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Real World Economics: Rent control going out with a whimper

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Real World Economics: Rent Control Going Out With A Whimper
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Observing St. Paul’s latest contortions in implementing a ballyhooed rent-stabilization measure passed in the November 2021 election evokes poet T.S. Eliot: This is the way rent control will end, not with a bang but with a whimper.

The original ballot measure wasn’t ill-intended. Indeed, there are problems. Many renters are among the poorest and most powerless in our society. Some landlords’ practices, especially those that are out-of-town hedge funds, are unconscionable — on rent and many other matters. And even for the most ethical of property managers, rental rates often are the tip of an economy’s whip that gets cracked when general prices rise rapidly. That can place poor households in dire straits that higher income, home-owning cohorts don’t begin to appreciate.

All that said, rent controls nationwide have a long history, not just of ineffectiveness in achieving their desired objectives, but having harsh unintended consequences that actually end up damaging the very people they’re intended to help.

There are reasons why rent controls are a sort of boogeyman example of bad economics in many introductory econ texts. Moreover, the real world examples are clear: Among other things, New York City’s rent control regulations helped drive societal and physical damage to the South Bronx 30 years ago, and now have turned lower Manhattan into essentially a rich gated community.

The conservative/libertarian idea is that markets, when “freed” of any government action, always produce optimal outcomes. The counterweight for many on the left is that any undesirable outcomes of market forces can be neatly fixed by law. Both are delusions that are similarly dangerous.

The problems that got rent control approved in 2021 are real: Many people who needed or wanted to live in St. Paul couldn’t find rental housing they could afford. Rents had been rising faster than incomes for some time. Many tenants facing rent hikes they could not pay were seniors, the disabled or low-skill single parents without vehicles and others for whom moving was problematic. Moreover, these groups were the most vulnerable to abusive rate hikes by bad landlords.

The ”market failure” here was transaction costs. In an intro textbook example of markets for bread and beef, many sellers offer products to many buyers. Any buyer can look at the T-bones before buying. If bad or high-priced, the buyer can just move on to the next stall and purchase there. Switching suppliers has no cost.

It is nearly ditto for college kids renting together. Many of their possessions are back home. Many can move back home in an emergency. If the landlord hikes the rent and they can find something cheaper, an offer of some beer will bring friends and a pickup to help move.

However, a senior or disabled person without family, who has been in an apartment for 15 years with all their earthly possessions, and who lives on an austere Social Security check, has few options. Their physical mobility may be limited, they may not have a car, nor friends or family members, to help move cherished things. A large rent hike is a real crisis. Homelessness is a true peril.

On the other hand, being a landlord isn’t easy either. Many view you with hostility — the occupation inherently invites difficult confrontations. There are substantial transaction costs attached to ousting tenants who don’t pay or who trash your premises or whose behavior scares away other tenants. There are slumps in housing markets, ignored by the general public, during which multiple units remain empty, while mortgages, insurance, property taxes, upkeep and utilities all must be paid.

So what about the specifics of the St. Paul ordinance? It passed narrowly, 53 percent to 47. Details were sketchy. The key one was a 3 percent per 12-month period cap on rent increases, with apparently no exceptions.

There were immediate market reactions. Developers planning to build in St. Paul warned that rent “stabilization” would discourage new construction of rental housing. Several pulled planned projects right after the election, some with much fanfare.

Some property owners reacted by adding “fees” for items like trash pickup, heat and other utilities that had been previously included in the lump-sum rent. Others reacted by rushing to raise rents before the controls took effect. Others now feel compelled to raise rents by the 3 percent limit every year where they normally wouldn’t have raised rents for maybe several years, or at all for existing long-term reliable tenants.

Renters and their advocates see this as an abuse. Owners point to modern pricing structures for natural gas and violent weather fluctuations and say they can’t bear the risk of price spikes alone.

“Since this passed, it’s been really bad for my ward,” St. Paul Council Member Jane Prince was quoted as saying. “I immediately lost 100 affordable units when a developer pulled out.”

Implementation details needed to be hammered out — an extended process that is finishing only now. Most changes the city council is now considering involve backpedaling.

One of the first retreats was exempting new construction, which developers want, first proposed for 15 years and now being finalized as 20. A provision to give this a look-back that would exempt anything built in the last 20 years seems to be in. This would essentially gut an essential part of the whole measure. Landlords could exceed the 3 percent limit by self-certifying that their costs have risen enough to justify higher rents. Very hefty increases are OK with a more comprehensive cost analysis worksheet. This is legally subject to review by city housing officials, but few if any such reviews are conducted. There are no penalties specified for exceeding caps and complaints about excessive hikes usually produce only a letter with “information” sent by the city to the landlord.

