September 13, 2002

12:08 PM

Boston is having a real brouhaha over grass-roots efforts to return to rent control. Here in D.C., some folks aren't happy about a massive vending machine in Adam's Morgan. Meanwhile, D.C. braces for protests surrounding the upcoming meeting of the International Monetary Fund and World Bank.

Is there, in this day and age, a debate raging about the equity, and even the efficacy, of capitalism? Is Marxism still a viable vein of thought in the modern age? Are free markets as self-policing as some folks argue? Or does industry require a more arduous watchdog?
posted by NedKoppel (33 comments total)

capitalism.org
That makes me laugh.
The more I look at things, the more I am becoming convinced that capitalism is responsible for almost everything bad on the planet.
posted by Fabulon7 at 12:21 PM on September 13, 2002

you're drunk
posted by techgnollogic at 12:23 PM on September 13, 2002

I wish I was drunk. Have to settle for Tussin CF for the time being . . . Shades of Marxism are working/could work more toward a "better" society . . . t'would take a philosopher king, to be sure.
posted by mikrophon at 12:25 PM on September 13, 2002

I've lived in both Boston and San Francisco. San Francisco has rent control, and Boston, at the time I lived there, did not. In San Francisco the housing situation is much worse, even now in recession.

In some ways it's not fair to compare, since San Francisco has had an even bigger influx of people over the past decade, and has pretty limiting natural boundaries.

However, I do think rent control, and other housing regulations, have made the housing situation here a lot worse. Since a lot of the older housing is locked in at below-market rates, nearly all _new_ rental units go on the market as incredibly expensive.

This is compounded by the fact that it's very hard to build new housing, especially the kind of high-density housing that San Francisco really needs, since the Board of Supervisors seems to think building new housing is part of the problem.

So the end result is that people who have camped out in the same apartment for 15 years have ridiculously cheap housing, while those who want to move into or whithin the city are basically screwed.

I don't think a world where people live in the same city and the same neighborhood their whole lives, with members of the same social class, and only the super-rich can ever afford to move, is particularly a good thing.

In Boston, while some rents got jacked up and yes, some people got evicted right after rent control was appealed, over time housing prices actually started falling as new housing got built (since landlords were not saddled with existing below-market units, and developers had more confidence in a good return on investment even on affordable housing).

So I'm pretty shocked that they would want to go back in the direction of SF's housing nightmare. It must be college students who did not live through the changeover.
posted by maciej at 12:27 PM on September 13, 2002

I'm all for capitalism as long as no laws are broken, and while I don't have any figures to back me up, I have to believe that for every debacle, there's probably a lot of companies who act responsibly and legally that you don't ever hear about.

I hardly think Marxism is viable, but some form of regulation over capitalism is necessary to protect consumers and the environment. I think that's been demonstrated amply in the past few years.
posted by RylandDotNet at 12:31 PM on September 13, 2002

I just moved to Boston from Minneapolis. My rent here is half my monthly income. Fortunately I have a fiance now and we share a one bedroom so we do quite well. In Minneapolis, however, my rent was about 20% of my monthly income. I think most people in my building are young professionals or graduate students, but yes it is very expensive. And if you want a guaranteed parking spot you can add another $200 a month at least. Street parking is reserved for residents only (and is enforced with amazing diligence) so you can usually find a place, but on days the Red Sox are playing it is impossible.
posted by McBain at 12:43 PM on September 13, 2002

Shouldn't it be captalism-dot-com? I love how it's presented as this fledgling little movement you've probably never heard of. So obscure, the most plain-talking person you could come up with to explain it would be Ayn Rand.
posted by cukeyou at 12:52 PM on September 13, 2002

Fabulon8, it's not capitalism that's the problem.

It's religion.
posted by jon_kill at 12:53 PM on September 13, 2002

Ned, you finished too early. One more sentence would have done it: Can there be a more over-generalized front page post?
posted by dhartung at 12:55 PM on September 13, 2002

I'm all for capitalism as long as no laws are broken

Which laws, though? Are you all for capitalism as long as the capitalists are free to rewrite the laws at their pleasure? Illegality is only one small part of it. Shaping what's legal or illegal also comes into it.
posted by claxton6 at 12:58 PM on September 13, 2002

Rents are no picnic here in DC right now either....
posted by pjgulliver at 1:05 PM on September 13, 2002

In Boston, while some rents got jacked up and yes, some people got evicted right after rent control was appealed, over time housing prices actually started falling as new housing got built

If you can point me to something that backs that up. I'd love to see it - In the 9 years I've been here I've never heard of prices dropping. I believe that while average prices are lower than in the bay area, the percentage increase over the last few years has been nearly as bad.
posted by jalexei at 1:05 PM on September 13, 2002

"Coming up next: Religion! Which is the one true faith?"

