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My Article at FreePo on the Resurrection of Rent Control

The Orange County Register’s new site, Freedom Politics just posted an article I wrote for them on rent control.  Here’s a snippet: In these days of economists constantly debating the right way to revive the economy, it seems like there is no way to find consensus among economists.  Economists don’t spend much time debating the issues they agree on, and to them, rent control is about as dead an issue as the earth revolving around the sun.  In 1992, 93% of American and Canadian economists surveyed agreed with the statement “A ceiling on rents reduces the quantity and quality of housing available.”  Opposition to rent control among economists spans the political spectrum from Milton Friedman and Walter Block to leftist Nobel Laureates Gunnar Myrdal and Paul Krugman.  In fact, it was the socialist Swedish economist Assar Lindbeck who famously said, “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it." The article is part of a series called “Undead Ideas” and I’m told the article is supposed to feature a humorously hideous illustration of a zombie Richard Nixon, which is the reason for the Nixon joke.  I will share the illustration once it is public.     Could President Obama resurrect an undead Richard Nixon to implement nationwide rent control in the face of the impending stimflation?  There’s a 93% chance his economic advisors wouldn’t let him do such a thing.  However, Nixon’s undead corpse has been spotted mumbling "I am now a Keynesian" in places like California and New York City where bad ideas never seem to die. I actually thought of the word “stimflation” on my own, but I checked and learned I wasn’t the first to think of it.  The domain stimflation.com had just been reserved last week… […]

How FDR’s TVA Went Wrong

Jim Powell’s latest article at Reason discusses the Tennessee Valley Authority, FDR’s most ambitious infrastructure program: It was heralded as a program to build dams that would control floods, facilitate navigation, lift people out of poverty, and help America recover from the Great Depression. Yet the reality is that the TVA probably flooded more land than it protected; much of the navigation it has facilitated involves barges of coal for coal-fired power plants; people receiving TVA-subsidized electricity have increasingly lagged behind neighbors who did not; and the TVA’s impact on the Great Depression was negligible. The TVA morphed into America’s biggest monopoly, dominating an 80,000 square mile region with 8.8 million people—for all practical purposes, it is a bureaucratic kingdom subject to neither public nor private controls. The article seems like it could easily be rescripted for just about any major government infrastructure project, especially our federal highway system. As a remedy for the Great Depression, the TVA didn’t work. It created no new wealth and, through taxation, transferred resources from the 98 percent of Americans who didn’t live in the Tennessee Valley to the two percent who did. Any spending that happened in the Tennessee Valley therefore was offset by the spending that didn’t happen elsewhere. Those taxes reduced net incomes. Much like any other complex public works project, it took an inordinate amount of time to build the TVA. Only three TVA dams were completed during the 1930s. The dams themselves were small—with less than one-twentieth the power-generating capacity of big western dams like Grand Coulee. Although the building process provided work for engineers and skilled construction workers—who earned above-average incomes—the dams simply came too late to have much impact on most people in the Tennessee Valley during the Great Depression. Nonetheless, expect governments to remake the same […]

“Misbuilding” the Future, Again…

From "Highway to hell revisited", a Financial Times article by Christopher Caldwell: The Highway Act probably has more defenders than detractors. But Mr Obama should be among the latter. The act, which budgeted $25bn in federal money to build 41,000 miles of motorway, exacerbated the very problems Mr Obama has been most eager to solve – spoliation of the environment, dependence on foreign oil, overburdening of state and local budgets, abandonment of the inner-city poor and reckless speculation in real-estate development, to name a few. The article goes on to discuss the history of the Highway act of 1956, some of the problems it caused, and critiques of the sprawl caused by the dangerous feedback-loop created by over allocating resources to infrastructure.  I recommend reading the whole article, which concludes: The infrastructure network that came out of the Highway Act had higher overheads than the one it replaced. It became a bottomless pit of spending. The largest building project in Mr Obama’s Recovery Act is $27bn for roads, and there have been no complaints that the government will have a hard time finding things to spend it on.  The US has big economic problems. But they have been made worse, and harder to resolve, by a half-century in which, at federal urging, the country was misbuilt. There is an inherent bias in favour of government projects. The successes can be mythologised through commemoration, goading future generations to imitate them. The failures are fixable only through equally extensive projects to undo them. This makes it easy to forget that there is no social or economic problem so big that a poorly targeted government intervention cannot make it worse. On the subject of “misbuilding”, this Onion video is the funniest thing I’ve seen in a while, and is pretty much how I […]

