
Home is where the cartel is: On the politics and economics of land-use controls - jseliger
http://www.interfluidity.com/v2/6287.html
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vezzy-fnord
This is a reasonable article about how people are inclined to use the
political method to secure their interests at the expense of others, and how
as such more naive deregulatory policies without institutional changes will
quickly reswitch back into a different pathological state as other rent-
seeking opportunities are discovered.

I'm not entirely convinced by the paragraph on rent control. The author is
resting on the assumption that new housing construction _post facto_ overcomes
regulatory hurdles, but it seems to me a broader picture of regime uncertainty
and adaptive expectations might still skew the allocation of resources, and
this discount be reflected in the rent being "too damn high". Actually, he
mentions the market-clearing quantity, but seems to gloss over that a modern
mixed economy has many forces countervailing from markets ever clearing.

The dichotomy of housing as capital/investment good v. housing as consumer
good is interesting, but again, I'm unconvinced of how one function _excludes_
the other, unless there is something countervailing the process of
speculation.

I'm sensing a Georgist vibe from this whole thing, but the author stops short
of advocating a land value tax. There's some issues with qualifying what an
"unimproved" value of land would be, and also on the valid uses of a resource
being idle. I'm unfamiliar with the housing trends in countries that implement
LVTs, but they're worth researching.

~~~
eru
Rent control is more complicated.

Rent control on existing units makes less of them available on the market.
That drives demand for new units (that are not under rent control). That's the
opposite of the straw man position the author argues against.

The real problem with rent control is that on the supply side it removes
incentives for upgrading or even just maintaining existing property; and on
the demand side it discourages an efficient allocation of scarce resources.

~~~
simoncion
Keep in mind that what you describe does _not_ describe the effect San
Francisco's Rent Stabilization ordinances have on the SF housing market. I've
written about this at length, many times, but the summary of the most salient
points:

* RS only applies to buildings built _before_ ~1979.

* RS does not apply to buildings built _after_ that date.

* RS only controls rent while one or more of the original tenants on the rent-rate-establishing lease occupy a controlled unit. Once zero of those tenants occupy that unit, rent can be set to _any_ value.

* RS permits all _sorts_ of passthroughs direct to the tenants in the building... city bonds, water bonds, capital improvements, maintenance cost increases, _increases in the cost to service the landlord 's debt_...

The SF rent board's site has more details. [0] So does my comment history.

[0] [http://sfrb.org/](http://sfrb.org/)

~~~
eru
Interesting. Thanks!

> * RS permits all sorts of passthroughs direct to the tenants in the
> building... city bonds, water bonds, capital improvements, maintenance cost
> increases, increases in the cost to service the landlord's debt...

Sounds like a good lawyer / accountant should make rent control toothless for
the landlord?

~~~
simoncion
> Sounds like a good lawyer / accountant should make rent control toothless
> for the landlord?

Potentially, kinda, yeah. There are some limits (depending on how many
buildings the landlord controls) on how much of an increase can be imposed how
frequently [0], but if you're _sufficiently_ nasty and clever, you _could_
squeeze substantially more out of your tenants than a naive understanding of
the RS ordinances would lead one to expect.

[0] Though, for things like municipal bonds, legally mandated retrofitting,
and water cost increases, there are -IIRC- no limits.

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briandh
One response to this piece (not by me, to be clear):
[http://marketurbanism.com/2015/12/26/a-response-to-
interflui...](http://marketurbanism.com/2015/12/26/a-response-to-
interfluidity/)

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eru
Despite some parts I disagree with: big kudos to the author for looking
outside the US to see how other countries are dealing with these problems.

(I happen to have lived in both Germany and Singapore, and a few other
places.)

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jakozaur
Really hard problem to solve.

Maybe with technology advances such as telepresence robots location will
matter less, so cities will have to start competing against each other?

On the other hand, the whole software industry which can be perform from any
office with the internet is so heavily condensed in San Francisco...

~~~
ZenoArrow
The problem can be tackled by making efforts to tailor new developments to the
environment they are being placed in.

[http://youtu.be/Hy4QjmKzF1c](http://youtu.be/Hy4QjmKzF1c)

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mwsherman
On the political economy side, it’s unlikely that we will displace things like
the mortgage interest deduction. What if we were to introduce a renters’
deduction instead?

~~~
eru
They have something interesting in Switzerland, called Eigenmietwert
([https://de.wikipedia.org/wiki/Eigenmietwert](https://de.wikipedia.org/wiki/Eigenmietwert)).
Alas, no English Wikipedia article.

The idea is like that: on the one hand renters pay rent with post-tax money.
But owners pay mortgages with pre-tax money. To equalize the two situations,
owners-occupiers get taxed on the virtual income they are at once producing
and consuming---ie they are taxed as if they were renting to themselves.

