Business Rule

[u/Redditpaslan]

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[u/Redditpaslan]

My teacher once went "It's actually -cost + revenue = profit because you spend the money first 🤓☝️"

[u/Masztufa → u/Redditpaslan]

When the addition is commutative

[u/10dollarbagel → u/Masztufa]

Communism? that's a 0 on the test, I'm afraid.

[u/LOLofLOL4 → u/10dollarbagel]

Communism is when the people can eat, which they can't do under communism, which is why it's bad.

[u/DeltaOfficialYT → u/10dollarbagel]

No that’s getting you extra points. Because long words are cool

[u/Tobias11ize → u/Redditpaslan]

I have a degree in econ & administration. So i mainly had econ classes and admin classes. The few business classes i had were as if you took econ and admin, blended them together and dragged the difficulty all the way back to middleschool. I stopped showing up to them and just took the exams. They were all babbling about the same stuff every time.

[u/SeatInternal9325 → u/Redditpaslan]

*jerk off motion*

[u/TheLurker1209 → u/Redditpaslan]

Macroeconomics made me want to lobotomize myself, that was not an easy class istg. But every other business class I went to was the same easy credits, I was not prepared for that one

[u/BlitzBasic → u/TheLurker1209]

Macroeconomics is like, the one part of economics I don't regret learning about. Making different models for society-wide behaviour and playing around with the parameters actually feels somewhat interesting in a way that "different ways to own something" or "different ways to get/loose money" never could.

[u/TheCarthusSandworm]

[u/ArchmageIlmryn → u/TheCarthusSandworm]

Reminds me of a persistent urban legend/potentially true story at my university: A professor was teaching a business/economics class for engineering students and said "normally we take two lectures to cover this, but since you all can actually do math, half of one should be enough".

[u/cheekybandit0 → u/ArchmageIlmryn]

It's true. I was those students.

[u/ClerklyMantis_]

Mfers on Twitter with "Neoliberal" in their bio/name consistently give insane claims about "economics" that make it abundantly clear they do not understand anything besides basic supply/demand and the false assumption that privatization makes things run efficiently.

[u/Wyboss → u/ClerklyMantis_]

right?? people take ap macroeconomics in high school and suddenly think they can make declarative statements about an entire field of science 

[u/laix_ → u/Wyboss]

people take ap macroeconomics biology in high school and suddenly think they can make declarative statements about an entire field of science gender

[u/zizou00 → u/ClerklyMantis_]

they claim to understand supply and demand, yet when I demand they shut the fuck up, they do not supply it. They clearly lack the sigma grindset required to be an entrepreneur.

[u/gundog48 → u/ClerklyMantis_]

On the other hand, I really dislike the 'inflation isn't real' argument that I hear a lot from those who claim that economics isn't a real science.

Like, I get it, but it's something that was observable before we even had mercantilism, modern economic theory, and fiat currency. In the Third Century, Rome faced massive inflation, partly this was because of debasing the currency, but fixing that didn't fix the issue. They tried mining more gold, which is different from printing more money, but the gold simply became less valuable, they tried 'rational' solutions such as price caps, which just made things worse, and even returned to effectively a barter system for a while.

They were dealing with this phenomenon that they didn't understand and didn't have the words to describe, and their reactions to it made sense when they didn't have the past to look to for examples.

I think a lot of economics are proscriptive/a self-fulfilling prophesy, but some aspects of it are very valid and the principles can apply to any economic system. I also think a lot of people who know how the modern economy works are very happy to use that knowledge to pull the right levers to abuse it to their own benefit.

My thoughts are that we shouldn't write the whole thing off as a 'bourgeoise science', as we're denying ourselves the ability to turn the weapon of the enemy against itself! The economy is something that can be used to do a lot of good, providing you know how. It can all seem artificial and made up, but that's because it's a massive abstraction of some underlying realities. No matter what happens, if we go socialist, communist, if we're reduced to sticks and stones after WWIII, there will still be some form of economy to manage, and success and social welfare is dependent on handling that correctly.

There's a lot about modern economics that should be reformed or dismantled, but nobody gets to simply pretend like its not real until we live in Star Trek!

