r/politics • u/nathan_j_robinson ✔ Verified - Current Affairs • 2h ago
No Paywall The Wall Street Journal’s Propaganda On Rent Control
https://www.currentaffairs.org/news/the-wall-street-journals-propaganda-on-rent-control•
u/ShrimpieAC 2h ago
Rent Control has its issues but if you think things are just dandy as they are you’re insane. It baffles me when people want to harp on forms of rent regulation but don’t want to admit the current system is busted beyond belief and desperately needs reform.
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u/Leon_Thomas Wisconsin 1h ago
The problem is that there are a lot of people who say, "The system is busted beyond belief and desperately needs reform; here's how to fix the problem..." and it gets rejected by NIMBYs across the political spectrum.
The issue with rent control is that it's a band-aid that protects some incumbent residents without doing anything to address the underlying problem. If it takes the form of "stabilization," not "control" (the market sets the original price; further increases are limited to inflation) and is paired with broad upzoning and by-right development policies, it can work. But way too many people advocate only the former while railing against the latter, which only serves to lock more people out of economically productive regions.
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u/ViennettaLurker 1h ago
Like a lot of things these days, its a big problem that needs immediate action and long term action. No, rent control or stabilization is not a singular long term fix. But it is a way to prevent people from getting tossed out on their ass at this moment.
Putting pressure on a bleeding wound isn't a fix or replacement for surgery. But that doesn't mean you shouldn't do it at all.
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u/OP_Skis_In_Jeans 1h ago
Problem is, unlike rent control, putting pressure on a bleeding wound doesn't impose harm on others. Rent control benefits existing tenants to the direct detriment of potential tenants, and that happens immediately.
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u/Anon529035893 1h ago
Nah. Rent control doesn’t benefit landlords.
Tenants with cheap rent aren’t spending millions to fight rent control across the country lol.
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u/Van-garde 1h ago
Certainly seemed beneficial to many after WWII:
“The Home Front: Rent control and the rapid wartime increase in home ownership”
Daniel K. Fetter∗
September 16, 2013
Abstract Over 80 percent of the 1940 U.S. rental housing stock was placed under rent control during World War II. Friedman and Stigler (1946), among others, conjectured that rent control in- duced property owners to place their units on the uncontrolled sales market rather than on the controlled rental market. I use newly collected data from newspaper advertisements and newly digitized data from intercensal tenure surveys to implement two empirical tests of this hypothesis. First, evidence from the staggered timing of rent control imposition shows that rent control led to an increase in the number of properties advertised for sale and a reduction in the number of properties advertised for rental. Second, conditional on the degree of pre-control rent appreciation, cities where rent control forced down rents further saw greater increases in home ownership in the first half of the 1940’s. This relationship does not appear to be driven by differential trends in housing demand or by other potential sources of policy endogeneity. The results contribute to the surprisingly small literature on the effects of rent control on rental housing supply, and suggest that rent control played an important role in the rapid wartime and postwar increase in home ownership.
https://economics.yale.edu/sites/default/files/fetter-130930.pdf
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u/FluffyB12 1h ago
Literally, and I do mean this, nothing is ever solved by saying x is bad. You must always propose a solution at the same you are identifying the problem, otherwise you are just complaining. You have to provide the solution you want or you are doing nothing but whining.
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u/ShrimpieAC 1h ago
I get what you’re saying but not everyone has a solution to a complex problem. Just because you don’t understand how to solve an issue doesn’t mean you shouldn’t voice concern. The only way people know that something is a larger issue is by hearing others sharing in their frustration.
Again not attacking here.
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u/viaJormungandr 1h ago
Easiest solution? Break up the big property management companies and fine them for price collusion. Then require they cannot use the same software providers as other major property management companies in the same area. Force them to compete on prices to bring rent down rather than setting prices such that a certain number of units can be empty to maximize profits and everyone relying on the “market rate” to force renters to accept ever increasing costs.
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u/AckerSacker 29m ago
Funny story, the Biden administration was bringing charges against some of the biggest rental company price colluders and as soon as trump got into office I thought "well that case is getting tossed." But it turns out the people working on the case went to extra lengths to keep it hidden from the trump admin, and it fucking worked lmao.
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u/fake-reddit-numbers 1h ago
current system is busted beyond belief and desperately needs reform.
What would you call/how would you define the current system? Supply and demand?
