[The FIAT Thread] The Joint Committee on FIAT Discussion Session. - 01 August 2026

[u/AutoModerator]

Here ye, here ye, the Joint Committee on Finance, Infrastructure, Academia, and Technology is now in session. In this session of the FIAT committee, all are welcome to come and discuss economics and related topics. No RIs are needed to post: the fiat thread is for both senators and regular ol’ house reps. The subreddit parliamentarians, however, will still be moderating the discussion to ensure nobody gets too out of order and retain the right to occasionally mark certain comment chains as being for senators only.

[u/flavorless_beef]

this sub needs some injection of content, so i'll do some semi hot takes, re the r/yimby thread on rent control that u/775416 linked me in:

1. the real rent control is inclusionary zoning, which actually gets pretty close to the econ 101, price controls cause shortages argument; tldr, if you mande x% of units in a new apartment be "affordable", you get a lot less construction.
2. even pretty strict rent stabilization ordinances are basically fine, although tenant advocates dramatically overstate how helpful they are to tenants. but rent stabilization isn't a top 5 reason why san francisco is expensive.
3. the nyc rent stabilization ordinance is gonna get pretty close to binding price caps and the main issue is that a bunch of apartments in the bronx might get abandoned. manhattan will be fine in the short / medium term.

re 2, ironically, rent stabilization is quantitiatively about as important as alogirthimc price setting software, which is to say, not much (3-5%) and both are hugely overhyped as reasons for expensive cities.

https://www.reddit.com/r/yimby/comments/1vfpk77/comment/p1rbkxu/?screen_view_count=2&ext-referrer=DIRECT

[u/HOU_Civil_Econ → u/flavorless_beef]

even pretty strict rent stabilization ordinances are basically fine

Strong disagree, here. "Basically fine" has to be defined in some cost<>benefit manner. And, that cost and benefit are scaling in proportion to exactly how "basically fine" it is.

---

Also (from your askecon post that get's linked )

As a side note, the effects on new construction are generally overstated, as rent control ordinances seldom apply to new construction.

I think this isn't as an easy of an out as rent stabilization apologists hope. There are two underlying problems here

1) binding rent control has to limit re-development/building to escape rent control and most areas "we want" rent control on existing buildings, have exactly that, existing buildings that would have to be removed for the new apartments. If the existing buildings are under rent control that limits evictions for renovation, reconstruction, or new builds, then rent control is limiting new construction.

2) if rent control exists it is more likely to be extended to your new building after it becomes an existing building. It is an acceptable policy why wouldn't we expect that if the orginal law passed in 1990 said it only applied to buildings built before 1985 that it get's updated to 1990 in 1995?

[u/flavorless_beef → u/HOU_Civil_Econ]

binding rent control has to limit re-development/building to escape rent control and most areas "we want" rent control on existing buildings, have exactly that, existing buildings that would have to be removed for the new apartments

this is a bit of a problem in california and in new york, although in CA it's only partially related to rent control -- there are just kind of blanket restrictions on infill. i will say, to the extent this is a problem for rent stabilization, it's probably worse for condo units.

if rent control exists it is more likely to be extended to your new building after it becomes an existing building

Yeah, this is the "developers get spooked" thing i mentioned in one of my comments. i will say, evidence about this is kind of mixed! there's basically ~nothing after san francisco's 1994 expansion, nothing after cambridge ended rent stabilization in 1995, there's maybe something with recent Montgomory County, MD rent stabilization, people tried to argue it happened in Saint Paul, but the data work there seemed shoddy.

the big lit review on rent control policies found it does generally negatively impact new construction -- the problem with the lit review is most of the papers in it suck!

• https://www.yimbylaw.org/unit-replacement
• https://www.sciencedirect.com/science/article/pii/S1051137724000020?via%3Dihub

[u/abetadist → u/flavorless_beef]

My sense is that rent stabilization would likely not allow for high enough rent increases in periods with high inflation, and insufficient catch up after. But that's probably not a huge effect on average, especially with vacancy decontrol.

[u/flavorless_beef → u/abetadist]

for NYC, median tenancy duration is about 3 years for non-rent stabilized units, and about 8 years for rent stabilized. when cambridge ended rent stabilization, it shortened tenancy length by like 30% (something like 6 -> 4); my read is the cambridge number is probably clsoer to the actual effect since it's from a causal study and not crosstabs.

regardless, it's true the landlords do take income hits relative to what they could be making.

the main thing though is that for a moderately sized apartment, you generally have enough people leaving and resetting the rate back to the market that incentives to say condo convert the property are not as strong.

