Only in New York would the state pump life into one of the dumbest economic ideas of the last century — rent control. Take it away, Megan:
In times like this, it’s easy to believe that if you laid all the economists in the world end to end, they still wouldn’t reach a conclusion. But here’s one of the things that basically everyone, left to right, agrees on: rent control is the surest way to destroy a city’s housing stock short of aerial bombing, and one of the major culprits behind New York’s painfully low vacancy rate. Rent control allows some people to stay in artificially cheap apartments, but only by forcing the people who would have rented them into some other, less desireable place. Those people bid up the price of the uncontrolled housing, so that you essentially end up with two housing markets, one with rents above the natural market price, and one with rents below it. There is no way to ensure that the deserving middle class folks you want to see stay in the city end up in the latter, and indeed, many of the owners of rent stabilized apartments were notorious for finding the richest tenants they could. Rich tenants rarely get behind on the rent, and move sooner than people who can just barely afford their below-market place.
Meanwhile, the stabilized stock deteriorates, because, especially in inflationary times, it does not pay the landlords to maintain them beyond the barest minimum required by law. And no one wants to build any new housing except luxury units which will not be controlled.
Then everyone wonders how come there are no houses for middle income people in the city.
Trying to repeal the law of supply and demand is like trying to repeal the law of gravity. If you artificially try to lower prices — on housing, on healthcare or on gas — the supply of it will dry up. This isn’t some fancy-shmancy economic model that only three guys understand. This isn’t some esoteric libertarian intellectual cul-de-sac. This is Econ 101. It’s something so basic that I bet even Paul Krugman would acknowledge it.
On the other site, I blogged about a poll showing that 2/3 of Americans think they could manage the economy better than Congress. I bet 100% could manage it better than the New York Assembly.