Economists oppose rent control because it makes it more difficult for people to find decent housing in the long run. In a 1992 poll, 93 percent of them said rent control reduces the quantity and quality of housing available.
But as Shifra Mendelovitz notes in the Wall Street Journal, it harms many workers as well. Landlords haven’t been “the only losers” from New York City’s recent expansion of rent control. Tenants and workers alike suffer as landlords are no longer able to afford renovations that improved housing quality. Those renovations provided jobs for workers who now are being laid off. In the past,
the improvements and beautification of residential lobbies, corridors and apartments changed the lives of low-income tenants. The residents’ behavior changed. They were proud to live in a renovated building. The previously trash-filled corridors were kept clean. The well-lit corridors and new security devices helped reduce drinking and drug use. The buildings’ supers were telling me that the residents aren’t complaining as they used to, because everyone is happy.
The new rent-control law has brought all this progress to a screeching halt. All renovations are on permanent hold. Many vendors that depended entirely on housing renovations closed shop. My friend who was in the kitchen cabinet installation business laid off his crew of 25 installers. He’s selling his house to be able to sustain his family. My friend, a contractor who renovated apartments in the Bronx for the last 20 years, closed shop. Ninety of his skilled construction workers are looking for new jobs. The domino effect from this legislation is greater than anyone could have predicted. But the saddest part is that the people whom this was supposed to help are the ones who’ll end up suffering the most.
Recently, Democratic legislatures in California and Oregon have enacted rent control. But even left-leaning economists think rent control is stupid, as expressed by Swedish economics professor Assar Lindbeck. He said, “rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” In 1989, Vietnam’s socialist leaders reluctantly admitted that their policy of rent control had destroyed the housing stock of Vietnam’s capital city, which had been sturdy enough to survive years of American bombing in the Vietnam War. Vietnam’s foreign minister said, “The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy.”
Will this presidential election be the most important in American history?
But rent control’s past failures haven’t dimmed enthusiasm for it among some government officials, such as Senators Bernie Sanders and Elizabeth Warren. In September, Senator Bernie Sanders said that America needs “national rent control.” As Matthew Yglesias notes at the progressive web site Vox, Bernie’s “rent-control proposal is much more sweeping and stringent than anything that’s been implemented anywhere” in America because it contains no “exceptions for vacant units, small-time landlords, [or] new construction.”
Senator Elizabeth Warren has also endorsed rent control. She has “included incentives for localities to pass rent control in her new housing bill.” She has also called for banning states from repealing rent-control ordinances.
Why they support rent control is a mystery, because even liberal newspapers mostly oppose it. As the liberal Washington Post explains, “Rent-control laws can be good for some privileged beneficiaries, who are often not the people who really need help. But they are bad for many others.” For example, after San Francisco imposed rent control, “landlords responded by converting their buildings into condos they could sell or business properties they could lease without rent-control restrictions — or by demolishing their old buildings and replacing them with new ones” not subject to rent control. Moreover, “landlords have less incentive to maintain their properties in a rent-controlled environment,” reducing housing quality. “And since rent-stabilization policies often tend to discourage people from moving, they harm worker mobility and the economic dynamism associated with it.”
