In our studies so far in Economics, price ceilings have interested me. These well-intended government actions often have unforeseen negative consequences. In this post, I will explore the effects of price ceilings, specifically on housing in New York.
Price ceilings are programs implemented by the government that dictates the maximum price that something can be sold for. In the case of apartments, this is called rent control. In New York City, rent control keeps prices low for long-time residents and controls price increases for regulated apartments.
This practice, in theory, should serve to help lower-income individuals and families afford housing in New York City despite skyrocketing demand. However, the fact that the current laws keep the price of apartments below equilibrium creates dangerous repercussions.
The first consequence of rent control is the creation of a shortage. When lower prices are mandated, apartment suppliers are unable to make as much profit and may be discouraged to the point of leaving the market, causing a downward shift in quantity supplied. Additionally, the lower prices bring about an upward shift in quantity demanded. These two factors combine to cause a shortage of apartments.
Another consequence of rent control is a decreased incentive for suppliers to improve their product. Because they are forced to rent apartments at a lower price, leading to decreased revenue, landlords have less reason to spend money on improvements to their units and buildings. In fact, regulated buildings in New York City are 9% more likely to have become structurally unsound than similar unregulated buildings.
Overall, while price ceilings may help provide housing to individuals who would not be able to pay the market price, resisting the invisible hand of the market and setting prices below equilibrium certainly comes with tradeoffs.
Many times, the Supreme Court seems to attract less attention in our minds and in the media than the highest part of other branches, like the Presidency or Congress. In fact, in our first day of learning about the court, we read Federalist #78 by Alexander Hamilton, which asserts that the Judicial Branch is the weakest of the three branches. However, this is not by fault: it is both intentional and beneficial.
The Judicial branch and the Supreme Court seem to operate differently than the Legislative or Executive branches. The justices are appointed by the President, not elected by the United States populace. Their tenure is for life, not any set term. Most importantly, they are meant to interpret the Constitution and current laws, as opposed to viewing them as concrete. Their ability to interpret and influence upon laws gives them, as argued in Federalist #78, the greatest power over the Constitution within the government. The actual words of the Constitution do not matter as much as how the justices decide to interpret and apply those words. The Court has a much lower turnover rate in terms of its personnel and thus is less susceptible to change in opinions and ideas than the Executive or Legislative branches. To me, the Supreme Court is one of the most intriguing facets of government. Throughout its history, its decisions have integrated schools, legalized abortion, further defined affirmative action, and upheld the Affordable Care Act. In 2013, the Court will likely hear cases that will have great effect on affirmative action, voting rights, and gay marriage.
How then, can it be said that the Supreme Court is the “weakest” branch, when it has clearly carried power and controversy in recent history? Truthfully, the Judicial Branch is only the weakest branch in terms of its ability to change the Constitution. While the Constitution may be absolutely central to what the Supreme Court does, the Judicial branch can do nothing to change or add to the words written in the Constitution. While the other branches can directly influence the Constitution, the Judicial only has the power to interpret it. This fact is, of course, completely by design. Montesquieu, a French philosopher who influenced the founding fathers, once said “there is no liberty, if the power of judging be not separated from the legislative and executive powers.” This sentiment is later echoed in Andrew Hamilton’s Federalist #78, and its effect is clear to this day in the structure of our government.
A so-called “weak” Judicial branch, separating the modifiers of the Constitution from its enforcers, is one of the many smaller designs by the founding fathers that has had a large impact. The Supreme Court has managed to remain an effective means of enforcement for nearly 250 years, and with its recent past of justified decisions, it looks to continue to do so.
On December 14, 2012, a shooting occurred at an elementary school in Newtown, Connecticut, claiming the lives of twenty young children. Soon after the tragedy, the United States became captivated with one question: What can be done to reduce gun-related violence? The ensuing debate about gun control has helped display many of the concepts that we have learned about in our government class. The Constitution, the pathways of action, and the powers of the Presidency have all come into play during the last few months. The current gun control discussion is an excellent real-life demonstration of how the government works together to deal with issues.
The first, and most basic, way that the gun control debate intersects with our government class is through the Constitution. During our learning, we have been asked to take on several case studies of the Constitution. We must interpret a Supreme Court case (real or fictional) and decide whether the events that transpire are constitutional or unconstitutional. In terms of the gun control debate, the second Amendment to the Constitution reads that“[a] well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed” (Amendment II). Obviously, this brings just as many questions as answers, but the interpretation that the law has used for most of American history until now is that American, adult citizens have the right to purchase and keep guns. However, in a government heavily influenced by John Locke, a major duty of government is to protect both its citizens’ lives and liberty. Thus, when certain firearms go well beyond the necessary stopping-power needed for protection, many believe that the government must implement gun control in order to keep Americans safe. On the other hand, there are great deals of people who argue that the government attempting to regulate guns violates the Second Amendment and interferes with the liberty that the government is meant to preserve. Because of the dichotomy of views on gun control, any potential legislation will likely have to be a compromise, that both ensures the safety of American citizens while not infringing too greatly on the rights of gun owners.
Another area in which our class and the real world have overlapped is the pathways of action. In the wake of Sandy Hook, the largest pro-gun lobby group, the National Rifle Association (NRA) made their official statement regarding gun control. Instead of conceding stricter gun laws, the NRA argued for increased protection, including armed guards within every school. Pro-gun control groups like the Coalition to Stop Gun Violence have also had their say. Additionally, individual Americans have attempted to create change through grassroots mobilization. Through the Internet and social media, getting the attention of many people has never been easier. Facebook posts, a variety of Twitter hashtags, YouTube videos, and whitehouse.gov petitions have all been used to try to create momentum for both pro and anti-gun control sentiments. Finally, a few politicians and leaders have attempted (albeit with little success so far) to enact cultural change. Many believe that American culture is too overtly violent, and some legislators have attempted to change that by adding potential restrictions on the depiction of violence in movies, television, and video games.
Finally, both the formal and informal powers of the President have been prominent throughout the last few months in the gun control debate. President Obama has strongly navigated the roles of Chief Legislator and Voice of the People. As Chief Legislator, Obama created a task force to explore all options available in the fight to reduce gun violence, and to make propositions about what needed to be done. During the State of the Union, Obama became the Voice of the People, concluding his address with a moving segment meant to stir up the American people and demand change. The President made use of Executive Orders after his initial proposal, and continues to play a key role in the discussion of the topic between Republicans and Democrats.
In the end, our government class has trained me to not just see the end product of a passed bill, but to also see all the work and effort in both directions that goes a nationwide policy debate such as the current argument about gun control. While the way in which our government works as a whole can be quite complicated, having knowledge of civics and government allows me to break down each component of change and progress. I believe in gun control policy that both keeps the public safe while respecting our freedoms and rights; government class has allowed me to make an informed opinion and analyze the situation.