Rent control v. subsidy for long-term residence

Rent control has evil results. But long-term residents of a neighborhood contribute to social capital. Why not subsidize them?

Since my mother didn’t raise any stupid children, I’m not going to get in the middle of an argument between Tyler Cowen (or his alter ego Tyrone) and Mike O’Hare. But their dispute over rent control gives me the occasion to offer what always seemed to me like the right approach, and to register my complaint that we threw out a rather attractive baby with the bathwater of the Rent Board.

As Tyler/Tyrone points out, longevity in an apartment creates positive externalities both currently and prospectively; because long-term residents are playing a repeated game, they’re going to make more public-goods contributions than transients, and moreover they build up valuable local knowledge and connections without which local self-government can’t work. Moreover, since neighbors I know are part of my personal social capital, every time one o them moves I suffer a loss. Transients (me, for example) free-ride on long-termers, whether they own or rent. (This is distinct from the argument ,which I also believe to be true, that being displaced from an apartment, like losing a job, is painful in a way that not being able to rent that same apartment anew is not, and that it’s reasonable social policy to help protect people from that unpleasantness if it can be done at moderate cost in static allocational efficiency.)

So I claim that a subsidy for long-term residence is a justifiable policy. But the problem with rent control is that all of the burden falls on the landlord of the rent-controlled unit. Not only does that generate the evasion games that Mike points out (and the far more vicious practices of buying controlled units cheap and then scaring out the tenants to be able to raise the rent which gave Donald Trump, among others, a chance to make money by doing pure evil) and the incentive not to maintain controlled units and to run them down to the point where their market rent falls to the legal ceiling, it’s just plan unfair.

Instead, why don’t we just have a tax on rental units to support a subsidy on long-term residence? The details would require some working on (for example, should someone who moves within a building, or across the street, still count as “long-term”?) but it would be far more just and far more administrable (and therefore far more efficient) than conventional rent control.

The fact that no city has such a program suggests to me that the political appeal of rent control comes from the notion that it helps tenants generically as against landlords generically. But that doesn’t mean that a subsidy program wouldn’t be a good idea.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: