At the world's oldest social housing, rent hasn't changed since 1521
cbc.ca
cbc.ca
https://nypost.com/2015/07/26/meet-historys-richest-man-who-...
I wonder if his name is the origin of the swearword...
What Luther was specifically mad about was selling indulgences (certificates of forgivness for certain sins) to pay off Church debt.
Is this legal? I mean the faith part...
The ruling party of Germany is expressly religious, the Christian Democratic Union. There's religious pluralism in Germany and all religions have the same benefits, but the idea of what those religions may do is not so intuitive from us in North America.
.. pretty sure you can set up religious sponsored/focused housing in NA as well
"The foundation deed specified that the housing complex was to exist “in perpetuity” and to be “further developed.” The philosophy behind it can be summarized as being to “provide assistance, not charity, to people in need so they can help themselves.” There are a total of nine foundations established by the Fugger family in Augsburg that have been in continuous existence since the 16th century. In addition to the Fuggerei, there are medical facilities, an infirmary, and a foundation to contribute to the salvation of the Fugger family, among others. According to an inscription on a tablet displayed at the Fuggerei, the Fugger family established the foundation to “reimburse God the money that he has generously bestowed upon the family.”
"Paupers or beggars are not eligible. A person that has been accepted for residence is required to say three daily prayers for the Fugger family"
https://blogs.loc.gov/law/2021/08/500-year-anniversary-of-th...
Its going for a long time: https://en.wikipedia.org/wiki/Fugger_family
And many foundations: https://www.fugger.de/en/foundations
I am sorry ...the business man in me...every time I see the word foundation I see only one thing. Only business vehicle where you are tax exempt... while at the same time still benefiting from the foundation assets.
"Forget about the Gates Foundation. The world’s biggest charity owns IKEA — which is not only devoted to interior design."
https://medium.com/@jurgeng/ikeas-tax-scheme-a-corporate-str...
Scientology has an IRS tax exemption in the US as another religion, but it seems in Germany the state has made their life quite difficult. Does German law provides for a clear specification of how to define a religion?
Probably not the most meaningful example as Scientology had to be pretty egregious to get disqualified.
Apparently members have stronger restrictions than those applied to persons who express extreme right views:
"Scientologists in Germany face specific political and economic restrictions. They are barred from membership in some major political parties, and businesses and other employers use so-called "sect filters" to expose a prospective business partner's or employee's association with the organization."
https://en.wikipedia.org/wiki/Scientology_in_Germany
I am just trying to check who are the committees who define what is an acceptable religion, how and under what legal framework.
(No major party allows membership in another party, except european sister parties in other countries, but it's possible, and some smaller parties allow it)
"In 2019, the Munich Labor court sided with the director of personnel of Haus der Kunst, a well-known artistic museum. He had been removed from his position after working for 22 years because it was discovered that he was a Scientologist. The case was settled and the director of personnel was paid 110,000 euro as severance and received a full pension. Many Germany courts also ruled the legitimacy of Scientology as a religion. In 2019, Ahmed Shaheed and Fernand de Varennes who were UN Special Rapporteurs on freedom of religion and on minority issues wrote to Germany that, "discriminating against those who profess a certain belief is illegal under international human rights law, irrespective of whether the belief is religious or merely philosophical or cultural."
but "pay for indulgences" is fine?
Scientology's founder has been quoted as saying: "You don't get rich writing science fiction. If you want to get rich, you start a religion.” German courts have argued that because of this (and the organization's behavior after he died) that it's actually a for-profit business organization masquerading as a religion.
EDIT: I probably should add that the US is rather extreme amongst nations worldwide in that it does tend to recognize personal conviction rather than only shared dogma/tradition as a form of 'religion'. It's unlikely but I could see the organization losing tax-exempt status. Even if this happened, the individuals couldn't be prohibited from practicing what they believe is a religion.
It's also worth pointing out that, unlike some other countries, the US doesn't really have a formal system for recognizing religious organizations. AFAIU, the closest thing we have is the IRS adjudicating in the first instance Federal tax exemption status. Otherwise, as a general matter, a religion is as a religion does, and it's usually up to agencies, municipalities, and ultimately courts to decide on a dispute-by-dispute basis whether an organization, group, or person is owed the benefit of some particular religious exception in law.
https://www.settle-in-berlin.com/stop-paying-german-church-t...
That is a stunning amount. I wonder how many Berlin based Startup Developers are having a second look at the salary receipt right now...
I think the way it is calculated (depending on the federal state your in): Gross salary -> income tax -> 8 to 9% of the income tax = church tax.
Five minutes at the local courthouse, 20 Euros or so, and it's effective next month.
Of course, during Corona it can be more difficult to get an appointment, and the fee can vary from state to state, but all in all it's easy to get out.
That is true in theory but not in practice. To be recognized you need to be organized as a Körperschaft öffentlichen Rechts which isn't exactly trivial. In practice the Catholic church and the "Evangelical church of Germany" (a confederation of various mostly independent parishes, mostly Lutheran) are the two big ones and everything else barely passes as a rounding error (e.g. there seems to be only one Muslim organization and while they reflect a sect mostly originating in Turkey, they're hardly the largest Muslim sect in Germany).
Also for example the two primary public broadcasting channels ARD and ZDF have a Catholic and Lutheran bias (although this mostly manifests in a handful of very short theological opinion pieces paid for by the respective churches and clergy of the two religious orientations being invited every time ethical concerns are discussed).
