Name: in a bid to flush out rent-controlled

 Name: Yao LiuCourse: Econ 4597.01Date:1/29/2018First Homework AssignmentUndergroundeconomy comprises the exchange of goods and services that are not officiallyrecognized by the government. Therefore, these operations are not subject totaxation. Although dealings in this economy include income from citizens inself-employment, most underground economy transactions involve shadowyprocedures in contraband and other illegal substances. Formal corporate playersmay also engage in unsanctioned businesses, for example with the intention ofevading government control.

The controversies regarding rent regulation in theUnited States’ real estate market has triggered fears of the deliberateinvolvement of landlords in the underground economy. In this connection,several suspicious fires have destroyed buildings in rent-regulated neighborhoods,raising concerns among stakeholders in government and insurance companiesregarding their cause. Theinferno that ravaged several buildings in the Mission District area of SanFrancisco created fears of the impact of rent-regulation by the government incertain jurisdictions. The landlords received the blame for deliberatelyburning the property in a bid to flush out rent-controlled tenants and resellthe building for high profits. Moreover, state governments have engaged inseveral conflicts with landlords over rent-regulation. It is the duty of thegovernment to provide housing to all the citizens (Brady 15). However, the enormity of this task constrains thestate to partner with the private sector in meeting this basic need. In a bidto provide affordable housing, several states have a rent-regulation rule thatcushions citizens from exploitation by landlords.

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For instance, the CondominiumConversion Statute of 1983 protects specific categories of tenants fromreckless eviction by landlords. The statute provides that landlords must issuean eviction notice lasting at least a year for their tenants. The evictionnotice period is longer for the handicapped, the elderly, and tenants in thelow-income bracket (“The Massachusetts Condominium Conversion Statute, Chapter527 of the Acts of 1983” 1). Landlords find these government stricturesunfriendly to their business projections and may resort to illegal actions toforce the tenants out of the premises.Rentwars in Massachusetts have pitted tenants against landlords since 1971. Rentersstaged demonstrations and succeeded in influencing the City Hall to enact rentcontrol laws. However, the landlords overturned this provision through lobbyingand abolishing rent control through a statewide ballot (“The MassachusettsCondominium Conversion Statute, Chapter 527 of the Acts of 1983” 1).

The rentwars dominated the state politics for over twenty-five years as opposing campsstruggled to elect their sympathizers in political office (Brady 15). The current arson scenariosexperienced in several states imply underhand dealings among property owners.Rent regulations deny landlords the liberty to charge market rates for theirhouses, which leads to diminished profit margins. Homeowners have previouslyused political processes to influence de-regulation, but most of these effortshave failed to overcome the political pressure to provide affordable housingfor citizens.Theincreasing fires in low-cost housing neighborhoods are attributed to theschemes of landlords to indirectly evict tenants and re-sell their houses forhigh prices. Insurance companies also have a role to play in the fires; whenthe houses burn, the landlords place a claim for compensation from thesecompanies (Brady 15). Most of the housesthat experience fires are old buildings where the landlords are compelled bythe government regulations to charge limited rents against their wish.

Theunderground economy in the housing sector thrives because of the pricingconflict between the government and private entrepreneurs. Whereas the formeris driven by the service provision goal for the welfare of its citizens,private homeowners engage in this sector to make profits. The government mustprotect the citizens against the exploitation by profit-hungry landlords andalso consider the profitability of the homeowner. The government can regulaterents for the citizens by completely considering investing in the housingbusiness. In this regard, the state can charge minimal rents as a service tothe citizens. However, most state governments do not have the capacity to fullyprovide housing, and for this reason, the private segment is a critical partnerin this sector. Therefore, the government must engage in consultation withprivate players in the housing sector to achieve reasonable rental incomeregulations.

Works Cited”TheMassachusetts Condominium Conversion Statute, Chapter 527 of the Acts of 1983″. New England Real Estate Journal, 25 May,2012.Brady, James. “Arson,Urban Economy, and Organized Crime: The Case of Boston.” SocialProblems. vol.

31, no.1, 1983, pp. 1-27.

  

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