Burnaby Updates

[Caliplanner1]

Originally Posted by Jebby

And the findings of the "real world" are that rent control (any price control, really) negatively affects supply and the quality of that supply. Rent control hurts the poor it's meant to help more than anyone by reducing the incentive to create affordable housing and reduces the incentive to modernise existing rental stocks.

Jebby, let's use Manhattan, NYC as an example. Would you conclude that city government rent control there has harmed low income workers seeking to live in "the city" by being a disincentive for the private sector development of low income housing in that part of NYC?

I would argue not and here's why. It's all about LOCATION, LOCATION, LOCATION! Manhattan is an ultra desired location for living hence the price of housing will be ridiculously high. Developers are currently building skyscraper apartments like crazy in Manhattan but guess what,...the poor still can't buy in no matter how many units are built at existing market prices. Hence how else do you think crucial lower income residents (e.g. cops/teachers/health care professionals/fire services etc.) will get a chance to live close to work (which helps reduce carbon footprint etc.)? You've got it!!...rent control........

[Sheba]

What does any of this have to do with construction and proposals in Burnaby - back on topic!!!

[rofina]

Originally Posted by Prometheus

Regarding your stale, old, clichéd (and false) narratives on the history and nature of capitalism and socialism, you are a regurgitator through and through. But it does not have to be that way, if you value reason and the independence of your own mind (although the saying about "old dogs and new tricks" can sometime apply).

I would be curious to see your counter arguments.

So far you haven't offered anything.

[Caliplanner1]

Originally Posted by Sheba

What does any of this have to do with construction and proposals in Burnaby - back on topic!!!

....isn't the economic theory behind the essence of housing affordability a key issue in Burnaby 's construction craze right now?

[Jebby]

Originally Posted by Caliplanner1

Jebby, let's use Manhattan, NYC as an example. Would you conclude that city government rent control there has harmed low income workers seeking to live in "the city" by being a disincentive for the private sector development of low income housing in that part of NYC?

YES. When the price of rent is held below the market level, shortages emerge and the housing stock rapidly deteriorates. Your position on rent control is simply grounded in your advocacy for distributive "justice" and not on any sound economic theory or even logic. There's a reason economists are virtually unanimous in concluding that rent controls are destructive.

Originally Posted by Caliplanner1

I would argue not and here's why. It's all about LOCATION, LOCATION, LOCATION! Manhattan is an ultra desired location for living hence the price of housing will be ridiculously high. Developers are currently building skyscraper apartments like crazy in Manhattan but guess what,...the poor still can't buy in no matter how many units are built at existing market prices. Hence how else do you think crucial lower income residents (e.g. cops/teachers/health care professionals/fire services etc.) will get a chance to live close to work (which helps reduce carbon footprint etc.)? You've got it!!...rent control........

Rent control has been shown to divert investment away from the construction of rentals. Rent controls also appear to discourage low-level maintenance, encourage condo conversions (diminishing the supply of rental stock), lead to higher rents in uncontrolled units as landlords try to recoup lost revenues, actually increase racial and socioeconomic segregation, and seem to have no effect on homelessness.

You talk about how rent control supposedly helps lower income people live closer to work, but that's just not the case. Rent controls cause tenants to keep the same apartment far longer than they otherwise would, while their place of work changes over this time. Among other problems, this reduced mobility causes longer commutes and therefore lower quality of life and higher fuel consumption.

With the shortages of adequate housing in the rent controlled sector, excess demand spills over to the non-rent controlled sector. But this noncontrolled segment of the market is likely to be smaller than it would be without controls because property owners fear that controls may one day be placed on them. The high demand in the noncontrolled segment along with the small quantity supplied, both caused by rent control, boost prices in that segment. Paradoxically, then, even though rents may be lower in the controlled sector, they rise greatly for uncontrolled units and may be higher for rental housing as a whole.

You can claim you're a master of economic history, but unless you studied at Che Guevara University, I don't see how you can come to the conclusion that rent control isn't economically destructive and hurts lower and middle income earners.