Saying "all religions have the same benefit" is a lot like saying all people are equally forbidden from sleeping under bridges regardless of their income. It's not exactly an equal playing field and a lot of the influence of the churches comes down to not just the number of registered members but also feudal property rights and pre-existing contracts (e.g. the Catholic church is one of the few entities that legitimately "owns" land in Germany whereas normally legal subjects are only granted "ownership" conditionally).
And let's not get into public sector institutions like hospitals and schools being operated by one of the two churches and personnel being subject to church labor laws while the majority of the operating costs (in some cases even 100%) are footed by the state.
We only call it pluralism because Martin Luther was successful. Much like our so-called federalism (because Germany was still a lose collection of functionally mostly independent states until around the time of the American Civil War) it's really more of an accident of history that we later rebranded as something desirable.
The Church was replaced by an irreligious state and that was it.
Revenue that exceeds the GDP of nations.
Walmart = $566 billion. Good enough for #25 among nations, larger than Nigeria or Thailand, just below Belgium and Poland.
Amazon = $443 billion. Equal to #30 among nations. Nearly identical to Israel or Norway, and ahead of the Philippines or Egypt.
Berkshire Hathaway = $365 billion. Equal to #40 among nations. Comparable to Singapore or Vietnam, just below Denmark.
Apple = $347 billion. Equal to #41 among nations. Larger than Pakistan, Finland, Chile and just below Bangladesh.
CVS = $278 billion. Equal to #48 among nations. Comparable to Czechia and larger than Portugal, New Zealand.
UnitedHeath = $270 billion. Equal to #49 among nations. Just below Romania or Colombia.
Google = $220 billion. Equal to #52 among nations. Comparable to Greece or Peru.
Microsoft = $168 billion. Equal to #56 among nations. Just below Hungary or Kazakhstan, ahead of Ukraine or Algeria.
Also keep in mind that revenue is not market value nor is it wealth/net worth.
I don't know the history and would love for someone to fill me in, but I'm just not convinced that you are right to downplay Luther's role.
https://www.twelvebooks.com/titles/patrick-wyman/the-verge/9...
Luther grew up in a mining community, where people where crass and confrontational. He had a frank, direct, and powerful rhetorical style that was forged in that environment. While he had several career options, a lightning strike made him get superstitious and become a monk. He was good at it. Take these 2 things - book smarts and an argumentative edge, and now a new twist enters the story...
The printing press!
The printers were in it to make money. His impact on history wasn't nailing a thing to a church door. The guy ran circles around the Church defenders because he replied quick, effectively, and he was the darling of the printers who controlled the medium.
It's not just about having the best argument, it's about fitting the format of the medium. Luther would deliver retorts in the space and time frame that the printers wanted. You can easily imagine how this would drown out the defenders of the Church (especially since it's salacious) and impact public opinion.
But that phase only lasted so-many years. Before long, the situation got out of his control, and that's kind of when you might say Protestantism started.
> The printing press!
Not quite so new. At the time Luther published his 95 Theses in 1517 the printing press with movable types has been around pretty much as long as the computer has been around for us in 2021: for three quarters of a century.
I really latched onto a point about Martin Luther - that his personality traits directly affected the course of events toward the Reformation as we know it.
History is probably a lot more chaotic than we give it credit for. Whenever an upheaval happens and the world gets turned upside down, we can always go back and trace structural trends in that direction. This fails to capture how many transformations failed to happen.
Printing was getting more affordable, but the printers themselves couldn't stop going out of business. The technology arc of lowering costs, but that doesn't map directly to profits and they just kept going bankrupt.
I'm really fascinated by the role of pamphlets. We keep talking about the press in the context of books, but Luther's legacy wasn't in publishing full-length books. This has come up again and again through history. In the 1600s, pamphlets played a role in the English revolution, and it did in the French Revolution as a whole universe of revolution presses sprung up. Were these like newspapers? Or was it some shorter and more targeted form of political hit piece?
Luther came out dropping rhetorical bombs. I get how reading stuff can radicalize you. I've felt that energy in my own life, but overwhelming volume of media we get combined with our longer life spans does some intellectual inoculation. I can only imagine the anger that could be stoked with the written word at that time. It's not a forgone conclusion, because most people are garbage at writing convincingly.
Some of Luther’s writing (good English translations, anyway) still feel electric. Even his Small Catechism, which is written simply and was legitimately intended for daily use in the home, contains self-examinations and positive formulations of the ten commandments which imply faithlessness on the part of bishops.
Yeah, that's electric.
That doesn't mean success, or those who succeed, aren't successful. Or don't serve as icons for the movements or initiatives they are known for.
There are many flaws with the Great Man theory of history. But reflexive rubbishing of it serves little use either.
Better is to have an understanding of what factors contributed to a breakthrough. And if that is chance, luck, timing, or a coincidental confluence of factors including emergent technologies, then yes, give those credit.
Real history is complex. It doesn't fit on postcards. Any less-than-comprehensive account is a map, not the territory.
Maps remain useful.
> The founder of the family was Johann Fugger, a weaver at Graben, near the Swabian Free City of Augsburg. The last name was originally spelled "Fucker".
> The first recorded reference to the family comes when Johann's son, also named Johann (or Hans), moves to Augsburg in 1367, with the local tax register laconically noting Fucker advenit, "Fugger has arrived".
