11-18-25 - 10am - Price Control

Episode Transcript

Speaker 1 (00:00):
And boomers.

Speaker 2 (00:01):
The use of the OH on the telephone was for operator.
They used to tell us to dial O for operator.
So if you're a gen xer or older, the use
of saying OH for zero is totally appropriate.

Speaker 1 (00:21):
Zero.

Speaker 3 (00:22):
There's a difference between a zero a number, and I
get your point. Yes, dial oh for operator zero is
a number. Oh is a letter. Uh, I can't use. Well,
let's do this.

Speaker 1 (00:36):
We asked. We had a talk back in which we heard.

Speaker 3 (00:41):
A a gagle of dogs, gagle of dogs and then
dragon one to know what a gagle of lawyers was,
and I think the best answer was no. There's actually
two good answers. A murder of lawyers same as crows,
So a murder of lawyers many people may interpret as

(01:02):
murder the lawyers out of Shakespeare. First we kill all
the lawyers, or this one from Goober number seventy one
and zero five, Michael. A gaggle of lawyers would be
a domestic terror network, except you can never have too
many lawyers.

Speaker 4 (01:21):
There's another one in here that a cackle of lawyers. Yes,
I'm still particular to my hemorrhoid of lawyers.

Speaker 3 (01:28):
Yeah, I have an agree. I think that was correct too,
But let's go back to the dogs for a moment.
I've been asked not to identify this individual, so I
respect their confidentiality. But they write this Michael and Dragon,
please do not identify.

Speaker 1 (01:45):
Me this time.

Speaker 3 (01:46):
I'm a loyal goober and the word goober is in
all caps.

Speaker 1 (01:49):
Uh.

Speaker 4 (01:50):
Oh, those are the ones that scary, yes, because you
know they're backgrab crazy.

Speaker 3 (01:56):
Those are my dogs, Eagles for rabbit hunting, all legal
with the shots and tags. Well, I assume, So why
are you, like, why do you have to scream at
me that they're all legal with shots and tags. I
didn't say they weren't. Most states have a legal limit
to number of dogs. Oh, now we're getting to the

(02:16):
truth of the money. In my world, I have more
than several dogs, hunters, herders, rescued from poor conditions and
from people who died and dogs needed homes. All were
welcome here. I purchase high quality dog food by the

(02:37):
ton in all caps. I bet you even beat me
when it comes to dog food.

Speaker 1 (02:44):
Good grief.

Speaker 3 (02:45):
Both my feed store and my veterinarian love my patronage.
No dog goes hungry here. There's a home for you. Dragon.
You know when you get kicked out. That's right, there's
a kennel for you. I even make bespoke food for
my more picky eaters. It's a good thing I'm retired.
Have a great day. Let's see Kuber number seventeen twenty one, Mike,

(03:09):
I've got two red healers, one blue healer, a massive
shepherd mix. What the hell's that look like? And a
shepherd whip a mix. I can kind of see that.
We volunteer for our local shelter, Soul Dog Rescue in
Fort Lopton. Have had thirteen dogs at my house at
one point. Noah, meth is ever too many. They don't

(03:29):
talk politics and are always happy to see you.

Speaker 1 (03:33):
That goes to the old joke.

Speaker 4 (03:34):
Hey, you put your wife in the trunk of a car,
and you put your dog in the trunk of a car.
Leave them there for an hour, open the trunk. See
which one is happy to see you.

Speaker 3 (03:45):
Let's see uh Guber seventy seven to fifty six, Mike,
two dogs, one is lonely, three is too expensive.

Speaker 1 (03:53):
I agree with.

Speaker 3 (03:54):
That, except I do believe that dogs are so domesticated
that they really can be happy in a home alone.
But watching my two limburgers play together, and one's much
older than the other. They're half sisters. But the older
dog she now turns seven, and I think the young
one just turned three, so they're about four years apart.

(04:15):
But the younger one, who I think is adhd or
on the spectrum somewhere, keeps the what are you laughing,
I'm just being honest about Michaelsburgers, right, I think the
younger one keeps the older one younger. So, but three
Saint Bernard's or I think three Liamburger's. First of all
the Liamburgers shed like crazy and Tamra would, well, those

(04:38):
of you hate me being on K zero A I would.
I'd be dead anyway. So there's that. There are other
differences between o's and zero, says goober number thirty eight sixty.
For instance, an O is round, but his zero is
oval very good, and of course zero sixty five one.

