And rent control isn’t just ineffective but counterproductive. Trying to solve a housing shortage by weakening the signal that something’s wrong is like trying to lose weight by breaking your scale: You may feel better in the moment, but your problems will probably get worse. In the case of rent control, landlords will decide not to build or operate units that are unprofitable at the capped rents.
This inevitability can be resisted with various tweaks, and the administration has some of these. What’s being proposed is not a hard nationwide cap but a soft one: The president has called on Congress to pass a law that would force landlords who raised rents by more than 5 percent to stretch out their depreciation allowances over a longer time. The cap would apply only to corporate landlords who own more than 50 units and thus have more margin (and probably fewer alternative uses for their multifamily properties) than do small landlords who own individual houses. The proposal would exempt new buildings altogether and include a carve-out for units that have undergone substantial renovations. And it’s supposed to be in effect for only two years while America waits for the new housing supply that the administration intends to spur by investing in more low-income housing and also by opening up some federal lands to development.
But while some of these tweaks might make the policy less bad, none of them makes it good.
Also writing critically and wisely about Biden’s rent-control scheme is Jason Sorens. A slice:
Studies of rent control show that it hurts not just housing providers, but tenants as well. A study of 1996 New York data in the prestigious Journal of Urban Economics found that rents rose in the uncontrolled sector after rent control was extended, harming those tenants. But even tenants living in rent-controlled buildings were worse off, because they found it difficult to move to apartments that better fit their needs (a more appropriate size, closer to work, etc.). The total welfare losses to tenants per year were two and a half billion dollars in 1996 dollars, or $4.4 billion in today’s dollars. Nationwide, based on multiple studies of existing policies in the US, I estimate that the combined losses to tenants and housing providers of a typical rent control policy would be over $50 billion per year. Moreover, this study didn’t even try to estimate the welfare losses caused by poor maintenance of rent-controlled apartments.
Another factor that is a particularly thorny issue to admit because it divides the right is regulations and local zoning restrictions. Looser restrictions would allow for the construction of higher-density housing, but more density would also change those communities. So would Vance prefer cheaper housing or prefer that locals get to preserve the character of their towns?
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Of course, this is all too complex to address in a convention speech. But that doesn’t excuse Vance for promoting economic illiteracy by turning the issue into a simple story that happens to serve his populist brand of politics.
For those who trust markets, businesses, and individuals more than government, there’s plenty to dislike in the economic policies of both Joe Biden and Donald Trump. That said, the most unhelpful piece of campaign literature this year is from the Biden side, not so much for its content, but rather because it undermines the scientific reputation of economics and the integrity of its highest honor—the Economics Nobel. It’s a letter from sixteen Nobelists arguing that, “Joe Biden’s economic agenda is vastly superior to Donald Trump’s.” The letter offers ideologically skewed ad hockery as economics and commandeers the Nobel’s prestige. (The letter is here.)
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Unfortunately, Nobel economists, including most of the signatories of this letter, regularly issue partisan economic predictions that prove dead wrong, and the press treats the predictions as profound. Doing so gives lay readers the false impression that economics and the Nobel are skewed leftward—a grave disservice to the profession and the prize.
The Biden letter employs internally inconsistent or highly contorted logic (e.g., Trump’s deficits are inflationary, whereas Biden’s deficits are disinflationary). As two scholars cited below note, these economists could have performed a real service by enumerating the serious shortcomings of both the Trump and Biden economic platforms.
Trump’s own personality, in other words, is a limit on what any administration he runs could achieve for the New Right, or for anyone else. It’s not just that he lacks the discipline and focus to carry out an objective, although he does lack both, or that flatterers easily manipulate him, although they do. It’s also that his objectives are malleable to start with. In 2018, he insisted on cuts in legal immigration. Since then, he has consistently said he wants to increase it to record levels. Picking Vance, who favors cuts, doesn’t mean Trump has changed his mind — or that he won’t change it again. Vance is both a smart, knowledgeable advocate of New Right policies and a zealous convert to the cause of Trump, who might have chosen him more for the latter than for the former. We can be sure he did not make his pick because he wants to be the titular head of a Vance administration.
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As much as some of Trump’s fans wish otherwise, he just isn’t a Trumpist. Those who think a second administration would be less chaotic than his first are ignoring the level to which it would be the extension of his character — and that character has not changed.
Eric Boehm isn’t impressed with J.D. Vance.
But Mr. Trump also rambled on about his good relationship with North Korean dictator Kim Jong Un, and he boasted that “I could stop wars with just a telephone call.” How he would do that he didn’t say, as he never does. The implication is that he will do it with the force of his personality. There were also promises to lower prices and interest rates, though without any explanation of how he would do that.
We could go on, but you may have heard most of this speech before. His tone was calmer and less partisan than usual. But the speech would have been more effective had he cut it in half.
Mr. Trump leaves Milwaukee with a lead in the polls for the first time in three presidential campaigns. The competence on display in this convention contrasts with the disorder among Democrats as they seek to push President Biden from the race. But if Mr. Biden bows out, Democrats have a chance to nominate a more formidable candidate who can still make it a tight race in this closely divided country.
The most sophisticated monetary and banking policy advice available in the decades after 1776 was found in Adam Smith’s Wealth of Nations. Smith recommended free competition among nationwide banks of issue with minimal legal restrictions and no legal privileges. Yet neither Alexander Hamilton nor Thomas Jefferson accepted Smith’s recommendation, despite their familiarity with his arguments, and despite Scotland’s positive experience while following it. We spell out Hamilton’s and Jefferson’s theoretical disagreements, and explain how Smith’s advice did not serve either founder’s political agenda. For Hamilton, competitive banking without a single privileged national bank would not do enough to strengthen the federal government. For Jefferson, any federal chartering of banks would strengthen the federal government too much at the expense of the states.
Ben Sasse is a man of virtue, doing what is best for his family.
