
Rent Control Needs Retirement, Not a Comeback - jseliger
https://www.bloomberg.com/view/articles/2018-02-07/rent-control-needs-retirement-not-a-comeback
======
adrianN
Recently I was in SF for the first time. I was pretty shocked to see the
endless rows of tiny one story + garage houses separated by impossibly wide
streets. No wonder housing is so expensive. The city could easily double its
density by building more apartment buildings.

~~~
codingdave
True, but not everyone wants their city to be packed full or large brick cubes
that block the views of everything else.

~~~
adrianN
I don't think you can see all that much from the first floor of one of those
houses. Higher density doesn't have to be ugly. Compare this random small
street in Berlin

[https://goo.gl/maps/hvkzDG4u9Tp](https://goo.gl/maps/hvkzDG4u9Tp)

with this random "small" street in SF

[https://goo.gl/maps/dJzn86V9ers](https://goo.gl/maps/dJzn86V9ers)

It's even more stark when you compare larger streets. Berlin:

[https://goo.gl/maps/hBg7aMA2Feu](https://goo.gl/maps/hBg7aMA2Feu)

SF:

[https://goo.gl/maps/YFcVLSWHPzS2](https://goo.gl/maps/YFcVLSWHPzS2)

I guess you can see why I thought the density in SF to be pretty ridiculous.

Low density wouldn't be so much of a problem, imho, if the zoning would be
better. Why does a large fraction of the population have to commute downtown
to the skyscrapers? Couldn't the offices be spread out a bit more? Why are
supermarkets to far apart? I did a lot of walking while in SF and in many
parts of the city I had the feeling that sidewalks were more decorative than
meant for transportation, because there were no shops or small businesses for
a kilometer or more around.

~~~
bpicolo
Berlin is half as population dense as SF, and has more surface area to spread
out. SF is stuck in a single 49 mi^2 peninsula. That's not to say issues can't
be solved in a variety of ways, it just doesn't seem like Berlin is a good
point of comparison.

[https://www.google.de/maps/@52.5351488,13.4089075,266a,35y,2...](https://www.google.de/maps/@52.5351488,13.4089075,266a,35y,223.57h,44.91t/data=!3m1!1e3)

This sort of layout in Berlin is something common in Europe that I kinda of
wish existed in US cities. (Barcelona is similar too?)

~~~
adrianN
I don't like comparing cities' density numbers as given by Wikipedia because
many cities, Berlin included, include large areas that have really low
density. Berlin for example has more than 4000 hectares of forest inside its
city limits where nobody lives. If you go by these numbers, SF is denser than
Tokyo.

~~~
bpicolo
Yeah, was trying to get at that with `has more surface area to spread out`.
Suburban sprawl doesn't work as well in SF.

~~~
pwinnski
That seems like double-counting, then. The density numbers are based on the
total area divided by the total residents. If the residents are squeezed into
half the area, it should not be said that there is lower density _and_ more
space to spread out. The lower density is already because of the space.

~~~
bpicolo
I don't think so, the point there is that SF physically has no room for
suburban sprawl because it's a single stranded peninsula. Berlin is both
currently less dense, and also has further room to expand geographically. One
might disagree but it makes sense that way to me

------
wheaties
Just so people understand where I'm coming from with what I'm about to say, my
family has worked and existed in the construction business for a long time.
Houses to rent out were considered the safest income producing retirement
asset to invest money. Then rent control was introduced.

Fast forward 20yrs later and rent had stayed the same but taxes and municipal
fees had increased to the point where they dwarfed the legally allowable
income. Add to this new mandates which stipulated how electricity and water
could be billed to tenants requiring installation of new equipment in the
buildings every few years. Then throw in rising insurance rates coupled with
rising maintenance expenses.

So, we took at look at the figures and decided the best course of action was
to either bulldoze a set of perfectly livable buildings, let the lots sit for
the required minimum time, then rebuild a non-rent controlled property --OR--
sell to someone who could afford to do the same. There was no legal way to
earn a profit otherwise. Turning into slum lords was not something we wanted
to do. Welcome to being a landlord with rent controlled property.

