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Jewish World Review Jan. 3, 2000 /24 Teves, 5760

Thomas Sowell

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Robin Hood laws

http://www.jewishworldreview.com -- ONE OF THE SAD Christmas stories in San Francisco was about low-income residents of cheap hotels, who were being evicted during the holidays. Some of these are elderly men who have lived in the same hotel for decades.

The hotel owners are of course being blamed for being heartless. But the real villains are those politicians who have recklessly pushed rent control laws, even though such laws have a worldwide track record of causing housing shortages.

Why are the hotel owners evicting these tenants? Because they would rather get out of the hotel business than keep losing money by renting at prices set by politicians. And they wanted to do it before January 1st, when a new state law requires them to give some tenants up to a year's notice and pay them thousands of dollars each to relocate. Hence these Christmas holiday evictions, in order to avoid ruinous expenses blithely created by politicians.

Such Robin Hood laws make politicians look good. But, in the end, these and other grandstanding laws only add to San Francisco's housing shortage.

Tenants and landlords alike lose out when things reach this point. Only politicians and anti-landlord activists gain. And they gain only because most voters do not understand the actual economic consequences of rent control laws, as contrasted with what these laws claim to be doing.

No matter how much rhetoric there is about "affordable housing," there is no free lunch. If you are not going to pay the price of building and maintaining housing, then you are not going to have the housing you want.

The existing housing supply will not be maintained and people will be reluctant to build new housing. This is not rocket science. It is elementary supply and demand.

Unfortunately, too many housing laws and policies are not about housing. They are about symbolism. The name of the political game is to show that you are on the side of the angels.

That means not only being for tenants, who always have more votes than landlords, but also being on the side of environmentalist and other restrictions that add to the cost of building. From a purely political perspective, it doesn't matter if the actual end result is less housing.

This political game works because most people see no connection between one thing and another. Many of the same people who are fervently in favor of more "open spaces" are also fervently in favor of "affordable housing." It never occurs to them that reducing the area available for building housing means higher prices for housing within that restricted area.

To such people, supply and demand translates as landlords' "greed." Hence rent control. And they are no more interested in the consequences of rent control than they are in the consequences of restricting the housing supply in other ways.

Just how little actual housing matters to political crusaders is demonstrated by the fate of the former military base known as the San Francisco Presidio. When the federal government decided to close this base and made it available to the city of San Francisco, there were suddenly nearly 1,500 acres of additional land available -- almost twice the area of Central Park.

Moreover, this land consists of rolling hills with a magnificent view of San Francisco Bay and the Pacific Ocean. Just imagine how much additional housing this could provide, in a city where housing is in such short supply that the average home costs more than $600,000 and apartments are nearly impossible to find unless you already have one.

Yet this vast expanse of land was not allowed to go on the market. Instead, it has been turned over to local politicians, who want to please everyone, including those who hate the very words "builders" and "developers." In the marketplace, this land would have been snapped up immediately and new housing built. But, in politics, it takes years of jockeying back and forth before anything actually happens. Someone once said that Congress would take 30 days to make instant coffee. Ditto local politicians.

Here too the symbolism of being on the side of the angels is more important politically than getting more housing. So long as much of the public, and even the intelligentsia, see no connection between supply and demand and the price of housing, policies that reduce housing will continue to flourish in a city where there are constant cries about the need for more "affordable housing."


JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author, most recently, of The Quest for Cosmic Justice.

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© 2000, Creators Syndicate