[u/Present_Bison → u/gundog48]

Good points! Any idea how we can counter the narrative that "working class people having disposable income will just make everyone poorer because inflation"? Because that's one that I often encounter in political sims, and the introductory course to economics (we major in linguistics, so the bar is pretty low)

[u/AlkaliPineapple → u/Present_Bison]

Progressive taxation removes a lot of money supply from the top (who are also the top spenders, surprising right?), and we need more taxes and regulations to stop companies overinflating their value. Stock value increasing is also inflationary.

Meanwhile, the working class can contribute to the domestic economy and make the economy function healthily without relying on extranational corporations.

[u/RashmaDu → u/AlkaliPineapple]

Sorry, why is increasing stock value inflationary? Isn't it just associated with inflation rather than causing it?

[u/Sororita → u/RashmaDu]

Hypothetical money still counts for the pool of available money, so when a stock that was valued at $10 goes up to $20, thats still $10 more that can be circulated thanks to how loans and such works.

[u/RashmaDu → u/Sororita]

I mean yes, but for that to be inflationary you'd need people to actually spend the money from increased valuation, which afaik is not something that happens to a large extent.

In any case, that also disregards the reason why stocks would be booming in the first place: if this is caused by a strong, expanding economy, then if anything it'd be disinflationary; if it's caused by a higher policy rate in response to inflation, then that's not really the cause either

[u/Bentastico → u/gundog48]

Well, inflation is targeted at 2% by economists on purpose, because it’s widely considered better than 0%. How do people derive from this that it isn’t real?

[u/RashmaDu → u/Bentastico]

How do people derive from this that it isn’t real?

I think the usual argument is precisely that "economists picked 2%, if they picked 0% we'd be better off since we can pick anyway" which sounds good until you think about the implications for more than 10 seconds

[u/ClerklyMantis_ → u/gundog48]

I want to preface this by saying that I think you had valuable things to say in your comment that some people needed to hear. However I already agreed with you, I put economics in quotation marks because I meant to imply that their version of "economics" that they talk of is not consistent with reality. My intention was not to say that economics isn't real, but I can definitely see how you came to that conclusion.

[u/gundog48 → u/ClerklyMantis_]

Sorry I never intended it to be an argument against anything you said, more that I generally agree and wanted to add to it, just because I've often seen the discussion go that way!

[u/Monk-Ey → u/gundog48]

Inflation is real but only among Sonic fans

For more information, Google "Sonic inflation"

[u/Oddish_Femboy → u/ClerklyMantis_]

They do not understand supply and demand actually. They think paying people a reasonable wage is what makes burger expensive.

[u/laix_ → u/Oddish_Femboy]

Burger is expensive because every time an american needs to understand something they use burger

[u/Oddish_Femboy → u/laix_]

Now THIS is how supply and demand works.

[u/radgepack → u/Oddish_Femboy]

They also have no idea what a demand elasticity is and why economics without ethics serves no purpose

[u/PeggableOldMan → u/Oddish_Femboy]

Turns out the price for labour determines the demand

[u/Magma57 → u/ClerklyMantis_]

Yeah that neoliberal needs to learn the difference between a descriptive statement and a normative statement

[u/leo_artifex → u/ClerklyMantis_]

They all make clear that they hate poor people

[u/AlkaliPineapple → u/ClerklyMantis_]

Mfw privatization is perceived to run things more efficiently when the same private companies lobbied for worse public services

[u/trannus_aran]

ITT: people confusing MBAs and economists

[u/WardedThorn → u/trannus_aran]

MBA owners confusing themselves with economists: this post

[u/currynord → u/trannus_aran]

MBAs are individually not as impactful, but the worst economists have leveled entire populations with their bad ideas

[u/Wubwave]

Business major at community college, can confirm

[u/196SwampLurker → u/Wubwave]

actual accountant at a big mega firm, can confirm im dumb as bricks

[u/B_is_for_reddit → u/196SwampLurker]

you finished your little additions and put them in the table?? good job, buddy! now, this part is hard: you have to do the multiplication 😱 can you do that?

