Clarity on 98 and 99

99 was the scam. In simple terms 98 came first, then some folks said uh-oh we need to confuse the people and they came up with 99. Yes on 98. No 99.

Yes on 98 wrote:

Thanks for the lesson in spelling, Slug.
Care to explain how local government intervening in the market is not a government intervention?
"However, other issues may be at work. Economics is a social science and other issues may influence rent control regulation. Some rent control laws are more intrusive than others."
This doesn't even make sense. You acknowledge how rent control screw up the market, and then follow it with an acknowledgment that rent control rates are set according to political benchmarks, not economic ones? How does this support your case?
How about we take your logic about not using "blanket laws" and giving more rights to the community to its logical end: choice of the individual. Individuals choose how much they are willing to pay and individuals choose how much they are willing to take, i.e. no rent control.

Rent control is price control. I obviously can't draw a graph here, but you can do a Google search. There are several good price control graphs available. A price control sets a price ceiling that has to be below the level of equilibrium to have a detrimental effect on the market.(The reverse is a price floor. Minimum wage laws set a price floor. If the minimum wage is above market equilibrium, there is a surplus of labor and unemployment rises.) Knowing that, though, doesn't make clear the spillover costs and benefits. My original example referred to a tight housing market, i.e., a very low vacancy rate. If prices rise so rapidly that incomes fail to keep up, experience has seen multiple families or multiple individuals may more frequently occupy one unit. The landlord may not care because the increased price may be preferred over the issue of how many are in the unit. The spillover to the community is limited parking, higher traffic density and social behavior problems that result in more law enforcement intervention. Rent control may contribute to the problem or it may help to relieve the problem. Rent control establishes stability on occupancy while also putting those not in the market at a disadvantage. Local residents, including homeowners, may like the benefits of rent control. Local entities are the places to deal with these issues because that is where they exist. Prop. 98 is a state reg, not a local one.

Slug, your argument is confused at best. I am well aware of how a price controls work, hence my post. You are completely ignoring the role of price signals and the fact that individual housing markets are not isolated; i.e. people can move. People are not indifferent to having their own apartment or putting 50 people in it, clearly. Rent control does nothing to abate multiple dwellings, but encourages it as it makes a SHORTAGE of housing. As for these "spillover" effects (economists call these externalities, btw), it wouldn't help you to show a graph because they are non-economic (or non-real) costs. Once again, these externalities are caused by zoning regulations and it still does not make sense that the government should seize the property rights of individuals rather than correct their first mistake.

98 is a state regulation, indeed, but it is one than ensures individual rights. Local governments can't even regulate taco trucks correctly, and you want to give them unlimited control over the housing market? That is insanity.

ditto the above!

98 is backed by the Prop 13 folks, and I have a really hard time questioning their motives. So far, they've saved me $000's.

Just look at the big businesses opposing 98. That in of itself is a big red flag not to vote for 99 & support 98.

Yes on 98 III wrote:

98 is backed by the Prop 13 folks, and I have a really hard time questioning their motives. So far, they've saved me $000's.

Yes, but your gain is someone else's loss.

the original Yes on 98 wrote:

Slug, your argument is confused at best. I am well aware of how a price controls work, hence my post. You are completely ignoring the role of price signals and the fact that individual housing markets are not isolated; i.e. people can move. People are not indifferent to having their own apartment or putting 50 people in it, clearly. Rent control does nothing to abate multiple dwellings, but encourages it as it makes a SHORTAGE of housing. As for these "spillover" effects (economists call these externalities, btw), it wouldn't help you to show a graph because they are non-economic (or non-real) costs. Once again, these externalities are caused by zoning regulations and it still does not make sense that the government should seize the property rights of individuals rather than correct their first mistake.
98 is a state regulation, indeed, but it is one than ensures individual rights. Local governments can't even regulate taco trucks correctly, and you want to give them unlimited control over the housing market? That is insanity.

