Tuesday, March 17, 2009

Links and quotes on Price Controls, Protectionism, US Growth and the Budget

Krugman, Nobel Prizewinner in Economics, wouldn't accept Mankiw's bet that US growth would fall well below Obama's expectations

More problems with the protectionist Employ American Workers Act:

Mankiw on the Budget

Price Controls

(Side note: It would be hubris for an economist to say he understands more about how politics works than a politician. The economist may have ideas for ways to improve politics, and certainly may have knowledge on certain issues, but in terms of actually "getting stuff done" politically, an economist would be stupid to ignore the experience of a politician.

Of course, in this article, the reverse happens. Two economists say that rent control doesn't help provide cheap housing, and this state assemblyman thinks he knows more economics?)

A particular quote I loved, from a former socialist who rejects rent controls...

"In many cases rent control appears to be the most efficient technique presently known to destroy a city -- except for bombing," said Swedish economist Assar Lindbeck, a former socialist who has been researching rent control since the 1960s.

"In New York City, the Bronx basically fell to pieces because of rent control. You even had the extreme of landlords burning down their houses."

The South Bronx lost 40 percent of its housing stock in the 1960s and '70s, largely due to arson. Many buildings were suspected to have been torched by the landlords themselves, who found that their buildings were literally worthless: There was no way to make a profit due to rent controls, and nobody would buy a building that could not make a profit. Burning the building allowed them to collect insurance money and pay off debts.

"The reason people ask for [rent control] is that those with contracts gain in the short term ... It's a way that politicians can buy votes," Lindbeck said. "But the policy really hurts people entering the market -- young people and immigrants."

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