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u/OP_Skis_In_Jeans 1h ago edited 1h ago
Constrained supply and unconstrained demand. Artificial scarcity imposed by overly restrictive zoning, a byzentine permitting and code compliance process, and NIMBYism is largely to blame. Not to mention building FAR below the rate that was necessary to keep up with demand for years after the 2008 housing crisis, largely driven by the factors I mentioned previously.
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u/OP_Skis_In_Jeans 2h ago edited 1h ago
Rent control is a bad idea according to the economics and economists, not because the WSJ says so. We need to build more housing to reduce prices, and rent control makes it much more difficult to build more housing in the first place.
Less housing being built leads to higher prices for everyone who isn't lucky enough to win the rent control lottery. That is not a good medium or long term result. We'd be far better off subsidizing the construction of new housing, easing overly restrictive zoning, streamlining the permitting and approval processes, and eliminating restrictions on multi-family dwellings than implementing rent control.
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u/ProfNesbitt 1h ago
Building more is only a partial solution for renters. Previously landlords had to compete with one another and there was guesswork to where to set prices. Now with ai and the additional algorithms involved it’s pretty much price fixing except they don’t have to meet and collude anymore they just all use the prices the algorithms give them which should be price fixing but isn’t for some reason.
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u/OP_Skis_In_Jeans 1h ago
IMO restricting pricing algorithms (which can be a form of price fixing) should certainly be part of the solution. Lack of supply is also a huge part of the issue, however.
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u/Anon529035893 1h ago
Why would rent control limit housing development ?
Explain it to me like I am 5 years old.
Cause it seems to me like the solution is the state taking housing or building it then if the free market yall love won’t do it. Subsidizing an industry to do it is stupid, cause if we tie basic human needs like water, food, and shelter to a profit incentive… and it’s not profitable… why would we not just build it ourselves instead.
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u/_n8n8_ California 1h ago
Why would rent control limit housing development?
In the naive case, if you restrict the ROI by subjecting new builds to rent control, less people will want to build new units.
In practice, almost nobody calls for rent controlling new builds. But, expanding rent control can still have these effects.
Suppose you expand rent control from 20 year old builds to 15 year old builds, you're thinking long term when you build housing and that still lowers your eventual ROI, meaning less units ultimately pencil out.
Even further pushing it back, let's take Los Angeles. Buildings built after 1978 are exempt from rent control. And because of state law, that date cannot be pushed up.
What is legal is making it extremely difficult to replace those units as they age. Building on a parcel with an RSO would require a lengthy legal process, again, inhibiting new development.
Inhibiting new development is also not the only mechanism of reducing supply, though.
Rent control increases inefficient allocation of housing. Suppose you have a roommate, in a rent controlled apartment, and eventually that person moves out, and your rent is cheaper than market rents after some years of rent control. If you don't sublet that room, that room is staying empty, leaving a lot of empty bedrooms off the market.
Suppose again, that costs of maintenance rise faster than an RSO allows (most are structured this way). Eventually, when a person moves out, those units become more expensive to maintain than they are to rent out. Leaving to disrepair, units becoming inhabitable after tenants leave, etc.
The negative effects of rent control are very well studied.
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u/Anon529035893 57m ago
So a basic human right such as shelter should be based of how much profit you make off those people to just exist.
Got it.
If it’s so unprofitable… then you can just sell when that investment no longer offers a return !
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u/_n8n8_ California 42m ago
I don't disagree with the notion that people should generally have access to shelter. That's an entirely different issue from rent control being good policy though.
I don't think the fact that profit exists is out of line with that though. Grocery stores are run for profit, and as a portion of their income, people spend less on them than ever, and for the people who still have difficulty, we subsidize them with SNAP. That's a far better and more efficient system compared to just making it illegal to raise prices.
The issue with housing is fundamentally one of supply. So much land in US cities are zoned for single family homes only and that dramatically inhibits supply, if we actually care about affordability, the solution is clear that we need to loosen land-use regulations.
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u/Anon529035893 17m ago
I mean, we could have govt run grocery stores too. NYC is doing some. We’ve had other govt run ones that operate just fine.
The Orion isn’t “hand money to private companies” or “make raising prices illegal”.
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u/Uptight_Cultist 54m ago
Yea, it's all about profit when it comes to literally every basic human need. Imagine a world where that wasn't the case. Seriously, just sit for two minutes and imagine it. Imagine what it would be like to not live hand to mouth.
