Letters for Week of May 13, 2015
Readers sound off on gentrification, race, and local music.
Page 3 of 3
Deborah Yaffe, Oakland
The Government Is Not Doing Enough
For two weeks in a row the Express has run letters regarding rent control appealing to the idea that the optimum pricing for housing, particularly rental housing, through the mechanism of supply and demand. What this commentary misses entirely is that market equilibrium can only be established through competition, which ignores that fact that landowners, when determining rent, specifically exploit the privilege they exercise over their property as opposed to exploiting their own productivity or that of anyone else. Landlords have a natural advantage over renters and thereby exercise their greater market power to extract rent.
The government has a responsibility here. It must make the market more competitive by evening out the market power between landlords and renters. If the law of supply and demand does hold true, it does so only in circumstances where the demand-side has enough market power to refuse an unreasonable price and when there is enough supply-side pressure from competitors to drive down prices. This is the exact problem that rent control is supposed to address. The fact that these conditions persist is evidence to the fact that the government is not doing enough to equalize the balance of power and hence foster a competitive market. If you believe in the law of supply and demand, you should support stronger rent control.
Don't be deceived into believing the "free market" propaganda that, in reality, supports anti-competitive wealth extraction on the part of landlords. It doesn't help when a city government conspires with developers to inflate land value (and thereby rent) by constructing "luxury" housing complexes. Perhaps if city governments weren't so dependent on property tax revenue ... but that's another story.
Andrew Richner, Berkeley
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