Not long ago, I quoted Swedish economist Assar Lindbeck’s conclusion about the results of rent control. He wrote that in many cases, it “appears to be the most efficient technique presently known to destroy a city — except for bombing.” Lindbeck, however, seems to have missed an even better way to wreak havoc on major cities. It would be rent control combined with massive subsidies for renters. Rent control dramatically limits the supply of new housing units by discouraging people from building new apartments and punishing landlords for offering them for rent by limiting the price they can charge. But if you throw in government rent credits, the results on the housing stock will be even more extreme.
This two-pronged approach not only limits supply, but it increases demand at the same time. So you have fewer apartments for rent and more people who want them. Rent control might be as effective as bombing, but this approach is the equivalent of carpet bombing. Naturally, California’s progressive Democrats are now trying to put this scheme into place. The only hope is that the state’s voters reject a coming rent-control initiative and the U.S. Congress will put the kibosh on the new legislation that would give renters a federal tax credit.
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