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u/OP_Skis_In_Jeans 1h ago edited 1h ago
People are much less likely to invest in building new housing if they can't make enough from renting it to pay the taxes, construction costs, and upkeep costs. Let alone make a small profit or realize property value gains.
They'll simply put the money in the stock market or invest in other ventures instead. This decreases the housing supply, which drives prices up while making it difficult to find now-scarce decent housing even for people who can afford it.
Cause it seems to me like the solution is the state taking housing or building it then
Do you want the state to build all housing that isn't single family homes? Because that's how we end up with the state building all rental units, which would be enormously expensive and economically inefficient. IMO some subsidies and state housing is certainly in order, but I don't want the government taking on this entire massive task single handedly.
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u/Anon529035893 1h ago edited 1h ago
Again, is basic housing. If it takes a profit incentive to convince private company to build houses…
Why are we involving them at all ?
Is shelter not a basic human right ? If something is economically not feasible does that mean we aren’t going to do it ? That’s it’s not worth it ? Slavery wasn’t economically feasible to end. We did it anyway.
If you don’t want to govt building housing, it seems like the private sector has no altruistic goals here and will simply not fill the gaps unless they make money doing it.
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u/OP_Skis_In_Jeans 1h ago edited 1h ago
Why are we involving them at all ?
Because the government is not equipped nor does it has the funding to build all basic housing. That's most of the housing in the US.
Is shelter not a basic human right ? If something is economically not feasible does that mean we aren’t going to do it ? That’s it’s not worth it ? Slavery wasn’t economically feasible to end. We did it anyway.
Now you're veering into whataboutism instead of discussing the pros and cons of rent control.
It's the governments job to step in when the private sector is unable to do so, but many of the reasons for the housing shortage stem from government policies like overly restrictive zoning, the disproportionate power of NIMBYs to sink projects that will benefit most of the community, a ridiculously complicated permitting process, persnickety burdensome building codes, and ridiculous density/height restrictions that most existing buildings wouldn't comply with were it not for grandfathering.
Once we fix that stuff, I'm all for the government stepping in to fill the remaining gaps.
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u/Anon529035893 1h ago
The govt is equipped.
They’ve built it before. And if we have the money to subsidize it, we have the money to build it.
Govt regulation is not why we have a housing shortage. If you want to talk reform, and debate why we need it, fine… but you can not tell me I’m veering into different topics here and then bring up one completely different then rent control.
Enact rent control, if the unit remains vacant cause the landlord would rather take a loss… take the property from the landlord. That’s hoarding.
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u/OP_Skis_In_Jeans 1h ago
The govt is equipped.
They’ve built it before.
No the government is certainly not equipped to build all basic housing lol. The government did a pretty shitty job of building very limited public housing in the 20th century. Many of those projects had to be demolished long before their useful lives expired. Building stuff that doesn't make sense then demolishing it 30 years later when it proves unworkable is not good policy.
Govt regulation is not why we have a housing shortage.
It's not the only reason but it certainly plays a major role. It restricts potential building sites and drives up costs and time involved, all of which directly result in less housing being built.
but you can not tell me I’m veering into different topics here and then bring up one completely different then rent control.
You're talking about housing as a right and slavery, neither of which relate to the housing shortage. I'm talking about nonsensical government regulations, which do.
Enact rent control, if the unit remains vacant cause the landlord would rather take a loss… take the property from the landlord.
Doing that would either impose that loss on the government (and would also erode the tax base if done at scale) or restrict that dwelling to people who can afford it outright or qualify for financing. Both of these create just as many problems as they solve, and a subsidy program (such as section 8) is far better.
That’s hoarding.
No, that's pulling the rug out from under investors, which would make people MUCH less likely to invest in building more housing. Why invest in a building that the government might render unprofitable or sieze when you can put the money in the stock market instead?
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u/Anon529035893 1h ago
The projects ? You wanna bring that up as an example. Great love to see it… you are further proving my point subsidizing things does not work. We need more govt control and stricter regulations !
Also, of course regulation isn’t the sole reason and I know you didn’t claim that. But again, if housing is currently tied to a profit incentive… and nothing is getting built… it’s not because it’s too expensive to build, it’s because people don’t have the money to pay for it. There are enough vacant apartments and homes and buildings all across America to house every single fucking homeless person TONIGHT. It’s just not profitable to do that. Wealth inequality is a bigger issue here than govt regulation.
And again with the subsides, section 8 is your shining example of what works ! Just like in my first sentence… section 8, just like the projects, is why we shouldn’t have private companies a single penny for this.