How to Sidestep FAR Restrictions: Mezzanine Floors

Most municipalities use the Floor Area Ratio (F.A.R.) metric to restrict development within their communities.  F.A.R. is calculated by dividing the total floor area of a building by the area of the site it is built upon.  In achieving planners’ and neighbors’ questionable objective of “preserving the character” of their communities, F.A.R. is a somewhat arbitrary metric that does little to effectively regulate “character”. In what I see as a great example of the silliness of FAR limits, a recent development in Brooklyn used an interesting, yet not unusual, method to build more space than allowed by zoning laws: mezzanine floors.  From Curbed NY: On the blueprints as "storage space" and not calculated into the building’s overall floor-to-area ratio, the zoning-busting half-floors can be converted to living space after the fact, as long as it’s kept reasonably hush-hush—though the broker in this case eagerly told the gadfly, "Those storage spaces can be converted into living spaces after the closing." Maybe a bump on the head is to blame? Photos from original source, Pardon Me For Asking:   The lengths developers are willing to go to subvert zoning, goes to show the extent that restrictions harm the marketplace.  Unfortunately, methods like this aren’t effective against more affordability-destroying restrictions such as limits on the number of units allowed on a piece of land.

Tagged (7 things about me)

Chris Bradford at Austin Contrarian tagged me back in December. It hasn’t fallen off my radar, and I’ve been meaning to get to it this whole time. I’m supposed to tell seven things about myself and tag seven other blogs to do the same.  (I probably won’t tag others.  Is that lame?)  It seems like a good opportunity to break from the usual seriousness of the blog… 1. Speaking of Texas, I’ve only been there once – the 2005 World Series in Houston. I had some great BBQ, but the friendly Houstonians were as memorable as the game. Many saw me with my jersey, smiled, and said, "welcome to Houston" when I was expecting, "go back to Chicago…" I now try to extend the same hospitality to visitors I see on the street – except Packers fans. (Sorry, I just can’t.  Someone wearing a Packers jersey could save my life, and I’d still probably cling to that rivalry.  Goes back to my two years of being a F.I.B. in Milwaukee…) 2.  In my past life, I was a structural engineer.  I worked for mostly public clients, none of whom impressed me at all.  This heightened my distaste for bureaucrats.  Rather than refocusing on private clients, I went back to school to study real estate development.  Studying economics in preparation for masters-level business classes opened my eyes to a new way of seeing the world.  This exploration continues here…. 3.  My first job was at Little Caeser’s Pizza.  It was fun for awhile back in my high school days.  I honestly don’t have any stories of disgusting things we did to people’s food.  But, I will say the tuna salad for sandwiches was not always fresh, and the quality of the ingredients decreased quickly while I worked there – especially the […]

Urban[ism] Legend: The Myth of Herbert Hoover

Herbert Hoover is not a man I consider a “Legend” – quite the contrary.  I use the words “Urbanism Legend” in the context of the series of posts intended to dispel popular myths as they relate to urbanism. Myths and fallacies about Herbert Hoover are abundant these days as the media discusses the Great Depression. Most of the myths incorrectly accuse Hoover of being a laissez-faire ideologue. However, Hoover is better described as a Progressive, and strongly believed in the power of government to shape society. (at the time Progressive elitists enjoyed a home within the Republican party and advocated vast social engineering programs such as alcohol prohibition) This was a significant departure from the relatively laissez-faire doctrines of previous Republican Presidents Coolidge and Harding. In fact, Hoover’s commitment to progressive programs prompted Franklin Roosevelt’s running mate, John Nance Garner, to accuse the Republican of “leading the country down the path of socialism” during the 1932 presidential campaign. I urge everyone to learn more about Hoover’s progressive interventionist policies on your own. (I also recommend Rothbard’s America’s Great Depression)  But, let’s look at Hoover’s anti-urbanist interventions, and legacy of sprawl. Hoover, an engineer by trade, was a strong supporter of the Efficiency Movement, a significant campaign of the Progressive Era.  He believed everything would be made better if experts identified the problems and fixed them, and that efficiency could be achieved through government-forced standardization of products. This helps explain Hoover’s zealous affection for planning, zoning, home ownership, and various objectives often shared by the (often conflicting) elitist-progressive strains seen in Robert Moses or Lewis Mumford (and later New Urbanists).   (not to be confused with the Roosevelt New Deal Democrats who preferred intervention to promote decentralization and ruralization) Hoover’s philosophy on planning and zoning could be exemplified by his praise of […]