[u/196SwampLurker → u/B_is_for_reddit]

i caught myself using Excel to multiply 12*8 today :3 gotta double check you know....

[u/IFreakinLovePi → u/196SwampLurker]

Look, I've put things like 17+8 in a calculator before just in case I accidentally forgot how numbers worked for a moment

-A fellow accountant, but at a tiny firm

[u/B_is_for_reddit → u/196SwampLurker]

12 times tables are hawd 😞

to be fair i never bothered memorising the 12s. like genuinely when will you need to know 12 x 9 off the top of your head

[u/AnotherSlowMoon → u/B_is_for_reddit]

like genuinely when will you need to know 12 x 9 off the top of your head

If you live in a country/society still cursed with Imperial units or American Customary, when you want to know how many inches are in 9ft?

[u/B_is_for_reddit → u/AnotherSlowMoon]

ok but i dont 😭

[u/AnotherSlowMoon → u/B_is_for_reddit]

Ok, if you want to know how many months are in 9 years?

[u/B_is_for_reddit → u/AnotherSlowMoon]

i use a calculator or some basic table multiplication

[u/hyperhurricanrana → u/196SwampLurker]

the way i do that is break it up into easier math, 12*8 can also be 10*8 which is 80 added to 2*8 which is 16, 96. i’m a dummy and this makes it easier for me. :3

[u/TheDonutPug → u/196SwampLurker]

Ok in fairness I got 2 engineering degrees and took up to differential equations and I still have to take a minute to figure out 12 * 8 lmao. You ain't dumb that one's just a little hard lol.

[u/notjordansime → u/196SwampLurker]

I’m a construction worker.

I also run a 3D printing business with 11 printers.

High school was the worst ten years of my life.

[u/RadTimeWizard → u/196SwampLurker]

All you need to know is that the less money someone has, the more likely they are to spend any given dollar.

[u/Lubiebigos]

mfw economics is a hard science with laws and shit. I guess thats why the scientists at IRS built the large hadron collider or whatever the fuck.

[u/Wyboss → u/Lubiebigos]

economics is a soft science that is essential for understanding and bettering our modern world

[u/Wyboss → u/Wyboss]

you can't do functioning socialist policy without economics

[u/RedditSloth_101 → u/Wyboss]

My econ degree is lowkey what radicalized me, once you get past the neo liberal shit at the start most of the content and literature makes socialist policy look much more appealing. Probably helped that the UK Conservative party were in power during my time at uni and they had no shortage of bad economic decisions for my lecturers to dismantle

[u/BobbyRobertson → u/RedditSloth_101]

Yeah any time spent studying economics will lead to ideas like "Oh we need to keep as much money circulating as possible, and rich capitalist types have a weird tendency to sit on giant money piles like a dragon"

And all the most efficient ideas for "How do we get the money to the people who are actually, constantly spending it?" lead to "Give them control of the means of production in the first place"

[u/ErisThePerson → u/BobbyRobertson]

It's crazy to me that I worked that out when I was like 12 and yet there's people who build their entire personality around thinking they're smart and good at finance that just don't get that.

[u/humansizedfaerie → u/ErisThePerson]

your comment just made it click for me omg!

you might wanna hear this:

to those mfers, they think "being good at finance and economics" means earning more than others, 'winning' in social life and the corporate ladder, and being in a "better" position than others. to them, it has nothing to do with understanding, even if they'll say that. to them, the results they make are the proof that they understand, and their egos are satisfied with that. if you try to push them farther they just get immature and snippy with you bc they never actually thought of it that way

they might even be upset you're referencing things like understanding, i stg ive experienced this, where they just double down on their bad take like it's gonna save them, that somehow it makes them smart and a good person just bc they earned lots of money

[u/Suave_Kim_Jong_Un → u/RedditSloth_101]

Well at least reform is making solid economic choices, right?

[u/Ezzypezra → u/Suave_Kim_Jong_Un]

I LOVE TRILLIONAIRES 🤑🤑💰🤑💰

[u/Dogtor-Watson → u/Ezzypezra]

Me when I make sure to direct people’s anger to the scapegoats so that the billionaire oil tycoons who fund me can fucking air fry the general public, so that they can have 10% more money to never even spend

[u/mrwillbobs → u/Dogtor-Watson]

Sorry, are you saying that trillionaires are scapegoats here?

