Tag: Economics

NYC Rent Deregulation

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.

Cheapskate Overtime Rules

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.

Reconstructing a Virtual Iraq

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.

Web Diarists, Collaborative Filtering, and Scale-Free Networks

Even though it disparages Josh Marshall, we have to thank No Data Source for the new Hugh Hewitt piece on the Big Four web logs. There was a time when web-based journalism was supposed to somehow revolutionize the delivery of news. The combination of low overhead and accessibility that web sites provide was supposed to wrest control of news from corporations and put it in the hands of the people. Now, presumably, anyone can publish their own broadsheet. It's unavoidable that readership is going to gravitate towards a small group of news providers -- no one person can read everything. The decision of which news sources to read is influenced in large part by their visiblity and referrals from friends -- it's a textbook scale-free network, where things that are popular tend to stay popular, and the ignored stay ignored. The result is Hewitt's Big Four: Instapundit, Mickey Kaus, Andrew Sullivan and the Volokh Conspiracy. Together, these four news outlets exert an enormous amount of influence over the day's agenda, reducing most publishers (like ourselves) to echoes and rehashings of thier posts. This is natural, of course -- reputation and habit are an essential part of the intellectual economy. It's also functionally identical to the "corporate media" problem: the agenda's controlled by a handful. It's useful to look at how computer scientists deal with this "collaborative filtering" problem. After a time, ranking items by strict popularity becomes less useful. The homogenization of search results are going to prevent valuable but unknown items from being found. The simplest solution is to insert unpopular items, at random. This doesn't interfere too much with the accuracy of the results, but does give a fighting chance to the underdogs. For you, the news consumer, this means occasionally trying something new. Just visit WebLogs or another blog aggregate service, and see if you can't find a new favorite. Unfortunately, scale-free networks tend to discourage this behavior. You need a large number of people accidentally picking up the same underdog at the same time in order to gather enough momentum to bring it to the top. Epidemiology studies scale-free networks, too. Viruses get passed around by a core group, and infect populations in clusters. So, it seems, truth is a virus.

OnePeople 2004 Federal Budget Wrapup, Part I

The United States' Federal Budget is where politics, theory and rhetoric collide with harsh reality. In its 2,866 pages is encoded an immensely complex set of priorities, commitments and compromises which together will keep the United States operating for an entire year. The 2004 budget is especially interesting (relatively) because it was designed by a strongly ideological White House who has the unusual advantage of controlling Congress. This means that the approved budget is a much less about the compromises and more about the priorities of the Republican party. For that reason, this year's budget is immensely instructive. OnePeople obviously has nothing better to do, so we're going to walk you through this year's budget, highlighting areas of interest that you could easily have skimmed over in your favorite periodicals. Since we're almost as lazy as you are, we haven't actually read the budget -- we're relying on a number of different sources, which we'll refer you to when the opportunity presents itself. We'll begin the series with some high-level analysis, turning our perceptive gaze towards the summary prose that precedes the tables and line-items of the budget proper. As it does each year, the Administration uses this prose to explain, justify and illustrate its own fiscal policy. It makes for an awfully big target.

Globalization for Dummies

It's likely that you missed the excellent PBS series on the history of 20th Century economics, Commanding Heights. Fortunately, the series is also available online, in one of the best uses of broadband we've seen in a while. The series takes an impossibly complex set of problems, and lays them out in an accessible and valuable way. Spend some time with this series before you get comfortable with your ideas about globalization and its consequences. As an added bonus, it's narrated by David Ogden Stiers whose dulcet tones graced Rick Burns' New York series.