Seeing some new *gadget* on Mankiw's blog, I had to check out his top-rated post - A Dastardly Clever Scheme.
It's rather short, so you won't have to hold your nose too long to read it.
In it Greg extols a ridiculously impractical idea crafted by his pinheaded colleagues. (And I guess, his brainless readers/students are also marveling at the ludicrous notion, or something, to get the post's *rank* up there.)
So here's the Moronic idea:
Universities in a place like NYC should buy up rent-controlled buildings. Since capped rent lowers the price of the buildings, these should be cheap to acquire. THEN the universities can turn around and offer up the cheap housing as what amounts to a perk to their professors. By doing this, they will be able to lower cash compensation to these professors and save $$$$.
Of course, this WOULD and COULD NEVER HAPPEN.
When someone buys a rent-controlled building in New York City, the tenants most certainly DO NOT LEAVE, they merely snicker.
They simply continue to stay there as long as they can AND their rights to do so are extremely well-protected. For example, my MIL had some Pakistani scumbag in one of her Brooklyn apartments paying $300 or so in monthly rent for a unit that would have fetched over $3,000 had it been de-controlled.
This woman had been there forever and she'll NEVER LEAVE, would you? In fact, she's still there after my MIL sold the building to new owners.
When I was around, she was illegally subletting one of her three bedrooms out for no doubt more than her entire controlled rent. Again, why would she EVER vacate that apartment?
Furthermore, she is, I believe, allowed to *bequeath* the unit upon her death if one of her many kids OR EVEN GRANDKIDS has been living with her for some nominal period of time. In that case, they get to stay and the landlord's own kids/heirs will be crying for having to deal with them for another 50 years!
There are tenants like this, acting rationally, and gaming the system all over NYC, oh exalted Harvard professor.
But this is 100% typical Mankiw - completely divorced from reality, and drunk on *theory*. "Yeah, we'll just buy a building, the tenants will leave, and we'll rent out the empty units to whomever we want..."
I'll bet this ivory tower provincial has never even met a rent-controlled tenant or a landlord suffering from this law - a disastrous and wholly ineffectual law that was no doubt the fruit of Mankiw's Harvard ancestors.
It's bad enough that an ignorant clown like this is (allegedly) teaching economics at our (allegedly) best college.
But even worse is the fact that this econo-aliterate was advising a President on economics matters!
I've written too much on this boob to list all the links....so I'll just highlight a couple:
Greg Mankiw - Selective Statism
Economists - Useless BUT Harmful!
And my - tag link.
5 comments:
C,
Old snooze, you really need to tune in to EPJ more often so you can stay up to speed on the latest trends in statist university professor intellectualizing: http://www.economicpolicyjournal.com/2010/09/scheming-nyc-universities.html
i second EPJ...one of the best out there.
just cant believe these idiots (krugman et.al) are the "top economists" of this country.
none of these guys could foresee financial crisis or current economic crisis, but nooooo they wont accept they screwed up Or doubt their theory.
Its like looking at one of those freak sci-fi fans that are crazy about starwars, but couldn't stop believing it.
wake the fuck up, economists.
Taylor,
Never heard of that site before - so I just checked it out.
I don't even know that I would call that a *blog post* on this particular subject. Thankfully, someone helped out with a comment there.
:)
After communist regime in Poland there was also a lot of rent- controlled buildings. And that was one of the best investments. Really. Some tenatns die, some can be bribed, some may be evicted and with every one value of the buiding is growing up. Of course, it's easier in a country with weak law enforcement, but I think nowwhere on the earth is possible to keep this stupid idea running, so it's everywhere good idea to buy a building with price- controled rents and just trying to evict tenats
When my FIL bought these apartment buildings in Brooklyn, some 30+ years ago there were in fact a ton of rent controlled units - people paying ludicrously cheap rents like $85 a month.
And many did irrationally move out or expire (I don't think he did any *buyouts*)...BUT that was over a period of decades.
Except the scant few ones who are left these days in NY aren't budging. They can't afford to.
Real estate was a terrific investment in NYC 30+ years ago because rates were high, the city was teetering on bankruptcy and crime-ridden, but most importantly, because bonds were about to begin the mother of all bull markets.
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