- Kent Brockman
posted by hackly_fracture at 1:07 PM on September 13, 2002

Marxism cannot be a viable system in the modern age: Groucho's hair, mustache, eyebrows are just not telegenic enough.
posted by luriete at 1:15 PM on September 13, 2002

Jon_Kill: Capitalism has largely become a religion, a Marxism has become a cult. The problem isn't religion, but peoples poor understanding of faith. But I digress.....

One can pick either capitalism or communism and point out inherent flaws and benefits until the cows come home, get bored and leave again. The answer (imo) has to come out of compromise. A government should allow free competition between business trying to create profits and growth. At the same time, government should be trying to protect individuals and environments from over-exploitation. I believe the phrase is 'tragedy of the commons' but resources can be abused under either system. Both the US and the USSR utterly destroyed parts of their countries ecosystems and degradated their citizens. Nations should be pushing toward open, but well regulated markets, and away from centralized systems - with a few exemptions. Infrastructure is the business of the government. Government should work to create an environment that breeds profitable business. This is my own ideology here, but I would list infrastructure as :Roads and highways, education, retirement and medical care.
posted by elwoodwiles at 1:22 PM on September 13, 2002

In the years that I have lived here prices are NOT coming down in Boston, they continue to go up. I spend almost half my income on housing.

My question is: where does the income from landlords go? Shouldn't we see a significant raise in salaries and wages to compensate for the increased cost of rent? Or are these landlords hoarding their money, buying gold SUVs? Trickle down, capitalism where is this trickle-down?
posted by ericrolph at 1:23 PM on September 13, 2002

instead of 'roads and highways' let me amend that to the more general 'transportation.'
posted by elwoodwiles at 1:23 PM on September 13, 2002

I live in Portland OR, and we don't have rent control per se, but there is regulation controlling the costs of certain rental properties. If someone wants to raise a building in the Urban Growth boundary, (another subject - maybe later) by law the building must be "Mixed use." Basically any new building has to provide a mix of retail, office and living space, priced according to the market value of the neighborhood. While gentrification is happening, it's not nearly as harsh here as in other cities I've lived in. I also live in a large, cheap apartment three floors above a 24 hour grocery and theres a bar with pool tables on the corner. Rent control isn't a good compromise between capitalism and communism, and doesn't really seem to have it's intended effect.
posted by elwoodwiles at 1:32 PM on September 13, 2002

In New York, there are scarcely any rent-controlled apartments remaining. Rent-stabilized apartments (landlords receive lucrative incentives to maintain small restrictions) are left here and there, and the rents on them are rather sensible -- my parents have a three-bedroom in Manhattan for around $1200.

But the stabilized units are virtually the only affordable ones. If you spend less than $1000 to share a small 2- or 3-bedroom in a far-flung neighborhood, you're quite lucky. Every landlord not participating in rent stabilization is making a ridiculous killing. (And guess what? I still hardly know anyone whose apartment is maintained as it should be.)

Stabilization is slowly being phased out -- my parents will lose their apartment of twenty years within a year or two -- and I haven't any idea what people will do with it gone. My guess is that rents will return to Earth only when the absence of affordable housing creates a labor shortage, and that's a long way off from here.

Those thinking of moving here take heed. It's a great city, but it is literally unliveable for most.
posted by Epenthesis at 1:40 PM on September 13, 2002

This is my own ideology here, but I would list infrastructure as :Roads and highways, education, retirement and medical care.

Sounds like your common or garden social democracy. An excellent system, and in theory the way things work in the UK. In practice, not quite as well as I'd like, but that's another kettle of fish entirely.
posted by zygoticmynci at 1:47 PM on September 13, 2002

Ned, you finished too early. One more sentence would have done it: Can there be a more over-generalized front page post?

Chandler? Chandler Bing?
posted by NedKoppel at 1:57 PM on September 13, 2002

That Boston no longer has rent stabilization (not rent control; by '94 most units were no longer rent-controlled but were instead under stabilization, which let landlords raise rents as much as they wanted after a tenant moved out and which let them automatically raise rents each year by the amount of the preceding year's cost-of-living increase) represents an aberration of democracy as practiced in Massachusetts.