The Nation’s mass transit hypocrisy

by Stephen Smith I was heartened to see an article about the need for mass transit in the pages of The Nation, though I was severely disappointed by the magazine’s own hypocrisy and historical blindness. The article is in all ways a standard left-liberal screed against the car and for mass transit, which is a topic close to my heart, though I’d prefer a more libertarian approach to returning America to its mass transit roots as opposed to the publicly-funded version that The Nation advocates. The first bit of historical blindness comes at the end of the second paragraph, when The Nation argues for government investment in mass transit on the grounds that it will “strengthen labor, providing a larger base of unionized construction and maintenance jobs.” But don’t they realize that the demands of organized labor were one of the straws that broke the privately-owned mass transit camel’s back during the first half of the twentieth century? Joseph Ragen wrote an excellent essay about how unions in San Francisco demanded that mass transit companies employ two workers per streetcar instead of one, codifying their wishes through a series of legislative acts and even a referendum. Saddled with these additional costs, the streetcar companies could not make a profit, and eventually the lines were paved over to make way for the automobile. Mass transit companies, whether publicly- or privately-owned, cannot shoulder the burden of paying above-market wages and still hope to pose any serious threat to the automobile’s dominance. The second, and perhaps more egregious error, comes a little later, when The Nation lays the blame on every group but itself for the deteriorating state of mass transit in America: Nonetheless, smart growth and transportation activists still have high hopes that the Obama administration and a Democratic Congress will revitalize […]

Density in the Animal Kingdom

Longtime reader, Dan M. wrote Hey Adam, I was on your site and saw that you posted a video about ant cities. ( I didn’t watch the vid yet, so my thought may or may not have anything to do with it) It’s funny that you posted it because it sounds related to something I’ve been thinking about. I know we have stats for population densities across the world for people, but I have been wondering, in terms of the animal kingdom, which species seem to thrive at which densities? It would seem to me that the purest form of survival would design the most ideal community in the wild. Termites don’t get vouchers, subsidies, or free health care and work until each unit has been totally expended (no retirement) so it would seem that whatever community they form would be the most efficient for their needs and means (though it would probably technically be a monarchy). I’m not saying the animal world is a particularly pleasant or good model of what we should work towards, but I would like to know what the correlations are. Anyway, just a tangent of something I have been wondering about, but if we scaled different animal communities to equate to the densities of different types of human communities, which animals would be considered city dwellers, suburbanites, or country folk? What could we learn from that? Thought that would be a fun project to work on… Make sense to you? -Dan M While you could call it a Monarchy because there is a queen, the queen is only the birth-giver, not a ruler. There is no ruler in an ant colony, it’s a completely emergent order. Well, we know ants are city dwellers. I thought I’d throw Dan’s questions out there to the readers. […]

NY Rent Control Revival

In an act of pure legislative idiocy in the face of overwhelming consensus among economists against rent control, the New York State Assembly started the ball rolling to strengthen rent regulation. NY Times: The Democratic-led Assembly passed a broad package of legislation designed to restrain increases on rent-regulated apartments statewide. The legislation would essentially return to regulation tens of thousands of units that were converted to market rate in recent years. In addition, the legislation would reduce to 10 percent, from 20 percent, the amount that a landlord can increase the rent after an apartment becomes vacant; limit the owner’s ability to recover a rent-regulated apartment for personal use; and increase fines for landlords who are found to have harassed their tenants as a way of evicting them. The legislation would also repeal the Urstadt Laws’ provision that in 1971 effectively took away most of New York City’s authority to regulate rents and transferred it to the state. Opponents of the legislation are concerned that the New York City Council, known for its pro-tenant leanings, would enact laws that are unfavorable to landlords. Expect some amazingly ignorant quotes from legislators while this is debated: Linda B. Rosenthal, an assemblywoman who represents the Upper West Side, said that unless rent-regulation laws were changed, middle class people were at risk of being driven out of the city. Actually, rent control drives out the middle class, making housing only affordable to the rich and beneficiaries of subsidies and rent controls. New housing will be nearly impossible for middle class tenants to find. Plus, for those who favor one particular class of people over others, rent control increases class tensions… “Pretty soon we’re going to end up with a city of the very poor and the very rich,” Ms. Rosenthal said. “Our social fabric […]

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