Year: 2020

Rent Control Burns People Alive!

Rent Control

By 

May 18, 2020

Representative Alexandria Ocasio-Cortez (D-NY, 14th District) has called for nation-wide rent control. AOC’s plan is to not allow rent increases larger than 3% per year. This is somewhat surprising, given that she majored in economics at prestigious Boston University. I – along with virtually every other economics professor in the country — am always at great pains to present in my introductory to micro-economics courses the familiar supply and demand diagram. It demonstrates that rents below equilibrium levels create shortages. I suppose she missed that lecture. If so, she really should have obtained the class notes from someone else, and/or perused her introductory textbook.

Senator Bernie Sanders has, if anything, done her one better: he is calling for a national rent control policy. California Governor Gavin Newsom has signed into law a policy along similar lines: rent increases shall be limited to 5% annually, in addition to any inflationary increases; this is coupled with making it more difficult to evict tenants.

Present New York City policy is very much in keeping with Rep. Ocasio-Cortez’s plan. It has recently worsened its previous rather Draconian rent control legislation. The presumed aim is to help tenants. But, there is something in economics called “unintended consequences.” Translation: “the plans of mice and men often go astray.”

Suppose, instead of exacerbating its rent control regulations, that the city council of this great city had tried this sort of thing with a different consumer good. Suppose the Big Apple had passed a law placing a ceiling of $1 on a fast food meal.The obvious result would be that McDonalds, Burger King, Wendy’s and their ilk would pretty much vacate the entire city. Posit that the city council mandated that gas stations charge no more than $1 per gallon. A similar result would ensue. Denizens of the New York City would be greatly inconvenienced.

Mr. DeBlasio would never institute any such ridiculous initiative. He would be laughed out of office if he did. Why, then, does the mayor think he can get away with inculcating analogous rules for residential real estate? This is because while burger and gas emporiums can easily locate elsewhere, the same is not true for buildings. If the owners had their ‘druthers, and this were economically and legally possible, they would hoist their real estate holdings upon onto giant wheeled vehicles, and roll them out of the city as soon as possible. New York City would then have no more accommodation for tenants than it would have fast food outlets or gas stations, under our hypothetical contrary to fact scenarios.

Of course, landlords can do no such thing, much as they would like to; heck, they would give their eye teeth to be able to cock a snook at the politicians in this manner.

But this inability of landlords does not mean that rent controls have no adverse effects upon local residents. They can certainly build less new capacity than would otherwise be the case. They may be legally compelled to upkeep and maintain presently existing apartments, but they will do so only reluctantly. “The customer is always right” which prevails in most industries, and will continue to do so for commercial and industrial real estate, which lack such unwise price controls, but will not apply to residential units. They will fight like the dickens to convert their holdings to condominiums and cooperatives. They will have incentives to – how can I put this delicately – not to be too unhappy if their buildings accidentally catch fire. Do we really want to promote such incentives, whether or not they actually become implemented?

Vacancy rates will plummet even further, with these new dispensations. This will have negative repercussions on labor mobility, when occupants fear to give up their rent controlled units. There will be a tendency to convert apartments to stores, to industrial and commercial uses. New laws will have to be enacted to prevent this, and will not be totally successful. Landlord – tenant relations will plummet even further (not of course for non-controlled, non-residential units.) New York City already has special courts charged with solving these confrontations. This is something not at all needed in any other industry. These costs are substantial, and the money misallocated in this direction could have been far more wisely spent.

The economics profession is not unified on too many issues, but this one is an exception. Opposition to rent control stretches all the way from Milton Friedman and Friedrich Hayek on one stretch of the political spectrum, to several scholars on the very opposite side. For example, in the view of Nobel Prize winner in economics Gunner Myrdal, “Rent control has in certain western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.” And according to Assar Lindbeck, a Swedish economist, “In many cases, rent control appears to be the most efficient technique presently known to destroy a city except for bombing.” Almost as a follow up, Vietnamese Foreign Minister Nguyen Co Thach averred: “The Americans couldn’t destroy Hanoi, but we have destroyed our city by the very low rents.”

It is urged in favor of this policy that tenants are poorer than property owners, and, often, are compelled to spend an inordinate percentage of their salaries on rent. But, with fewer buildings being constructed, and more of them falling into disarray due to reduced maintenance, upward pressure on rent levels, paradoxically, will tend to be the result. It is an economic truism that the less supply, other things equal, the higher the price. There are no exceptions for housing, or based on the fact that this expenditure plays a large role in the budgets of poor and middle class householders.

In any case, we do not single out textile manufacturers and insist they alone help clothe the impoverished, that only grocers and restaurants feed them, that automobile, air conditioner and television purveyors all on their own make these products available to those who cannot afford them. All of these income transfers come out of general funds. I do not at all favor any of these policies, but fair is fair. Why should housing be any different? Why should landlords, alone, have to bear the entire burden of housing the poor?

Not only should these latest violations of private property rights be rescinded, but the entire notion that rent control can alleviate housing shortages and high fees should be confined to the dust bin not only of history, but of economics too. From a legal point of view, this is a taking. Landlords should be compensated for this seizure of the (value of) their property.

From LRC, here.

