Let’s at least be honest about the benefits that capping rent increases delivers.
The Wall Street Journal’s Emma Camp recently put out a short video criticizing “rent control” (I put this in quotes because the term can describe many different policies and one of the video’s first sins is lumping them all together as one thing). The clip became popular online and earned acclaim from those who believe regulating rents is economically foolish. “God bless Emma Camp,”said Adam Singer, the Vice President for marketing of an ad company, “for replying to the economic flat earthers who think rent control is a good idea.”
I irritated Camp by calling the video a piece of “propaganda,” and posting a link to an excellent Current Affairs piece by economist Cahal Moran, a.k.a. “Unlearning Economics,” who shows that many of the anti-rent control arguments massively overstate the case against it and overlook its benefits. In reply to me, Camp said leftists simply call things they don’t like “propaganda,” which we use a kind of boo-word. Camp says that while she herself possesses the “smidgen of intellectual humility required to admit that there are plenty of honest and smart people I disagree with,” regrettably “this favor is rarely returned.”
Now, Camp is wrong that I am one of those leftists who simply calls every argument I dislike “propaganda.” I, too, believe there are honest and smart people I disagree with. It so happens that none of them work at the Wall Street Journal’s opinion division, but they do exist. I do think I need to justify my decision to call Camp’s video propaganda, however, and show that I am not simply shouting that word because I don’t like the conclusions. Instead, I am referring to a set of tactics the video deploys to present the issue, such as avoiding the questions that matter, burying inconvenient facts, and misrepresenting counterarguments.
To make sure I’m giving Camp the kind of fair hearing that she does not give to proponents of rent control, let me first present the full script from her video. It’s brief:
Can rent control fix the housing crisis? No! It’s time for some Econ 101. Rent control sounds like a simple enough idea. Housing is too expensive, so why don’t we stop landlords from charging so much money? Yay! Wrong. The main reason why rents rise is there aren’t enough housing units for the number of people who want to live in a given city. With many people competing for the same apartments, landlords rationally set rents at the highest amounts they think someone is willing to pay. Rent control sets a ceiling on how much landlords can charge, but it doesn’t solve the underlying housing shortage. It actually makes things worse, because developers don’t want to build new units if they think they can be legally prohibited from charging enough to earn back their investment. Almost half the apartments in New York are rent regulated. About 50,000 of them stand empty, many of them because landlords can’t charge enough to make up for the cost of necessary repairs. So how do you lower rents? Build more housing! Cities like Austin, Denver, and Phoenix have recently seen a huge increase in building and decrease in rents. Lots of people want to move to these cities, but the housing supply can keep up, so landlords have to compete with each other to attract new tenants, which they do by lowering prices.
I would argue that this video is propaganda from the very first line: Can rent control fix the housing crisis? Well, is this what proponents of rent control argue? That it can fix the housing crisis? Camp’s video centers on New York City, and the most prominent proponent of rent regulation there is, of course, Mayor Zohran “Freeze the Rent” Mamdani. Has Mamdani ever argued that rent control can fix the housing crisis? In fact, Mamdani’s housing plan, which aims to “meet the housing crisis with the ambition and urgency that New Yorkers deserve,” centers primarily around building hundreds of thousands of new units of affordable housing. The whole reason Mamdani met with Donald Trump in February was to try to get the president to approve federal money to build affordable housing!
When I criticize a right-wing position, usually what I do is find an example of someone saying it, quoting it at length so that they can’t claim to have been misrepresented. For instance, my book Responding to the Right: Brief Replies to 25 Conservative Arguments begins each chapter with examples of conservatives making arguments, which I then debunk. The reason for doing this is that if you simply put words in the mouths of your opponents, you risk arguing against strawmen. This is, fundamentally, what Camp is doing. She asks whether rent control can fix the housing crisis, then proceeds to argue that we need to build more housing in order to meaningfully address the housing crisis. But the fair version of her opponents’ position is more like: well-designed rent control regulations are an important policy tool in helping people afford to stay in their apartments, as part of a more comprehensive plan to increase the overall supply of housing. I realize this would be a more boring thing to argue about, and wouldn’t allow Camp to engage in the same level of delighted mockery of leftist ignorance. But sometimes to be accurate you have to be boring.
The first problem with criticisms of regulating rents is that they often criticize the policy for not achieving goals that it is not actually meant to achieve. The central purpose of limiting the amount that rents can be raised annually is to ensure that people don’t lose their housing because their rent suddenly gets massively hiked. It is not to expand the amount of housing available. It is to protect as many people as possible against a particularly harsh injustice that can easily befall them if the cost of their living space is determined solely by the fickle operations of the free market. What if, for instance, an older couple has been living in the same apartment for 40 years, but all of a sudden the neighborhood gentrifies and the landlord decides (“rationally,” according to Camp, since we cannot expect landlords to act morally) that he’s going to double their rent, because this is what the market will bear? What if you’re trying to raise a family on a limited budget, have built a cozy home that you love, and all of a sudden you have to dismantle everything and move because you can’t shell out 70 percent of your income to your landlord? Should this be permissible?
