buy more than landlords are willing to sell. So rent control just reduces the quantity of housing sold.

As to your second question, There really is no "heterodox" position on rent control. Economists of all stripes, be they marxists, austrians, or neoclassicals, are more or less united on this particular issue, which is why every principles of economics textbook written in the past 30 years uses rent control as an example of why markets are generally good and government meddling is generally bad.
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/18/2013 7:41:44 PM
Posted: 3 years ago
At 8/17/2013 1:31:40 PM, Jake-migkillertwo wrote:
At 8/14/2013 11:19:25 AM, blueberry_crepe wrote:
I will argue the dissent, but only as a devil's advocate; my true purpose is to understand why, if it is true, that rent control is bad, because as it stands now, I haven't been convinced by the arguments I have read online. Perhaps it is because the arguments weren't explained well enough to me, thus I turn to this forum.

Please list the reasons in numbered order so it is better for me to agree/counter.

Also, as a secondary question, does anyone know the heterodox economics perspective on rent control? That is, is "rent control is bad" only a neoliberal economics consensus, or also a heterodox economics consensus?

Thanks.

The economics are really simple. There is only so much housing that landlords are willing to provide at a certain price, and only so much housing that customers are willing to buy at a certain price. Under free markets, these two prices equal eachother and the amount of housing that people are willing to buy matches the amount that landlords are willing to sell.

Under a price ceiling below the market clearing rate, renters want to buy more than landlords are willing to sell. So rent control just reduces the quantity of housing sold.

As to your second question, There really is no "heterodox" position on rent control. Economists of all stripes, be they marxists, austrians, or neoclassicals, are more or less united on this particular issue, which is why every principles of economics textbook written in the past 30 years uses rent control as an example of why markets are generally good and government meddling is generally bad.

DanT: Thanks, but that is still too abstract for me. Could you phrase it practically?

Jake: Most, if not all, economics textbooks are written by mainstream economist, so that is not a good reason to think there is no heterodox position. Yet, I still trust you that there is no heterodox position.

I'm still confused by your argument. Why would renters want more? I am renting my apartment right now. Just because my city starts implementing rent control does not mean I would want to rent another place. I will still only want/need one place.
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/18/2013 7:57:27 PM
Posted: 3 years ago
Additionally, I am confused in terms of giving people housing, in which critics argue rent control would lead to less people being housed.

Let's say society is composed of 100 people. In Gotham City, there are 10 houses filled by 10 poor people who have lived there their whole lives. Without rent control, demand would just keep increasing until those 10 people have to move away, say to Crimson City. An alternative is new housing will be built in Gotham City so the new people can move in and the original 10 can remain. But seeing as in cities like SF and NYC, rent rises rather than new housing being built to fulfill the demand (this is why poor people are moving out of city centers), I am less confident that those 10 people will remain in their childhood homes.

However, in a rent controlled situation, instead of those 10 original people having to move to Crimson City, the new people will have to move to Crimson City instead. This way we protect the community ties of the old people and everyone gets housing.

In short, instead of poor people moving to new housing, rich people move to the housing that the poor people were going to move to.
Jake-migkillertwo
Posts: 67
Add as Friend
Challenge to a Debate
Send a Message
8/18/2013 7:58:19 PM
Posted: 3 years ago
At 8/18/2013 7:41:44 PM, blueberry_crepe wrote:
Jake: Most, if not all, economics textbooks are written by mainstream economist, so that is not a good reason to think there is no heterodox position. Yet, I still trust you that there is no heterodox position.

I'm still confused by your argument. Why would renters want more? I am renting my apartment right now. Just because my city starts implementing rent control does not mean I would want to rent another place. I will still only want/need one place.

Well for one, even heterodox economists do accept the basic partial equilibrium/supply and demand analysis behind the conventional rent control. You'd be hard pressed to find even one economist with a Ph.D who denies that rent control reduces teh quantity of housing.

