How Rent Control Drives Out Affordable Housing

I have a vagrant living in my NYC apt building that pays $75 a month in rent and eats out of the garbage. He has no electricity or running water. When he opens the door to his apt in the summer the rest of the building gags. There are two other units that pay $75 dollars; a nice old couple and a loony chain smoker with bad BO.

Rent stabilization in NYC isn't mandatory for new construction, so new buildup being condos is not a response to rent control (unless it's a response to the threat of future rent control). Also, you'll need to explain how "sky high rents + abandoned buildings" corresponds to "Why renovate when you can't charge rents commensurately?" - if landlords can't charge rents commensurately, where are the sky high rents coming from?

The argument that rent control prevents owners from maintaining their buildings is pure bullshit. There's not a rent-control law in existence that doesn't allow annual increases sufficient for maintenance. Buildings aren't maintained because the owner sees the opportunity for dramatically increased profits if the current tenant leaves and lets the building fall to shit in an effort to drive them out.

As for why allowing people to stay in their homes is a good thing (and forgive me for being sentimental, but these are their homes, even if other people own the buildings - they do live there): there a few things that bother me about the free market religion:

1. The belief that all things with value have been priced appropriately.

2. The belief that ownership is the only form of risk that should be rewarded by society.

Neighborhoods don't just magically become expensive to live in. I won't claim that the only reason is because good, noble people moved in when things were cheap and turned things around, but it's ridiculous to suggest that the people living in a place have nothing to do with that place becoming a desirable place for wealthier people to live.

As for whether unskilled workers are somehow more deserving of a house in Manhattan than skilled workers: no, but then again, they don't deserve to be run away from their jobs and families simply because some rich asshole can price them out, either. You're making an emotional appeal for a guy with a family to have a right to be close to his job - that cuts both ways, you know.

Perhaps, but the rerouting has a cost, which often lands on those least able to bear it; in the case of rent control, the cost lands preferentially on poor tenants in the form of higher rents. And even costs that land on the rich make us all poorer in the long run.

Because of the harm done, it's still worth noting that rent control and other "pro-tenant" law is rarely good for tenants, or indeed anyone other than sometimes well-meaning but economically illiterate busybodies.

Cato actually has done some studies on the libertarian vote. It went overwhelmingly for George Bush in 2000, but swung about 20 points democratic in 2004. I'm not sure that they've updated the study for 2008, but my gut (and surveys of self-identified well-known libertarians) tell me Obama won the vote.

If you like market economics, don't care if your neighbor is gay, and don't feel like occupying countries on the other side of the world, there is really nobody pandering to you. You tend to move around.

Edit: Here's the paper comparing the 2000 and 2004 elections that I mentioned

http://www.cato.org/pub_display.php?pub_id=6715

Kerry did 18% better than Gore among libertarian voters, despite not having a libertarian bone in his body. Bush won the demographic in both elections, but lost 13% between 2000 and 2004, for a 31 point net swing.

While I'm sympathetic to the goals of empirical studies of this type, I doubt their utility: if they find that rent control increases rents, the evidence is right; if they find that rent control does not increase rents, the evidence is wrong.

The reasons for this apparent rejection of empiricism are simple:

(1) Empiricism, so successful in the exact sciences, relies on clean evidence and controlled experiments, but evidence in economics is necessarily messy, and controlled experiments rare.

(2) Given extremely reasonable and general assumptions (buyers tend to buy more of something if its price goes down, producers tend to produce more of something if its price goes up), the connection between rent control and rents is a theorem, not a conjecture. (See any introductory economics text for a proof.)

Doing an empirical study to test the statement "Rent controls increase rents" is kind of like measuring the length of ladders leaning against buildings to test the Pythagorean Theorem. You're likely to find that Pythagoras was right, but if you don't it's probably a flaw in your measurements rather than a mistake in the proof.