[Caliplanner1]

Originally Posted by Jebby

YES. When the price of rent is held below the market level, shortages emerge and the housing stock rapidly deteriorates. Your position on rent control is simply grounded in your advocacy for distributive "justice" and not on any sound economic theory or even logic. There's a reason economists are virtually unanimous in concluding that rent controls are destructive.



Rent control has been shown to divert investment away from the construction of rentals. Rent controls also appear to discourage low-level maintenance, encourage condo conversions (diminishing the supply of rental stock), lead to higher rents in uncontrolled units as landlords try to recoup lost revenues, actually increase racial and socioeconomic segregation, and seem to have no effect on homelessness.

You talk about how rent control supposedly helps lower income people live closer to work, but that's just not the case. Rent controls cause tenants to keep the same apartment far longer than they otherwise would, while their place of work changes over this time. Among other problems, this reduced mobility causes longer commutes and therefore lower quality of life and higher fuel consumption.

With the shortages of adequate housing in the rent controlled sector, excess demand spills over to the non-rent controlled sector. But this noncontrolled segment of the market is likely to be smaller than it would be without controls because property owners fear that controls may one day be placed on them. The high demand in the noncontrolled segment along with the small quantity supplied, both caused by rent control, boost prices in that segment. Paradoxically, then, even though rents may be lower in the controlled sector, they rise greatly for uncontrolled units and may be higher for rental housing as a whole.

You can claim you're a master of economic history, but unless you studied at Che Guevara University, I don't see how you can come to the conclusion that rent control isn't economically destructive and hurts lower and middle income earners.

Jebby,..you're missing the point here....rent control doesn't impact Manhattan's (growing) housing supply because that market is out of the domain of the working poor. Hence, if there is a need to (as you put it) bring social justice to the market place (for what ever reason-e.g. to promote environmental justice in the form of "green" livable cities etc.) then rent control is one applicable tool given the market's blind eye to the poor who are not a profitable group. BTW,..do you agree with the premise of growing income inequality and attendant debt being the Achilles Heel/dark side of capitalism?

[Jebby]

Originally Posted by Caliplanner1

Jebby,..you're missing the point here....rent control doesn't impact Manhattan's (growing) housing supply because that market is out of the domain of the working poor. Hence, if there is a need to (as you put it) bring social justice to the market place (for what ever reason-e.g. to promote environmental justice in the form of "green" livable cities etc.) then rent control is one applicable tool given the market's blind eye to the poor who are not a profitable group.

And you don't seem to be able to comprehend the fact that rent control DOES impact Manhattan's housing supply in a way that makes new builds inaccessible to a majority of the population.

A few points that seem to have gone straight over your head:

• Not only is there no economic incentive to create new affordable rentals
• the existing stock of rent controlled apartments is decreasing as condo conversions are far more profitable
• those apartments that remain rent controlled are in poor state because there is no incentive for proper maintenance (and in many case no funds as the low rents can't cover the cost)
• it lead to higher rents in uncontrolled units

Harm Caused by Rent Control
1. Inhibition of New Construction
2. Deterioration of Existing Housing
3. Reduced Property Tax Revenues
4. Substantial Administrative Costs
5. Reduced Consumer Mobility
6. Consumer Entry Costs

Social Implications of Rent Control
1. The Substantial Costs of Rent Control Fall Most Heavily on the Poor
2. Higher Income Households Benefit Most from Rent Controls
3. Rent Control Promotes Housing Discrimination
4. Rent Controls Unfairly Tax Rental Housing Providers and Other Real Estate Providers
5. Effective Alternatives to Rent Control Exist

A detailed description of all those points can be found here if you're interested: http://www.nmhc.org/News/The-High-Cost-of-Rent-Control/

Originally Posted by Caliplanner1

BTW,..do you agree with the premise of growing inequality and debt being an Achilles Heel/dark side in capitalism?

