🏚📈🚫🚕 Bad California Laws
California recently imposed statewide rent control ( www.washingtonexaminer.com/opinion/california-embraces-failed-rent-control-policies-at-the-statewide-level ) and tried to force companies like Uber to classify their drivers as employees instead of contractors ( www.sacbee.com/news/politics-government/capitol-alert/article234973107.html ).
Uber is being attacked because it is a big company and because the employment terms it offers to people (on a voluntary basis) don’t fit with the sort of employment terms that people in power think should exist. Uber offers dollars to its drivers as incentives, but the govt wants to change the terms of the agreement using their government guns. Uber is resisting the law using legal arguments and strategies, which is good, because companies need to resist evil laws that will put them out of business and not just meekly comply in their own destruction.
Another issue with laws of this kind is that there are already exceptions built into the law and all sorts of people now applying for exceptions. This sort of pressure-group warfare, where the govt passes a terrible new law and people all fight to get special treatment so they’re not destroyed by the new law, is incompatible with the rule of law and with a free market in which competition, productiveness, efficiency, and merit determine who wins in the marketplace.
Regarding rent control, below is some wisdom from the topic by the great economist George Reisman, writing in his work “The Government Against the Economy”. He describes how rent controls effectively removes housing from the marketplace and increases rents.
As far as the market is concerned, partial rent controls are equivalent to a reduction in the supply of rental housing. They take part of the housing stock off the market by giving it to people who could not afford the market rents. This leaves less of a supply of housing for the market and, consequently, increases rents on the diminished supply that is available for the market.
Perhaps the best and clearest way to understand these points is to think once again of the conditions of an auction. So imagine that an auctioneer is holding up two units of the same good. Imagine further that there are three bidders for these units. One bidder, imagine, is willing to bid a maximum of $300 for one of these units, if necessary. Another bidder is willing to go as high as $200, if necessary. The third bidder, assume, can afford to bid no more than $100—that is his maximum limit in the bidding. In a free market, the price at which these two units will be sold will be above $100 and below $200. The price will have to be above $100 to eliminate the weakest bidder. It will have to be below $200, in order to find buyers for both units. It will tend to be the same for both buyers because there is usually no way to discriminate between them. Let’s assume the actual price turns out to be $150: too high for the weakest bidder, yet low enough for both of the other bidders.
The weakest bidder has been excluded from this market. What must happen if we begin to feel sorry for him? Suppose people begin to feel so sorry for him that they get a law passed that orders the auctioneer to give him one of the units of the supply at a price he can afford—say, $50. In that case, he gets his unit at $50. But now, as a result of this, instead of the auctioneer having two units to auction off in the market, he has only one; the supply available for the market has fallen. And this one unit will now have to sell at a price somewhere above $200 and below $300—say, $250. It has to be high enough now to eliminate the middle bidder instead of the weakest bidder. All that has happened is that one party has gotten part of the supply at an artificially low price and has caused the price on the remaining supply to go high enough to eliminate another party. The party eliminated could have afforded the market price if it were determined by the full available supply. But he cannot afford the market price as determined by the artificially reduced supply.
This auction example does not differ in any essential respect from the case of partial rent controls. Partial rent controls give part of the supply of housing to some people at below-market rents. To whatever extent these people could not have afforded as much space in a free market as they obtain under rent control, they leave that much less space available in the uncontrolled market. Consequently, rents in the uncontrolled market must rise that much higher—in order to level down the quantity demanded to equality with the reduced supply that is left for the market. For example, if the total housing supply in a city is one million rooms, and we give half of those rooms to people who could not have afforded them at free-market rents, then we are correspondingly depriving other people of those rooms who could have afforded them at free-market rents. In the process we make the rents on the uncontrolled half-million rooms rise so high that that diminished number of rooms is all that people will be willing and able to rent in the uncontrolled segment of the market. In other words, we make the open-market rents balance demand and supply at a supply of half a million rooms instead of a million rooms. People are eliminated from the market who could have afforded market rents as determined by the full supply of rental housing. These people cannot afford market rents as determined by the artificially diminished supply of rental housing that results from rent control.
🍚I recently discovered ReadyRice microwaveable rice from Uncle Ben’s. Very good for making rice for lunch!
www.unclebens.com/rice-products/ready-rice
🍱 Speaking of lunch, I recently got some “Brilliance” Rubbermaid containers and they seem great. The lids have vents when raised, so you can leave the lid on and heat food in the microwave, which helps eliminate splatter. And their advertised stain resistance seems legit (I heated up a meat dish with some tomatoes involved. This normally stains the hell out of containers similar to these, but the tomato wiped right off when cleaning the container 🧽).