rent control

Your Betters Decide For You: (Not) Choosing a Tenant in Seattle

The Socialist Alternative for Seattle

The Socialist Alternative Party for Seattle

The Party of Government knows better than owners and managers how to run a business properly — look what they did for Detroit and Flint! We’ll talk about the $15 minimum wage (really outlawing jobs worth less than that) and the movement to prohibit prospective employers from asking about criminal records or checking credit ratings, but the latest brilliant idea from the socialist progressives (including the new Socialist councilwoman) in Seattle wins the prize for harmful intrusion pretending to do good: landlords must take the first tenant candidate who meets their qualifications, which must be set forth in advance. This is of course intended to prevent invidious housing discrimination in a city with a shortage of rentals and rapidly-increasing prices as Seattle goes the way of California, inhibiting new housing construction (because that only benefits greedy developers) and then blaming the business of providing housing for the shortage and high prices of same.

From the article “A primer on Seattle’s new first-come, first-served renters law,” by Daniel Beekman in the Seattle Times of August 10, 2106:

Seattle is apparently breaking new ground by requiring landlords in the city to rent their housing units to qualified applicants on a first-come, first-served basis. Officials say they’re unaware of any other U.S. city with a policy like the one the Seattle City Council approved Monday, along with other rental-housing changes.

This might be a clue that your new law might be a bad idea. Good luck with those lawsuits!

The goal is to ensure prospective renters are treated equally, according to Councilmember Lisa Herbold, who championed the policy. When landlords pick one renter among multiple qualified applicants, their own biases — conscious or unconscious — may come into play, she says.

May come into play! To prevent thoughtcrime, one must banish discretion. A similar law in employment will help even more, when jobs aren’t handed out on the whim of those who are responsible for production. Every applicant will have a place in tractor factory! The city will tackle discrimination in mating and friendship next.

Some landlords don’t mind the policy, saying they already operate on a first-come, first-served basis. But others are upset, saying they should be able to use their own judgment to choose the renters they believe will be most reliable.

The landlords who say they don’t mind may be running shithole low-end buildings with low maintenance and high turnover. And lying, since they’ve been trained to discriminate covertly by previous regimes. One of the casualties of socialist systems is truth — everyone pretends and works the system. Underground economies spring up — the best apartments go to the connected who can trade favors or outright bribes to get in, as in San Francisco’s rent-controlled units.

Even proponents of the policy acknowledge it could have unintended consequences, and some details still need to be worked out before it takes effect Jan. 1.

“There seems to be a strong common-sense argument for this,” said Leland Jones, regional spokesman for U.S. Department of Housing and Urban Development. “But we’ll have to wait and see.”

Like common-sense gun regulations, progressives label whatever micromanaging policy they want that week obvious and sensible. Those who point out the unintended consequences are just standing in the way of progress and fairness for all. Unicorns and rainbows happen when we cut up that pie our way! After all, housing is a human right. Those who own it have to give it to those who need it.

Before accepting a prospective renter’s application materials, a landlord will need to provide the renter with information on the landlord’s minimum screening criteria, Kranzler said. When the landlord receives a completed application — in person, electronically or through the mail — the landlord will be required to make note of the date and time. The landlord will be required to screen multiple applications in the order in which they were received and make offers to qualified renters in that order. A prospective renter won’t necessarily know her position in line, but she can ask SOCR [Seattle Office of Civil Rights] to investigate by checking the landlord’s records. Prospective renters will also have the option to sue a landlord when they think they’ve been skipped — an aspect of the policy that bothers landlord groups.

To aid enforcement, the next update to the law may require all landlords to maintain an open Internet connection which transmits all changes to their records directly to the SOCR.

Ann LoGerfo, a directing attorney with Columbia Legal Services who pushed for the policy, offered an example: A landlord with two qualified applicants picks a name he associates with his own ethnicity, rather than a name that sounds foreign to him. Under Seattle’s new policy, if the latter completes her application first and meets the landlord’s criteria, the landlord will be required to offer her the unit.

One Seattle landlord who likes the idea is Jason Truesdell, who rents out a duplex in Madison Valley. Truesdell says he practices first-come, first-served now. “Because my goal is to get a unit occupied as quickly as possible by someone reliable,” he said.

While that sounds quite reasonable, Jason, your ability to set those criteria for reliability is being taken away. You won’t be allowed to use credit scores, criminal histories, or reports from previous landlords to refuse a new tenant — the next generation of this ordinance will set qualifications that your political masters decide. Your pain and suffering in dealing with bad tenants and the apartments they trash and the good tenants they run off matters not at all; giving protected classes do-overs to cover up their irresponsibilities of the past is more important. Because literally nothing in their lives was ever their fault. The Man has kept them down, and you’re The Man now, Jason — we’re taking control of your property for reparations.