Saying my point is confusing at best is nonsensical. IF you understand price controls, you know the closer the control point is to market equilibrium the less effect it has on the market. The point being even a price control has a varying effect on a market. Since economics is a social science the empirical data helps interpret what is going on in a market and how varying factors have different degrees of influence. Rent controls are usually adverse, but so is most regulation. However, an economist whose name I don't recall, several years ago got the Nobel Prize for proving lemon laws actually helped the market increase the sale prices of cars because buyers had recourse if they ended up with a lemon. Rent control may be viewed as a method to avoid the spillover costs of a boom market.(Parenthetically, no such case can be made for the energy market and price controls where used have failed that market miserably.) Again, your use of housing density is counter to experience and logic. As rent prices have increased in a tight market, renters have been more willing to share an apartment and owners have been more willing to take the additional income. That's business, but the neighbors don't benefit and their burden is not in the transaction. Spillover costs and benefits were terms used in my micro survey class 35 years ago. The term externalities I didn't come across until I saw it in the popular press. Spencer's Contemporary Economics now says the two words are interchangeable, which is true, but it leads the topic by the preferred term "Spillovers". Rent control is a local policy mechanism and choice on the issue belongs there.

Akerlof, Spence and Stiglitz shared the 2001 Prize for their work on asymmetric information, but you're probably referring to Akerlof specifically. He wrote a famous paper about the lemon market. If you forgot their names you could at least try not to forget their ideas. If you'd like to point out how creating legal recourse to buyers with imperfect information regarding the transaction supports that the government should put price controls on rental property, I'd love to hear it. Rent control is not a recourse for consumers and does not account for spillover costs in any way.
My housing density market may be counter to your experience and "logic," but it may serve you to put aside the availability heuristic and take a look at the situation. In a tight _unregulated_ market, the story isn't over as soon as the cause appears; there is still an effect. When rents are driven up people move out to the outskirts of town where the lower rents offset commuting and other costs. In the longer term, where capital is not fixed, more housing is built and the price _falls_. No need to intervene. If you want to understand density and rents, Denise DiPasquale wrote a good book on the matter. The 35 years ago part of your econ class may have been the problem. You might have missed it, but the prevalent theories (e.g. rent control) back then didn't work out too well. Take a gander at the Phillips curve.

Apartments belong to someone that bought them as an investment. The government has no more right to control rent prices than they have to control how much you make in your job. Yes on 98 and No on 99.

the original Yes on 98 wrote:

If you want to understand density and rents, Denise DiPasquale wrote a good book on the matter. The 35 years ago part of your econ class may have been the problem. You might have missed it, but the prevalent theories (e.g. rent control) back then didn't work out too well.

This is more fun than life itself. Which is how 98 came about in the first place. There are zoning laws and all kinds of regulation regarding what suppliers and consumers can and cannot do. We are overregulated. RHE is a classic example. Why, if the issue is choice in the marketplace, is there not a state regulation (or federal law) making it illegal to pass a law that tells a homeowner how high and what color a fence can be for no other reason than aesthetics? Many communities refuse to allow power plants, waste dumps, airports, etc. nearby. If they can specifically exclude the services they use from existing where they are used, why is rent control so special of a regulation that requires state intervention? Eminent domain issues are arising because of recent Supreme Court interpretation.(And you criticize my logical thinking skills?) I wonder why the case against rent control is not successfully argued in communities where it exist. And, when it adversely impacts the community, why is not the law overturned. Where price controls have adversely impacted a market significantly, they are overturned or circumvented.(In the case of electricity under Davis when he was left with a screwed up regulated market from Pete Wilson, he finally raised retail price caps and negotiated long term contracts from suppliers with guaranteed delivery provisions. He should have completely deregulated, but the strategy he took gave the market relief.) If communities don't like rent control they can overturn it. The rent control concept when measured on a graph tells what impact it has on supply and demand, all things being equal. But, it fails to express all the variables at work in the market and what relationship they all have. I don't know who came up with the idea of combining rent control with eminent domain in the same proposition and for what purpose, but it will probably lead to 98 failing and 99 will pass. I don't like this kind of regulation because it looks like more partisanship and somebody's pet issue. I have tried to defend something that I don't live under personally and don't like, mostly because I see it as another manipulation of the proposition process. But, people are free to vote and they can always change that, too. BTW, 35 years ago price controls were well known to cause a failure in the market mechanism of adjustments in supply and demand.