~~~
hindsightbias
> rent had stayed the same

SF allows rent increases, CPI adjusted, usually 1.5-2.5% a year. SF county use
taxes have been ~8% for a couple of decades. Prop 13 has been in effect since
the 70s.

4 out of 6 units in my building have flipped in 5 years, allowing rent
increases. Resulting in at least $70-80K additional income for the landlord
(at Prop 13 tax rates). This is more the norm than an outlier - many of the
new techies aren't mad at grandma stealing their freedom fries, they're mad at
techies who beat them here in 2012.

I'm all for giving up rent control when landlords give up Prop 13.

------
bradleyjg
We have a standardized bundle of rights that shields the person that possesses
that bundle from many (but not all) price increases in a living space. It's
called ownership.

If a city thinks that certain people should be protected in that way, it
should buy the proprieties and give them to those favored people. Trying to
unbundle ownership and tenancy to mix and match them, at a city level with
only acquiescence as opposed to enthusiastic collaboration from state and
federal governments, as well as quasi-governmental institutions, is not going
to work well.

------
amorphid
I live in a San Francisco rent-controlled apartment. I only moved to San
Francisco because of rent control. Otherwise I would not have been able to
afford a place at all. New apartments in cities without rent control always
seem to be expensive, and I couldn't afford those either. Rents on old
apartments seem to be skyrocketing, too. I, for one, welcome rent control.

~~~
swsieber
It's not that rent control doesn't help some people - it's just the _wrong_
solution.

The real solution is building more housing. (I think)

~~~
Broken_Hippo
That's not the only solution I think we should be implementing, though. We
could subsidize housing for people that can't afford it in other ways - giving
people money to pay for their apartment through social programs after
considering their income, rent, and expenses to get a grip on their actual
ability to pay for available housing. All without having a hard-line income
cutoff for this stuff (which doesn't help when the numbers are out of balance
with the local situation). Building housing will hopefully help folks so long
as there is a shortage, but it isn't a cure-all either.

~~~
xamuel
Sounds like a recipe for really, really wealthy landlords.

~~~
Broken_Hippo
Folks aren't generally getting rich from HUD: In Indiana, at least, lots won't
accept HUD due to regulations and not paying on time. The last bit should be
fixed, the first bit should just be standard for rentals. Landlords wouldn't
necessarily know if they just let it be shown as regular income.

Besides, this does hinge on there being enough housing - including a few empty
places. It is better to generally have empty units available just like you
want a little unemployment to have a pool of employees to choose from.

~~~
PeterMikhailov
> lots won't accept HUD due to regulations and not paying on time

That's pretty weird, since if HUD assists you with rent, they pay the landlord
directly.

------
vr46
London housing still has a fair number of long-settled subsidized tenants who
no longer need subsidized housing, but "council-homes-for-life" is in place
and confers huge advantages to incumbents, which hardly seems fair. Basing
access on need, this is not.

I have lived in various parts of Central London in mixed social housing,
always as a market rate tenant (I am fortunate enough to afford it as a
software engineer) and sympathize with the laments of poorer tenants who are
occasionally booted out of their homes due to some housing development or
other, complaining about the breakups of their communities and their families.
But what about people who HAVE to leave their communities and families in
order to make the most of opportunities when they arise? Is there an easy
answer?

------
jacobsheehy
The author thinks low-income people's incomes are rising and that is false.
The rest of the article is fallacious because of this.

~~~
ChrisLomont
Lowest incomes, even inflation adjusted, certainly have been rising. Here's
historical Census Data [1], Table H-1. Income Limits for Each Fifth and Top 5
Percent.

Maybe you have some large scale data you'd like to share?