And Shanna Smith, president of the National Fair Housing Alliance, said the policy means Seattle is taking a leadership role. “We’ve been asking people to address this issue for years,” but landlords always push back, said Smith. “We know landlords skip people all the time, and often the people they skip are people of color, people with vouchers and families with children.”

Stupid landlords. What do they know? Shanna knows better. Section 8 people are the salt of the earth and belong in quiet buildings. They can be key in the neighborhood Party Committee that will dole out scarce food and housing to those who support the goals of the Council.

Not everyone is happy about the policy, however. Don Taylor, who rents out a small building off Aurora Avenue North, said he doesn’t need policing. “How do I do it? Part of it is just feel,” Taylor said, recalling an instance in which he chose one qualified applicant over another because her salary was lower and he guessed she’d be less likely to buy a home and move out. “The longer you can keep a tenant, the better off you are,” the landlord said. “I don’t care whether you’re black, white or purple.”

I was a landlord in an area where good apartments were in great demand, and this is exactly how a smart landlord thinks. There’s little or no racism or improper discrimination involved — I chose black men and lesbians quite cheerfully when they were the most likely to pay the rent, be good neighbors to others, and take good care of the apartment. Taking away all the subtle discretionary factors that go into making these decisions amounts to harming small landlords who are doing it right.

Sean Martin, spokesman for the Rental Housing Association of Washington, says the group already advises landlords to operate on a first-come, first-served basis — to avoid discrimination claims. But he’s worried about unintended consequences. He wonders whether the race-to-apply policy will give an advantage to people with cars, smartphones and free time over people who ride the bus and work three jobs….

Then there’s the question of enforcement. Taylor says he’ll keep going with his gut. “I plan to find a way to work around the law,” he said.

False times and dates. Different screening criteria. Pre-application interviews. Those are all possibilities, said [Jason] Truesdell, who plans to adhere to the policy. “I can easily imagine how this could be gamed,” he said.

That’s why… the national expert says Seattle will need to ramp up its sting operations. According to SOCR, it will need to add two staffers to handle work related to the first-come, first-served policy — to the tune of more than $200,000 next year.

Your tax dollars at work, making housing more expensive and harder to find by discouraging new rental housing construction. Seattle is on the road to San Francisco’s impossibly expensive, two-class housing market, where only the very wealthy or connected can find comfortable and affordable apartments.

Death by HR: How Affirmative Action Cripples OrganizationsDeath by HR: How Affirmative Action Cripples Organizations

[From Death by HR: How Affirmative Action Cripples Organizations,  available now in Kindle and trade paperback.]

The first review is in: by Elmer T. Jones, author of The Employment Game. Here’s the condensed version; view the entire review here.

Corporate HR Scrambles to Halt Publication of “Death by HR”

Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness, and Death by HR is an important research tool… All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.


Zero-return Investing: NYTimes Weighs In

Employment Graph

Employment Graph

The market is down today, probably because investors have had a chance to look at the supposedly good employment report released Friday and discovered some shocking bad news: “full-time jobs declined by 523,000 and part-time jobs surged 840,000.” It’s widely believed employers continue to replace full-time workers with part-time workers to avoid increased benefits expenses, notably the Obamacare mandates-to-come on over-30-hours-a-week employees. The widely-cited unemployment rate is declining because discouraged workers have simply dropped out of the labor force or work off the books in the growing underground economy. A move toward European-style micromanagement of employment means a move toward European-style underemployment and corruption….

For those of you who don’t accept ZeroHedge (with its tendency to sensationalize) as a source of investment thinking, we have this recommended New York Times piece saying the same thing: probabilities favor very low or no returns on almost all categories of investment for the near and medium term. This situation has been engineered by the world’s central banks, who decided to suppress interest rates and savers’ incomes to lower long-term rates on riskier investments, which supposedly would bring back the growth economy and full employment. It hasn’t worked, and the recovery from this recession has been slower and weaker than the historical norm, but it did boost bank profits and bail them out at taxpayers’ and savers’ expense. Diversion of investment funds to politically-connected firms and interests has led to massive losses (Solyndra et al) and misinvestment: what capital is being invested is misallocated because the central banks have put a thumb on the risk scale, so risky projects that would not make sense at free market interest rates are getting funds while more valuable projects without political sponsorship go unfunded.

In Spain, where there was a debt crisis just two years ago, investors are so eager to buy the government’s bonds that they recently accepted the lowest interest rates since 1789.