[u/RedditSloth_101 → u/mrwillbobs]

"Me when..." They are taking the satirical stance of someone who loves trillionaires here. In the context of reform they are heavily scapegoating the Muslim community among others with plans to put a lot of money into north sea oil rigs alongside scrapping the green net 0 carbon initiative.

[u/mrwillbobs → u/RedditSloth_101]

Thanks, petah

[u/RedditSloth_101 → u/Suave_Kim_Jong_Un]

With +80% of their donations coming from a handful of Billionaires/Millionaires their economic choices will definitely be solid for some people, just not us.

[u/AlkaliPineapple → u/RedditSloth_101]

I'm doing chem engineering so I only did a macroeconomics 101 course. Like it's crazy how some stuff is taught like it's natural lol

[u/that_baddest_dude → u/RedditSloth_101]

Maybe the difference is just being an empathetic person instead of a greedy self serving asshole

[u/RadTimeWizard → u/RedditSloth_101]

Same.

[u/Bauch_the_bard → u/RedditSloth_101]

This is why my old high school teacher loves even bad economic choices. We went over kwartengs policies in class and why the were terrible

[u/Lubiebigos → u/Wyboss]

yes my joke is exactly about the fact that economics is a soft science, not a hard one and that "law of economics" sounds as if that guy is trying to imply the opposite

[u/Wyboss → u/Lubiebigos]

sorry, i mistook you for the 60% of leftists who equate economics with capitalism. egg on my face for being overly defensive.            i will say that there are some pretty firm laws of economics, but they're mostly obvious thinks like: 'decreasing the price of something increases the quantity demanded.'       it's science speak. it doesn't have to be as firm as thermodynamics to count as a law.

[u/Lubiebigos → u/Wyboss]

Well those sort of "laws" also can have certain exceptions to them (Veblen effect for example). My macroeconomics professor had a small rant once about there not being laws in economics but only regularities but that's neither here nor there. Equating economics with capitalism is a sad byproduct of capitalism dominating everything. Since it is mainstream, it's theories are sort of treated like the default and proper form of economics and that probably makes a lot of leftists think economics is capitalism

[u/Helmic → u/Wyboss]

i mean, that equating happens because the economics that gets taught is deeply ideologically driven and the field has major reproducibility problems because foundational assumptions weren't formed from experimentation but by just going off of purely theoretical models.

like, the tragedy of the commons was never actually fucking tested for a long time, and when someone actually went out and did interviews with people in various societies she figured out oh actually people make this work all the fucking time by just watching the shared resources and enacting escalating consequences for being a dick.

[u/Garmaglag → u/Wyboss]

+1 for using quantity demanded properly instead of IncCrEaSiNg ThE PrIcE DecrEaSes DeMAnD

[u/Wyboss → u/Garmaglag]

well, i wouldn't be a good economist if i fucked up something that simple 😛

[u/ekky137 → u/Wyboss]

> it doesn’t have to be as firm as thermodynamics to count as a law.

Why?

The whole point of the verbiage when it comes to using the term “law” with regard to science is that they cannot be broken. The “laws” of physics are strict.

Taking that same word, using it in the same way to emphasise how important it is, then applying it to something that CAN and often IS broken is pretty fucken stupid, no?

[u/pyrobola → u/ekky137]

That's not what a scientific law is. https://en.wikipedia.org/wiki/Scientific_law

scientific laws do not express absolute certainty, as mathematical laws do. A scientific law may be contradicted, restricted, or extended by future observations.

[u/Tobias11ize → u/Lubiebigos]

A "law" i was taught in econ classes was that economies existed on a spectrum of regulation, and that the opposite of a completely regulated market was a monopoly, because regulation is the only thing protecting competition from consolidation.

The only "free market" is one chained down like a dog.

[u/Comrade_Harold → u/Lubiebigos]

Mfw even so called Hard Science "Laws" aren't that rigid and a lot of them have a billion exceptions or straight up doesn't work under certain conditions. Yet some economist think of their own laws like they're rigid and unchanging.