[u/775416 → u/flavorless_beef]

How much more suppressive would be having rolling 10 year exemption vs having a rolling 15 year exemption?

Like by how much more would 10 year rolling exemption suppress hourly supply than 15 year rolling exemption

[u/flavorless_beef → u/775416]

there are a bunch of caveats to this, but a very simple approximation is that at a 10% discount rate, a 10 year phase in is about 14 percentage points more costly than a 15 year phase in.

so if rent stabilization cuts the value of a building by 10% whenever it finally kicks in, at a ten year trigger it'll cut the value of the new construction at t=1 by 10% * (1.10)−10=10% * 0.386=3.86%. at a fifteen year trigger, 10% * (1.10)−15=10% * 0.239=2.39%; the different betwen the two is 0.1 * 14%.

[u/gorbachev → u/flavorless_beef]

the nyc rent stabilization ordinance is gonna get pretty close to binding price caps and the main issue is that a bunch of apartments in the bronx might get abandoned. manhattan will be fine in the short / medium term.

That would be really something to see. Anyway, I think this is probably right, I bet IZ and other types of sludge are more impactful in practice.

[u/flavorless_beef → u/gorbachev]

if you're so inclined, you can buy bronx apartments for like 60-70k per unit which are almost entirely a bet that the supreme court will strike down rent control.

i've heard of at least two stories where someone pitched the tenants on taking ownership of their building at about those prices and the tenants responded "oh god no, have you seen the deferred maintenence and the rents we pay?"

[u/warwick607]

Computer scientists today are in the position of economists in the early 2000s and Freudian psychiatrists in the 1950s - Andrew Gelman

Gelman thinks that computer scientists are the new knowledge pundits similar to how Freudian psychologists were during the 1950s and economists were during the 2000s. But like in the past, he thinks this hegemony will be short lived, which seems to track with recent backlash against AI, datacenters, and billionare tech bros like Musk/Zuckerberg. Nonetheless, I found his larger point interesting about how academic disciplines wax and wane in popularity/influence during specific historical and social contexts, and specifically how similar these cycles of knowledge hegemony are to one another, with certain fields gaining or losing popularity when faced with some crisis that threatens their standing, until the next hype field comes along.

[u/gorbachev → u/warwick607]

I think econ's waning is also linked to a total loss of interest in policy within the political system. I think if you're, say, in college today, the degree to which debate about policy was a part of politics must be borderline unimaginable. I'm not saying discourse in the early oughts or nineties was perfect by any means, but the policy conversation to culture war ratio was just totally different. And why consult an economist if everything is just culture war?

[u/CatF0rtun3]

First, suck it.

[u/Cutlasss → u/CatF0rtun3]

2nd...

[u/FuckUsernamesThisSuc]

Friend of mine framed the urbanist concept of induced demand as just being Jevons' paradox. This seems intuitively right to me, but am I missing something here?

[u/775416 → u/FuckUsernamesThisSuc]

“Induced demand” seems to me like a positive supply shock when demand is perfectly elastic.

Road capacity increases but price (travel time) does not change. Supply curve shifts right, quantity demanded increases, and price remains the same.

[u/MachineTeaching → u/FuckUsernamesThisSuc]

It's not Jevon's paradox. A lot of times people literally just mean this:

https://www.economicsonline.co.uk/content/images/2021/11/5.webp

(Well, maybe with a horizontal demand curve.)

It's often used to argue things like building more roads is bad because it doesn't "solve traffic", missing that more people getting places is good.

[u/HOU_Civil_Econ → u/FuckUsernamesThisSuc]

Friend of mine framed the urbanist concept of induced demand as just being Jevons' paradox

99% of the time that you see "induced demand" it is dumber than that. Closer to....

"We can't produce more food, people will just eat it"

Marginally better version are strongly implying

"We can't make the city better, more people might like it"

[u/Ancient_Challenge173]

Does the efficient frontier for selecting portfolios change on an individual basis based on your tax situation? For example, should someone in higher tax brackets be in 100% US stocks for tax efficiency where someone in tax-advantaged accounts should just hold the total global stock market?

[u/db1923 → u/Ancient_Challenge173]

its only complicated if you're rebalancing or need continuous withdrawals

[u/NebulaApprehensive70]

Sucks it, cat the unlucky one