Strikes me as an excellent name for a Christian rock band.
Interesting thought, but I don’t think so. The F word predates Mr Fugger. https://en.wikipedia.org/wiki/Fuck#Early_usage
Maybe it was his mother.
How canst thous speak thus?
So, standard economics at work: If prices are rigidly set at a low level, there will be rationing. There is the non-price rationing.
> Roughly 160 residents live in the Fuggerei ... there are about 80 people on the waiting list ... applicants could be waiting years for a callback.
And there is the persistent shortage.
Things that don't cost to buy at least as much as they cost to make, are not sustainable by definition and will be riddled with systemic problems like shortage, rationing, etc.
It's hardly charity or a perk. It's basically a local government service.
> Money for maintaining the village comes from investments in forestry, real estate and entrance fees.
It is just a charity with religious requirements.
Exclusion based on price.
because it provides some sort of objective measure for how badly you want it, and incentivizes/finances more housing developments.
Markets rarely actually work as advertised.
I've lived in Hamburg, Germany, adjacent to an expanding hipster area. Rents rose steadily and every vacant lot was being built upon, industrial zones were repurposed for more housing etc. It's just that that still only gives you a fraction of the apartments you'd need to satisfy demand.
If there was no incentive for investment, I'm sure we'd see even fewer new houses being built, because there's no incentive for the state to move, neither fast nor at all.
In a price defined shortage, there are always alternatives, it's not so black and white:
- you can get a smaller apartment
- you can get a not so nice apartment, but with space
- you can get an apartment further away from points of interest, meaning it's cheaper but you have a longer commute
This is very similar to free market for groceries: in communism you don't get groceries on the shelves. You get them only if you are lucky enough to be around when a delivery is made.
In capitalism, some groceries might be more expensive, but you can always buy cheaper ones, or travel longer to buy from cheaper stores.
>What makes dollars unique is that if you inject more dollars into the free market for a good, then ceteris paribus, you will cause more of that good to be produced. Whereas if you injected more bureaucratic know-how into the Canadian patient population, you'd merely cause more intense competition for the same fixed number of physician-hours.
If the video card shortage has taught us anything, it's that this is not always true.
This is a soul-buying operation, ironic since Catholics aren't supposed to buy and sell souls.
But maybe I'm totally misunderstanding the medieval mind.
Why does that seem doubtful? There are many people (myself included) who feel that way today.
Separately, I don't think we as a society that strives to be rational, should be open to claims of belief based on faith. I think they should be immediately discarded as arbitrary claims. Just an FYI, let's steer away from that particular topic (i.e. the legitimacy of believing some part of Catholic doctrine).
Many people today believe in the power of prayer for the dead to help the state of the souls of the departed. Not a majority, but enough that you probably know a few who don't speak about it precisely because of the incredulity people express when people actually believe their religion, especially Christianity.
How would raising the rent change the wait time for ground floor housing? By forcing poor people to move out because richer people want to move in?
That doesn't sound like a good thing.
According to standard economics, since there's a demand, why isn't there other, new housing along these lines - where costs are paid for by investments and entrance fees rather than rents?
Yes. When a good or service is always available to anyone who can pay the price, all one needs to do is find the money and one can get it.
When prices are set artificially low, both current and long term go down which results in perpetual shortages. Since getting the thing now depends not just on being able to come up with the cash, but relies on the pen of a bureaucrat, corruption seeps in and becomes endemic.
This charity is able to get it done by requiring adherence to a specific religion which serves both as a selection and an enforcement mechanism.
If one is tempted to think of generalizing this, I would recommend reading about both Western socialists waxing poetic about USSR's "solutions" to housing shortages and the reality of housing in the Soviet Union. Unfortunately, city & urban planning programs as well as architecture schools tend to produce a lot of credentialed people who parrot the former.
This sounds nice but breaks down because shelter is a human need, it is not a new iPhone.
I am aware that the solution to housing crises is build build build, and that the more profit is in developing housing the more there is being built, but pretending a place to live is like any other common good is cold and wrong.
Does it help if you pretend that it's not? Do you get more investments into housing, and in the end, more houses, if you consider housing different from other markets?
And then there's the next part: how good and how much? What's the housing that everyone supposedly has a right to? 100sqft? 500? 1000? And of what quality, and where? Do they get to choose the location?
This is nonsense you just made up. Positive and negative rights are both rights, as is common understood in English but especially as defined within political science and philosophy. [1]
1. https://en.wikipedia.org/wiki/Negative_and_positive_rights
"all one needs to do is find the money" is the mechanism that keeps some people out of the housing market, or at least makes their lives pretty hard. Middle-class families can find the money, but the poor do not and usually cannot (for whatever reasons) raise their value on the job market enough.
A case can be made for rationed housing at extremely low prices. If you let anyone in, you would get a cash-flow problem and distort the market, but not if you limit it to the poor.
The incentives and the price mechanism is independent of the desire of some people to think this or that good/service is "special".
https://en.wikipedia.org/wiki/The_Wave_(Arizona) has a rationing system.
> Due to the fragile nature of the formation and the large number of people wishing to visit it, a daily lottery system is used to dispense only ten next-day permits in person at the Kanab visitor center. Additionally, ten online permits for each date are available four months in advance of a planned trip.
There will be a perpetual shortage.
This is not a bad thing ... unless you don't care about preserving things for the future.
