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Rent Control: The Ceiling Trap
25 days ago
- Rent control aims to cap rents to address housing affordability, offering immediate relief to tenants by freezing or limiting increases.
- Economic consensus warns that rent control reduces housing quantity and quality, leading to shortages, decay, and higher market rents in uncontrolled units.
- Studies show rent control causes misallocation, as tenants stay in mismatched units, while landlords exit through conversions or reduced maintenance.
- Alternatives include increasing housing supply through zoning reforms, using housing vouchers, and implementing second-generation rent control with exemptions and incentives.
- The costs of rent control—like reduced supply and long queues—often fall on future tenants, while benefits accrue to current, sometimes affluent, occupants.
The Beauty of Tautologies
a month ago
- Tautologies, often dismissed as simplistic definitions, are crucial in economics for promoting clear thinking and revealing plausible causal relationships.
- The Equation of Exchange (M*V=P*Y) is less intuitive than the Cambridge Equation (M=k*P*Y), which clarifies that NGDP is determined by base money and the share of income held as cash balances.
- The savings equals investment (S=I) identity shows that increased saving leads to increased investment, contradicting fears that thrift causes depressions; Keynes' paradox of thrift relates to hoarding, not saving.
- Say's Law (aggregate supply equals aggregate demand) holds true, but sticky wages can cause low output during nominal spending drops, making it a supply-side issue.
- GDP equals GDI emphasizes that stabilizing NGDP aids labor and financial markets, and technological advances like AI could boost income even with high unemployment.
- The tautology S - I = current account balance suggests protectionism affects trade balances via changes in saving or investment, not directly through tariffs.
The Most Important Cheque in Economics
19 days ago
- A 1990 check for $576.07 settled a famous bet between economist Julian Simon and biologist Paul Ehrlich over resource scarcity.
- Ehrlich predicted that population growth would make metals like copper and tin scarcer and more expensive, while Simon argued human ingenuity would make them more abundant.
- Over a decade, despite a 19% population increase, the inflation-adjusted price of a basket of five metals fell by about 36%, proving Simon correct.
- The bet highlighted a key error: viewing resources as fixed gifts of nature rather than as matter combined with human knowledge and innovation.
- Simon emphasized that the ultimate resource is the human mind, which, when free to experiment and trade, can solve scarcity through invention and efficiency.
- The lesson is that prophets of permanent scarcity often underestimate human creativity and overestimate physical limits, a relevant insight today.
- The debate reflects two visions of humanity: people as mere consumers depleting resources versus as problem-solvers who create new wealth and expand possibilities.
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8 hours ago
- AI systems, despite their flaws, have achieved tasks like language understanding, programming, and bug detection that were science fiction years ago.
- Deep learning models, including LLMs, are poorly understood, and even experts have repeatedly failed to predict progress accurately.
- Future progress may plateau, but such a plateau could trigger massive research into new architectures.
- If AI becomes significantly more capable and independent, it would represent a unique revolution unlike past technological booms.
- Economic markets are treating AI like previous tech booms, but the possibility of mass worker replacement could severely stress the economic system.
- Companies may rely on internal AI, reducing demand for external services, and a concentration of AI power in a few firms is unlikely to be sustainable.
- AI might force a fundamental economic system change, potentially reducing prosperity, but markets continue to rise despite uncertainty and global instability.
- Historical institutions that seemed permanent have been eradicated by fundamental societal changes, and AI could be such a change.
Pluralistic: Deranged billionaires and their syndromes (16 Jul 2026)
8 hours ago
- Market theory assumes competition turns selfishness into public benefit, but successful capitalists often escape that discipline to become feudal lords.
- Economic doctrines like consumer welfare, revealed preferences, regulatory capture, and meritocracy are used to justify billionaire power and escape competition.
- Billionaires like Peter Thiel and Elon Musk openly advocate for aristocratic rule and immunity from constraints, rejecting democracy and market discipline.
- The term 'billionaire derangement syndrome' is misapplied; the real syndrome is billionaires' belief they are above any rules or accountability.

economics

Rent Control: The Ceiling Trap

The Beauty of Tautologies

The Most Important Cheque in Economics

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Pluralistic: Deranged billionaires and their syndromes (16 Jul 2026)