And yes, yes it is hoarding. If you’re willing to take that loss, you could mitigate it by having less of a loss by renting it out. Landlords aren’t doing that. They’re using forced scarcity to drive up other tenants rent to cover those losses and there in lies the scam. Vacancy taxes work.
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u/OP_Skis_In_Jeans 55m ago
There's a lot to unpack here, and your arguments are poorly organized to the point that it is tough to tell what you're arguing for in the first place.
Most of the worst public housing was and is government constructed, owned, and managed. Not section 8.
Most of those vacant houses aren't in areas where jobs are plentiful, let alone jobs that pay living wages. Those jobs are mainly in cities which is where overregulation and bad policy has constrained the housing supply most effectively.
Section 8 is only better than government owned and managed housing. It is far from an ideal solution.
A vacancy tax is far better than rent control, and it imposes much fewer negative externalities. It's also better than government owned housing and section 8. This is the first time you've mentioned it, however.
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u/Anon529035893 53m ago
No. I said before take the properties if they are vacant.
That’s the best tax there ever could be !
My arguments are consistent. You just don’t like them. And proved my point by bringing up failed projects that were subsidized. The projects were literally subsidized projects. Hence the name.
We cut out the middlemen and shit developers and contractors. Do something akin to the new deal. Specially since we have HUD, the mechanisms are there to do this. And do it right.
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u/Pennsylvanier 1h ago
Because the rate of growth in utilities costs, as well as growing property valuations and associated property taxes, makes it unprofitable to rent out a unit if you can't raise the rents. Thus, nobody finances or buys these properties.
It's not just these costs, though. The rising cost of maintenance, staffing for large scale and dense housing (which is what we need anyway), etc.
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u/Anon529035893 1h ago
If it’s unprofitable, sell the house or building then.
Simple as that.
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u/AccomplishedDust3 1h ago
The value of the house or building depends on what you can rent it for. The building doesn't get built in the first place if there is a high risk that it will be unprofitable and can't be sold for what it cost to build.
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u/Anon529035893 1h ago
No, that’s not true at all actually. When you get a property assessment, they don’t base it off what you could charge for rent.
You say that if something isn’t profitable, it doesn’t get built.
Okay then, remove the profit incentive. Shelter is a basic human right.
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u/AccomplishedDust3 1h ago
Huh? A property assessment is for calculating tax, not for deciding value.
Value is based on what someone will buy the property for. Someone will buy an apartment building because they are going to rent out the apartments, if the apartments are rent controlled then they will get less rent, so they will buy it for less, so the value is less.
Not sure what magic wand you plan to wave to "remove the profit incentive" - profit incentive is what brings the investment to build the thing in the first place. Do you mean public housing? That always works out great...and you still need to pay for it! Building is expensive!
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u/Anon529035893 1h ago
Tax is based off your property value lmao. That’s how they know how much to tax you. It’s based off a percentage of your properties value.
You seem to not have a basic understanding here.
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u/AccomplishedDust3 1h ago
Tax is based on your assessment. Assessment is based on your property value.
And the question of the day is: where does your property value come from? What a buyer will pay. And as I said, for a rental property a buyer will pay based on how much rent they expect to take in.
Which part am I not having a basic understanding of?
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u/Anon529035893 57m ago
So the yes, I am right. An assessment determines value. As I said.
Again, you seem to not understand that.
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u/Pennsylvanier 59m ago
Be a corporate landowner:
Should we build another complex in Smallville?
It should be profitable for two years until inflation and cost of utilities eat away any profit we'd get.
Let's do it!
Said no investor ever.
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u/Anon529035893 50m ago
So then, build it without them.
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u/Pennsylvanier 32m ago
That would be a good solution.
Too bad leftists are more focused on rent control (which makes the problem worse) than actual solutions (government builds more housing).
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u/Anon529035893 20m ago
Not really.
Leftists do want the govt to build housing. Thats like, a core tenant of most socialist and communist policy platforms.
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u/FluffyB12 1h ago
Because if there is less profit potential in something, less people will go into that business. Less money will be used to fund construction because money deployed elsewhere would have a higher return.
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u/Anon529035893 1h ago
So basic human shelter needs a profit incentive to be built ?