A landlord group got a question to repeal rent control/stabilization on the *statewide* ballot. People in Boston, Cambridge and Brookline, the three communities that actually had rent control/stabilization, voted to keep it, but they were outvoted by the rest of the state.

As for rents themselves, no, they're not coming down in Boston. But there is some softening in the market - you no longer have to show up with four month's rent to get a place (first and last month's, a security deposit and a broker's fee). Progress, sorta.
posted by agaffin at 2:02 PM on September 13, 2002

Epenthesis, you are wrong, wrong, wrong.

$1,200 rent-limits for a 3 bedroom apartment in Manhattan is theft, pure and simple. It is no different, at all, than if employers were able to get together and pass a law saying that doctors couldn't earn a salary of more than $36,000 a year, or mechanics couldn't charge more than $12 an hour for repairing you car.

Owning residential real estate in New York is not a particularly profitable business. This is why there have been so many co-op and condo conversions; owners had no real incentive to stay in the rental business. A very large proportion of unregulated units are those in 2, 3 and 4 family houses in the outer boroughs, where the rent of $1,000 to $2,000 for 1 to 2 bedroom units barely pays the mortgage and property taxes of the owner (who usually lives in one of the units himself).

No one is forced to work in Manhattan ... people either pay a premium to do so in some professions, or a demand a premium for doing so, in other professions, depending upon supply and demand. Thus, $6.99 extra value meals which cost only $4.25 a bridge and tunnel away. This is natural and proper.

Virtually all "progressive" manipulations of housing supply and pricing have the effect of destroying overall public wealth, misallocating resources, and distorting private choices. When housing 100% market rate, then people live where they can afford to live, which is where there are jobs that pay them the wage necessary to live. Labor follows the labor force, or raises wages enough to keep its labor force in housing. Everything works.
posted by MattD at 2:33 PM on September 13, 2002

In Boston, while some rents got jacked up and yes, some people got evicted right after rent control was appealed, over time housing prices actually started falling as new housing got built

If you can point me to something that backs that up. I'd love to see it

A good assumption would be a comparison in the rise of cost in housing, to the rise of income. In other words, if the average housing cost does not keep pace with the average increase in income, this is seen as a drop in the cost of housing costs.

ie. We people in congress talk about budget cuts, it is the same thing. No one actually gets a cut in their budget, they just don't get an increase.
posted by Steve_at_Linnwood at 3:22 PM on September 13, 2002

No one is forced to work in Manhattan ... people either pay a premium to do so in some professions, or a demand a premium for doing so, in other professions, depending upon supply and demand. Thus, $6.99 extra value meals which cost only $4.25 a bridge and tunnel away. This is natural and proper.

I agree entirely. But Brooklyn? Queens?

Paying a premium to live in the center of your city is fine and dandy...but not when there is no longer a periphery where it's possible to survive on less. Parts of Manhattan were once in that periphery, so perhaps my parents' place is a relic -- perhaps subsidized rents should be confined to larger buildings in the boroughs. But they have to exist somewhere.

I'm willing to explore alternatives -- direct subsidies, or whatever someone can dream up-- but the situation is critical.

(Incidentally, what you call "theft" is a program the developers were paid handsomely to enter. FYI.)

Labor follows the labor force, or raises wages enough to keep its labor force in housing.

I'll believe that one when I see it. By my experience it's absolutely false.
posted by Epenthesis at 3:23 PM on September 13, 2002

NedKoppel, great post, and great discussion from everyone else!

I have to agree with what maciej and others are saying about rent control. I moved to a medium-sized city in Europe with rent control (Stockholm, Sweden) and found it almost impossible to find a place even though I was paid fairly well. I ended up renting a place second-hand at "market" rate from a guy who had the rental contract for the apartment and paid his landlord a miniscule "controlled" rent, pocketing the difference.

Then I moved to Silicon Valley, which is arguably a hotter market than Stockholm. But there's no rent control, so I found a place at once. Sure, it was pricey, but about the same proportion of my salary as in Europe. And last week I moved to a new place and lowered my rent drastically as the market softened.

