Saturday, November 30, 2013

"Unwinding inequality" by making them poorer

It's difficult to argue with the initial claim that some of the wealthy and connected seek to have their power entrenched (HBR):

Whether international or domestic, inequality becomes intolerable when individuals who have gotten ahead for whatever reason use their power to pull further ahead—and even to render others worse off in absolute terms. When successful people—businessmen, lawyers, traders, doctors—use their success to change the rules in their favor, by lobbying or funding politicians, that success is no longer something to be celebrated.
But the author goes off the rails with the following claim:
When they push for what they see as important without perceiving that others have different priorities—the rich have little need of public health care or public education, for example—they undermine the provision of public goods on which the rest of us depend. When they make it hard for those without wealth (or not beholden to wealth) to fully participate in society, they undermine the democratic process.
In fact, well intentioned policies often have the exact opposite effect. Take rent control and the housing crisis in San Francisco that threatens to get even worse (Reason):
With the area economy rebounding, San Francisco is in the midst of a housing crisis as many residents are evicted from their apartments. “It is a situation rooted in limited housing stock and surge in demand that has pushed the median rent up from $2,968 in 2010 to $3,414 this year…,” reported the San Francisco Chronicle.

The median home price has soared to nearly $900,000, which helps explain why nearly two-thirds of the city’s residents are renters. So the rent hikes are particularly acute—and have put the city’s tough rent-control laws in the spotlight. As property values have rebounded, an increasing number of San Francisco owners are getting out of the rental business and cashing out their properties to turn them into co-ops.

While the city’s rent-control ordinance places strict limits on the ability of landlords to increase rents, a state law called the Ellis Act allows property owners to take their property off the rental market after providing tenants with a 120-day notice (and much longer for elderly or disabled tenants).

Following a 170 percent increase in such evictions, some Bay Area legislators are calling for changes to the state law. And San Francisco tenant activists recently proposed new regulatory and financial burdens on property owners who want to sell or move into their own properties.
The same is true of policies like minimum wage, public education, and even public healthcare.

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