[1] [https://www.census.gov/data/tables/time-
series/demo/income-p...](https://www.census.gov/data/tables/time-
series/demo/income-poverty/historical-income-households.html)

~~~
frgtpsswrdlame
So when I take the median wage by state table, there are 11 states with
negative wage growth between 2009 and 2016 and another 16 states where the
total inflation adjusted wage growth is less than 5% between those years.
That's more than half the country that is either not feeling a recovery at all
or is feeling a pretty damn slow one.

Edit:

Actually looking at this a little more, take the year 2000 (all inflation
adjusted numbers.)

The lowest fifth of workers have seen wages fall 8.6%. The second fifth of
workers have seen wages fall 2.42% in that time, the third fifth has seen
wages only rise 0.45%. This is not what I would call a strong time period for
workers.

~~~
ChrisLomont
See my reply below.

Picking less than half the country population, ignoring the high end, treating
small growth as insignificant, then complaining that the result is not the
growth you wish it were, is terrible analysis.

Instead of picking 2 dates out of 50, look at all dates. 2016 was the highest
avg for the lowest quintile for all years back though 1967 except
1999,2000,2001. So out of 50, its #46, at 96% of all time high, has been
increasing since the recession, and is headed to record highs. The same trend
is true of each quintile.

~~~
frgtpsswrdlame
>Picking less than half the country population

shows the bifurcation of outcomes, you can't just ignore that for half the
people incomes _haven 't_ been rising

>ignoring the high end

This is literally how your previous comment begins: " _Lowest incomes, even
inflation adjusted, certainly have been rising_ "

All I'm doing is demonstrating that no, they haven't really.

>treating small growth as insignificant

I'm literally giving examples of negative growth...

>2016 was the highest avg for the lowest quintile for all years back though
1967 except 1999,2000,2001.

Are we looking at the same graph? I see 2016 as being 12,943 for the lowest
quintile. These years all beat that:

    
    
      2008    $12,994
    
      2007    $13,371
    
      2006    $13,513
    
      2005    $13,095
    
      2004    $13,016
    
      2003    $13,044
    
      2002    $13,333
    
      2001    $13,740
    
      2000    $14,161
    
      1999    $14,293
    
      1998    $13,578
    
      1997    $13,189
    
      1996    $13,103
    
      1995    $13,061
    
      1989    $13,075
    

So out of 50, it's what? #35, 34?

>has been increasing since the recession

Now who's picking advantageous dates? Wages have been growing since the
biggest downturn since the depression? Duh, but they've never caught up to
where they were before.

>at 96% of all time high

It's at 99% of what it was way back in 1989, we can even move past the boom
years in 2000/2001, in 2003 and 2004 wages were higher than they are now for
this quintile. That's not really endearing to the idea of wage growth.

EDIT: I realize that no, we're not looking at the same data, you're looking at
the maximum on the range that is included in the lowest quintile whereas I'm
looking at the mean of the lowest quintile. Table H-3. I believe mean is
obviously going to be a better measure than upper limit of the range.

~~~
ChrisLomont
>shows the bifurcation of outcomes, you can't just ignore that for half the
people incomes haven't been rising

Yes, that's how averages work. You similarly cannot ignore that for more than
half, wages rose, which is why the numbers have increased. And usually
bifurcation means bimodal, which in this case is not likely.

>Now who's picking advantageous dates?

I listed multiple times now what happens when you use all data. The example
that there has been recent growth counters your claim of picking two dates
from 50 and making claims about the whole.

In fact, I suspect that since the last few years have seen median overall
wages rising (2015 or so was the highest growth ever recorded for median
wage), that once the numbers for the past two years are tallied, new records
will be set.

>Are we looking at the same graph?

No. I quoted exactly what graph the Census data was in with my first post. You
keep picking other ones.

>I believe mean is obviously going to be a better measure than upper limit of
the range

Not likely since we're already taking the lower quintile of the range of all
income. Mean loses a info due to skew, which is why most discussions about
wages should focus on the median. Since we don't have the median (well, you
can possibly find the decile cutoffs to get it), looking at cutoffs tells you
that more income has flowed into the bottom than before, since the cutoff is
higher.