I think this story illustrates two points:

1. Rent control doesn't necessarily mean that people pay less in rent.

2. Rent control stops people from moving. People moving around forces landlords to compete on price.
posted by Triplanetary at 3:42 PM on September 13, 2002

"Labor follows the labor force, or raises wages enough to keep its labor force in housing.

"I'll believe that one when I see it. By my experience it's absolutely false."

Because it is absolutely false. Business tries to find the cheapest labor at the cheapest price, whether it be a livable wage or not. If what MattD says is true there would be no Vietnamese sweatshops where workers can't even afford to eat on their salary, let alone rent or own a home.

This world is not forced into a false choice between capitialism and Marxism. If it were, I would be an ardent supporter of capitalism. There are many more options, from varying degrees of corporate and Keynsian capitalism, to communitarian economies, and syndicalism. Some systems would work better in different parts of the world due to culture and geography. You can see this in how Darwin's theories were adopted in England and Russia. In England it morphed into a racist shadow of itself as social darwinism (which, thankfully, is not a popular theory any more); in Russia it became evolution as cooperation.

"Or does industry require a more arduous watchdog?"

Industry not only requires an ardous watchdog to operate, it requires regulation or deregulated businesses eat themselves. The examples recently made in the deregualted industries of Energy and Telecom are behind obvious. More so, industry requires a law-making body to even concieve industry. Without the soverignty of governments and law-making bodies on which all papers of incorporation exist industry, as we know it, and corporations simply would not exist.
posted by raaka at 4:18 PM on September 13, 2002

Every landlord not participating in rent stabilization is making a ridiculous killing. In Manhattan? Can you back that up? Look at some real estate listings for buildings and work out the numbers.

Second, what is with this whole group of New Yorkers that feels they are entitled to live in Manhattan for some certain 'reasonable' amount of money? Everyone wants to live there and it's a small place. If you take the pricing system out of it, how would you decide who gets to live there? Only really cool artists types or something?

I also don't understand why so many Manhattanites support rent-stabilization and rent-control so vehemently at voting time. A vanishingly small number of renters benefit from this, and everyone pays. If you don't live in a rent-controlled or -stabilized building, YOU are the one subsidizing the TV star who pays $800/month for his 2500 square foot tribeca loft.
posted by jeb at 5:39 PM on September 13, 2002

"behind obvious"?

I don't remember being drunk when typing that out.
posted by raaka at 7:28 PM on September 13, 2002

I also don't understand why so many Manhattanites support rent-stabilization and rent-control so vehemently at voting time. A vanishingly small number of renters benefit from this, and everyone pays.

sorry jeb, but very wrong. Over one million apartments in New York City are rent stabilized. once the rent goes to $2,000 and above, it's destabilized (some landlords have installed new refrigerators and toilets to push rent on vacant apartments up and over $2,000 to avoid stabilization laws)...The vast majority of rental apartments in NYC are stabilized (for now, at least). Every year a board decides the percentage increase for 1 and 2-year leases. (like 4% and 6% or 3% and 5%). Last year, people proved that costs of maintaining and owning an apartment bldg actually went down (heating costs were cheaper, etc), but the board still approved an increase.

rent-controlled apartments are a totally vanishing breed and people who have one (you would have had to moved in pre-1970something) keep it til they die, and put their relatives on the leases when they get old. They're the ones people hate, because they pay ridiculously small rents. (like my friend who pays $425 for a 4-room apt.) These controlled apts. never go up in rent, no matter what (although they're trying to change that)
posted by amberglow at 7:57 PM on September 13, 2002

"Which laws, though? Are you all for capitalism as long as the capitalists are free to rewrite the laws at their pleasure? Illegality is only one small part of it. Shaping what's legal or illegal also comes into it."

If capitalists are pushing for laws to protect them over another than your venturing outside what is capitalism.
posted by ZupanGOD at 10:10 PM on September 13, 2002

Rent control seems to only help Muffy and Buffy pay dilly-o on their apartment. Silly idea.
posted by owillis at 12:16 AM on September 14, 2002

I also don't understand why so many Manhattanites support rent-stabilization and rent-control so vehemently at voting time. A vanishingly small number of renters benefit from this, and everyone pays. If you don't live in a rent-controlled or -stabilized building, YOU are the one subsidizing the TV star who pays $800/month for his 2500 square foot tribeca loft.

Except that you have to qualify to get and keep the apartment by proving that you don't have too high a salary.

And what amberglow said.
posted by Epenthesis at 12:29 AM on September 14, 2002