Overlooking the function of rent control as a protection against injustice is one reason why economists (whose field struggles to think about questions of justice, since it does not fit neatly in their equations) tend to understate the benefits of these regulations. When I posted our article on the subject, I received a “community note” on Twitter/X (not quite a correction, but a note indicating your post is missing important information), noting that “according to a Clark Center survey, only 2% of a panel of prominent US economists agree that rent control has a positive impact.” The survey is from the Kent Clark Center for Global Markets at the University of Chicago’s business school (Kent Clark was a Goldman Sachs executive).
Now, the “community note” actually misrepresents the findings in a crucial way. The economists were not asked whether rent control has a “positive impact,” but rather whether “local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.” And only one of the surveyed economists said “yes” to that.
But once again, we’re asking the wrong question. Why would rent control be expected to have a positive impact on “the quality” of affordable housing? And given the way the question is worded, even if you took the position that rent control did have a positive impact on the amount of affordable housing, but you (correctly) thought it did not have a “positive impact” on the quality of the housing (because why would it?), you would have to answer the survey in the negative. In other words, the Goldman Sachs Center For Definitely Unbiased Research has rigged the question by asking if rent control does something that rent control is not meant to do. This is like asking whether seatbelts prevent car crashes and improve the quality of cars, and then when experts say “no” (because they’re meant to protect you in a crash, not prevent you from crashing or make your car “better”), concluding that experts say seatbelts don’t do anything. (Funnily enough some libertarians have argued that seatbelts cause more car crashes by encouraging reckless driving, but there does not appear to be data to substantiate this.)
In fact, many of the critics of rent control concede that it has major positive benefits for large numbers of people, although they tend to pass rather quickly over this fact. Ryan Bourne and Sophia Bagley, in a blog post arguing rent control has all kinds of negative effects, also note that “unsurprisingly, studies overwhelmingly find rent control reduces rent prices for properties it applies to.” One of the economists in the Chicago survey, MIT’s David Autor, says that “Incumbent renters benefit from capped prices” while “new renters face reduced rental options.” Another, Yale economist Pinelopi Goldberg,” notes that “price controls create disincentives to increase supply. But without rent control, no one outside the top 1% would be left in Manhattan.” But these positives, if “unsurprising,” are crucial to assessing the policy. While on social media I see a lot of people saying that rent control is a “disaster,” or mocking proponents as economic illiterates the way Camp does (“Yay!”), what many of the surveyed economists argue is that rent regulations have benefits and costs. There are real gains for those whose units are covered by the regulation (Michael Greenstone of the University of Chicago says rent control is “Great if you are lucky enough to get one of those apartments!”). But if enacted in isolation, without being part of a more general affordable housing plan, or if badly-designed (say by making it much less profitable to build apartment buildings, while continuing to rely on the profit-seeking motives of developers to supply apartment buildings), rent regulation can cause negative effects as well.
What I often see critics of rent regulation do is treat the people who live in regulated apartments as if they are some kind of undeserving special interest group, living large with a sweet arrangement. A recent Wall Street Journal article profiled young people who “scored the ultimate deal: a rent-stabilized apartment.” Now, I have to say, many of these “ultimate deals” sound pretty modest (e.g., $2,100 a month for a 300-square foot studio!) During the mayoral election, Andrew Cuomo accused Mamdani of “theft” because he lived in a rent-stabilized apartment—a one-bedroom in Queens that cost him $2,300 a month! The fact is that rent stabilization (and, to be precise here, we should make it clear that in New York City, the term “rent control” is actually used to describe a separate regulatory regime that applies to only about 24,000 apartments, while “rent stabilization” is the more common regulation) only achieves the limited goal of making covered rents slightly less extortionate. Landlords can and do increase the rents even in rent-stabilized apartments (except during temporary rent freezes), increases that add up over time. When you consider that there’s currently a battle in the city over whether to pay teachers’ aides an extra $10,000 to supplement salaries that are as low as $32,000 (a battle that Mamdani is on the wrong side of, incidentally), you can see why Prof. Goldberg says rent regulation is the only way any working-class people will ever live in Manhattan.
If New York City repealed its rent regulations tomorrow, there would likely be mass displacement and a huge transfer of wealth from renters to owners, as currently rent-stabilized tenants faced huge increases in costs. Is that a good thing? Is this something we should not, at the very least, weigh as a major factor? If a substantial percentage of the remaining Black population of Harlem was driven out by the elimination of rent stabilization, would this simply be a non-issue? A major component of any consideration of rent control is not about the economics, but about rights. Should someone have the right to send armed agents of the state to remove you from your home because you can’t pay 50 percent more next month than you did this month? Should you have the right to be able to continue to stay in the place where you may have lived for decades? Should someone else have the right to take that away from you because by evicting you they can get richer? No survey of economists can tell us an answer to this question, because economics is silent on morality.
