The reason is that you can’t produce more land. Fixed supply will also warp economic markets and create terrible incentives (land speculation).
If you want the best solution, you implement a land value tax. If you want the 2nd best solution, tax property (Land + Building value). If you want the worst solution, implement rent control.
The workaround is to build more dwellings, and rc generally is not an inhibitor there.
Funny enough 'wealth taxes' may actually be the worst of tax of all - aka a double negative - like a double negative.
What we want to do is make it so that 'rich people get rich' not from rent-seeking but from real value creation.
Create an entity with a mandate to build and the funds to make it solvent. Basic and dignified shelter that enables all the other economic activity does not need to be a profit center.
something can be essential + morally important + still governed by supply/demand constraints, this is such a silly statement to make. If there was no market, there would be no efficient allocation of resources. You need to make homes abundant to have the most economically (and thus, morally) efficient outcome.
> What we want to do is make it so that 'rich people get rich' not from rent-seeking but from real value creation.
Agreed! Tax the full rental value of land (rent seeking) and do not tax the value of the productive value creation that happens on it (building, capital, labor).
This is the genteel version of "BUT THAT'S COMMUNIST!!" in response to any kind of policy that isn't rooted in a really narrow purview of markets.
Also - it's also a misrepresentation to consider that 'rent control' is somehow not quite a 'market based' solution, or, that considering 'homes' to be a civic function first, and economic issue second, somehow means they'd completely outside market functions.
"have the most economically (and thus, morally) efficient outcome." <- Adam Smith himself would completely disagree.
The argument I'm making here is directly against this warped sense of what value is.
Markets are just a system of rules that allocate only through the narrow purview of those rules.
We only get 'efficiency' as defined by those rules.
There are many examples, but at easy one, is that we grow our GDP substantially by getting older and sicker, and 'having more work to do' to take care of our system gone awry, or, that wars can be very profitable due to the armaments and subsequent reconstruction efforts.
Both of those by the are rooted in a similar notion - that we don't actually measure 'consumer surplus' - which is the value or 'profit' obtained by the individual, we only ever 'producer surplus'.
If we started to put 'consume surplus' as part of the GDP (impossible, because value is in the eye of the beholder, but maybe plausibly, it could be done) - then we'd see the 'consumer GDP' drop off a cliff as we got old and sick, so much that it would not make up for the increased consumer side GDP benefit of 'medical economy'.
That's just to start.
You could look at national security and justice, and how if we had to pay our soldiers for the risks they take - it would never work.
The more challenging one is to start recognizing the markets are mostly a function of power arbitrage, and not value creation.
We like to think that 'the man who builds his home, and does work for others, creates value, while the man who does nothing all day does not' - yes - that's the easiest way to see it, and it's not wrong. But most of the economy does not work that way, it works on power. Traditionally, it's rooted in real estate, now, it's also rooted in resource access and I would say finance. (And of course as always, political access and monopoly rights).
We should make 'housing' the primary focus, and use 'markets' as a 'tool' to enable social outcomes, not the other way around.
So the 'baseline things' - like basic housing, civil infrastructure, security, food security - those we have to have to be grounded in non-market terms using 'markets as tools' - and then the rest of everything, well, people can have fun, do as they please etc..
Critically - more people should to read Adam Smith, to see where he was coming from. The 'godfather' of economics was the first person to grasp it's limitations.
> It's a bit disturbing and dystopian that one counldn't think of any other way to 'distribute things efficiently' than markets ... but worse, that even contemplating that there could be 'other ways' would be 'silly'.
It's not disturbing, nor dystopian. And I didn't say there isn't any other way of distributing things efficiently, but there is no way of distributing _more_ efficiently.
Ultimately, you understand the beauty of markets, or you don't. Under the right conditions (fair markets, open information, competition, no monopoly), the invisible hand of the market distributes more efficiently and fairly than any individual or team ever could, without requiring the labor of an expert to be spent doing something that the invisible hand of the market could, leaving them to use their highly valuable skillset in some other way to actually benefit mankind.
My argument is specifically predicated on the fact that a housing market is well positioned to benefit, and doesn't because of poor policy decisions, like rent control, overly restrictive zoning, poorly designed tax schemes, etc. - which you assumed it isn't and then broadly and generally said I don't understand market limitations, agreed with me in a super roundabout way, and made sure to include some irrelevant nonsense about power arbitrage instead of value creation wrt housing. You lack focus and brevity. Truth comes from understanding things simply, not complicating the domain until you can apply any lens you want to view it in any way you choose.
It's property ownership this is the core problem.
It's a zero sum game, of no value creation and mostly just economic rent extraction.
It's the 'property problem' not the 'thing on it'.
We have no problem getting people to 'make stuff and sell it'.
Land IS zero sum. Land I own is land you do not own, and does not serve you, and I should not profit from the value of the LAND, only the value of the property I build / maintain / manage.
Anyways, there are many studies showing that rent control is bad in the long term for housing affordability.
A market in this case isn't a literal street market with vendors hawking their goods. The word "market" describes the relationship between people who have more than they need selling to people who need and would prefer to exchange their money (or vouchers etc.) to acquire it.
Housing can't not be a market anymore than food or labor could not be a market. It's like saying it's warped that water evaporates and becomes clouds and turns into precipitation. It's a word that describes one of the natural systems of how the world works.
Even in communist societies where the State owns all the land and all the housing and decides how to distribute it, you still have a State-owned-and-directed market between citizens who need housing and a State that has excess housing and provides it to citizens.
It will also provide immediate relief for struggling citizens, whereas a LVT or taxing property will take time to actually drive construction which will push down rents.
It's something local governments often have the authority to implement, unlike LVT.
A little mentioned fact: the highest rate of house building in new york (FAR FAR higher than today) coincided with by far the STRICTEST rent controls. Something to ponder next time somebody tells you that rent controls just stops homes from being built.
