There's Nothing Liberal about Rent Control

By Eichenwald, Kurt; Fleetwood, Blake | The Washington Monthly, June 1986 | Go to article overview

There's Nothing Liberal about Rent Control


Eichenwald, Kurt, Fleetwood, Blake, The Washington Monthly


THERE'S NOTHING LIBERAL ABOUT RENT CONTROL

A single 38-year-old correspondent for ABC News is participating in an interesting program in New York City. Despite his salary of $70,000, he qualified for a roughly $1,000 discount in rent for his one-bedroom Manhattan apartment. He pays $560 a month. His secretary isn't quite so fortunate; she's not in the program. Although she makes less than a third of his income, she is paying $1,000 per month for an apartment half the size.

If the program were welfare, we'd call the lucky man a cheat; if he were a defense contractor, we'd say he is gouging the taxpayer. But the correspondent is a long-time New Yorker, so we'll just call him typical.

The program he has benefited from for the past ten years is rent control, and few New Yorkers are demanding an end to the inequity. Set up as a temporary curb against rapid wartime rent increases, controls have remained long after they were supposed to expire. Over the years, politicians have expanded the controls through a complex web of rules, governing rents for 1.2 million apartments, and more than half of the city's tenants.

Faced with a housing crunch, nine states, along with such major cities as Boston, Los Angeles, San Francisco and Washington, D.C., have instituted rent controls. As a result, 12 percent of the nation's housing is now covered by some form of control.

Liberal politicians and organizers tend to view rent control as the most effective way to combat abusive rent hikes by unscrupulous landlords and to guarantee cheaper housing for the poor. But rent control's track record in New York should make them think twice, not out of some abstract affection for the invisible hand, but because in practice rent regulations have benefited the well-off at the expense of the urban poor, fundamentally contradicting the principle of equity to which liberals subscribe.

Rent regulation has been inequitable in its application, as the case of the ABC correspondent shows. It has drained hundreds of millions of dollars from city treasuries, is open primarily to those with money and guile, and plays a role in exacerbating the housing shortage. Yet rent control has developed a culture of protective tenants frightened of an unregulated market and politicians who play to their fears, making rent control politically untouchable. It is a classic case of the majority gridlocking the political system for personal gain and in the process hurting the entire community.

As a World War II-era emergency measure, rent controls made perfect sense. New York was jammed with war workers, housing was scarce and housing speculation feverish. Congress enacted rent controls around the country in 1942 and repealed them in 1945. But New York retained its. Only 15 percent of the apartments in the city are now under the original rent control laws; the remainder fell under subsequent regulations. Rent increases are decided by a body called the Rent Guidelines Board, consisting of tenant and landlord representatives appointed by the mayor. Initially, rent regulations applied only to apartments built before 1947, but in 1969, in response to what tenants said were unjustified rent increases and landlords said was political pressure from the wealthy living in the new buildings, the city placed all existing buildings under rent stabilization. The rules governing rent increases are hopelessly complex in application but simple in principle: rent increases are controlled by the state, not the market. It would seem to boil down to a philosophical question of whether the market or the government can best balance equity and efficiency; a classic liberal/conservative split.

The first questions asked by liberals then, should be, are rent controls equitable? Do they help those who need it most? The answer is no. Consider the infamous Mayflower Madam, Sydney Biddle Barrows, who was paying $376.99 monthly on her apartment when her income from her "escort service' was more than a million dollars. …

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