Wired New York, via No Data Source, has a running discussion on rent controls in New York. Briefly: New York's rent controls are distorting the market. Single widows hold on to three bedroom apartments, causing artificial shortages. Apartments allowed to float must subsidize the rent-controlled units, creating exhorbitant rents. The example of Cambridge, Massachusetts is held up as an example of the healing power of the marketplace. An MIT study cited in almost every piece concludes that after deregulation, housing investment increased 20%. The Cambridge model is presumably the best-case scenario. New York would lift all controls at once, and allow the market to sort itself out. Investment in new housing would increase 20%, with a commensurate increase in available units, driving down the price of apartments. Retired widowers would no longer knock around in three bedroom apartments. Everyone has presumably won: the construction industry is happy with the new investment, landlords now have the flexibility to respond to market pressures, and tenants benefit from new, cheaper apartments. Floating the 1 million rent-controlled units would certainly eliminate distortions in the market, but is this really what we want? Markets are excellent for delivering the best price-point to the widest possible audience, but terrible at instituting social policy. There are other forces at work, however, which complicate the rosy scenario. At the heart of this deregulation-induced revitalization is the increase in supply. This means more people. Many more people, which is exactly what New York doesn't need. This assumes, of course, that the 20% increase in housing investment is devoted to new construction, which is unlikely. It is far more likely, that new investment would be devoted to upgrades. New construction is messy and complicated. It is far easier and more lucurative to add hardwood floors, bay windows, and dishwashers to dilapidated apartments, and charge a higher rent for a tidy and newly unregulated profit. This does nothing to relieve the housing shortage, which is the presumed goal of deregulation. Lo and behold, this is exactly what the MIT study claims will happen: deregulation creates better apartments, but does not increase their availability. Better, more expensive apartments come at the cost of driving out lower-income tenants, creating homogenously affluent neighborhoods. Deregulation, it seems, works nicely for the construction industry and landlords, but works to the detriment of lower-income tenants. Under the current system, these tenants are subsidized by more affluent residents and an unpleasant market inefficiency. Faced with a choice between this, and a Manhattan reserved for old- and new-money New York Brahmins, we would gladly accept the former.

Some of you may have heard the story on NPR this week about how the Bush administration is proposing changes to the overtime rules. They are touting it as a way to give more OT to some million low wage workers. But, what it's really about is not allowing overtime to many more millions. Anybody who makes over $22,000 and supervises two or more people. So, your 7-11 manager? Executive, ineligible for overtime. Your McDonald's boss? Management: ineligible. NPR pointed out that the last day to comment is Monday. I looked high and low on the Labor Department website and couldn't figure out how. So, I called. They told me it may be too late. Got another number. Was transferred. Finally got the email address. If they want to keep people from commenting this much, I'd say it's worth it so send an email. HERE'S WHO YOU WRITE: whd-reg@fenix2.dol-esa.gov HERE'S WHERE THE INFO IS http://www.dol.gov/esa/whd/ March 27, 2003 U.S. Department of Labor Proposal Will Secure Overtime for 1.3 Million More Low-Wage Worker Department Seeks to Modernize 50-Year-Old Wage Regulations The U.S. Department of Labor today published a proposal to modernize its 50-year-old regulations defining exemptions from the Fair Labor Standards Act (FLSA) for "white-collar" employees, a measure that will help small businesses grow and guarantee overtime pay for 1.3 million more low-wage workers. "Our proposal will strengthen overtime for the most vulnerable low-wage workers and allow for stronger Department of Labor enforcement of this important worker protection," said U.S. Secretary of Labor Elaine L. Chao.

David Plotz has a nice piece at Slate on Iraq: The Computer Game. Everyone's heard of the Department of Defense using shoot-'em-ups like Doom to train soldiers, but another game genre is starting to take hold as well: massively multiplayer role-playing games. If you can create a virtual world, like the Sims or EverQuest, that matches real-world conditions, the outcome of the game can provide hints for how the real world will unfold. This isn't just blue-sky thinking, either. General Wesley Clark commissioned a didactic system called SENSE, in which each player played a stakeholder in postwar Bosnia. He had the new Bosnian government play different roles in the game, to show them the consequences of different policies. The game got so heated that the opposition leader had to go on television after one session and explain why the country fell apart while he was playing the role of President. These games are also good for observing group behavior. This is where Iraq comes in. Edward Castronova from Cal State was approached by the DoD for suggestions on how to model the politics of post-war Iraq. He suggested that they update the War of the Roses strategy game Kingmaker. If you can accurately model the situation, and let the computer simulate each significant role, a few million simulations should give you a sense of how likely certain situations are: if the new Iraq doesn't join NATO, Iran will invade 25% of the time. The utility of these simulations is not for prediction, but analysis: they can provide a list of outcomes that policymakers could apply to their pet theories. The most intriguing idea is described by Plotz as NorthKorea.com: create a world that simulates the conditions of North Korea, and let thousands of gamers loose on it. Each player would act in their own interests, and the aggregate effect of their actions would provide an excellent insight on the internal politics of the country. The players would treat it as a game, of course, but observers could glean valuable intelligence from it. The greater story here is in the use of actual humans to perform a simulation. It's notoriously difficult to effectively model human behavior. The great insight here is that modelling human behavior is unnecessary: with a set of networked players, you can incorporate the genuine article.