Rent Is Too Damn High

Not much to add to this brilliant insight: The rent is too damn high!

Jimmy McMillan doesn’t get into details about what he intends to do about such high rent. The answer is clear: Let the markets go!

Sure it’s nice to live in a safe, high-rent neighborhood. Hopefully Jimmy McMillan understands that the problem with rental price caps (like rent control) and regulations (like banning food trucks) is that these policies create spikes and troughs across abutting rent districts. This artificially ghettoizes neighborhoods rather than permitting rents to rise and fall naturally to reflect the more nuanced actual rent prices people are willing to pay.

If he intends to fix the “too damn high” problem by mandating a maximum rental price, neighborhoods will suffer. From a 2004 CEI paper:

Price controls are, historically, a dismal failure; in the short-term they may produce a drop in prices, but they also destroy the incentives to produce more goods. Under rent control, housing stocks deteriorate[.] A survey of economists 20 years ago demonstrated that the destructive effect of price controls is more widely recognized by economists than is practically any other regulatory effect. As a Swedish(!) economist once noted, “rent control appears to be the most efficient technique presently known to destroy a city–except for bombing.”

Even that bastion of conservative thought the New York Times filled its latest article decrying the “disappearing rent-controlled treasures” with tale after tale of sad disrepair. The simple truth is that when housing boards prevent landlords from earning market price for the apartments they rent, landlords cannot afford to fix apartment problems as they arise.

After all, city-imposed rent control may keep the rent from getting too damn high, but the price of plumbing, masonry, flooring, repairing a leaky roof, bread for the landlord, plumber, et al–none of these fall under a price cap.

That’s how markets work, kids, in a nutshell. Prices aren’t pegged to anything; they simply reflect information.

Pegging one item’s price to an arbitrary number will either destroy the market for that item or it will require such extreme control over all related markets that even a Stalinesque dictatorship can’t keep it together. Only when the government lets go of price control entirely do prices correctly reflect what things are worth to the relevant market.

Rent is high. When rent is too damn high people move. Relate to your people all you want, Mr. Politician, but keep your hands off of price control!