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The Horrid Consequences of Rent Control

As you saw in the video, supporters of rent control tend to be the cranks and crazies, such as Bernie Sanders and Alexandria Ocasio-Cortez.

The vast majority of economists, by contrast, recognize that such policies undermine incentives to provide and maintain rental housing.

Who is going to invest in a new apartment complex, after all, if politicians impose laws that ensure it will be a money-losing project?

The video highlights what has recently happened in Minnesota.

I wrote about that mistake last year. Christian Britschgi of Reason also looked at what happened. Here are some excerpts from his column.

Another housing development in St. Paul, Minnesota, is on hold… The reason? St. Paul’s newly-passed rent control ordinance, which Alatus’ principals say is making their once-eager investors skittish about doing business in the city. …the policy has developed a rock bottom reputation among economists over the past few decades. They almost uniformly argued that capping rents deterred developers from building new homes, and discouraged landlords from taking care of the ones that already exist. The inevitable result is less, and less well-maintained, housing. …Rent control is always going to disincentivize housing construction.

I recommend reading the entire article, since it also discusses the pernicious impact of zoning laws.

Since we’re on the topic of rent control, here’s the abstract of a study published by the American Economic Review in 2019. Because the policy discourages construction of new units, Rebecca Diamond, Time McQuade, and Franklin Qian found rent control actually increases rents in the long run.

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law.

Rent control is bad for both landlords and renters.

But renters generally don’t understand the topic, which is why many of them support demagogic politicians pushing the policy.

The bottom line is that rent control is a form of price control. And we have centuries and centuries of evidence that such policies produce shortages and other forms of economic damage.

Defending Capitalism, Part I

It’s a two-part series. In this first video, we discussed three myths about free enterprise.

Myth #1 – Capitalists get rich by ‘taking’ money from others.

Since voluntary exchange, by definition, is mutually beneficial, this is a truly absurd argument. Indeed, only the most vapid politicians and pundits suggest otherwise.

The most definitive research in this area came from Professor William Nordhaus of Yale, who estimated that, “innovators are able to capture about 2.2 percent of the total social surplus from innovation.”

Translated from economic jargon, that means the rest of society gets nearly 98 percent of the value created by rich entrepreneurs.

Myth #2 – The rich getting richer, and the poor getting poorer.

This is an issue I’ve repeatedly addressed, showing how poverty was the natural state of humanity until capitalism appeared a few hundred years ago.

Now we are incomprehensibly rich by comparison. At least in market-oriented nations.

Focusing on more-recent data, I’ve shown that living standards have dramatically increased in the post-World War II era.

In the video, John and I also discussed the Census Bureau’s data showing that the middle class is shrinking, but only because more people are becoming rich.

Myth #3 – Monopolies destroyed the free market.

Supporters of government intervention commonly argue that capitalism produces monopolies, meaning big producers capture the market and exploit consumers.

This is a rather puzzling argument since monopolies almost always are the result of government favoritism.

• The Postal Service.
• Government schools.
• Fannie Mae and Freddie Mac.

Even if we go back to the days of the so-called Robber Barons, we find that the consumers were only exploited when politicians decided to prohibit competition.

P.S. Next week, the second video will look at four other myths about capitalism.

P.P.S. On a related note, I have a five-part series (Part I, Part II, Part III, and Part IV, and Part V) on “The Case for Capitalism.”

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The climate-change hustle

John Stossel: Through 50 years of reporting on scares, only COVID proved true

I hear that climate change will destroy much of the world.

“There will be irreversible damage to the planet!” warns a CNN anchor.

Joe Biden says he’ll spend $500 billion a year to fight what his website calls an “existential threat to life.”

Really?

I’m a consumer reporter. Over the years, alarmed scientists have passionately warned me about many things they thought were about to kill Americans.

Asbestos in hair dryers, coffee, computer terminals, electric power lines, microwave ovens, cellphones (brain tumors!), electric blankets, herbicides, plastic residue, etc., are causing “America’s cancer epidemic”!