(05:00):
You are being removed from the list of goobers, not permanently,
just temporarily, Mike a septic tank of lawyers.

Speaker 1 (05:11):
That's not bad. That's not bad.

Speaker 3 (05:13):
And that's why she's being or he or she's being
demoted for We'll give them a fifteen minute demotion.

Speaker 1 (05:21):
No text for fifteen minutes, no.

Speaker 3 (05:23):
Text for fifteen minutes. That's harsh, I know, but sometimes
sometimes you gotta treat these goobers just like they are.
They deserve to be treated. There's a woman that walks
at the dog park who she just pays the ticket,
and I think the rangers have just given up giving tickets.
Your limited to three dogs at the dog at this
particular dog park. She comes out there with either five

(05:44):
or six poodles. It's a pound of poodles. It's a
lot of poodles. On Sunday, the New York Times ran
an essay that, well, let me just read you the
title economists hate this idea. It could be a way
out of the affordability crisis. What do you think they're

(06:07):
talking about. Democrats dominated the November November four elections, but
the other big.

Speaker 1 (06:14):
Winner was price controls.

Speaker 3 (06:18):
In New York, the democrats socialist excuse me, the democrats,
see I started to actually read what was on the
on the in the editorial, as opposed to tell you
what I really meant. In New York, the democrat socialist
Zoepram mom Donnie ran for mayor on a simple promise
to freeze the rent freeze the rent. So now the

(06:39):
New York Times is out pushing for price controls. The
hard the core truth is very simple. Every dollar of
relief to one party becomes a dollar of burden on
somebody else, minus the loss is that you get from

(07:00):
the distortion in the price. Caps don't magic that budget
constrain away. It's just the fact of ones and zeroes
of price controls. Prices allocate scarce goods. Now I don't
mean scarce good. I mean you can have a you
can have more than enough porkin beans. So you go

(07:23):
to if you go to the grocery store and you
go to the bean aisle, you'll find all kinds that
you'll pint f find porking beans, black beans, red beans,
every kind of bean, pental beans, every kind of bean.
You can possibly imagine that in that particular aisle, in
that section where the beans are. But beans are still

(07:43):
a scarce good. Why because prices allocate the availability of beans.
So when the state moves in and caps prices, scarcity,
scarcity doesn't vanish. It just shows up as things like
a que aligne, rationing decay and then the exclusion of

(08:08):
newcomers without political pull or lucky timing because the number
of apartments are killawatt hours or whatever you're talking about
or pork and beans is fixed by yesterday's investment and rules.
So in playing terms, rent control, like the New York
Times advocates, is a tax on current landlords that pays

(08:30):
a subsidy to current tenants with the deadweight loss on top.
And it doesn't make housing affordable for society as a whole,
only for the lucky insider who holds the controlled leases,
while all the outsiders bear the shortage and the search costs.

Speaker 1 (08:47):
Who wins who loses.

Speaker 3 (08:49):
The immediate winners of rent camp of rent caps are
incumbent tenants whose units get covered because oh my rent
can't go up, I'm the winner.

Speaker 1 (09:02):
Who's the loser?

Speaker 3 (09:03):
The immediate loser are the landlords and indirectly all of
the would be renters who must pay with wait time
or side payments, or lost opportunity by foregoing opportunity in
dynamic cities because controlled units aren't going to turn over
and the uncontrolled units will continue to climb in price,

(09:25):
So if you're looking for an apartment in Manhattan, you're screwed.

Speaker 1 (09:30):
The biggest long.

Speaker 3 (09:31):
Run losers are the young mobile and the ambitious you know,
the graduate of the University of Colorado Boulder are harwd.
The graduate who can't get a foothold in downtown Denver
if there were rent controls here, or San Francisco, New York,
because the turnover stalls out, and then the maintenance and

(09:53):
new supply receid under the shadow of confiscatory rules and
the expectations that they were you to turn or just
this once again and again and again. The rules of
economics still applies now. Economist object price ceilings because they
jam the signals that call forth investment, that allow or

(10:17):
permit maintenance. And of course the blocks entry even caps
set just above costs, that's gonna dull in centies and
degrade the quality. Is owner's ration rationally cut all the
marginal rehabs or maintenance all their future projects because of
the regulatory risk that past experience shows rarely fades on

(10:41):
schedule demand subsidies layered on top constraint supply that mostly
bids up prices, transfers value to the least elastic side,
and then frequently the property owner or the utility or
the being manual that being processed us Sir, proving again
that trying to buy pass scarcity with money or mandates

(11:06):
moves the bump under the rug, not out of the carpet.
History is really harsh on these temporary targeted controls. All
we have to do is just look at the history.
We see what goes on. New York's wartime measures were
sold as emergency steps.

