Indexing Minus One

Indexing was a great idea that stopped government from really taking us to the cleaners with inflation.
But it could also help to balance the budget now if people would start taking inflation minus one as their benefit increase.

Here is a real world example.

In Santa Monica we have tough rent control.

Every year landlords can increase rents, but only at 75% of the rate of inflation.



If inflation is 3% then the rent increase is 2.25%.

If inflation is 4% then they can raise rents by 3%. So this scheme is actually a little more generous to landlords than indexing minus one would be. That is, as long as inflation does not exceed 3%.

And the escape for landlords is vacancy decontrol. When a tenant voluntarily vacates the landlord can then ask for whatever the market will bear.

Thus gradually rents will stay near the free market price.