We’re in desperate need of basic economic lessons around here.

Economically illiterate activists are laying the groundwork to make housing harder to find, and make life worse, in Rhode Island:

JenStewartRI: Thanks for this important reporting @antoniafarzan & @projo

This is how economics works.  The rent goes up to reflect the real value of the property.  Other property owners see the value of their space and reconsider their usage.

For example, instead of renovating or building to add a new storage unit (which progressives hate), the property owner renovates or builds apartments.  When the supply increases, the value and the rent will stop climbing or go down.  Cap rent, and you’ll get the reverse effect: less housing and higher prices.

Unfortunately, the same activists have been training each other for decades to dismiss such arguments as mumbo-jumbo from evil, greedy people.  That’s a shame, and they’ll probably never question whether they, themselves, are contributing to the suffering as it increases.  They’ll get angrier and angrier that others didn’t react as they’d expected them to, taking it as greater proof of evil.

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CC Reed
CC Reed
23 days ago

How did rent expropriation work when it was tried in Berkeley, CA when I lived there years ago? Just swell, if you were a restaurateur. How’s that? Read on. First, rental advertising disappeared. The local rags weren’t too pleased at losing the ad revenue, but tough tata you know? Eggs, omelettes, and all that. How did housing providers fill their vacancies? By word of mouth. Who’s mouth? A new breed of urban entrepreneur known as the ‘shark’.  After cutting maintenance budgets to zero, housing providers went into hiding from all the sharks pestering them about upcoming vacancies. They might have been pretty crummy, but what could you expect for short money? Rhode Islanders will recognize this as the ‘know a guy’ system. If you knew a guy who was a shark, you might get tipped to what you were looking for. For the right consideration, of course. Nothing too extortionate, just a few Benjy’s under the table — say — a month’s worth.  But even with paying the shark’s commission, renters got real estate discounted from its fair market value. What did they do with their windfall income? Went out to dine at Alice Water’s trendy new place Chez Panisse. Rent expropriation funded the culinary Renaissance in Berkeley, helping to turn us all into the foodies we are today. Farm to fork, courtesy of your housing provider. Such a deal.   This article from 2016 remains pertinent.  https://www.heritage.org/housing/commentary/11-million-spent-half-their-income-rent-why-the-government-blame Mayor Brett seems like a pretty savvy guy so we might not expect anything counterproductive out of City Hall. He must be able to understand that market interventions result in market distortions, usually in the exact opposite direction of their intent.  Suppose the law makes it so that corporate investment doesn’t pencil out, resulting in the big money exiting that asset class. In this scenario, assets move from strong hands to weak.… Read more »

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