Speaker 1 (11:24):
You'll hear that all the time. Everything's an emergency now.

Speaker 3 (11:27):
Yet the scaffolding of rent regulation metastasized across decades, exactly
as political economy predicts when concentrated beneficiaries mobilized so they
can preserve their gains, and then sunset clauses become sunrise clauses.
The core problem is credibility. No government combine its future self,

(11:49):
and investors price that risk. So a policy that trades
relief today for a weaker long run investment often delivers
exactly that trade repeatedly, with compounding consequences for stock quality, mobility.
It just compounds itself. You invoke price controls and all
those things on the margins that you don't spend the

(12:09):
money on maintenance, new construction, whatever, It just begins to
compound itself, which leads me to the next point.

Speaker 1 (12:21):
Supply is policy.

Speaker 3 (12:23):
If the objective of if you're objecting is lower rents
or say, lower utility bills, the durable path is supply.
Remove zoning choke points, accelerate by ride approvals, Relax height
and density caps, streamline permits, reform labor and licensing frictions

(12:47):
that make adding units or megawatts or more cans of
beans a decade long obstacle. Course supply is also about
using what exists allow us or room rentals, conversions, ease
exit frictions for seniors, suck in over large homes by

(13:08):
reforming capital gains, reforming the property tax cliffs that many
seniors face, and fixed contract rules that discourage a landlord
from serving a marginal tenant, all of which expand effective
vacancy now, not in the future, Not in the future,

(13:29):
you can't even predict. But this is what the New
York Times is proposing. There is a powerful demand. I've tried,
I don't think I have yet in this segment. But
the word affordability is the new buzzword affordability, and that

(13:51):
creates this political temptation to do something right now. So
when you get an op ed like the New York Time,
carefully designed to temporraiarriy caps alongside ambitious buildouts that's aimed
to satisfy that desire to do something now. But we're
talking about politics, we're not talking about physics. Because the

(14:13):
budget constraints remain, and so do incentive effects that shrink
tomorrow's pie so that you can try to cover today's promise.
Economists are most useful when resisting, pushing aside that allure
of liver expectations to rules that have stood for what

(14:34):
thousands of years of trial controls distort shortages, then follow
maintenance and investment begins to fade, and insiders prevail over
outsiders who most need access to opportunity, or I would
even phrase it, as I think about it a little differently,

(14:55):
it also takes those outsiders who not just need access
to opportunity, but they want the access to opportunity they've
got in a very crude way. They got money burning
in their pocket. But why would you go spend your
money to build some more apartments. They're going to be

(15:17):
subjected to rent ice controls. Why would you start processing
more beans when you've got the money in the capital
and you've got the supply where you could you know,
sell even more beans, capture more market share, but there's
a price control on it. So you've taken away that incentive.
And when you take away that incentive for someone to

(15:38):
produce more apartments or more beans than what scarcity moves in.
And when scarcity moves in, what happens next? Prices go up.
You know, we have lessons we can learn from this,
but nobody seems to want to do it. And the
thing that frustrates me the most is these lessons are
never taught. Oh, you took an econ class in college?

(16:02):
Woop poop do you do? I bet you didn't take
one economics class in high school? And whatever you took
in econ one oh one in undergraduate school, you were
so focused on your major you forgot about the lessons
about rents and power. And so when you forget those lessons,
you're doomed to do what repeat the mistakes.

Speaker 5 (16:22):
Michael, who was at goober That, said that dialing oh
for operator was part of his lexicon when he was
growing up. I always heard dials zero for operator, later
on press zero for operator. I mean, come on, did
this guy come from a place where the invention and
numbers arrived?

Speaker 1 (16:43):
If you millennia too late.

Speaker 3 (16:46):
God, Now we get an argument between a rotary dial
telephone or maybe maybe a princess phone, and so you pushed.

Speaker 1 (16:55):
Maybe we got a push button phone. Oh had a
pink princess phone at home. I just love it when
they fight with each other, I know, because we can
just sit back and let go. We just let them
go tomorrow, don't forget.

Speaker 3 (17:11):
Let's help those in need with Koa's holiday food drive
benefiting Food Bank of the Rockies, a good organization. You
can join KOA nine to nine yours truly at King
Soupers at Colorado and Yale. Donate turkeys, no, not yourself,
a real turkey, food or cash through a QR code.