If anything, from an economics standpoint, the problem of “imperfect information” in rental housing has increased, as have “transaction costs.” Government could reduce some of this, for example, by hiring people to carefully review rent-hike worksheets and audit self-certifications. It could help landlords by reducing the complexity of evictions for cause.

But the underlying problem is that real estate prices generally, but especially for housing, have been rising sharply — faster than the general price level. There are people in $800,000 houses in St. Paul’s Mac-Groveland or St. Anthony Park neighborhoods who voted for the ballot measure — but would scream if the price they could get on selling their house could only be higher than what they paid 20 years ago by a compounded 3 percent a year. Property managers who bought an apartment building 20 years ago see no reason why the law should treat them, and their property values, any differently.

Rental housing markets involve intractable problems. Many European countries, including Germany, the Netherlands and Switzerland have far more households renting, often for very long terms, than we do. Housing there is not considered the make-or-break “investment” everyone is assumed to need. But those are very different economic and political cultures.

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Hilaria Baldwin gives birth to her 7th child with Alec Baldwin, ‘Ilaria Catalina Irena’

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Hilaria Baldwin Gives Birth To Her 7Th Child With Alec Baldwin, 'Ilaria Catalina Irena'
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Sept. 24 (UPI) — Hilaria Baldwin gave birth Thursday to Ilaria Catalina Irena Baldwin, her seventh child with Alec Baldwin and her eighth, she announced on Instagram Saturday.

” She’s there ! We are thrilled to present our little dream come true,” Hilaria Baldwin wrote in the caption of her post.

“She and I are happy and healthy. Her Baldwinito siblings spend the day bonding and welcoming her into our home. Lots of love to you all. We are very happy to celebrate this wonderful news with you.

Ilaria, weighing 6lb 13oz, is now the couple’s youngest child after Carmen, 9; Raphael, 7 years old; Leonard, 5 years old; Romeo, 4 years old; and Eduardo and Lucia — who are both under 2 years old.

The mother explained how Lucia, just six months younger than her brother Eduardo, was born via surrogate in an Instagram post in August 2021.

“Whenever I meet people and they ask me the age of my children, I wait for their awkward moment when they calculate the age difference of my last two babies. I have not yet found the transparent way to explain it,” Hilaria Baldwin said at the time.

“What I do know is that I’m so existential now, becoming a mom, what makes us family, bonds, communities… what makes us belong. The paths and nuances may be different, but meaning is what gives meaning to our existence.

Alec Baldwin, 64, shares another child, Ireland Baldwin, 26, with ex-wife Kim Basinger.

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Nestlé to invest Rs 5,000 Crore by 2025 in capacity and brand building in India: CEO Mark Schneider

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Nestlé To Invest Rs 5,000 Crore By 2025 In Capacity And Brand Building In India: Ceo Mark Schneider
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This was Schneider’s first visit to a global market since the Covid-19 pandemic hit as well as the first board meeting in an international market, which is an indication of the importance of India, he told Storyboard18 – CNBC-TV18, in an exclusive interview.

Nestle, the world’s largest food company, has ambitions to invest Rs 5,000 crore in India by 2025, CEO Mark Schneider said during his week-long visit to the country, which is the Nestlé’s tenth global market. The new investments will help the company accelerate its core business in the country and take advantage of new growth opportunities in established and emerging categories.

It was Schneider’s second visit to the country since joining the Swiss food and beverage group from healthcare group Fresenius in 2017, where he was chief executive. This is also its first visit to a global market since the Covid-19 pandemic hit as well as the first board meeting in an international market, which is an indication of the importance and India’s impact on Nestlé’s global agenda, Schneider shared during an exclusive high-profile interview with Storyboard18’s Delshad Irani on CNBC-TV18.

Schneider also said the investment would focus on capital expenditures, expanding and improving Nestlé India’s brand portfolio, acquisitions in emerging segments and establishing new factories.

Today, 99% of what Nestlé sells in India is made in India and the company also has a global R&D center in the country.

Nestlé owns over 2,000 brands globally and is the maker of iconic household brands such as Kit-Kat, Nescafe and Maggi, which is a staple in the Indian pantry and one of the country’s most beloved brands.
Maggi, the undisputed market leader, made a dramatic turnaround when it came back from the brink after the lead crisis in 2015. Packages were pulled from shelves and over 22,000 tons of Maggi had to be destroyed to an estimated cost of Rs 500 crore. In the years since, the company has redoubled its efforts to restore trust in the brand and has seen Maggi regain its leading position in the market. But there is increasing competition from established and new players and the challenge of constantly changing tastes and preferences.

The company has also stepped up its sustainability efforts to address the many challenges it faces today, with a focus on the new bottom line – People, Planet, Profits.