Absolutely not. With regards to income inequality, it's not necessarily a bad thing. If a rich person's quality of life increases by 500% but a low income earner's quality of life increases by "only" 100%, his quality of life still increased 100%. The problem with your collectivist socialist way of thinking is that incomes must increase in a uniform standardized manner or else it's "unfair".

And with regards to debt. That's not because of capitalism. Under capitalism when there is excessive debt and misallocations of assets the market mechanism is able to act through price signals and correct itself. What we have instead is government action which blurs and distorts these price signals through, for example, artificially set interest rates, debt backing/guaranteeing, bailouts, debt relief, etc.

[BobLoblawsLawBlog]

I always thought rent control existed so TV characters could live in Manhattan unemployed.

[Jebby]

Originally Posted by BobLoblawsLawBlog

I always thought rent control existed so TV characters could live in Manhattan unemployed.

Or for wealthy politicians:

Harlem Congressman Rents Four Apartments At Below-Market Rates
http://www.nytimes.com/2008/07/11/ny.../11rangel.html

[Caliplanner1]

Originally Posted by Jebby

And you don't seem to be able to comprehend the fact that rent control DOES impact Manhattan's housing supply in a way that makes new builds inaccessible to a majority of the population.

A few points that seem to have gone straight over your head:

• Not only is there no economic incentive to create new affordable rentals
• the existing stock of rent controlled apartments is decreasing as condo conversions are far more profitable
• those apartments that remain rent controlled are in poor state because there is no incentive for proper maintenance (and in many case no funds as the low rents can't cover the cost)
• it lead to higher rents in uncontrolled units

Harm Caused by Rent Control
1. Inhibition of New Construction
2. Deterioration of Existing Housing
3. Reduced Property Tax Revenues
4. Substantial Administrative Costs
5. Reduced Consumer Mobility
6. Consumer Entry Costs

Social Implications of Rent Control
1. The Substantial Costs of Rent Control Fall Most Heavily on the Poor
2. Higher Income Households Benefit Most from Rent Controls
3. Rent Control Promotes Housing Discrimination
4. Rent Controls Unfairly Tax Rental Housing Providers and Other Real Estate Providers
5. Effective Alternatives to Rent Control Exist

A detailed description of all those points can be found here if you're interested: http://www.nmhc.org/News/The-High-Cost-of-Rent-Control/



Absolutely not. With regards to income inequality, it's not necessarily a bad thing. If a rich person's quality of life increases by 500% but a low income earner's quality of life increases by "only" 100%, his quality of life still increased 100%. The problem with your collectivist socialist way of thinking is that incomes must increase in a uniform standardized manner or else it's "unfair".

And with regards to debt. That's not because of capitalism. Under capitalism when there is excessive debt and misallocations of assets the market mechanism is able to act through price signals and correct itself. What we have instead is government action which blurs and distorts these price signals through, for example, artificially set interest rates, debt backing/guaranteeing, bailouts, debt relief, etc.

....you obviously have not studied or understand the many/interconnected causes of the Great Depression or the recent Great Recession (re: growing income inequality/debt which collapsed market demand etc.). Be honest, you have not studied economic history so don't BS me here! I bet that you don't agree with the basic universal economic axiom that all resources are scarce either because that is a part of the income ineaqulaity narrative.

As per your Manhattan rent control assertion you refuse to admit that builders there are not interested in supplying low income housing. The only way rents will fall to engender affordaility is if the economy collapses....the dialectic of capitalism.

Finally, the Ancient Greek philosopher Aristotle correctly postulated that advancing technologies engender growing unemployment/income inequality etc.. I guess you think Aristotle is an idiot...do you?

[Spr0ckets]

This is the most fascinating (and somewhat entertaining) internet fight I have ever seen.

[Caliplanner1]

Originally Posted by Spr0ckets

This is the most fascinating (and somewhat entertaining) internet fight I have ever seen.

You know,...what amazes me with right-wing (pseudo?) intellectuals who try to debase the (market stabilizing) role of government is that they fail to realize that government is the conerstone of (human) civilization and ultimately the modern nation-state (as we know it). Markets thus are a feature of government/the nation-state and hence cannot exist without said government to protect/sustain it.