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u/jinkyjormpjomp California 1h ago
If you're dependent on someone else providing you with housing, then yes, unfortunately they usually want something in return for it. Rent controls are good for the already housed but not for those looking to rent because it raises the prices on new constructions while depressing the upkeep on existing properties. The government would do best to highly incentivize construction of as much housing as possible, which would make rents more affordable. Hell, there are so many would-be first time home buyers out there just waiting to grab their own place that increasing inventory for them would inherently free up the rental spaces they currently occupy... lowering rents across the board.
The issue is that a lot of cities make building a nightmare because the more friction the city council can impose on the process the more power they can accumulate for themselves and the good-ol-boy network of developers who depend on them to keep competition out of the process. Like all American problems, they know the system is hurting everyone -- it's just too profitable for themselves and their friends to ever allow anyone to fix it.
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u/AccomplishedDust3 1h ago
It needs a profit incentive for someone to choose to invest the money they have in the supplies and labor it takes to build the shelter rather than investing that money in something else.
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u/Anon529035893 1h ago
So then, if it’s not profitable…
Let’s have the govt build it.
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u/AccomplishedDust3 1h ago
Okay, you want government housing. So, why are you arguing for rent control instead of for government housing?
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u/Anon529035893 55m ago
Because we have an article about rent control on Reddit.
You wanted to bring up 2827482 other topics.
You all are saying it doesn’t work, so the solution is to do … what exactly ? Kick the can down the road ?
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u/FluffyB12 37m ago
Bruh look at the California boondoggle rail system 🫠 we don’t want government doing that
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u/Uptight_Cultist 55m ago
lol fuck the economists. I say this seriously, but what do they know? They're ideologically-driven soft-scientists who gave us trickle down and privatization and whatever else. We can just say "no, we're gonna do rent control." At some point you just gotta get a backbone.
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u/OP_Skis_In_Jeans 52m ago
lol fuck the economists. I say this seriously, but what do they know?
Right, why listen to the experts when you can believe whatever you want on social media instead? After all, they were wrong a couple times in the past! It's not like that brought us bad stuff recently like antivaxxers or anything...
/s obviously
At some point you just gotta get a backbone.
No, getting a backbone does not involve doing whatever we want regardless of expert opinions and without an evidence-based case for doing so. SMH...
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u/Uptight_Cultist 50m ago
When I'm wrong at my job, nothing happens. When they're wrong at their jobs, they destabilize entire economies.
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u/OP_Skis_In_Jeans 47m ago
That's kind of how responsibility works. It's no excuse to disregard expert opinion entirely in favor of doing whatever you want with no supporting evidence...
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u/RIP_Greedo 25m ago
A conservative newspaper for a business audience is against rent control? Now I've seen everything!
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u/ParticularJoker 1h ago
You don’t need “propaganda” against rent control. It’s bad policy.
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u/Anon529035893 1h ago
Why ?
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u/ParticularJoker 1h ago
Because it messes up with the demand while also causing incentive to create more housing to go down. If you put a cap on rent, shortages are basically bound to happen.
If the goal is to make housing cheaper for people in a city, it fails. If the goal is to make housing cheaper for those who already live there, than it succeeds.
A better goal would be to build more housing.
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u/Anon529035893 59m ago
Is basic shelter a human right, yes or no ?
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u/ParticularJoker 56m ago
This has nothing to do with rent control.
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u/Anon529035893 51m ago
Neither does what you said before I asked my question lol.
Rent control isn’t about building more housing. It’s about controlling rent, simple as that.
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u/ParticularJoker 48m ago
More housing is a more effective way to stabilize rent prices, though.
Rent control is pretty awful with that in the long run, and the problem is exacerbated with less incentive to build housing.
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u/Anon529035893 46m ago
So then build more housing then, whether it’s profitable or not.
You saying that ROI needs to be there to build, but also saying if we build more it’ll drive prices down, are two very contradictory statements.
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u/ParticularJoker 38m ago
Yes, that’s called a market. Rent control instead places a distortionary effect on it which doesn’t solve the long term issue.
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u/Van-garde 58m ago
You somehow keep a straight face talking about ‘potential housing shortages,’ when the reality is, we’ve been getting shorter for years. There are like a million homeless people in the country.
A redistribution of resources is needed. Relying on the market can’t work, when the macroeconomic objective of the entire system is wealth consolidation.
If each individual experienced benefits of economic growth, the supply-side model might work, but the disparity in economic gains means consolidation of capital, too.
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u/ParticularJoker 56m ago
I don’t like shortages. I want more houses. I want fewer homeless
people.None of this means rent control is a good idea. It will just make things worse.
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