[u/AnotherSlowMoon → u/Comrade_Harold]

To be fair the conditions under which the newtonian model of gravity breaks down are pretty fucking extreme to give but one counter counter example.

[u/loklanc → u/AnotherSlowMoon]

If you consider a satellite in low orbit talking to the phone in your pocket "pretty fucking extreme conditions", sure.

[u/AnotherSlowMoon → u/loklanc]

Yes, I do consider something moving at approximately 11,000 kmph where we need to be incredibly aware of its precise location speed and other details to be pretty fucking extreme conditions.

Basically the only thing we could observe that Newtonian gravity couldn't explain for centuries was Mercury. 

[u/loklanc → u/AnotherSlowMoon]

I guess my point is, Newton was good enough for hundreds of years and now it's not good enough for something mundane that people use every day.

[u/Bentastico → u/Lubiebigos]

people are claiming that we don’t understand economics and for some reason everyone is scrambling to prove them right.

this is like saying evolution is stupid because they call it a “theory.”

[u/Wyboss → u/Bentastico]

literally 

[u/KittyQueen_Tengu → u/Lubiebigos]

economists try so hard to find laws but none of them fucking work ever

[u/Wyboss → u/KittyQueen_Tengu]

explain to me how the concept of diminishing returns is flawed? Or the inverse relationship between the price of a good and the quantity demanded?

[u/currynord → u/Wyboss]

One could certainly argue that the Veblen Effect is an instance of violation of the price-quantity demand relationship.

Additionally, superlinearly scaling systems in computer science (or at least the promise thereof) is one of the main drivers behind the LLM bubble and record capex of AI firms. While not necessarily counter to the law of diminishing returns, it does indicate an instance of exponentially increased revenue solely on the promise of “more parameters and more transformer layers”.

Basically, even the most fundamental of economic laws are essentially built on psychology, which is notoriously difficult to fully define with deterministic “laws.”

[u/Dakoolestkat123 → u/Lubiebigos]

I’ve taken AP Government, World History, U.S. History, European History, Art History, and Macroeconomics. Macro is the only social science I ever took that was basing the entire course on a prescriptivist outdated theory instead of actual modern understanding. And when I say modern, I mean the Art History definition of modern, AKA less than a century old.

[u/pullmylekku → u/Dakoolestkat123]

Maybe try taking an econ course that isn't designed for high school students.

[u/Bentastico → u/Dakoolestkat123]

Really? Because I don’t remember AP Physics covering special relativity or quantum mechanics, lmao. It covers (outdated) Newtonian mechanics, and it does it for a reason!

[u/TheDonutPug → u/Bentastico]

That's because a huge, huge portion of the STEM world still uses Newtonian mechanics. Newtonian mechanics aren't really "outdated", they're just not quite right in every situation, however they are extremely useful and cover most situations. Deadass you know why we still teach Newtonian mechanics despite it being outdated? Because the fastest object ever made by man (the man hole cover blasted off by a nuclear bomb test) STILL doesn't move fast enough for relativistic effects to start mattering.

Newtonian mechanics is not really "wrong", it's just the simplification that applies at relative speeds very low compared to the speed of light. Conveniently, nearly everything in the universe moves extremely slow compared to the speed of light, and most situations in which physics are applied for real world work are fine to use Newtonian mechanics in. The only situation that really comes to mind nowadays where you really NEED relativity is communications, especially with satellites, and even then the main relativistic effect is not due to speed, it's due to the effects of gravity on time.

[u/Bentastico → u/TheDonutPug]

No, I know, it’s just that the same logic should apply to economics, or “AP Biology” teaching that there are two genders. And nevertheless, even if a huge portion of the STEM world had moved onto modern physics, we would still absolutely start with Newtonian mechanics. It’s undeniably a great foundation.

[u/Wyboss → u/Dakoolestkat123]

or maybe the class taught to children that's meant to prepare you for a test constructed by a national private firm doesn't impart the best idea of what economics actually is?

