The Rumble of Rent Control

by Don Boudreaux on December 11, 2005

in Prices

There’s plenty wrong with the presumption — embodied bountifully in this editorial appearing in today’s New York Times — that New Orleans can be rebuilt only if there’s "a comprehensive plan" to define and guide the rebuilding effort.  Here’s my take on centralized versus decentralized approaches to rebuilding my hometown.

I was also struck by the NYT editorialist’s fear that the recent "rumbling" that New Orleans’s levees might not be rebuilt quickly will stall the rebuilding effort.  That might be so.  But an even more ominous rumbling is being heard throughout New Orleans — a rumbling that will do at least as much to disrupt rebuilding as any uncertainty about levee reconstruction.  The rumbling that I speak of is the rumbling of calls for rent-control.

When my family and I were in New Orleans at Thanksgiving, we heard the local television stations report that several prominent politicians in the city are considering rent control.  And NPR ran this report a couple of weeks ago.  It’s entitled "New Orleans Considers Implementing Rent Control."

Uncle Sam can build levees that will withstand category 10 hurricanes, earthquakes, tornadoes, locusts, and any other natural disaster you care to name: if the government imposes rent control, the rebuilding of New Orleans will be, at best, fitful and slipshod.  Additionally, what rebuilding there is will be of owner-occupied homes and of condominiums — structures that escape rent control.  The population of rebuilt New Orleans will be artificially biased toward middle- and upper-income people — and artificially biased against low-income people.

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{ 9 comments }

Christopher Meisenzahl December 11, 2005 at 6:17 pm

This is scary. I remember learning in 200 level economics class that rent-controls, or really any price controls, are bad. I can safely presume that most of these politicians are sharper than I am, and better educated than I am. Do they not get it? Do they not care? Have they completely sold out to political expediency?

C. Bracken December 11, 2005 at 8:37 pm

Rent control is scary and would be an amazingly stupid move.

However I have to side with the Times on needing more government commitment to lift New Orleans out of the muck.

Imagine you are a New Orleans business owner with an insurance check to reinvest in your business. Would you invest in a city that is in ruins with 90% of the population gone (your customer base), and little in the way of federal and state government actions or planning.

I would probably not risk it.

Ivan Kirigin December 11, 2005 at 10:28 pm

"Nothing will happen without certain government action"

I just find it hard to believe.

"Something will not happen due to government well-intentioned action"

Now that is something which I am far more prepared to believe.

Rafal Smigrodzki December 12, 2005 at 12:29 am

"The population of rebuilt New Orleans will be artificially biased toward middle- and upper-income people — and artificially biased against low-income people."

This is it! Who in his right mind wants poor people stinking up a nice city with good old homes on high ground and great gentrification potential? Nobody, that is, nobody with political power.

So, here comes rent control to the rescue, and to make it all even more spicy, they say they are just being helpful.

Hypocrisy is fun!

Rafal

JohnDewey December 12, 2005 at 5:54 am

Rafal,

I cannot fault you for questioning the motives of politicians. But consider that some well-meaning leaders often respond to the uninformed wishes of their electorate.

I think the call for New Orleans rent control is being led by housing rights advocates and by politicians who depend on low-income voters for support. Their actions are grounded not in hypocrisy but in ignorance.

True_Liberal December 12, 2005 at 11:17 am

Unfortunately for these populist rent-control pols, their electorate has scattered to the four winds. The only voters remaining in New Orleans will be those with the wherewithal to rebuild. The renters are nowhere to be found, so the next local elections will bring in a wave of officials who have no use for controls.

JABBER December 12, 2005 at 12:18 pm

JohnDewey wrote: "Their actions are grounded not in hypocrisy but in ignorance."

I wish that that were so. I'm quite sure that they are advocating it for purely political reasons, sound economics be damned. Ignorance can be overcome with education; greed cannot.

Noah Yetter December 14, 2005 at 3:19 pm

"Imagine you are a New Orleans business owner with an insurance check to reinvest in your business. Would you invest in a city that is in ruins with 90% of the population gone (your customer base), and little in the way of federal and state government actions or planning.

I would probably not risk it."

No, and that's exactly the point. If it is true that New Orleans won't be rebuilt without government intervention, that means it's not worth doing.

New Orleanian December 14, 2005 at 8:00 pm

Wait a second. The calls for rent control here in New Orleans lasted about 3 days. This quickly died on the vine and was never ever seriously considered. The levee system in New Orleans was built by the Federal government. That levee system failed. If the levee system is not going to be rebuilt better and stronger, we need to know so we can lose everything we have left in the way of property and just move on. If, indeed we are going to rebuild the levees, New Orleanians need to know that also, so that decisions can be made on rebuilding.

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