Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

NY Rent Control Revival

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In an act of pure legislative idiocy in the face of overwhelming consensus among economists against rent control, the New York State Assembly started the ball rolling to strengthen rent regulation. NY Times:

The Democratic-led Assembly passed a broad package of legislation designed to restrain increases on rent-regulated apartments statewide. The legislation would essentially return to regulation tens of thousands of units that were converted to market rate in recent years.

In addition, the legislation would reduce to 10 percent, from 20 percent, the amount that a landlord can increase the rent after an apartment becomes vacant; limit the owner’s ability to recover a rent-regulated apartment for personal use; and increase fines for landlords who are found to have harassed their tenants as a way of evicting them.

The legislation would also repeal the Urstadt Laws’ provision that in 1971 effectively took away most of New York City’s authority to regulate rents and transferred it to the state. Opponents of the legislation are concerned that the New York City Council, known for its pro-tenant leanings, would enact laws that are unfavorable to landlords.

Expect some amazingly ignorant quotes from legislators while this is debated:

Linda B. Rosenthal, an assemblywoman who represents the Upper West Side, said that unless rent-regulation laws were changed, middle class people were at risk of being driven out of the city.

Actually, rent control drives out the middle class, making housing only affordable to the rich and beneficiaries of subsidies and rent controls. New housing will be nearly impossible for middle class tenants to find. Plus, for those who favor one particular class of people over others, rent control increases class tensions…

“Pretty soon we’re going to end up with a city of the very poor and the very rich,” Ms. Rosenthal said. “Our social fabric will have been torn apart. And that is not what we want in the city of New York.”

Well, she’s right about that, but Rosenthal is co-culprit. Let’s take a collection for her to enroll in a basic Microeconomics course. She can even take it at The New School, for all I care.

There is hope. Democrats have a slim 32-30 majority in the Assembly, so I wouldn’t expect any series regulations to pass without a fight.

Assembly Speaker Silver declared 2009, “The Year of The Tenant”. Market rents in New York are falling quickly due to the financial mess, but I don’t think that’s what he means.

As Harvard Economist Ed Glaeser so eloquently puts it, “Rent control is bad, bad, bad.”

  • Benjamin Hemric

    Two thoughts:

    1) The New York Times article linked to above seems to me be slanted in favor of rent control. It seems to me that proponents of rent control get an opportunity to state at least a brief rationale for being in favor of rent control, while opponents of rent control just get a line or two to say that it would be “bad” (for them? for the general public?), but without also getting the opportunity to say WHY they believe it would be bad (e.g., it would discourge the construction of new housing, etc.).

    Unfortunately, it seems to me that this kind of one-sided, pro-rent control coverage is common in the New York media, not just at the “Times.” In the 1990s, however, the Metro Section of the “Times” had a wonderful pro-market columnist, John Tierney (who now writes a blog for the papaer’s science section). Tierney did a terrific job of presenting the arguments of the “other” side and thus provided a very nice balance to the newspaper’s, generally speaking, left/liberal coverage of local issues.

    2) Since most New Yorkers — or at least most “activist” New Yorkers — appear to be these days basically anti-marketplace development and pro-planned development (ignorantly spurning success and embracing failure, in my opinion), it seems to me that simply abolishing rent control (without also eliminating anti-development laws and regulations too) would indeed create problems, as the marketplace wouldn’t be allowed to increase supply in order to meet demand.

    Also, from the anti-marketplace / pro-planning perspective, rent control seems to meet a genuine “need” — it’s a way to keep prices down (at least for current residents/voters) without having to permit “unwanted” increases in density, etc. (which would be the marketplace way of dealing with expensive housing). With rent control, the problem of expensive housing is thus shifted to people who don’t live/vote here yet (if ever) and is hidden in years-down-the-road, not easily connected to current policies, stagnation and decay.

    But, given the current, anti-development / pro-planning environment, rent control laws do seem to solve a problem — but, in a way, it’s a self-created problem in the first place.

  • Benjamin Hemric

    Two thoughts:

    1) The New York Times article linked to above seems to me be slanted in favor of rent control. It seems to me that proponents of rent control get an opportunity to state at least a brief rationale for being in favor of rent control, while opponents of rent control just get a line or two to say that it would be “bad” (for them? for the general public?), but without also getting the opportunity to say WHY they believe it would be bad (e.g., it would discourge the construction of new housing, etc.).

    Unfortunately, it seems to me that this kind of one-sided, pro-rent control coverage is common in the New York media, not just at the “Times.” In the 1990s, however, the Metro Section of the “Times” had a wonderful pro-market columnist, John Tierney (who now writes a blog for the papaer’s science section). Tierney did a terrific job of presenting the arguments of the “other” side and thus provided a very nice balance to the newspaper’s, generally speaking, left/liberal coverage of local issues.