Second, some people will certainly want more as the price declines. Persons who are marginally attached to their residence or are actively seeking a new place to live will be more likely to demand housing in new york when the price goes down.
wrichcirw
Posts: 11,196
Add as Friend
Challenge to a Debate
Send a Message
8/19/2013 9:37:53 AM
Posted: 3 years ago
At 8/18/2013 7:57:27 PM, blueberry_crepe wrote:
Additionally, I am confused in terms of giving people housing, in which critics argue rent control would lead to less people being housed.

Let's say society is composed of 100 people. In Gotham City, there are 10 houses filled by 10 poor people who have lived there their whole lives. Without rent control, demand would just keep increasing until those 10 people have to move away, say to Crimson City.

This portion is incorrect. With OR without rent control, demand keeps increasing. Why? Because there are 100 people needing housing and only 10 houses.

What you're saying here is that PRICE increases until those 10 people have to ostensibly move away, and that is most likely true. They'll either have to increase their net worth to match that of the other 90 people, or move out.

An alternative is new housing will be built in Gotham City so the new people can move in and the original 10 can remain. But seeing as in cities like SF and NYC, rent rises rather than new housing being built to fulfill the demand (this is why poor people are moving out of city centers), I am less confident that those 10 people will remain in their childhood homes.

Yes. Those 10 people were fortunate enough to live in a very high-demand area. They had their early start to make that area work for them. If they couldn't, then others better-equipped to take advantage of the productivity inherent in the area will move in. It's somewhat Darwinian, but economics is all about competition.

However, in a rent controlled situation, instead of those 10 original people having to move to Crimson City, the new people will have to move to Crimson City instead. This way we protect the community ties of the old people and everyone gets housing.

This is true.

In short, instead of poor people moving to new housing, rich people move to the housing that the poor people were going to move to.

Hmmm...interesting. I think the main idea stems from productivity. Are those newcomers able to bring more to the area? Are those newcomers able to more fully realize the productive potential of that area? The answer is more than likely yes if they are wealthier.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
DanT
Posts: 5,693
Add as Friend
Challenge to a Debate
Send a Message
8/19/2013 10:40:12 AM
Posted: 3 years ago
At 8/18/2013 7:57:27 PM, blueberry_crepe wrote:
Additionally, I am confused in terms of giving people housing, in which critics argue rent control would lead to less people being housed.

Let's say society is composed of 100 people. In Gotham City, there are 10 houses filled by 10 poor people who have lived there their whole lives. Without rent control, demand would just keep increasing until those 10 people have to move away, say to Crimson City. An alternative is new housing will be built in Gotham City so the new people can move in and the original 10 can remain. But seeing as in cities like SF and NYC, rent rises rather than new housing being built to fulfill the demand (this is why poor people are moving out of city centers), I am less confident that those 10 people will remain in their childhood homes.

However, in a rent controlled situation, instead of those 10 original people having to move to Crimson City, the new people will have to move to Crimson City instead. This way we protect the community ties of the old people and everyone gets housing.

In short, instead of poor people moving to new housing, rich people move to the housing that the poor people were going to move to.

Let's say there are 10 houses and 10 tenants. 8 of the houses are filled by 8 tenants, and there are 2 houses still on the market with 2 tenants searching for homes.

Now lets say rent control was implemented, and only 5 houses are capable of generating a profit at the maximum rate. This causes 3 more houses to stop renting
the 2 houses on the market to stop renting, along with 3 houses that were currently renting. Now 5 houses are off the market, and the 2 people looking for housing became 5.
"Chemical weapons are no different than any other types of weapons."~Lordknukle
blueberry_crepe
Posts: 25
Add as Friend
Challenge to a Debate
Send a Message
8/19/2013 11:30:16 AM
Posted: 3 years ago
DanT: Why would they stop renting? We just have to design rent control so landlords still make a profit, but just not an extravagant one based on demand.

Wrich: Why does productivity matter? On a moral level, why does productivity matter over the poor?