Speaker 1 (17:29):
Hey dragon, can I bring my own QR code? No?
Oh I have to use the official QR code? Yes?
Oh well, how are they gonna know?

Speaker 3 (17:37):
I'll just I'll have a QR code and a white
piece of paper and I'll just tape it to the
back of my Wouldn't that be awful? Can you imagine
some dirtbag doing that? You're trying to raise money for
a food bank and you take your own QR code.

Speaker 1 (17:51):
I'm sure it's been done before.

Speaker 3 (17:52):
Oh my gosh uh anyway presented by Red Bird Farms, Colorado,
but GMC.

Speaker 1 (17:57):
Dealers and Koha.

Speaker 3 (18:01):
I'm going to finish the price controls and then I
have a few text messages I want to get to
in case you need a map to know where we're going.
So back to the price controls for a moment. Have
you ever heard of the Lindback warning? As their Lindback
put it pretty starkly next to bombing something, You're going
to go bomb the crap out of something. Rent control

(18:24):
has been among the most effective techniques known for destroying
a city.

Speaker 1 (18:31):
Now.

Speaker 3 (18:31):
He reached that conclusion by looking across decades the comparative experience,
and it sighted or I cited because it captures the
cumulative damage of chronic under maintenance, the exit of capital,

(18:53):
and destalled mobility. Think about each one of those things.
When you put price controls on, it is damage that accumulates.
There's chronic under maintenance. Well I'm stuck at this price level. Now,
if you're stuck at that price level on your rent
as a landlord, what about old say light bulbs, or

(19:18):
you gotta have plumbing fixed, or you got to put
a new flooring in, or you have to paint. All
of those prices keep going up, but your income from
your rent control department does not. This is what this
is what Voverham wants to do in New York City,
and this is what a bunch a bunch of socialists
things is. The is the cure all for affordability. So

(19:40):
you impose price controls, so you start deferring maintenance because
it's costing too much. You don't have that capital, particularly
if you're if you're operating on the margins, so you
have under maintenance and then you have the exit of capital.

Speaker 1 (19:56):
Why would I loan you money if.

Speaker 3 (19:59):
I'm a mortgage or why would I loan you money
to go out and build an apartment complex when I
know that your income is going to be capped at
a certain amount, and I know your expenses are going
to be over here, and those expenses are going to fluctuate,
most likely rise, but your income is going to remain stable.

Speaker 1 (20:18):
I'm not going to lower you.

Speaker 3 (20:19):
I'm not going to loan you that money to build
that apartment unless I know that you've got a whole
bunch of capital back here that can absorb and maintain
that apartment complex. So you have an exit of capital,
and then you have stalled mobility. The person who is
in a rent controlled apartment, let's just say, you know,

(20:42):
it's a boyfriend and a girlfriend. It's in a boyfriend's name,
pretty typical in New York. But they have a family,
they they decide to have a baby. Now they can't
get to a larger apartment because they can't afford it,
because then the rent control apartment and once they move out, boom,

(21:02):
Now that rent can go up. So they're never going
to move. So you've got stalled mobility. And when you
have stalled mobility, that means that the upward mobility gets compressed,
if not stalled completely. So people trying to move into
those lower cost apartments they're screwed. They can't do it.
So you have perpetuated the problem of affordability of so

(21:26):
called affordable housing. The New York Times is out there
advocating this. They're actually advocating this, as is the new
Mayor of New York too. The rhetorical sharpness endears because
the mechanism is so mundane. The city is its flow
of reinvestment and entrance, as people move in and out,

(21:48):
as reinvestment occurs, and all these price controls systematically erode
both of those things, first beginning at the margin, then
in the middle, until finally vitality way.

Speaker 1 (22:00):
To just stasis. You're just stuck.

Speaker 3 (22:04):
When the government insists on short run help, use transparent
on budget tools, time limited means testing cash transfers or
maybe vouchers to households paired with hard front loaded supply
deregulation milestones, rather than implicit taxes on very specific asset

(22:25):
owners that quietly degrade the base on which future affordability depends.
Pair those transfers with automatic off ramps that are tied
to vacancy rates, new unit completions, or maybe priced income ratios,
so that exit out of that system is governed by

(22:46):
measurable conditions instead of lobbying muscle. And then approvals for
new construction or changes or whatever on zoning system or
whatever that advances on a legally binding calendar, on a
legally binding bases that allows all of those moving parts
to begin moving. Think of it this way. Price controls

(23:08):
just freeze everything, mobility, maintenance, everything, And when that freezes,
what happens? Everything begins to deteriorate. The temptation to a
to flatter a base of voters is bipartisan. Both parties

(23:34):
do it. Tariffs dressed up as strategic are relatives of
price caps dressed up as temporary, and both breed permanence,
rent seeking, investment killing uncertainty that ultimately is going to
do what It harms the very workers and families that
they purport to try to shield to try to help.

