Friday, July 29, 2005

A Placebo Named "Empirical Studies"

Steven E. Landsburg, author of the amusing piece "(Thats) What I Like About Scrooge", confirms what I've been extemporizing here on this blog regarding the deletrious effect of the governance-thru-economic-ignorance when it comes to the state of the housing market.

In his latest article titled "Is Housing Too Expensive? Blame the Government", ponders the effect that all forms of housing governance- zoning regulations, landmark & community boards, building deparments, the permit process, rent regulations, et al. and how two economists (Edward Glaeser of Harvard and Joe Gyourko of the University of Pennsylvania) came around to realize that "That is, zoning and other restrictions put a brake on competitive forces and keep housing prices up". (The link goes to their study)

I don't really think that their study is neccesary, regardless of the "hard" and "scientific" credibility that is psychologically attached to empirical data by intellectuals and policy makers. I find it blatently obvious that externally-imposed regulations of the market in both long and even short-term, tends to either increase the costs, decrease the supply or both. To prove their conclusions, they devised a sliding scale from 1-5 which rates only the factor of average time lost in the stages of regulation compliance with the local government, and using that as a very rough estimate of what that locality's housing cost will be in comparison to governments with stricter or more lenient regulations.

What is of interest to me is that perhaps people will now realize that there are consequences of varying economic impact in their meddling with the housing market, and it can be demonstrated with the help of the empirical data's placebo effect.


Vache Folle said...

I suspect that supporters of the regulations intend to make housing less affordable. Burdensome regulations and zoning rules help to keep out the riff raff, so to speak.

Escap said...

Iceberg, where have you been all my life? Another free-market thinker in Brooklyn? Don't you know it's considered satanic in this region of the country to say anything positive about capitalism?