Current Example: How Israeli Pols Got Jews Killed, Because ‘What Will Do Without the Goyim?’

The Lesson Israel Must Learn From Coronavirus

May 19, 2020

Rabbi Chananya Weissman

Politicians are human, and they make mistakes just like everyone else. As long as these mistakes do not stem from corruption or gross negligence, they can be forgiven. Mainstream and social media’s never ending game of “Gotcha” can make us forget that. Leaders shouldn’t be mocked or condemned every time they prove they aren’t perfect, even though we hold them to a higher standard.

Israel’s handling of the coronavirus plague was far better than that of most countries around the world. It was also far from perfect. It’s impossible to say what a “perfect” response would even be, or what the results of that would look like. I will leave that to others to debate. Overall, we have much to be proud of and thankful for, starting with the divine protection that softened the consequences of our imperfections.

There is, however, one mistake Israel’s leaders made that I cannot forgive. By late January they had determined that the coronavirus was a serious threat and had already begun spreading across the globe. They canceled flights from China. At the start of March there were about two dozen cases in Israel, and Israel had already banned entry to non-residents from most of Europe and Asia.

The virus had begun spreading in the United States. On March 7, Ynet reported the following: “A government official said the Health Ministry is pushing behind the scenes to have the U.S. added to the list, but so far the move has been delayed by some government ministries for fear of compromising diplomatic and economic ties with the U.S.”

Israel’s leaders knew beyond the shadow of a doubt that the virus was raging across the United Stated and that entry from there needed to be restricted. Nevertheless, the ban did not go into effect until March 18, lest certain people in high places take umbrage at a perceived insult.

Barely two months later, Israel has suffered over 16,000 known infections and 262 deaths, not to mention economic devastation to countless others.

In retrospect, the decision to allow entry from the United States during those critical two weeks was not only ludicrous but homicidal. Those responsible for the decision understood that they would almost certainly be sacrificing the lives of untold people in favor of not offending American officials who might take umbrage at restrictions they deemed unnecessary. The Israelis calculated that it was worth it to sacrifice these lives rather than the risk whatever repercussions might come from offending the Americans. Surely those repercussions would lead to an even greater loss of life, they rationalized, and hence this was the right decision.

How many times have we witnessed exactly the same rationalizations in slightly different contexts? How many Jewish lives have been sacrificed on the altar of appeasing not only our enemies but those who may or may not be our friends? How much longer will we allow this to go on, and not hold those responsible for this accountable?

Israel has a long history of failing to vanquish its enemies for fear of repercussions from its supposed friends. If we ruffle the feathers of the nations of the world we will be unable to survive, say our leaders. We must act with restraint. We must defend ourselves with one hand tied behind our back and one eye looking over our shoulder. Our friends will not be happy if our victory is too decisive, and that would spell doom for us all. We must bleed enough to justify our actions. The gods of the nations can only be appeased with Jewish blood.

Those who challenged this galut Jew mindset have been marginalized as extremist right-wing warmongers by atheists who consider themselves more “practical” and “responsible”. The coronavirus has given these enlightened adults the opportunity to examine whether this mindset is really to our benefit.

Restricting entry from the United States two weeks earlier would not have killed any of Israel’s enemies or expanded Jewish control over our G-d given land — sins which our friends often consider unforgivable. At the very worst it would have offended American officials who had yet to realize the prescience and absolute necessity of this order, which would have become clear mere days later. It is hard to imagine any serious repercussions to Israel from this.

Instead, Israel knowingly imported more cases of coronavirus, trading the lives of its citizens for diplomatic convenience. Israel let itself bleed rather than risk losing even a smidgen of “American support”, which is presumably the only thing preventing our total destruction.

Were Israel not chained to relationships that demand Jewish blood to be cheap, were Israel not convinced that it needs to bleed itself to prevent others from bleeding us even more, it could have blocked the curve from starting without ever needing to flatten it. Imagine how much death and damage Israel brought upon itself “for fear of compromising diplomatic and economic ties with the U.S.”

Was it worth it?

Was it ever?

Let our leaders finally learn the lesson that should be obvious by now. No longer shall we sacrifice our people and our land to receive approval from the nations of the world. No longer shall we rationalize bleeding ourselves, jeopardizing our soldiers to protect our enemies, and giving new life to defeated enemies. No longer shall we rationalize self-destructive behaviors or trade dead Jews for diplomatic favors.

So many of our people died from this coronavirus plague. So many people are suffering from the foolish, self-loathing decision to keep the borders open when our leaders already knew.

Let us finally learn the lesson and never make this mistake again.

Rabbi Chananya Weissman is the founder of EndTheMadness and the author of seven books, including “Go Up Like a Wall” and ““Tovim Ha-Shenayim: The role and nature of Man and Woman.” He is also the director and producer of a documentary on the shidduch world, “Single Jewish Male,” available on YouTube.

He can be contacted at admin@endthemadness.org; many of his writings are available here. Click here to read more of this writer’s work in The Jerusalem Herald.

Reprinted from The Jerusaelm Herald.

P.S.

Particularly timely given the N12 news report, cited on Arutz Sheva, that approximately 70% of Israel’s coronavirus carriers were infected by people arriving from New York.
Chananya