In New York, the Art Deco office tower at One Wall Street sold in May for $585 million, only three months after the going wisdom in the real estate industry was that it would sell for more like $466 million, the estimate in one industry tip sheet.

In France, a cable-television company called Numericable was recently able to borrow $11 billion, the largest junk bond deal on record — and despite the risk usually associated with junk bonds, the interest rate was a low 4.875 percent.

Welcome to the Everything Boom — and, quite possibly, the Everything Bubble. Around the world, nearly every asset class is expensive by historical standards. Stocks and bonds; emerging markets and advanced economies; urban office towers and Iowa farmland; you name it, and it is trading at prices that are high by historical standards relative to fundamentals. The inverse of that is relatively low returns for investors.

The phenomenon is rooted in two interrelated forces. Worldwide, more money is piling into savings than businesses believe they can use to make productive investments. At the same time, the world’s major central banks have been on a six-year campaign of holding down interest rates and creating more money from thin air to try to stimulate stronger growth in the wake of the financial crisis.

“We’re in a world where there are very few unambiguously cheap assets,” said Russ Koesterich, chief investment strategist at BlackRock, one of the world’s biggest asset managers, who spends his days scouring the earth for potential opportunities for investors to get a better return relative to the risks they are taking on. “If you ask me to give you the one big bargain out there, I’m not sure there is one.”

But frustrating as the situation can be for investors hoping for better returns, the bigger question for the global economy is what happens next. How long will this low-return environment last? And what risks are being created that might be realized only if and when the Everything Boom ends?

In my personal investments, I’ve reduced exposure to stocks and bonds, raised cash, taken a small position (15%) in precious metal miners, and done what I could to reduce risk since this environment will probably either result in another decade of stagnation a la Japan, or crash in some unforeseeable way when the imbalances prevent any central bank response. As I said a few years ago, the Fed has bailed out all the banks, but who bails out the Fed if their newly risky balance sheet assets go south? The Paul Krugman answer (print money as needed!) will not stop the collapse. If things muddle along and resolve without a crisis, my investments will return a bit less, and I will be happy if that happens!

Wall Street versus Main Street

Wall Street versus Main Street

In the normal operation of a capitalist economy, high profit margins in some products would make it very profitable to invest capital in increasing supply of those products, reducing their price, the margins of production, and eventually the returns on investment in that product; this increases everyone’s standard of living as capital is allocated to the projects that best serve consumers.

But if you look at the products that have gone up most in price without any improvement in quality, you find sectors that are heavily regulated and bureaucratized, where barriers to entry from political management are so high it is not worth investing until profits are enormous and some can be kicked back to the politicians. Health care: supply constrained by government regulation of supplies of doctors, nurses, and treatments. Education: K-12 innovation squelched by union contracts, local monopoly, and federal oversight; post-secondary, half government run and 100% regulated, with increasing salaries to ballooning numbers of administrators, subsidized student loans, and dumbed-down programs suited for the dumbed-down graduates of modern public high schools. Rents: in highly-regulated coastal cities like San Francisco and New York, where local governments already have rent-controlled or mismanaged their way into housing shortages, even stratospheric rents call forth little new supply because the process for obtaining permission to build new housing is so slow and politicized. It takes a huge premium to induce builders to even try where their projects can be made worthless by lawsuits and local vetoes. Newcomers seeking an apartment to rent find themselves in a scrum of 20 or more people at open houses and are sometimes asked to offer more than the asking price along with their life history, credit report, and occasionally bribes. $5,000-a-month one bedrooms are starting to appear in good locations. Meanwhile, transit service is poor and subject to whimsical strikes and slowdowns by the overpaid union workers who might as well own the systems, so transit to lower-cost areas is slow and inconvenient. This is not normal!

Cable TV: has increased in price much faster than inflation as Congress encouraged local monopolies and local governments resist new services (unless bribed.) People are voting with their feet: they already left their landlines, and soon the cable companies will only be rescued by their monopolies on broadband access.

All of these regulations and restrictions on new entrants keep profits high for incumbents and are supported by their political donations, but at some point the losses to consumers add up and they revolt — by not buying, or working off book, or not getting married, or not buying a house. The younger generation is slowly realizing that they’re being bled dry by old people and politicians who lie to them without consequence and promise free or low-cost routes to a better life that turn out to be crap, while the politicians enjoy golf, jet about at public expense for their party fundraisers, and pile up magically-increasing net worth. The economy is stagnant and rigged in favor of the donors to the political parties, and the future has already been mortgaged and sold.