Do you still think rationing is bad? Or is my example not a case of rationing?
Bavaria is majority Catholic. "Demonstrate financial need" is likely a much stronger selection mechanism.
You didn't answer my question about why, if there's a wait list for this place, and since it's proven to be economically sustainable, other housing isn't built along these lines.
> corruption seeps in and becomes endemic
After 500 years, is the Fuggerei endowment fund corrupt?
Corruption can seep in whenever the person making the decision isn't the person making the profit. Even in a free market.
According to wikipedia bavaria is only 49.6% catholic. I'm not sure how excluding more than half the population on the basis of religion can be justified.
My point is that the requirement to demonstrate financial need is likely a significantly stricter criterion than the requirement to be Catholic, so the latter shouldn't be singled out.
After 500 years, is the Fuggerei endowment fund corrupt?
I do not know about their internal workings. As I said, in this special case, verified adherence to the rules of a specific religion may help. However, history is filled with examples of catholic clergy dispensing with favorable judgements in exchange for things of value. How do you know if a more "deserving" person was not passed over for someone else who may be had a good connection or promised personal favors etc.
Regardless, I was referring to the situation when someone tries to replicate something which seems to work in a 160 person case at a grand scale.
Who is suggesting any intent to replicate this at a grand scale?
What does it have to do with the Fuggerai, or the mentioned new settlements planned in Sierra Leone or Lithuania?
History is filled with lots of examples of corruption. Including in free markets.
You were referring to the existence of a years-long waiting list, as if it were a meaningful evidence they should raise rents in order to avoid the artificial scarcity you think is universally bad.
Who do you think they should kick out, and why?
There are not more since someone has to put up the money for the investments. And entrance fees would not likely work for anything new and not novel. Only the government can spend more than it makes.
I think you have to leave look a little deeper to reach a correct conclusion. Namely: I don't think significantly more free housing would in fact be offered without these regulations. So it would not be rational to allow this type of discrimination. The regulation in essence provides an anchor "price" for free housing, while not distorting the "market" very much. This is a good type of regulation to have.
Economics 101 often fails to convey the crucial fact about rationing: under any rationing system that isn't a pure random lottery, the only effect of rationing a good is to change the currency in which that good is priced. [1]
For example, I live in Canada. Our healthcare system is single-payer [2], which is isomorphic to saying that it is rationed. So it would not be accurate to say that your access to healthcare in Canada is priced in dollars. But it would be accurate to say that your access to healthcare in Canada is priced in your ability to navigate bureaucracy, the flexibility of your working hours (to snag last-minute appointments), and your family connections who are embedded in the healthcare system as administrators or physicians.
Depending on your personal values, you might consider it good or bad that access to healthcare in Canada is priced in these units. What makes dollars unique is that if you inject more dollars into the free market for a good, then ceteris paribus, you will cause more of that good to be produced. Whereas if you injected more bureaucratic know-how into the Canadian patient population, you'd merely cause more intense competition for the same fixed number of physician-hours.
That is: by repricing a good in non-dollar units, you've removed a lot of the flexibility that would have allowed your system to make more of the good if lots of people wanted it. There are situations when this might make sense to do, and there are legitimate debates to be had around it. But this is the tradeoff you're making when you ration.
People often mistakenly think that if the price of a good is opaque, then the good must not have a price. This is incorrect. What's more, if you believe it, then you're almost certainly getting over-charged. And very unfortunately, this mistake tends to be most common among less sophisticated folks — who are the very folks that rationing was intended to protect in the first place.
[1] And unfortunately, real human-managed bureaucracies are not reliably pure random lotteries, even when they are supposed to literally be pure random lotteries. See, e.g., https://en.wikipedia.org/wiki/1980_Pennsylvania_Lottery_scan...
[2] More accurately, big subsets of our healthcare system operates under single-payer. Many services like eye doctors, dentists, etc. are private.
Only if they were capable of paying for it as well. That is a big assumption for something as expensive as healthcare.
I personally find it very comforting that (at least at in principle) both the rich and poor wait in the same line.
That's rarely the case. For stuff like consumer goods (ie. getting the iphone on launch day, a few years ago) the rich person can buy it off a scalper, or pay someone to stand in life for them. For healthcare they can just fly to a private clinic.
Recently I learned you can even do this for the DMV... Truly the only place where men are made equal is the porcelain throne.
Note that this is one of the problems in the US too. Health care prices are pretty opaque, it definitely has a price - which you'll find out after you get something done, and I would argue people get overcharged - evidenced by the fact that insurance companies can come in and slash the bill to a fraction of what it was (literally saying "you aren't allowed to charge this much").
Markets don't actually work this way in practice. That's the theory, the theory rarely actually pans out. We could look at US healthcare, which is an insane mess, but it's pretty easy to argue that it's not actually a market due to insurance and opaque pricing and all the same problems. We've kind of got the worst of all worlds over here. But dental and vision care, which are closer to real markets don't actually work any better. They're still expensive, in accessible, and pretty non-responsive to price signals.
Instead, take something like food, where it's a commodity. That's a place where markets should be the cleanest and most responsive to price signals. We produce 1.6x the amount of food the world needs. And food is some thing where there's a literal cap on the ability of any individual to consume it. Our stomachs are only so big, there's literally only so much each of us can consume in a day. By market theory, prices for food should be almost negative and no one should be with out food given those facts. But that's not how it works out. As always, there are too many confounding factors and the profit motive causes rent seeking at every layer.