It's funny because if Jebby looks around impoverished Mexico he'll realize that the numerous/VAST third world slums/shanties seen are a product of little or no government intervention and the (poverty generating) free market at work.

In contrast the FEW upscaled Mexican neighborhoods are shaped by government initiated/monitored urban planning rules/regulations/laws. Without such proactive government control we would have spatial (urban) chaos more so.

[Caliplanner1]

Originally Posted by Jebby

And you don't seem to be able to comprehend the fact that rent control DOES impact Manhattan's housing supply in a way that makes new builds inaccessible to a majority of the population.

A few points that seem to have gone straight over your head:

• Not only is there no economic incentive to create new affordable rentals
• the existing stock of rent controlled apartments is decreasing as condo conversions are far more profitable
• those apartments that remain rent controlled are in poor state because there is no incentive for proper maintenance (and in many case no funds as the low rents can't cover the cost)
• it lead to higher rents in uncontrolled units

Harm Caused by Rent Control
1. Inhibition of New Construction
2. Deterioration of Existing Housing
3. Reduced Property Tax Revenues
4. Substantial Administrative Costs
5. Reduced Consumer Mobility
6. Consumer Entry Costs

Social Implications of Rent Control
1. The Substantial Costs of Rent Control Fall Most Heavily on the Poor
2. Higher Income Households Benefit Most from Rent Controls
3. Rent Control Promotes Housing Discrimination
4. Rent Controls Unfairly Tax Rental Housing Providers and Other Real Estate Providers
5. Effective Alternatives to Rent Control Exist

A detailed description of all those points can be found here if you're interested: http://www.nmhc.org/News/The-High-Cost-of-Rent-Control/



Absolutely not. With regards to income inequality, it's not necessarily a bad thing. If a rich person's quality of life increases by 500% but a low income earner's quality of life increases by "only" 100%, his quality of life still increased 100%. The problem with your collectivist socialist way of thinking is that incomes must increase in a uniform standardized manner or else it's "unfair".

And with regards to debt. That's not because of capitalism. Under capitalism when there is excessive debt and misallocations of assets the market mechanism is able to act through price signals and correct itself. What we have instead is government action which blurs and distorts these price signals through, for example, artificially set interest rates, debt backing/guaranteeing, bailouts, debt relief, etc.

Jebby, does free market capitalism have any (uncontrolled) dark side?

Is free market capitalism (unlike the evils of socialism) a pure and perfect system? If your answer is yes,...then explain please why socialism developed in the late 19th century (out of industrial capitalism)......was it out of envy of the deserving successful rich (as opposed to growing income inequality and poverty)?

[Jebby]

Originally Posted by Caliplanner1

....you obviously have not studied or understand the many/interconnected causes of the Great Depression or the recent Great Recession (re: growing income inequality/debt which collapsed market demand etc.). Be honest, you have not studied economic history so don't BS me here! I bet that you don't agree with the basic universal economic axiom that all resources are scarce either because that is a part of the income ineaqulaity narrative.

Well, I have two BSc degrees from LSE; onein Economics and the other in Political Sciences & International Relations and an MSc in Finance, so I think I understand the economic and historical concepts pretty well.

But thank you for adding that touch of typical liberal academic arrogance.

Originally Posted by Caliplanner1

As per your Manhattan rent control assertion you refuse to admit that builders there are not interested in supplying low income housing. The only way rents will fall to engender affordaility is if the economy collapses....the dialectic of capitalism.

And you seem to refuse to even confront the economic facts. Developers are not interested in building more affordable units in large part due to the policies you propose!

It's incredible how you keep parroting the same ignorant talking points but never address the arguments against your viewpoint.

Originally Posted by Caliplanner1

Finally, the Ancient Greek philosopher Aristotle correctly postulated that advancing technologies engender growing unemployment/income inequality etc..