(23:57):
Intellectual honesty requires telling voter is what works, even when
it is slower to show up on a chiron because
short run, short run theatrics that corrode long run supply
is going to leave a community poor, less mobile, and
more unequal than ever it was before.

Speaker 1 (24:16):
So if the goal.

Speaker 3 (24:18):
Is affordability, then you've got to lift price controls. You
got to make room to build, to subdivide, to convert,
to move, and to maintain. You don't tax it very
casualw that keeps the roofs, attack in projects penciling out,
And you don't and do not ask price signals to
lie when hoping that engineers and investors will be you know,

(24:39):
will pretend, oh I'm not going to notice that. No,
it freezes everything, and that's precisely what you don't want
to happen.

Speaker 1 (24:48):
Hey, Michael, there's four lawyers in my family.

Speaker 5 (24:51):
When they're all together, we refer to them as a muddle,
as in a muddle of lawyers.

Speaker 3 (24:59):
I like that one too, and I bet the whole
conversation is muddled too, because nobody can agree on anything,
and everybody's got their own opinion, and everybody thinks they're
right and nobody there's there's no in between. It's one
or the other, and that's it. I cheated a little
bit during the break because we have a text message

(25:22):
that just irritates me. M Gober number three, four, zero seven. Michael,
you said earlier zero was a number, Oh was a letter.
Zero is the absence of numbers, Okay, but that doesn't
mean that it's not a number. So I asked one

(25:44):
of the AI platforms is zero a number? Zero is
an integer, a whole number. It belongs to multiple number sets,
natural numbers in some definitions that included zero integers Z,
rational numbers Q, real numbers, are and complex numbers C.

(26:06):
It satisfies all the basic properties of numbers. You can add, subtract, multiply,
and with care divide.

Speaker 1 (26:12):
It with it.

Speaker 3 (26:13):
In the number of systems that we use, zero is
the additive identity for any number, for example, x x
plus zero equals x the additive identity. It represents nothingness
or the absence of quantity, but in a very precise
operational way, not just a placeholder. It's the number of

(26:35):
elements in the empty set. So that makes a foundational
in set theory, the modern foundation of all mathematics historical
fun fact. Zero was invented or discovered relatively late. The
Babylonians used a placeholder around three hundred BCE, but the
fully fledged number zero, with its own semblance rules, emerged

(26:56):
in India around the fifth tenth century CEU. It spread
via Arab mathematicians to Europe, where it faced resistance from
people like you, because people found the concept of nothing
being a number as being philosophically weird. Okay, common misconceptions

(27:17):
that zero is not a number, that it's nothing that's wrong.
Nothing is what zero measures. But zero itself is a
perfectly valid number. Division by zero is undefined, would say,
another misconception. Okay, true, but that's a special rule, not
evidence that zero isn't a number. It's just a number

(27:38):
that breaks division in the real numbers. In short, yes,
zero is one hundred percent a number, probably the coolest number,
because without it, we'd still be stuck with Roman numerals
and no decent way to do algebra or computing, and
I wouldn't have anything to talk about.

Speaker 1 (27:57):
So zero is a real number as well.

Speaker 4 (28:00):
You can now wear zero in the NFL as of
about a year or so ago. And uh Cooper, Jonathan
Cooper wears zero on the Broncos. So oh, really is that?
I didn't know that it's a number. Oh all right,
let's see. I thought there was only years too sinking about.

Speaker 3 (28:21):
Oh, this is pretty good about dogs. Guber thirty eight
sixty two, Mike, I have no use for people who
don't like dogs, but I trust a dog when he
doesn't like a person.

Speaker 1 (28:33):
True.

Speaker 3 (28:33):
Oh, that's so true, just so true. Brownie's number seventy
seven oh three. I have two dogs, a ninety pound
mutt and one hundred and fifty pound gladiator Dane. Greta
the Lienburger used to follow her on Instagram until I
got booted. I'm happy to say that Greta the Lionberger

(28:57):
never got booted off Instagram