By market theory, there should be over production of food, which should cause everyone to have food and food producers to drop out of food production until prices rise to equilibrium where everyone has food and the people producing food have a good living.
Has that happened anywhere? No. Instead, you have corporations standing between producers and eaters finding ways to make food more expensive through value add and marketing. You have producers struggling to get by, buried under a mountain of debt, and often effictively in indentured servitude to the processors. And you have hundreds of millions of people food insecure, tens of millions even in a rich country like the US that massively overproduces food. Because markets in real life don't work according to the theory.
And that's why we can't just approach economic problems with the idea that we can just throw more markets at them. And why we have to think about when systems like single payer, for all their faults, are better than what we'd end up with through markets.
Trust me, if you'd ever had to deal with the American health care system, you would long for the Canadian one.
There are a whole lot of distortions on every side of the market for food which interfere with a properly functioning market. There are incredible subsidies paid to farmers to produce specific things (which then cause over-production in those items). There are tariffs to protect privileged farmers. There are actual import and sometimes export quotas. Then, rich countries dump the over-production as in-kind food aid to poor countries undermining poor farmers there.
Case in point is Nebbia v. New York[1] where the supreme court affirmed state interference in free markets by setting a price floor on milk to protect a select few milk producers.
Going back to my first comment. The mechanics are clear. An effective price ceiling leads to too few units being offered relative to the units demanded resulting in perpetual shortages and non-market mechanisms end up determining who gets the benefits of the existing units. Persistent price ceilings lead to chronic reduction in investment producing the thing.
Similarly, effective price floors (minimum price of milk, minimum wage etc) lead to too many units being offered to the market leading to persistently wasted productive resources.
Both reduce the total productive capacity of an economy.
Economic theory has never been predictive to any reasonable margin of error. And a theory that cannot predict outcomes is not a valid theory.
Even diamonds are not perfect.
Perfection is good to have in models to demonstrate limiting cases, but not necessary to know the difference between situations where prices are allowed adjust and where prices are not allowed to adjust.
The "markets are not perfect" crowd loves to imagine the existence of a "perfect" and benevolent social planner who will always act according to their wishes. Let me know when you find one. (I know, "#realsocialism never been tried).
> Economic theory has never been predictive to any reasonable margin of error. And a theory that cannot predict outcomes is not a valid theory.
I find it ironic that you make this statement in the context of a clear cut demonstration of what happens when prices are not allowed to adjust.
There are a zillion markets across the world where one does not need to depend on the benevolence of the proprietor to get what you want or the benevolence of the customer to earn a living. Those get conveniently ignored.
If price controls worked so wonderfully, Uber, which was only an improvement on what was there before it and nothing close to "perfect", would not have become so popular. I would have loved for them to run a continuous double auction, but then nobody every gave me a billion dollars to burn.
> distortions created by the markets
By definition, distortions are created by interventions in markets.
Can I get a source for the 1.6x figure? I suspect it's 1.6x on the field, but doesn't factor in losses in transport/processing. By the same logic, we generate 110%[1] the amount of electricity that the world demands (at the power plant, 10% is lost due to transmission losses), therefore electricity prices should be negative as well.
[1] https://blog.se.com/energy-management-energy-efficiency/2013...
This just sounds like an instance of the fact that a sufficiently abstract system of reasoning can be always be forced to described any particular patch of the world. Though typically at the cost of considerable contortions of the terms that makes no sense in other bits of the world.
For example, you may well say that "ability to navigate bureaucracy" is a currency. But it's hard to understand how you put that currency in a bank, in which sense this currency splits into perfectly equivalent units, or how it represents equivalent value at many different physical locations since the specific bureaucrats are tied a specific location.
By the way, picking an instance of cheating as some sort of general argument of why a specific system is not to be trusted is just a straw man, since the problem of cheating is independent on the exchange mechanism. Alternatively, accept this argument: scammers on Amazon prove that free market mechanisms don't reliably give a fair price.
Isn't it often worse than that? Unless rationing can be perfectly enforced (e.g. require consumption of the entire resource under observation of enforcers, which is actually most tenable with housing by frequently checking to make sure only the authorized people are present) then secondary grey/black markets form when there is an opportunity for arbitrage.
Just because something is "priced" in a different quantity doesn't mean that it isn't cheaper or higher quality overall. That requires a more sophisticated argument than a simple observation that there's still some cost.
It does makes me wonder how low the price of social housing can go while still being sustainable either to be subsidized by the government or payable by tenants.
Land use policies, that is transportation and housing makes up about 30% of the cost in the average American budget, which suggests living in America is pretty expensive.[1]
Non the less cool they manage to keep prices down: much lower than actual social housing operated by govt.
That aside, in the U.S., there is https://www.census.gov/programs-surveys/ahs.html
- in 2015 there were an estimated 118,290k housing units
- in 2017 there were an estimated 121,560k housing units
- in 2019 there were an estimated 124,135k housing units
(note that the majority of these -- more than 70,000k in each case -- are single, detached houses)
Those are quite useful starting factors - roughly one housing unit per three persons in the population, and roughly 5% growth in capacity over four years.
The next few steps would be to match those against population and property price trends, check for correlations, and perhaps narrow and regionalize the data to look for any notable outliers.