The lowest income bracket contains a lot of retirees, who have no income, but
have wealth. It also includes students, that have little income, but likely
will have wealth in the future. These zeros and low values will pull the mean
down, likely much lower than the median. So they count in this case as poor,
but they are not. Since the boomers are retiring, this pulls the mean down,
but is not representative of what those at the 20% mark of income earn, which
is a better measure, since you're not seeing averaged effects. You see the
exact measure at a fixed position in the queue.

Similarly, at the high end, taking the mean is nor representative because a
few high income earners can skew the mean higher than the median. This is why
the ends of the distribution are better served by median (which we don't
have), or cutoffs (which is basically a median, but at 20% instead of 50%).

To demonstrate this quite conclusively, here's [1] BLS data on expenditures by
quintile for 2016. The bottom quintile has a mean of $11k as in your numbers,
but has mean annual expenditures of $25k, well over twice the mean income.
Note the other 4 quntiles have mean expenditures more in line with the income.

This is why mean, especially at then ends, is pretty screwy. These people have
low incomes, but are not poor.

[1]
[https://www.bls.gov/cex/2016/combined/quintile.pdf](https://www.bls.gov/cex/2016/combined/quintile.pdf)

------
skybrian
A compromise that would please nobody: how about mild rent control, say a
limit of a 5% increase a year, doubling in 15 years?

------
purplezooey
"Rent control is one of the most effective ways to destroy a city’s housing
stock."

The concept of 'housing stock' is generally a foreign one to the bay area.
Residents mostly care about their own home value, rather than how having ample
supply regionally benefits everyone.

------
diogenescynic
Build more houses first—reduce the ridiculous zoning laws and permitting
processes, especially in California. Then we can talk.

------
notyourday
True, rent control needs retirement, but only with the retirement of
restrictions on building of housing.

------
PeterMikhailov
Please stop taking Megan McCardle seriously

[https://theoutline.com/post/2303/megan-mcardle-has-a-lot-
of-...](https://theoutline.com/post/2303/megan-mcardle-has-a-lot-of-bad-ideas)

[http://exiledonline.com/megan-mcardles-hypocrisy-exposed-
por...](http://exiledonline.com/megan-mcardles-hypocrisy-exposed-portrait-of-
a-libertarian-as-a-taxpayer-subsidized-brat/)

[https://twitter.com/asymmetricinfo/status/960546413582192641](https://twitter.com/asymmetricinfo/status/960546413582192641)

[https://www.splicetoday.com/politics-and-media/megan-
mcardle...](https://www.splicetoday.com/politics-and-media/megan-mcardle-
pushes-meritocracy)

[https://www.bloomberg.com/amp/view/articles/2018-01-30/megan...](https://www.bloomberg.com/amp/view/articles/2018-01-30/megan-
mcardle-s-12-rules-for-life)

[https://www.bloomberg.com/view/articles/2017-10-23/we-
libert...](https://www.bloomberg.com/view/articles/2017-10-23/we-libertarians-
were-really-wrong-about-school-vouchers)

[https://www.bloomberg.com/view/articles/2017-06-16/beware-
of...](https://www.bloomberg.com/view/articles/2017-06-16/beware-of-blaming-
government-for-london-tower-fire)

[https://www.bloomberg.com/amp/view/articles/2017-09-18/we-
di...](https://www.bloomberg.com/amp/view/articles/2017-09-18/we-didn-t-
normalize-trump-we-normalized-the-left-s-violence)

[http://www.oregonlive.com/opinion/index.ssf/2017/06/why_not_...](http://www.oregonlive.com/opinion/index.ssf/2017/06/why_not_try_medicare_for_all_g.html)

[https://twitter.com/asymmetricinfo/status/859101074501890048](https://twitter.com/asymmetricinfo/status/859101074501890048)