Critics of rent regulation argue that it ultimately causes housing to be more scarce. The Competitive Enterprise Institute says that “rent control reduces the supply of rental housing, discourages new construction, and tightens housing markets over time,” citing a famous San Francisco study of rent control’s effects “where the rent-controlled unit supply fell by roughly 15 percent and rent levels for the entire city increased by 5.1 percent.” But as Cahal wrote for Current Affairs, in part this reduction in the supply of rental housing occurred because landlords converted units into owner-occupied condos, in other words, because the law allowed landlords to evade rent control and seek a different way of maximizing their wealth. “Landlords are amoral and will evade regulations” may be a critique of rent control’s effectiveness, but this rather makes the socialist case that “regulating” a market without fundamentally altering the distribution of ownership is unlikely to have much of an effect, and it’s why socialists are much more in favor taxing wealth and building social housing than trying to tinker with markets. Nevertheless, what comes out a lot of the empirical literature is proof that if rent regulations are badly-designed, they can have negative effects on housing supply. (This is why new construction is often exempted, which gradually reduces the stock of housing subject to regulation.)
But as I say, we need to be clear on why this whole argument about the effects of rent control on housing supply misses the point. Requiring apartments to be habitable also probably reduces housing supply, because there are all kinds of cheap, dangerous structures we do not allow to be built. Indeed, some do argue that in order to solve housing shortages we should compromise our legal standards for what constitutes a livable space. Matt Yglesias, for instance, is a proponent of building large windowless blocks in which the poor can be efficiently stored. But “one effect of x regulation is to reduce supply in the market, because we expect the owners of property to be rational wealth-maximizing sociopaths” is not a knock-down argument against a regulation that is in large part about restraining the ability of owners to treat people unfairly, or establishing baseline inviolable standards of human dignity that must be respected.
For libertarians, the idea of fairness has virtually no meaning. If it’s a market transaction, and nobody has a gun to their head, we have no right to judge it (even if the weaker party to the transaction feels exploited and wishes they had other viable options). But to people with an ordinary moral compass, it is very important. And keeping people from suddenly facing exorbitant rent hikes is a policy designed to reduce injustice in housing. Now it’s not at all clear that the economic consequences of well-designed rent regulation policies are particularly harmful to supply, or “destroy” cities in the way critics allege. As I noted, the Clark Center survey does not actually measure economists’ opinions on the extremity of the costs, because it asks a loaded question about whether there were positive effects on supply and quality. But even if there is a cost, there is also an enormous benefit to those who are protected by the rule (often called “incumbent renters,” a term that carries with it a whiff of resentment, even though this category might theoretically contain the vast majority of a city’s working-class residents). Economics is actually not equipped to tell us whether the benefit is “worth it,” because this depends on our values. Those against rent control generally do not see much of a problem with poor people being evicted because they can’t afford a rent hike, since this is the market at work. Others of us see this as a monstrous crime against human dignity, and believe that even if stopping it discouraged some developers from building some housing, we should find other ways to expand the housing supply (the Mamdani approach), and not accept monstrous crimes against human dignity as the necessary cost of increasing the number of apartments in a city.
I could count endless other ways in which the Wall Street Journal’s video is propagandistic. Setting up cities like Austin and Phoenix against New York, when these cities don’t just lack rent control but are easier to build in, confuses the issue. In fact, an argument that YIMBY types make in other contexts is that it’s too hard to build in the blue states because of all the damned regulations and red tape (of course, the fact that there’s not much extra land in New York City and San Francisco doesn’t help either). But that’s an argument about zoning and permitting processes, and does nothing to show that rent control is the issue here. As for the claim that 50,000 rent-stabilized units are sitting empty because landlords can’t afford the cost of repairs, the New York City comptroller investigated the issue and found that this number is far too high, and in fact a “a quite small number of affordable rent-stabilized units – likely fewer than 2,000 that rent for $1,500 or less, representing less than 0.5% of the City’s stabilized housing stock – is sitting vacant due to landlords’ inability to make repairs.” But even here, there are means of addressing the issue that do not involve eliminating rent stabilization, and the Mamdani housing plan contains a number of provisions for helping the owners of rent-stabilized units keep their costs under control. (See Section 2.1)
I therefore stand by my assessment that the Wall Street Journal video is a piece of anti-rent control propaganda. I am not disputing the empirical claim that strict rent regulations, passed in isolation without a broader housing plan, have the consequence of reducing the availability of rental units. I would, of course, dispute the Wall Street Journal’s view that landlords should not be judged for failures to act morally, and that their decisions to raise rents, because they are “rational,” are not the “cause” of high prices (raising someone’s rent is a choice, the Market does not in fact make you do anything beyond recouping your costs). But the real reason it’s propaganda is that it sets up a strawman, the person who argues that rent control will fix housing. And it does so even in a city with a socialist mayor who explicitly argues that we need to increase housing supply. That is an extraordinary piece of deception. To leave out any discussion of the socialist mayor’s own views just shows that Camp is trying to knock down strawmen. And so I would repeat that while I do admit there are honest and serious people who disagree with me, I have yet to encounter any who produce opinion content for the Wall Street Journal.