(not sure when I'll get to those, but it'll be a good learning experience I'm sure)
It's kind of a given that any social housing like this is going to have a limited number of rooms. And as a result, only so many people will be able to live there.
That's not some clear proof of market theory. Because the other half of market theory - about how price signals drive behavior of rational actors - doesn't hold up.
That is not market forces, that is government controls
OK, so here we once again have a situation where the price mechanism is not allowed to operate. For a moment, I thought this was a private gated community in San Fransisco.
> Mount Athos (/ˈæθɒs/; Greek: Άθως, [ˈa.θos]) is a mountain and peninsula in northeastern Greece and an important centre of Eastern Orthodox monasticism. It is governed as an autonomous polity within the Hellenic Republic. Mount Athos is home to 20 monasteries under the direct jurisdiction of the Ecumenical Patriarch of Constantinople.
Oh, another religious membership test.
How is this at all pertinent to the functioning of the price mechanism? Especially when it is government enforced?
> Although Mount Athos is legally part of the European Union like the rest of Greece, the Monastic State of the Holy Mountain and the Athonite institutions have a special jurisdiction which was reaffirmed during the admission of Greece to the European Community (precursor to the EU).[5] This empowers the Monastic State's authorities to regulate the free movement of people and goods in its territory; in particular, only males are allowed to enter.
Here is a video forwarding to the entrance: https://youtu.be/cECanw-2SQw?t=3100
> Original residents of the Fuggerei were asked to offer three prayers a day for Jakob Fugger and his family. …
> "Jakob Fugger says they have to pray for him. Our administrator always says he is in heaven and will see if you do that. You are responsible for that," said Herzog.
> In other words: that part of the deal is between residents and God.
In a world with scarcity, social housing protects the poor against unaffordability. That's commendable. However, scarcity also means there is not enough for everyone.
Inevitably that means you get a group of poor winners (who obtain a social home) and a group of and poor losers (who remain on a waiting list for a social home).
Those on a waiting list are relegated to the non-social sector: paying market rates. The more social housing there is, the smaller the private housing market is, the higher the rent prices.
Thereby, the scarcer the situation is, the more unaffordable housing is, the bigger the calls for social housing, and the more the differences between winners & losers is exacerbated.
That's what we see develop in many cities . Some pay absolutely nothing, others pay way too much. The winners and losers group is often partially arbitrary. The benefits of rent-control are distributed unequally, some receiving rent-controlled benefits for decades, others remain on a waiting list for decades, while earning just as little. In many European cities waiting lists are >10y, in Amsterdam for example it's about 14y.
Second, the benefits of rent-control take away various healthy market-based incentives. My dad for example lives on welfare in an apartment with 3 bedrooms, by himself in the capital city, and pays 1/3rd of the market rate. He has no incentive to seek out smaller housing which suits his needs just fine. Similarly, he does not make much use of the cultural offerings in the capital city that makes this place popular and expensive: theatre, bars, cinema, restaurants etc, he would be fine living in a smaller town without them. Yet, he has no incentive.
A market based rent for my dad would indeed make it unaffordable for him. At the same time, the market price is a way to allocate supply & demand efficiently. My single retired dad has no demand for the size and location of his home, yet it is in extreme demand by others. The high market rate rent of say $2k a month, if applied, weeds out those who're unwilling to pay the price of $2k worth of opportunity costs (high value for my dad) in return for 3 bedrooms in the capital city (low value for my dad, who'd decide to move in), and lets those who's calculus is different (high value for young urban professionals) move in. Rent-control destroys that efficiency.
Second, it obviously puts a cap on prices and rental returns. Price elasticity of supply is at least somewhat elastic (more in the US than say, the Netherlands, but still). If industry X has fixed prices and industry Y doesn't, ceteris paribus you'd expect most investments in production/supply of industry Y because the returns aren't capped. Rent-control in this sense can limit housing construction, exacerbating the problem further down the line. (This is less applicable to Europe which has more high-density built up areas that are more land-constrained than the US. As such, higher prices don't always translate into more construction, which means the downsides of rent-control are smaller in this respect).
I'm a big fan of rent-control, but it has to be balanced with (partial) incentives. There seem to me some easy mechanisms that should be applied to bring more balance.
1) Rent-control is not enjoyed permanently, such as in many countries is the case. Instead, one gets 8 years of rent-control, after which you must move, or pay market rate. This brings balance to the current situation where one person has a rent-controlled apartment forever, and another is on a waiting list for 16 years. While de facto forced eviction after 8 years is obviously bad, it's a lesser evil compared to the above distribution of scarce rent-controlled units.
2) If a rent-controlled unit has 3 bedrooms and you live there alone, you lose some of the rent discounts. It's okay to live as you like, alone or with others. It's not okay to live alone in a home that can house multiple people, and expect others (the government/taxpayer or landlord) to subsidise you, while there's people on waiting lists for decades. We actually have a lot of real estate, in almost all countries the number of people per home has been dropping for decades, while the average home size has been increasing for decades. Yet there is a scarcity of housing, in part because people occupy larger homes than they need. Particularly if the home is subsidised and rent-controlled, that shouldn't be acceptable.
