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FreedomLiberty's Profile

Display Name: FreedomLiberty
Member Since: 6/3/08
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mcQuaidLA,

Thank you for reading my comment and for replying. You actually proved my case.

The government actually NEVER the market to work its magic - the government is doing the opposite (but saying otherwise). Just like you said, the government should stop bailing out mismanaged firms (let the debt liquify), end subsidies to Big Oil (and other welfaristic projects), and not only should we stop subsidies, but we should also enforce unnecessary spending by the government - which leads to all these problems - which leads to MORE government intervention (just like those you mentioned).

You actually proved my case. What is wrong with the majority's knowledge about the government's economic handling is that they buy in the government's announcement that they are allowing the market to do its magic. But unfortunately they actually are NOT for the free market as they have been intervening with the market for years and years because of the Keynesian School of Economics' hold on them. So the problem that you see, and that you actually dictate in your posts is the problem of - the government starting all these bubbles and intervening with the market (by subsidies, taxes, bail outs etc). You misconstrue the present actions of the government as "PRO free market" but in fact, it is NOT. The problems you just stated, the examples you just gave is directly because the government has been meddling with the market. As I said, you just proved my point.

I've done my reading, I've seen the results too mcQuaidLA. In fact, I've been studying these things very very carefully for quite some time now and I respectfully disagree with you and "folks like you". I understand your passion and concern about the topic but unfortunately, you are gravely misinformed - though it is understandable due to the way information (should I say misinformation) is disseminated these days. I am quite passionate and concerned about these topics too. Thanks again for your reply. If you wish to on the type of materials you should be reading when it comes to these topics, let me know, I can give you a list. By the way, I offer this list with the most honest of intentions and I am not trying to be antagonistic.

FreedomLiberty


Apartment Therapy Los Angeles | Property Rights and Rent Control Ballot Measures
6/7/08 7:23 AM

Hi,

I am an avid visitor of AT and I just created an account to be able to give my input on the issue of rent control not exactly on the prop 98 or 99.

Rent Control is actually a form of price control. To give you a simplified way of putting it, advocates of price control believes that government intervention helps consumers through price control. The same thing goes with Rent Control. The biggest economic mistake people are doing now is only looking at the short-term benefits and only on a group of people as opposed to considering short AND long-term benefits and the rest of the people in the country. Rent prices are up due to the meddling of the government through rent control. The most ideal way is to let the market set the price as the normal social behavior balances everything out.

By putting price ceilings on rent, wasteful space usage is encouraged as opposed to the situation when the market determines that the price should go up (where people are encouraged to economize space). By economizing space, and the prices naturally up, incentives for people with capital are present to build more apartments. Because of this, the supply goes up, demand goes down – then the prices go down. People can now, again, be able to afford bigger places. Rent control favors the old tenants (who never leaves their current apartment even if the size of their family increases or decreases relative to the space they occupy – to take advantage of the lower rent). This leaves, not only the landlords to subsidize the old renters, but also the new renters who actually cannot look for an apartment due to the set up.

Now, the politicians, thinking that luxury condos/apartments can only be afforded by the “rich”, they remove the price ceiling on the said apartments while leaving rent controls on the rest (because lower and middle class consumers cannot afford rent). Now, more incentive is present for people with capital to create more luxury apartments because there is no price ceiling on its rent - thus the occurrence of only having new luxury apartments springing up while no new middle/lower class apartments being built, which in turn does not satisfy the demand of the lower/middle class. What happens is a reaction by the landlords not to “take care” of their buildings because they have no incentive to. Eventually, slums appear because they could not even sell or give these rent-controlled apartments anymore because it is not profitable. You will see the occurrences of slum areas here in New York.

If only the free-market was allowed to reign free, the prices would have been much lower than how it is now as far as renting is concerned. The fallacy that short-term consequences ONLY and that only one group of people should be considered as far as economic planning is really doing much harm.

The politicians who say that they are for free markets and that they recognize the evil of rent control, when it comes down to it, do not even try to follow through with their beliefs for the fear that by attacking rent control, they may not get enough sympathy from the majority which makes their political careers a little unstable. (There are more renters than landlords). What should be done is that rent control should be abolished BUT in a way that those who got dependent because of the misleading claims of certain groups should be taken care of through a “transition phase” and just let the free market do its work.

Now, this is not an attack on the renters, nor is it an attack on the landlords. It is just a statement of fact and that by getting the government out of our economic lives, it will be much better for all due to the fact that the market is stronger than any artificial intervention.

For an interesting read on this, there is a chapter on what Rent Control really does in the book “Economics In One Lesson” by Henry Hazlitt who wrote a lot about the Austrian School of Economics (Ludwig Von Mises, Rothbard, etc.)

I hope I was able to add to the discussion.


Apartment Therapy Los Angeles | Property Rights and Rent Control Ballot Measures
6/3/08 6:56 PM