He was right in that advancing technologies create inefficiencies that create unemployment. However, Aristotle did not see the full picture. It may cause unemployment in terms of that particular function, however, automation does not cause unemployment overall; any savings in labor costs must be either passed on to consumers (who then have extra money to spend or save, either of which produces more jobs) or pocketed by the employer, who then has extra money to spend or save, again producing more jobs. In the event the money is spent, that results in more labor being used to provide products; in the event the money is saved, that makes more investment money available with which to establish or expand businesses in hopes of reaping profits later. Savings results in resources being used for production of capital goods, rather than for production of consumer goods. This makes increased production, and therefore increased consumption, possible in the future.

One way or another, jobs will be created to make up for those that were lost. Of course, it is possible that skilled labor might displace some unskilled labor. For example, a machine operated by one skilled laborer, paid $12/hour, may be able to do work that would have otherwise required three unskilled laborers paid $5/hour apiece. Even then, however, there will be a tendency for those unskilled workers to find jobs somewhere or another.

Originally Posted by Caliplanner1

I guess you think Aristotle is an idiot...do you?

[Jebby]

Originally Posted by Caliplanner1

It's funny because if Jebby looks around impoverished Mexico he'll realize that the numerous/VAST third world slums/shanties seen are a product of little or no government intervention and the (poverty generating) free market at work.

Completely the opposite. The vast slums and poverty in Mexico are precisely due to the fact that Mexico has never experience free market capitalism or the enshrinement of basic rights such as the right to private property. From the times of Spanish rule of mercantilism and the caste system, to the destructive retributions and "empowerment" policies of the Juarez years, to the autocratic centralization of Porforio Diaz, then to the socialist redistribution and kleptocracy of the post-Revolution era, and even up to today's corporatism protectionist system...free markets have never existed in Mexico.

Originally Posted by Caliplanner1

In contrast the FEW upscaled Mexican neighborhoods are shaped by government initiated/monitored urban planning rules/regulations/laws. Without such proactive government control we would have spatial (urban) chaos more so.

Actually, the upscale neighborhoods in Mexico are almost exclusively privately developed with very little input from the government. If you look at the Polanco and Lomas de Chapultepec neighborhoods in Mexico City(the two wealthiest neighbhoords in the country) they were completely built out before zoning laws were put into place. One is a European-style high density neighborhood, the other is a covered in huge mansions.

The upper-middle class neighborhoods that have sprung up in the last 2-3 decades (notably Santa Fe, Interlomas, Bosque Real, etc) are also all private developments built mostly without zoning or urban planning. They were mostly massive empty lots surrounding formerly poor town outside of city limits which were purchased and developed en masse by private developers with little to no input from city government.

[Jebby]

Originally Posted by Caliplanner1

Is free market capitalism (unlike the evils of socialism) a pure and perfect system?

The only pure and perfect system is one based on voluntary exchanges. If you need to use the threat of force to implement your beliefs, they're probably shitty beliefs.

[BodomReaper]

Caliplanner1, all your replies to Jebby's very specific, thorough critique of rent control have been off-topic sweeping statements about 'capitalism.' The points made by Jebby are not disputed among economists.

Also, I have to admire Jebby's restraint: he hasn't even mentioned rent control's gross violation of (shudder) property rights, or attacked the premise that it is just for the state to force me by threat of violence to provide strangers with accommodation on my own property at a specific price.

[Jebby]

Originally Posted by BodomReaper

Caliplanner1, all your replies to Jebby's very specific, thorough critique of rent control have been off-topic sweeping statements about 'capitalism.' The points made by Jebby are not disputed among economists.

Also, I have to admire Jebby's restraint: he hasn't even mentioned rent control's gross violation of (shudder) property rights, or attacked the premise that it is just for the state to force me by threat of violence to provide strangers with accommodation on my own property at a specific price.

Thank you BodomReaper.

I didn't want to get into the moral aspects of rent control, because in essence that can be applied to all government mandates. I wanted to stick strictly to the economic perspective, which according to Paul Krugman 93% of economists side with me.