3) Rent-controlled rates should have market-based foundations. In the Netherlands for example, a rent-controlled unit in Amsterdam or a shrinking village of 500 people, is governed by the same maximum rental rates. Despite the fact that market rates might be 4-5x as high in Amsterdam. It's important to subsidise the poor. It's also important not to take away every single incentive, and create 1 price for a thousand different locations which are all in wildly different demand. If homes in city A and B are priced similarly due to rent-control, but many want to live in A, those who're indifferent to living in city A will occupy homes unnecessarily. If minor price differences are allowed and A is slightly more expensive than B, it'd incentivise those living in A who're indifferent to A or B, to move to B due to the lower prices, freeing up in-demand homes in A. Rent-control is commendable but it should allow for some level of market rates, still.
Hope the post makes sense as some of it is written from an EU and even national/city-level perspective that doesn't apply everywhere in the same way.
Whereas if you allow market rate on all apartments you've given landlords collecting rent an incentive to impede all kinds of property development which might bring rents down with NIMBYism.
If they are leveraged landlords who risk going underwater on their mortgage if too much supply comes on the market you've created a veritable NIMBY zealot who will show up to every town planning meeting and throw sand in the gears of new development and vote down every social housing program that might impede supply.
Will your dad? Doubtful.
Rent control wasnt ever a clean, ideal fix (land value taxes are) but they're a band aid solution to rent seeking driven evictions - especially of the frail and elderly.
that assumes rent control actually brings down rents (overall), and landlords aren't baking it into the price. When the government forces landlords to give tenants an indefinite call option on housing (ie. rent control), I doubt landlords are just going to carry on business as usual. The call option has a cost, and that will be incorporated into the cost of future tenants' rents.
Are you saying that if landlords are required to enact rent control they have the power to unilaterally raise future market rents in response?
...for the current tenant. When he leaves it goes up to make up for it, and then some to make up for the free call option.
(or alternatively, why they would choose to leave money on the table and rent below market rent if they weren't subjected to rent control)
It doesn't make a lot of sense to me that they would (minor exceptions excluded) charge anything other than market rent.
It won't be above market rate, but the market rate will go up to account for the call option. It's like if the city mandated all landlords to install AC (assume for this example this is for a region where most units don't have AC). Since this cost is applicable to most landlords, the landlords collectively will raise their rent because their costs have gone up.
That is, unless there was a non-negligible number of landlords who would be so infuriated with spending, say, $2k on installing AC that they would take their house off the market (but not sell it) and therefore willingly forego, say, $2k of rent every single month.
I don't see that as plausible, though. If you have an unsold rental unit doing nothing but collecting dust you're wasting money. In rent controlled cities like SF/NYC almost by definition rent is high, so these theoretical landlords would be leaving a lot of money on the table so if you think this effect is real you are obligated to assume that these landlords are behaving in an irrational manner.
this is basically equivalent to the effect of elasticity on tax incidence. you can view the cost of AC or forgone rent from rent control as a sort of tax.
https://en.wikipedia.org/wiki/Price_elasticity_of_demand#Eff...
another good example of an inelastic good is gas. people who commute can't easily change the amount of fuel they consume. if the gas tax goes up, or a barrel of oil becomes more expensive, your local gas station doesn't just make it up from their margin. they increase their prices, regardless of how accustomed people were to the previous price.
tl;dr: the fact that a landlord can charge more after being forced to install AC does not imply that they could have just increased rent in the first place if they weren't so stupid.
A careful reading of my previous comment should make it clear that I alluding to precisely that, in fact. Also it was explaining why it would 90%+ fall on the landlord in high rent locales like NYC/SF.
Why you think it shouldn't fall on the landlord in high rent markets just because the supply of property is relatively inelastic isn't so clear to me.
I think part of the problem with this example is that $2k is just not very much money compared to rental income in those areas. I agree, it is hard to imagine landlords dropping out of a market where they can rent a studio for $2500+/month over a one-time $2000 expense. I argue it would still happen at the margins, but it might result in a market rent increase that is below the noise floor.
still, it is a mistake to assume that all HCOL landlords are making money hand over fist. places with high rents tend to also have high price-to-rent ratios. landlords with recently purchased, mortgaged properties might not be making much profit, even with sky-high rents. if a lot of landlords are in this situation, the supply could be surprisingly elastic.
Relatively inelastic, but not as inelastic as supply. There are people who would gladly move to NYC tomorrow if rents were cheaper and vice versa.
>I think part of the problem with this example is that $2k is just not very much money compared to rental income in those areas. I agree, it is hard to imagine landlords dropping out of a market where they can rent a studio for $2500+/month over a one-time $2000 expense.
Ergo why the incidence falls squarely on the landlord.
This also explains why they bitch the most about things like property tax hikes and building regs while renters do not care. A double whammy of it hits their net profit and hits the value of their property because it reduces the profit it can generate.
>still, it is a mistake to assume that all HCOL landlords are making money hand over fist.
Right. If they're not it's because they're leveraged in which case there is even LESS reason to suppose that they would be the cause of a drop in supply because instead of not making as much as they could by not renting their apartment out, they'll be LOSING money hand over fist.
I do agree that property prices will likely bake in the cost of having to install aircon or having to abide by rent control regulations. It might be the proverbial "last" straw for some who might sell up but that won't reduce supply because they'll sell it on to somebody else who will rent it out (or live in it).
I also believe that what say may be right in, say, rural Alabama where rent control might well disincentivize the construction of new housing where land is not at a premium. But, NYC is a different kettle of fish.
This incentive still exists if only some of the apartments are market rate, right?