[http://web.archive.org/web/20120314140221/http://www.janegal...](http://web.archive.org/web/20120314140221/http://www.janegalt.net/blog/archives/004056.html)

[https://www.theatlantic.com/business/archive/2007/10/defendi...](https://www.theatlantic.com/business/archive/2007/10/defending-
vegetarian-honor/2054/)

[http://prospect.org/article/atlantics-mcardle-
problem](http://prospect.org/article/atlantics-mcardle-problem)

[http://firemeganmcardle.blogspot.com/2008/03/everybody-
has-t...](http://firemeganmcardle.blogspot.com/2008/03/everybody-has-to-die-
of-something.html)

[http://nymag.com/daily/intelligencer/2012/12/newsweek-
wins-w...](http://nymag.com/daily/intelligencer/2012/12/newsweek-wins-worst-
newtown-reaction-award.html)

------
crdoconnor
>Serial experimentation with this policy has repeatedly shown the same result.

New York's two largest building booms took place during times of very strict
rent controls - the 1920s and between 1947 and 1965.

>rent control looks like a victory for the poor over the landlord class. But
the stifling of price signals leads to problems.

Except when it actually happened the price signals sent by the strictest rent
controls still weren't enough to end the city's biggest housing booms.

Seriously, Megan McArdle telling you that price controls are "just going to
hurt the poor" is a bit like Trump telling you that demolishing Mar a Lago
will only hurt the immigrants.

Rent control is a dirty hack, for sure, but it's a dirty hack that shouldn't
be removed until a proper fix is put in place - i.e. a land value tax.

I won't hold my breath for Megan McArdle to advocate for that.

Bloomberg should have her fired. She does absolutely no credit to their
publication.

~~~
CaptainZapp
You may get downvoted to hell for, er, speaking the truth?

I'm afraid you're right and Miss McArdle is really nothing much more than a
libertarian hack.

Case in point: Her book review fo Piketty's "Capital in the Twenty-First
Century". While opinions may certainly differ about the tome this is a bit
rich for a book review:

    
    
      I apologize in advance, because I am going to talk about a book that I have not yet read. To be clear, I intend to read Thomas Piketty’s “Capital in the Twenty-First Century.” It is sitting on my (virtual) bedside with a big stack of other (digital) books that I intend to read. But it’s far down in the queue, and I’m afraid that I can’t wait to weigh in—not on the book itself, but on its topic.
    

Reviews a book she hasn't read and needless to say completely trashes it in
the process.

I actually agree: Bloomberg really should have her fired.

I link to the Baffler article[1] since the original review is apparently only
available to subscribers.

[1] [https://thebaffler.com/latest/what-pikettys-conservative-
cri...](https://thebaffler.com/latest/what-pikettys-conservative-critics-get-
wrong)

~~~
sitkack
Talking about books that you haven't read. [1]

[https://www.theguardian.com/books/2008/jan/06/fiction.societ...](https://www.theguardian.com/books/2008/jan/06/fiction.society)

Signaling that you haven't read it gives one a defensible position! You can't
criticize my mischaracterization of the arguments of the book, I haven't read
it! Her opinions can be her alternative facts known to none except her.

There is accidental fallacious logic, and then there is manufacturing
bullshit.

------
frgtpsswrdlame
>So the promise of economic justice erodes over time, as lucky insiders come
to dominate rent-controlled apartments, especially because having gotten their
hands on an absurdly cheap apartment, said elites are loathe to move and free
up space for others.

So Megan's response is just not to pursue economic justice at all? It doesn't
make any sense, of course the powerful will try to erode justice for the
powerless, that's just society, that doesn't mean we stop pursuing justice. It
means we become even more vigilant about it.

~~~
paulgb
> Megan's response is just not to pursue economic justice at all?

I think the argument here is more "not pursue short-term economic justice at
the expense of long-term economic justice"

~~~
AstralStorm
And she tested that the long term justice materialized ever how? Any reference
group at least?