Getting into the moral aspect of the violations of property rights, the right to freely contract, the right to free association, etc...will just elicit more accusations of being "right wing pseudo-intellectual" from Caliplanner.

[Caliplanner1]

Originally Posted by Jebby

And you seem to refuse to even confront the economic facts. Developers are not interested in building more affordable units in large part due to the policies you propose!

It's incredible how you keep parroting the same ignorant talking points but never address the arguments against your viewpoint.


He was right in that advancing technologies create inefficiencies that create unemployment. However, Aristotle did not see the full picture. It may cause unemployment in terms of that particular function, however, automation does not cause unemployment overall; any savings in labor costs must be either passed on to consumers (who then have extra money to spend or save, either of which produces more jobs) or pocketed by the employer, who then has extra money to spend or save, again producing more jobs. In the event the money is spent, that results in more labor being used to provide products; in the event the money is saved, that makes more investment money available with which to establish or expand businesses in hopes of reaping profits later. Savings results in resources being used for production of capital goods, rather than for production of consumer goods. This makes increased production, and therefore increased consumption, possible in the future.

One way or another, jobs will be created to make up for those that were lost. Of course, it is possible that skilled labor might displace some unskilled labor. For example, a machine operated by one skilled laborer, paid $12/hour, may be able to do work that would have otherwise required three unskilled laborers paid $5/hour apiece. Even then, however, there will be a tendency for those unskilled workers to find jobs somewhere or another.

Jebby, the concept of housing affordabiliuty lies in the domain of diminishing consumer purchasing power due to inflation (re: the Time Value of Money Principle) as a function of market scarcity as well as just the redundancies precipitated by evolving/advancing industrial production technologies.

For workers to fully benefit from advancing technologies they would have to own such technologies or else they will see their jobs/income cut (if for no other reason than falling prices and profits as output/production rises on the basis of increased efficiency).

As for the owners of production capital, their capacity to hoarde wealth does not automatically equate with investment opportunities because if you understand that the economy is finite and thus limited in terms of the scarce existence of wealth (the premise of economics 101 at LSE) then you'll understand that weak market demand (as experienced say during the Great Depression) will prove a disincentive for investment spending thus opening up a need for government intervention (ala Keynesian New Deal economics and communism etc.).

Do you know what the post World War II role of the IMF and World Bank are in terms of opening up and expanding market access for Western firms as Western governments sought to eliminate the market restrictions that helped fuel their Great Depression? Hence we see a global government system via the IMF seeking to promote "free market" capitalism/trade given the natually built-in economic imbalances of global trade based on the value added paradigm (which you can't dismiss).

[Caliplanner1]

Originally Posted by Jebby

Thank you BodomReaper.

I didn't want to get into the moral aspects of rent control, because in essence that can be applied to all government mandates. I wanted to stick strictly to the economic perspective, which according to Paul Krugman 93% of economists side with me.

Getting into the moral aspect of the violations of property rights, the right to freely contract, the right to free association, etc...will just elicit more accusations of being "right wing pseudo-intellectual" from Caliplanner.

BodomReaper, I will not waste time on answering his many disjointed individual assertions because he has no grasp of the broader subject of economics. For an LSE graduate how can he dismiss the reality of scarcity (and growing income inequaltiy etc.) as realities in the market place...thus the market mechanism of supply and demand which sees wealth (creation) being the domain of scarce/restricted market access (as opposed to free trade)....

There seems to be a misunderstanding as to the essence of growing income inequality and affordability for most. Whether it is the young family/individual whose earning power is suppressed by a lack of work experience (outside of the growing number of unemployed on welfare) or our growing senior citizen population on fixed incomes etc., growing income inequality affects the housing market in ways that private sector developers have little propensity to correct.

Any LSE graduate of economics should know that general economic collapse/economic depressions etc. (like housing bubble bursts) is ultimately the result of fast falling consumer prices/profits and EFFECTIVE demand, all as a function of income inequality and attendant debt (in an organically slow economy).