For instance, in my neighborhood, (market rate) landlords generally want new residential development, because it's seen as something that will have a gentrifying effect on the area and bring up property values in general. That mentality presumably doesn't apply to neighborhoods that are already rich, though.
A progressive land tax would tax owner occupied housing less but then collect the shortfall when the owner sells his land. If for any reason the owner cannot pay, he can apply to defer taxes for 5 years which then result in eviction if the taxes are still due and the property will automatically be upzoned to prevent future evictions.
Land owned by companies does not qualify as owner occupied to prevent share deals.
Property investors will face increasingly higher land value taxes the more land they own in a single location. The idea is that instead of investing in thousands of plots in the same top 10 cities they will have a presence in multiple different cities. This should result in competition between landlords instead of regional consolidation like ISPs have done in the US.
And now the cherry on top. Deduct paid land value taxes from taxable income of the tenant or owner occupant. Finally, lower income taxes across the board and remove the deduction.
Ok, enough about land value taxes. The reason why I personally am against rent control is actually the reason why a minimum wage works. Supply and demand aren't perfectly inelastic. Raising the minimum wage turns the government into a union. But the real question is, who does this hypothetical union serve? People imagine that it will help minimum wage workers but that is just a story to sell the policy. The truth is that it works because the only people impacted by the policy are the poor. Any market distortion that the minimum wage achieves primarily benefits those who are below the previous level. If corporations are cash rich they can simply afford the higher wages so unemployment isn't as big a deal as the theory tells us. The downside of losing jobs that pay less than minimum wage may be overstated because those jobs merely save the government a few dollars on welfare but do not contribute to a meaningful existence.
Now, if a minimum wage has an impact on the poor then who does rent control have an impact on? Rent control is a price ceiling. Who is paying the most for rent? Of course, those who can afford high rents. There are lots of high end apartments that are simply not meant for low income people in which reliable and affluent tenants live in. Yet rent control starts with the most expensive housing first. Poor tenants are usually paying bottom or mid end housing. It doesn't reach them at all. What often happens as a result is that landlords raise rent on low and mid end housing to compensate for losses on high end housing. In my opinion people who advocate for rent control simply do not understand the policy they vote for.
It's a ban on renting in a market that badly needs more rental units.
This is how Section 8 vouchers work in the US. But unlike most welfare programs, the vouchers are limited and only a small portion of people who are eligible can get one.
> In a world with scarcity, social housing protects the poor against unaffordability. That's commendable. However, scarcity also means there is not enough for everyone.
And in a world with landlords, housing can be both ubiquitous AND scarce! (At least in the USA, the number of vacant homes greatly outnumbers the number of homeless people in the country)
Add to that a political system that takes the side of large investors...
First, the number of vacant homes. The vast majority of these at any given time are vacant because they are on the market, someone has signed a lease but not moved in yet, or they are undergoing repairs. Of the homes that are legitimately vacant, many of these are in very poor shape, and in areas where no one wants to live. Suggesting that these homes are a solution to homelessness means that you want to send homeless people to live in condemned structures with no running water an hour outside of Detroit.
Second, the number of homeless. The number used in this factoid is only the number of chronically unhoused, often mentally ill homeless. These people need a lot of support and medical treatment. Sending them to live in a random vacant home, much less one with no running water an hour outside of Detroit, is not going to help them. But people spouting this factoid don't actually care about the homeless. They are simply a prop for a cute political point. If you counted the true number of homeless, sheltered, and housing-insecure folks, this dumb factoid wouldn't sound as good.
Third, the entire concept. Vacancies are lowest in the areas in the country with the highest homeless populations. So the entire implication that some evil (probably foreign) real estate investors are causing homelessness is baseless. The reality is that vacancies are mostly associated with how competitive the real estate market is, which is associated with the economic opportunities in an area vs the supply of housing. Higher vacancies means it is easier to find a place, which means that landlords get nervous and drop the rents. There was a very clear demonstration of this in San Francisco during 2020 when a lot of renters left. Rents dropped by 1/4 or more, while vacancies rose.
https://bewelcome.org/forums/s23259/
BeWelcome is like CouchSurfing but free and open-source. I heard about the Fuggerei from Paul, a guy in Singapore, a few months ago, who I met at the Asia-Pacific weekly meetup (every Thursday, 23:00 NZDT = 6 pm Jakarta = 7 pm UTC+8).
https://bewelcome.org/activities/3343
It's so interesting to hear the same topics coming up. Although I'm not Catholic, and the idea of segregating housing based on religious views bothers me, I like the idea of investing in a community by sharing freely. The Fuggerei outlasted several political forms in Germany!
I'm not sure why the previous page is tracked like this but I guess they have their reasons.
What is going on there?
Keeping it up and running is cross-financed by the entry fees.
Also the 1 Euro is not the whole truth. Residents will have to pay so called "Nebenkosten" (auxillary costs) for electricity etc. like with any other flat.
Compared to Augsburgs rent levels it's still very cheap to live but I'd prefer not to do so.
Source: Lived down the street for a few years.
The Euro didn't exist in 1521. Wikipedia doesn't even list what the currency was back then:
https://en.wikipedia.org/wiki/Currency_of_Germany
I suppose it would have been priced in some sort of metal back then, and the first official currencies would have been on a metallic standard.
> Fugger charged residents one Rheinischer gulden a year, the equivalent of one month's salary at the time.