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Need incentives for new housing construction 

Editor: 

Four years ago the idealogues on the PUC deregulated the power companies with the mantra that the free market would reduce prices. In Berkeley, the Planet has carried a number of opinion pieces on how deregulation of the rental market will solve the rental crisis.  

It is the same argument. 

I was taught that the market is the most efficient, and equitable, way to allocate resources, if certain fairly common conditions are met. If I remember correctly one of those conditions is that supply and demand be rapidly responsive to price signals. A two to three year lead time for new power plants clearly violates this condition. Demand too, tends to be slowly responsive. Small, temporary changes are possible through changes in habit, but major permanent changes require the purchase of more efficient equipment or structures, or changes in product mix or production technology. 

The rental market is similarly inelastic, and neither market is necessarily efficient or well-behaved when allowed to operate in a completely unregulated fashion. This does not mean that one should simply ignore the influence of the market, as former Rent Stabilization Board Chair Randy Silverman does in his arguments for more extensive rent control (Forum: 12/12/00).  

The current form of rent control forces landlords to shoulder the burden of the social problems of poverty and over-population without even an atta-boy in recompensation. If we are serious about the rental problem we should restructure our regulations to provide incentives for new construction, and continued availability of low-income units. 

Robert Clear 

Berkeley