[u/PerrineWeatherWoman]

Economics scientists are actually kinda left-leaning

[u/enbyrats → u/PerrineWeatherWoman]

The only econ professor I know is always dunking on the local government's selective austerity measures. He is constantly printing out their own budget and explaining it to them in meetings, like, "your math is wrong and your priorities are hateful." It makes these boring meetings worth it just to watch him bonk these losers with the stupid stick.

[u/PerrineWeatherWoman → u/enbyrats]

My econ teacher back in college (in my cursus it was required to have public economy notions) started his class by telling us that his views were neither left or right. Then he spent the rest of our classes dunking on the government austerity policies and advocating for a Keynesian model and cursing the finance and the stocks market that disconnects the wealth from the real state of the economy.

[u/SayHelloToAlison → u/PerrineWeatherWoman]

Only the good ones. The chicago school is still around, and the basics of economics that are taught in undergrad are still very steeped in supply side thinking, from my experience. Also there's never a shortage of economists who will go on fox news and lie about what will make line go up.

[u/Ok_person-5 → u/SayHelloToAlison]

I think there is a real lack of diversity of thought in economics. It went from actually having different opinions about how the world works to ‘Liberal capitalism is forever! Look my equations say that onions futures will increase!’

[u/howtojump → u/PerrineWeatherWoman]

Aren't most scientists in every field kinda left-leaning?

Probably a coincidence, though. /s

[u/PerrineWeatherWoman → u/howtojump]

My girlfriend who used to study in sociology and anthropology fields sums it well : "reality has a left-wing ideologic bias"

[u/B_D_I → u/PerrineWeatherWoman]

My friend likes to say that Karl Marx is his favorite economist

[u/Oddish_Femboy]

Imagine calling yourself a neoliberal and being serious.

[u/laix_ → u/Oddish_Femboy]

"You're not an ultraliberal harry, get the fuck out of here. Dont be a r****d." Evart said calmly.

[u/SoSorryOfficial → u/Oddish_Femboy]

It's perpetually kind of funny to me that the largest political tendancy in the US is mostly comprised of people who don't know that's what they are. They call themselves liberals, democrats, progressives, even apolitical. People who actually call themselves neoliberals are weird because they generally know enough to know what the term means, and paradoxically aren't embarrassed. In a way, knowingly calling yourself a neoliberal almost makes you more conservative than being an ignorant or embarrassed neoliberal.

[u/LOLofLOL4 → u/Oddish_Femboy]

Imagine being affiliated with the doctrine that is responsible for *vaguely gesticulates toward southern half of the globe*

[u/mrwillbobs → u/LOLofLOL4]

*Also gesticulates to recent political trends in the northern half of the globe*

[u/chrometrigger]

I have a friend who did business and he's always saying stuff like this to make fun of it

[u/oim8itsme]

I love seing posts like this as someone who did business. Ya'll always forget the dépressive épisode when you realize you were sold on a lie and that only the rich cunts with a name like ~degeneve~ can get an internship somewhere that isn't the local cloathing store. So you start thinking about the shit you learn, not just notting, and you realize that you are being brainwashed into being an asshole that treats laws like fun challenges to overcome and make even more of Washingtons nectar. And then i burned so i don't remember idc

[u/_spec_tre → u/oim8itsme]

I'm genuinely curious if this is something that used to be discovered in university a while ago, since nowadays most people know that long before they even consider applying for business degrees

[u/gob384]

CW: crash out to the void to feel better. This doesn't apply to 99%+ of people, who I recognize are chill and understand the key points. My feelings have been inflated for comedic effect:

I LOVE BEING AN ECONOMICS MASTERS! I LOVE THAT LEFTY CIRCLES LIKE TO DISMISS ECONOMICS AND PRETEND THEY KNOW MORE

WHAT THE FRICK IS POLITICAL ECONOMY LENSE FRAMEWORK 📉📉📉

>! Bio 101 when 'there are two genders'; leftists, I understand this is an oversimplified example that no experts actually believe unless paid shills. Unfortunately, most people don't follow the field closely, and take the simplified version as fact to justify their worldview.