In India, initiatives under Nestlé’s “Commitment to Society” relate to the areas of nutrition awareness with the Nestlé Healthy Kids program (launched in 2009) and the Jagriti project to encourage good nutrition practices and food and encourage the use of public health services. In rural development, Nestlé leads Dairy Development (1961) and the Nescafé Plan (2012) to improve the quality and sustainability of coffee sourcing and production. Others include the Spice plan, the Vriddhi project and the Hilldaari project to promote better management of waste collection and segregation.

Nestlé has had a presence in India for over a century and Schneider shared that in the past 60 years since Nestlé started manufacturing in India, it has invested over Rs 8,000 crore in its operations here.

“In 1961 we started our first manufacturing site and so throughout that period it has been Rs 8,000 crore and now in the next three years it will be Rs 5,000 crore,” Schneider told a panel discussion with the media. The investment, subject to board approval, is intended to accelerate core business and increase capital expenditure, development work and brand building with sustainability as one of the main pivots.

Don’t miss the full interview on CNBC-TV18.

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‘The Watcher’ Trailer: Ryan Murphy’s New Netflix Show Looks Super Scary

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'The Watcher' Trailer: Ryan Murphy'S New Netflix Show Looks Super Scary
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A couple move into their dream home in upcoming Netflix series The Watcher, but things quickly turn into a nightmare when disturbing letters start appearing in their mailbox. “Your house is my obsession, and now you are too,” intones a voice in the new trailer that dropped during Netflix Tudum Fan Event Saturday. ” Who am I ? It might not scare you yet, but it will.

Ryan Murphy (American Horror Story, Glee) co-created the limited series based on the true unsolved mystery of the Broaddus family’s disturbing experience at their new Dutch Colonial in Westfield, New Jersey. Current residents of the town apparently don’t like to talk much about the “Watcher House”, so named because the unidentified correspondent signed the letters “The Watcher”.

Naomi Watts and Bobby Cannavale play the new owners of the Brannocks. “Can you keep us safe?” the Brannocks’ son asks his father in the disturbing new trailer featuring strange neighbors and sinister threats. Dad doesn’t look too confident.

Mia Farrow and Richard Kind also appear in the series, which premieres on Netflix on October 13, just in time for Halloween. The White Lotus’ Jennifer Coolidge plays real estate agent Karen Calhoun and has previously appeared as the character in a short teaser in which she points out the house’s perks, including the vintage freight elevator. “I tell you,” she said. “You could accommodate a person there.”

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‘Resilient’ Tennessee Volunteers relish second win over Florida in 18 years

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'Resilient' Tennessee Volunteers Relish Second Win Over Florida In 18 Years
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Knoxville, Tenn. – For only the second time in the past 18 years, Tennessee basked in a win over Florida on Saturday, this one a 38-33 thriller that went all the way.

But as fans celebrated outside the media room at Neyland Stadium, Tennessee quarterback Hendon Hooker smiled and said nothing had changed for the Vols.

“We still have the same mission, and that is to get to Atlanta [for the SEC championship game]”, said Hooker, who passed for 349 yards and rushed for 112 yards. “We’re just going to stay the course, come in every day and keep improving.

The Vols (4-0) last qualified for the SEC Championship Game in 2007, and a big reason for that drought is that they just couldn’t beat Florida.

While Hooker did his best to play down the win, a sold-out checkerboard Neyland Stadium was still buzzing about 15 minutes after Tennessee cornerback Kamal Hadden intercepted Florida quarterback Anthony Richardson’s final shot to the end zone in the final seconds. Tennessee was leading 38-21 with 7:55 remaining when Jaylen Wright crossed the goal line on a 5-yard touchdown run.

But the Vols had to survive a few late touchdowns from the Gators (2-2), not to mention a kick recovery in the final seconds to sweat the win, something that had eluded them in just about every possible way. for many of the last decade and a half.

“I’m really excited for our players, just the growth they’ve shown, the ability to compete regardless of the score, regardless of what’s going on in the football game,” Tennessee coach Josh Heupel said. . “They’re just resilient, fierce competitors, where we’ve grown since I’ve been here. I’m really proud of our players.”

Hooker, making his own claim for the Heisman Trophy, threw a touchdown pass in his 16th consecutive game. He also shook off several fierce punches to stay in the game and lead the Vols to what was by far the biggest victory of the Heupel era. Since taking over as starting quarterback in Week 3 a year ago, Hooker has totaled 45 touchdowns, completed 69% of his passes and thrown just two interceptions during that span.

“I told him after he broke a long run, ‘You’re special,’” Tennessee running back Jabari Small said. “I was impressed. I’m a fan right now, but Hendon is the same person every day. He stays in the game, always smiling and does everything off the pitch. So when you see him on the pitch, it’s is just translated. … He’s just a great player.”

And never was Hooker’s tenacity more apparent than in the second quarter, when he tugged his shoulder and stood up, grimacing. But he never flinched on the pitch.

