Rent Control

Kahlon The Fake Has A Genius Idea for Bringing Down Real Estate Prices: Rent Control!

rafifarber Economics, The Jewish Libertarian Blog , ,

“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”

Assar Lindbeck, The Political Economy of the New Left (New York: Harper and Row, 1972)

It’s all the same. There is never any change. It’s all the same total bullshit. The only reason people ever though Kahlon was different from all the other disgusting slime was that the media, licensed and directed by the State, decided it would be a good idea to paint a picture as if someone were slightly different in order to get people interested in granting the State more legitimacy.

Kahlon is a genius! He’ll stand up for the middle class! He’ll bring down housing prices! He’ll save everything! This is just Netanyahu’s way of getting 10 more seats in his stupid game. Kahlon is Likud, and he left it to get some more votes from the left for Bibi. That’s all this ever was. There is NO DIFFERENCE between Kahlon and Dov Henin or Bennett or Ahmed Tibi.

So his idea, just like I said it was going to be, is rent control. That’s the greatest idea that comes to any politician’s mind. Don’t let people build houses. Don’t give up your thieving control of the unhomesteaded land supply. Don’t help increase supply by getting out of the freaking way.

Just pass a law saying that higher prices are illegal. Why not pass a law that says everyone needs to have a yacht. Then they can sell it for a house. Why not pass a law that nobody is allowed to die.

We can see how well rent control is doing in Venezuela, where people there can’t even get basic goods while the government prints money to death and forbids prices from rising.

I already wrote a post about Tzipi Livni and Pretty Boy Lapid’s idea for bringing down housing prices. Guess what it was. Rent control. But if Kahlon says the same exact thing, he’s a freaking genius!

You know, when I first got into the whole libertarian crowd, and started seeing claims all over the place discrediting the media and claiming it was all rigged and worthless, I kind of poo-poohed it. These are just tinfoil hat types.

I already wrote about rent control here. What it does is destroy property, as landlords cannot charge enough to maintain the property, so they abandon it, and it becomes unliveable, which exacerbates the housing crisis.

It really is a simple issue. If there’s not enough of something, you MAKE MORE OF IT SO PRICE GOES DOWN.

But the government’s solution is tojust  FORBID THE PRICE FROM GOING UP

What a vicious little nothing creature Moshe Kahlon is.

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Universal Rent Control Coming to Israel

rafifarber Economics, The Jewish Libertarian Blog , ,

Swedish lefty economist Assar Lindbeck once said back in 1972,

“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”

Assar Lindbeck, The Political Economy of the New Left (New York: Harper and Row, 1972)

Well, rent control is coming to Israel. The price control frenzy will get worse and worse as the Bank of Israel keeps printing more and more money and the inflation seeps into the consumer sector. Tzipi Livni introduced this gem of a law, teaming up with Pretty Boy Yair Lapid. Those two are the dynamic duo of destruction it seems.

From Ynet:

שר האוצר, יאיר לפיד, ושרת המשפטים, ציפי לבני, הציגו היום (ה’) את הצעת החוק שלהם לפיקוח על שוק השכרת הדירות בישראל. על פי ההצעה, החל מתחילת השנה הבאה ועד סוף שנת 2019, תחול מגבלה על יכולתו של משכיר להעלות את שכר הדירה משנה לשנה. המשכיר יוכל לקבוע באופן חופשי את שכר דירה אחת לשלוש שנים ולאחר מכן להעלותו בשיעור העלייה של מדד המחירים לצרכן בלבד.

Minister of Finance Yair Lapid and Justice Minister Tzipi Livni presented their bill today for rent controls. According to the bill, starting at the beginning of next year until the end of 2019, landlords will be prohibited from raising their rents. A landlord can freely decide what rent he will charge once every three years, and after that he can only raise it in accordance with the consumer price index.

Before I tear this apart, a short little thing on the harmfulness of price controls in general. A price is set by supply and demand. The price point is the point at which the number of sellers for a good equals the number of buyers. It is not set by greed, nor by luck, nor by generosity. Rents do not go higher because suddenly human nature changes and landlords get greedier than they once were. Landlords do not raise rents because they get greedier. They raise rents because that’s the price that buyers are willing to pay. It’s what they can get. Rents go higher because the amount of buyers at a lower price are greater than the number of sellers at that price. So the price goes up in order to equal out the buyers and sellers.

That’s it.

If your goal is to bring rents down, you can do one of two things. Lower demand, or increase supply. In order to lower demand, you would either have to kill people, expel people, or else convince them that they don’t really want a place to live and they should go forage in the Jerusalem forest instead. You’d need a really good Zen public education system to get that done.

So really, the only thing that can be done to lower rents is to increase supply. But this is the ONLY THING that the Israeli government DOES NOT WANT TO DO. They love building freezes instead.

So in their genius, loathsome Lapid and Livni propose a rent control law. What this means is that now, by arbitrary decree, the price of housing could end up being lower, by law, than the market price. What will then happen is that the number of buyers will be greater than the number of sellers at that price, and you will end up with a shortage, meaning people willing to rent at that price but unable to do so because there is no more supply.

Or even worse, in the Bronx in the 1980’s, the rent that landlords were allowed by politicians to charge renters was lower than the taxes that the politicians insisted that the landlords pay THEM. As a result, guaranteed a loss if they rented out a place, they simply abandoned their buildings and entire neighborhoods were destroyed and turned into crack houses. The picture below is of rent-controlled Bronx circa 1980.

As for the technical stupidity of this law, to base rent on the CPI index is entirely circular. The CPI depends on housing rents.

The more effective this law is, meaning the wider the spread between the price allowed and the free market price for rents, the more devastating the consequences will be. If landlords are not allowed to raise prices for three years but allowed to ask whatever price they think they can get now, they won’t take a risk of renting it out for anything below what they think they would need 3 years from now to cover their costs and maintain a profit. In other words, this law will push up rents even faster to where they would be 3 years from now assuming constant price inflation.

Batten down the hatches guys, it’s gonna get rough. How rough could it get? See below for more 1980’s Bronx.

Bronx2