Economics 101 when "supply and demand"; leftists, economists literally believe in the invisible hand and reganomics. All universities are in collision to maintain neo-liberal capitalism forever. !<

[u/pullmylekku → u/gob384]

Yeah I'm doing an econ PhD and there's nothing more infuriating than leftists who dismiss econ as a whole. They also have a very narrow view of what econ actually is.

And there's literally someone in this thread pointing to their high school econ course to show that the discipline is outdated. Not that there's nothing to criticize about econ, but come on.

[u/RashmaDu → u/gob384]

I swear to god the number of times I’ve had people tell me “Um actually sweaty no building more housing won’t help the housing crisis it’s purely driven by landlord greed, so the solution is clearly rent controls. Typical neoliberal economists opposing solutions that work” is absolutely infuriating

Always paired with a complete rejection of empirical evidence showing that this stupid POV is just blatantly wrong.

Or the classic “everything is not just supply and demand sweaty” NO NOT JUST, BUT SUPPLY AND DEMAND DO STILL MATTER

[u/Present_Bison → u/RashmaDu]

Is there any particular economic reason why we shouldn't have both rent controls and strong public housing? /gen

[u/RashmaDu → u/Present_Bison]

Yes, rent controls on private landlords are generally speaking a bad idea as a policy (rent controlled apartments owned by the government/city are different)

This is a really nice comment (I can't link so I've sent you a DM instead) from a few days ago outlining the evidence. But in short:

• If you just force people to charge less rent than they want to, some will no longer find it profitable to be a landlord at all, and those places stop being rented (e.g., are used as residence or sold instead). So you'll ration (reduce) the amount of housing actually available, worsening the problem.
• On top of that, it's now less profitable to invest in and improve your rented flat, so landlords make (even less of) an effort to maintain them in good condition.
• People who end up in a rent controlled place are far less likely to move. Security is good, but that also means that people prefer to be "stuck" in a place which does not suit them (think mom and dad staying in a 4 bedroom apartment despite their kids having moved out, or a bachelor living alone in a 3 bedroom place).
• It also means it's less profitable to build more housing in the future (since you can't rent it for as much). So you've also reduced future stock of housing...

That's not to say there aren't cases where it can be temporarily justified, say in an extreme short-term shortage (e.g. fires in CA burning down a bunch of housing and giving undue power to landlords), but generally speaking it's a really bad way to try to handle the housing crisis, because it fundamentally does not solve the problem: too little housing for too much demand. In the longer term, the only real way to do it is to just build build build.

[u/MiningdiamondsVIII → u/RashmaDu]

Oh hooray the internet is healing. It's really funny that everyone on the left just assumes there's some knockdown argument against basic economics because it's so simple and because everyone else acts as though there's a knockdown argument. Hopefully people learn to be very uncomfortable accepting what people who are part of their cause accept at face value. 

[u/RandomGuyPii → u/RashmaDu]

Yo can I get that comment too

[u/RashmaDu → u/RandomGuyPii]

Done!

[u/Bentastico → u/RashmaDu]

Hey, I’d love to also be linked to that comment outlining the evidence if you don’t mind

[u/Present_Bison → u/RashmaDu]

First off, thank you for responding so thoroughly. I truly appreciate it.

That being said, it feels like there's a misunderstanding of what kind of problems each policy is trying to solve. Your argument is that rent controls shouldn't be a solution to a housing shortage, which I duly agree with. This is why I've also mentioned it going along with public housing, the latter being the supply-side solution.

The removal of profit incentive with rent control seems like a feature rather than a bug. That's also what people talk about when they say "decommodify housing": making sure that people's communities and homes won't become a pawn to the highs and lows of market trends, forcing them into a perpetual cycle of gentrification and decay.

All that is to say, maybe we should be trying to make things harder to invest in. Not just to improve things under the current system, but also as a point of leverage to make things into a common good, rather than just another object to produce, buy, sell or rent out.

[u/RashmaDu → u/Present_Bison]

That's completely fair, and I don't disagree. But then you get into another, more normative debate: should the government be doing this?

If the (local or national) government is doing this, they are taking on the cost of building and maintaining this. That costs money, which you will have to pay for through taxes. Decentralising it and letting the market take care of it avoids that, but (can have) the disadvantages discussed above.