“There are ups and downs and pain throughout a football game. It’s a physical game,” Hooker said. “To persevere through this is something I’m proud of, just to be a warrior and to compete for my brothers.”

Hooker said getting hit didn’t change the way he played the rest of the way. In fact, he led the Vols on a game-changing 12-play, 99-yard touchdown just before halftime.

“It’s part of the game,” Hooker said. “You’re gonna get hit hard. You’re gonna get punched. If you can go, you can go. If you can’t, you can’t.”

The Vols were without their top receiver, Cedric Tillman, with an ankle injury. Having an open date next week should help the Vols heal some of their wounds. They go to LSU on October 8, then Alabama arrives in Knoxville on October 15.

“There are a lot of things we can do better, but the goal for us is to find a way to win every Saturday we are on the pitch, to be the best team in football,” Heupel said. “We were able to do that tonight. Great game, man.”

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Watch Nicola Coughlan read the opening lines of Bridgerton Season 3

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Watch Nicola Coughlan Read The Opening Lines Of Bridgerton Season 3
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Dear reader, we have a teaser.

Bridgerton fans should start swooning over what to expect from the third season of the Netflix series, because Nicholas Coughlanwho plays beloved Penelope on the show, just gave us a look.

During Netflix’s Tudum event on September 24, Claudia Jessy and Luke Newtonwho play Eloise and Colin Bridgerton respectively, are seen painting while discussing the upcoming season, when suddenly Nicola pops up asking the question we all obviously want the answer to: “Do you want to hear what I , I mean, Lady Whistledown has to say about Bridgerton season three?”

Luke’s response is that we all say “Absolutely”, while Claudia simultaneously says “Yeah”.

The three actors then draw attention to a storyline that reveals the title of season three, episode one. Nicola continues:Bridgerton season three, episode one, “Out of the Shadows”. Do you want to hear it?”

She goes on to read the opening lines of what’s to come in the upcoming season, saying, “Dear dear reader, we’ve been apart for far too long. Finally, London’s smart set has made a comeback, and so has this author As the season begins, the question on everyone’s mind is, of course, which new debutante will shine the brightest? This year’s crop looks quite dazzling indeed. Unfortunately, not all young ladies can catch the light. »

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North Korea fires ballistic missile ahead of US Vice President Harris’ visit

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North Korea Fires Ballistic Missile Ahead Of Us Vice President Harris' Visit
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SEOUL — North Korea fired a ballistic missile into the sea off its east coast on Sunday, ahead of planned military exercises by South Korean and U.S. forces involving an aircraft carrier and a visit to the Vice President’s region. American Kamala Harris.

The South Korean military said it was a single short-range ballistic missile fired from near the Taechon area in North Pyongyan province just before 7 a.m.

Japanese Defense Minister Yasukazu Hamada said Japan believes he reached the maximum altitude at 50 km and may have flown on an irregular path. Hamada said it was outside Japan’s exclusive economic zone and there were no reports of navigation or air traffic problems.

Many of the short-range missiles tested by North Korea in recent years were designed to evade missile defenses by maneuvering during flight and flying in a lower, “depressed” trajectory, experts said.

“If you include the cruise missile launches, this is the nineteenth launch, which is an unprecedented rate. North Korea’s action poses a threat to the peace and security of our country, of the region and the international community and to do so while the invasion of Ukraine is unfolding is unforgivable,” Hamada said, adding that Japan had protested through the North Korean embassy in Beijing. . .

The launch comes after the U.S. nuclear-powered aircraft carrier USS Ronald Reagan arrived in South Korea to participate in joint exercises with South Korean forces, and ahead of a planned visit to Seoul this week by Harris.

It was the first time the North had carried out such a launch after firing eight short-range ballistic missiles in one day in early June, leading the United States to seek more sanctions for violating Security Council resolutions. the UN.

North Korea rejects UN resolutions as a violation of its sovereign right to self-defense and space exploration, and has criticized previous joint exercises by the United States and South Korea as evidence of their hostile policies.

The drills have also been criticized by Russia and China, which have called on all parties not to take steps that escalate tensions in the region, and called for an easing of sanctions.

After North Korea conducted an unprecedented number of missile tests earlier this year, including its intercontinental ballistic missiles for the first time since 2017, the United States and South Korea said they would strengthen joint exercises and military displays of power to deter Pyongyang.

“Defense drills are not going to prevent North Korean missile testing,” said Leif-Eric Easley, professor of international affairs at Ewha University in Seoul.

But U.S.-South Korean security cooperation helps deter a North Korean attack and counter coercion from Pyongyang, and allies must not let provocations prevent them from conducting military training and exchanges needed to maintain the alliance. , he added.

South Korea’s Yonhap news agency reported on Saturday that North Korea may also be preparing to test a submarine-launched ballistic missile, citing the South Korean military.

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