In New York, lawmakers are currently debating a compromise between New York City and upstate interests to change the policies that shape residents’ housing costs. New York City lawmakers are fighting for an extension and expansion of current rent control laws, while Governor Cuomo wants to tie this extension to a two percent cap on yearly property tax rate increases.
Legislators voted against a temporary extension of the current policy on Wednesday. The Wall Street Journal reports:
The Senate Democrats had been urged by tenant advocates to reject even a short-term extension in an attempt to ratchet up attention on their efforts to expand protections for existing tenants.
“Our members have said from the start: extension is not enough—we need to strengthen regulations,” said Austin Shafran, a spokesman for the Senate Democrats.
Senate Republicans, meanwhile, blamed the Democrats for the defeat, noting that they are acting against a bill pushed by Gov. Andrew Cuomo, a Democrat who supports expanding regulations.
City lawmakers ignore that in fact rent control laws make housings costs more expensive for many residents and would-be residents in order to appease the fervent interest group of tenants who currently live in apartments priced below market rates.
In 1972, the Swedish socialist economist Assar Lindbeck famously wrote, “In many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.” Why then, are New York City politicians – politically to the right of Lindbeck — fighting to protect rent control today? The policy is detrimental to all those unable to find housing at rent stabilized or controlled prices as well as landlords.
Rent control has not had the dire impact in New York that it has in other cities because the number of apartments that are fully rent-controlled is a small portion of the total. A much larger number are rent stabilized (about 50 percent according to Wikipedia). Rent stabilization laws dictate the rate at which landlords can raise rents,] rather than permitting housing prices to equilibrate supply and demand. The tightening of the current price ceilings that city lawmakers support will further limit the rental market from serving middle class and lower income tenants who are not lucky enough to secure rent-controlled or rent-stabilized units.
All of the evidence against rent control begs the question: Why does such a detrimental policy persist with many favoring expansion? On Wednesday, pro-rent control protestors in Albany were arrested for blocking lawmakers’ access to the capitol, and clearly most democratic lawmakers think the current laws do not go far enough.
Rent control has some classic aspects that make it an enduring policy. The costs are dispersed across all city residents while the tenants in rent-controlled buildings reap the concentrated benefits. Additionally, the harm of rent control is a classic case of unseen costs. Residents may see only the benefit of reduced rent without seeing the policy’s negative impacts.