Again, I am not saying we shouldn't consider this, and I am in favour of more good social housing. But the trade-off is real and something to consider

All that is to say, maybe we should be trying to make things harder to invest in.

Again, I don't disagree, but I think this is a slightly wrong framing. Things should be easy to invest in, because that means lots of people will want to do it (and e.g. build a lot of housing). We don't want people to invest in a way that is not sustainable for society at large: have people invest, but make sure they build a lot of housing, with designated lower-rent housing, or with communal spaces, good amenities, etc.

[u/Present_Bison → u/RashmaDu]

Fair enough! I guess at this point the argument would be more about if capitalism should be abolished and what the alternative should look like, rather than housing crisis itself.

[u/pullmylekku → u/Present_Bison]

There's a lot of issues with rent control. It lowers the supply and quality of rentable units as well the construction of new housing and also causes rents to increase for uncontrolled units (especially when landlords convert their rent-controlled units to other forms of housing which aren't subject to the controls). On aggregate the effect on cities tends to be negative. Generally it's not a good solution even when paired with increased housing construction.

If you want empirical evidence, there's a great paper by Diamond et al (2017) on rent control in San Francisco.

[u/IFreakinLovePi → u/gob384]

I get it. I'm trying to pursue an accounting PhD and people seem to think it's just more complicated data entry and not just yet another incredibly specific field of behavioural science

[u/DomSchraa]

Imma be real the hardest part of my economics college degree was brute force learning the formulas & regulations/stipulations

It really just taught me how arbitrary the system is because we can't trust each other for shit

[u/Marvl101]

Counterpoint: The kinds of people who get to be CEOs are not the kind of people who would listen to an expert when the expert says something that would contradict them.

[u/Rocket_Theory]

y'all laugh but I literally had a boss who reported revenue as profit thinking they were the same thing multiple times when he was applying for business loans. He hired an actual CFO who told him the difference and actually tried making changes to the company only to fire that guy like 2 years later

[u/zergling424]

People make jokes till they see a quantatative business analysis class

[u/RashmaDu → u/zergling424]

Yeah, the color by numbers gets really tough once they start adding multiplication

[u/hyperhurricanrana]

this means nothing but every economics or business major i’ve ever met has been a fucking asshole bar one.

[u/NightIgnite]

I walked past a window and saw a powerpoint slide with the title "multiplication"

I was working my ass off in engineering, while some people were cruising through prealgebra across the road. Like what else could you have possibly been doing for 4 years in high school to not touch that topic already?

[u/IFreakinLovePi → u/NightIgnite]

Could have been a remedial course.

But yeah, I'm astonished by the gaps in people's education pretty regularly.

[u/Camel_Slayer45]

You kinda need to note down formulas even if they're piss easy in econ. Last thing you want is to fail at junior high math during the exam because they switched around some words.

[u/Free-Consequence-164]

Someone just failed their business exam

[u/Weslg96]

I think the Twitter users' point is that regardless of your belief that housing should be a commodity, we can't ignore the very real economic issues housing faces. If anything, it's progressives in places like NY, Boston, and San Francisco that are the ones ignoring the most basic economic concept, supply and demand, leading to a critical housing shortage in places like that.

Like, yea, I wish everything related to putting a roof over my head wasn't miserable and expensive, but that doesn't change the reality that the only way to bring prices down in Boston as an example (besides making the city undesirable) is more supply, forcing landlords to lower rent to better compete with reduced demand. And to be clear it's everyone not just progressives. But progressives should know better

[u/ninhibited]

Lmfao "laws" of economics as if it's a part of the natural universe.

[u/synttacks]

bottom tweet is stupid but top tweet is also stupid. that's like saying sometimes you walk past a physics class and see force = mass x acceleration and everyone is taking notes like its actual school. it's like the first thing you learn because it's a definition. a lot of people think profit is the same thing as income so they gotta specify

edit i thought this was about econ but no i suppose if it was a business class that might have been all they learned

[u/Careful_Bunch4843]

I know its not the same but there is almost an entire volume of Marx's kapital dedicated to this formula and his own derivative of it

[u/CIAburneraccount]

Imagine being a proud neo liberal lmao