If those things don’t get us, “West Nile Virus will!” Or SARS, Bird Flu, Ebola, flesh-eating bacteria or “killer bees.”

Experts told me millions would die on Jan. 1, 2000, because computers couldn’t handle the switch from 1999. Machines would fail; planes would crash.

The scientists were well-informed specialists in their fields. They were sincerely alarmed. The more knowledge you have about a threat, the more alarmed you get.

Yet, mass death didn’t happen. COVID-19 has been the only time in my 50 years of reporting that a scare proved true.

Maybe you accepted the phrase I used above: “America’s cancer epidemic.” But there is no cancer epidemic. Cancer rates are down. We simply live long enough to get diseases like cancer. But people think there’s a cancer epidemic.

The opposite is true. As we’ve been exposed to more plastics, pesticides, mysterious chemicals, food additives and new technologies, we live longer than ever!

That’s why I’m skeptical when I’m told: Climate change is a crisis!

Climate change is real. It’s a problem, but I doubt that it’s “an existential threat.”

Saying that makes alarmists mad.

When Marc Morano says it, activists try to prevent him from speaking.

“They do not want dissent,” says Morano, founder of ClimateDepot.com, a website that rebuts much of what climate activists teach in schools.

“It’s an indoctrination that’s so complete that by the time (kids) get to high school, they’re not even aware that there’s any scientific dissent.”

Morano’s new movie, “Climate Hustle 2,” presents that dissent. My new video this week features his movie.

Morano argues that politicians use fear of global warming to gain power.

“Climate Hustle 2” features Sen. Chuck Schumer shouting: “If we would do more on climate change, we’d have fewer of these hurricanes and other types of storms! Everyone knows that!”

But everyone doesn’t know that. Many scientists refute it. Congress’ own hearings include testimony about how our warmer climate has not caused increases in the number of hurricanes or tornadoes. “Climate Hustle 2” includes many examples like that.

“Why should we believe you?” I ask Morano. “You’re getting money from the fossil fuel industry.” After all, Daily Kos calls him “Evil Personified” and says ExxonMobil funds him.

“Not at all,” he replies. “I’m paid by about 90% individual contributions from around the country. Why would ExxonMobil give me money (when) they want to appear green?”

Morano’s movie frustrates climate activists by pointing out how hypocritical some are.

Actor Leonardo DiCaprio says he lives a “green lifestyle … (using) energy-efficient appliances. I drive a hybrid car.”

Then he flies to Europe to attend a party.

I like watching Morano point out celebrities’ hypocrisy, but think one claim in his movie goes too far.

“Stopping climate change is not about saving the planet,” says narrator Kevin Sorbo. “It’s about climate elites trying to convince us to accept a future where they call all the shots.”

I push back at Morano: “I think they are genuinely concerned, and they want to save us.”

“Their vision of saving us is putting them in charge,” he replies.

And if they’re in charge, he says, they will destroy capitalism.

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State of the Union 2013

Published on Feb 13, 2013

Cato Institute scholars Michael Tanner, Alex Nowrasteh, Julian Sanchez, Simon Lester, John Samples, Pat Michaels, Jagadeesh Gokhale, Michael F. Cannon, Jim Harper, Malou Innocent, Juan Carlos Hidalgo, Ilya Shapiro, Trevor Burrus and Neal McCluskey respond to President Obama’s 2013 State of the Union Address.

Video produced by Caleb O. Brown, Austin Bragg and Lester Romero.

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In the past I have written the White House on several issues such as abortion, medicare, welfare,  Greece, healthcare, and what the founding fathers had to say about welfare programs,   and have got several responses from the White House concerning issues such as Obamacare, Social Security, welfare,  and excessive government spending.

Today I am taking a look at the response of the scholars of the Heritage Foundation and the Cato Institute scholars to the 2013 State of the Union Address.

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