    2) Since most New Yorkers — or at least most “activist” New Yorkers — appear to be these days basically anti-marketplace development and pro-planned development (ignorantly spurning success and embracing failure, in my opinion), it seems to me that simply abolishing rent control (without also eliminating anti-development laws and regulations too) would indeed create problems, as the marketplace wouldn’t be allowed to increase supply in order to meet demand.

    Also, from the anti-marketplace / pro-planning perspective, rent control seems to meet a genuine “need” — it’s a way to keep prices down (at least for current residents/voters) without having to permit “unwanted” increases in density, etc. (which would be the marketplace way of dealing with expensive housing). With rent control, the problem of expensive housing is thus shifted to people who don’t live/vote here yet (if ever) and is hidden in years-down-the-road, not easily connected to current policies, stagnation and decay.

    But, given the current, anti-development / pro-planning environment, rent control laws do seem to solve a problem — but, in a way, it’s a self-created problem in the first place.

  • 1)

    it seems to me that simply abolishing rent control (without also eliminating anti-development laws and regulations too) would indeed create problems, as the marketplace wouldn’t be allowed to increase supply in order to meet demand.

    It’s correct supply problems are mostly caused by development restrictions, but rent control also hurts the supply of housing as I discussed in the series on rent control:
    Rent Control Part One: Microeconomics Lesson and Hoarding
    Rent Control Part Two: Black Market, Deterioration, and Discrimination
    Rent Control Part Three: Mobility, Regional Growth, Development, and Class Conflict
    Rent Control Part Four: Conclusion and Solutions

    2)

    But, given the current, anti-development / pro-planning environment, rent control laws do seem to solve a problem — but, in a way, it’s a self-created problem in the first place.

    Right. The key work is seem(s)…

  • 1)

    it seems to me that simply abolishing rent control (without also eliminating anti-development laws and regulations too) would indeed create problems, as the marketplace wouldn’t be allowed to increase supply in order to meet demand.

    It’s correct supply problems are mostly caused by development restrictions, but rent control also hurts the supply of housing as I discussed in the series on rent control:
    Rent Control Part One: Microeconomics Lesson and Hoarding
    Rent Control Part Two: Black Market, Deterioration, and Discrimination
    Rent Control Part Three: Mobility, Regional Growth, Development, and Class Conflict
    Rent Control Part Four: Conclusion and Solutions

    2)

    But, given the current, anti-development / pro-planning environment, rent control laws do seem to solve a problem — but, in a way, it’s a self-created problem in the first place.

    Right. The key work is seem(s)…

  • Wow. Of all the bad ideas…

    This does, though, provide the perfect excuse to write a piece titled, “In Case You Forgot, Rent Control Always Fails.” Would you be interested in penning such a piece for FreePo, Adam?

  • Wow. Of all the bad ideas…

    This does, though, provide the perfect excuse to write a piece titled, “In Case You Forgot, Rent Control Always Fails.” Would you be interested in penning such a piece for FreePo, Adam?

  • Thanks, Bill. I’ll email you. Great site by the way! I’ve visited a few times…

  • Thanks, Bill. I’ll email you. Great site by the way! I’ve visited a few times…

  • Ken

    Why is there no discussion of the following:

    Rent control reduces the value of buildings. This
    1. Reduces real estate taxes to the city – How many millions are lost each year in real estate taxes?

    2. No market based incentive to maintain and improve apartments – How many carpenters, plumbers, painters, electricians and other craft jobs are lost?

    3. The reduced rent to the enormous cost of the City and Jobs is given to those regardless of need and at the expense of those in the poorer areas of the City who now cannot relocate by reason of artificial low vacancies in the more desired areas.

  • Ken

    Why is there no discussion of the following:

    Rent control reduces the value of buildings. This
    1. Reduces real estate taxes to the city – How many millions are lost each year in real estate taxes?

    2. No market based incentive to maintain and improve apartments – How many carpenters, plumbers, painters, electricians and other craft jobs are lost?

    3. The reduced rent to the enormous cost of the City and Jobs is given to those regardless of need and at the expense of those in the poorer areas of the City who now cannot relocate by reason of artificial low vacancies in the more desired areas.

  • Great points Ken!
    I did touch on that in the part 3 of the rent control series:
    http://www.marketurbanism.com/2008/05/28/rent-control-part-3-mobility-regional-growth-development-and-class-conflict/

    I wish the politicians thought the way you do…

  • Great points Ken!
    I did touch on that in the part 3 of the rent control series:
    http://www.marketurbanism.com/2008/05/28/rent-control-part-3-mobility-regional-growth-development-and-class-conflict/

    I wish the politicians thought the way you do…

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