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Jewish World Review August 21, 2000 /20 Menachen-Av, 5760

Thomas Sowell

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Consumer Reports

Sanity in 'Frisco -- CONGRATULATIONS are in order for the San Francisco Weekly, for an informative article that introduces sanity into a subject where insanity is the norm -- namely, rent control in San Francisco. What has happened under stringent rent control laws in the city by the bay is what has happened in virtually every other city around the world where such laws have been passed. But it will still be news to rent control advocates, who seldom bother to get the facts.

According to the San Francisco Weekly, new construction of multifamily housing dropped by 32 percent within a decade after the city's rent control law was passed in 1979. Over the past 10 years, the number of rental units in the city has declined absolutely by 7,500. The vacancy rate is below one percent. Nor has rent control meant low rents. The average rent for a one-bedroom apartment in San Francisco is nearly $2,000 a month.

None of this is unique to San Francisco. A study of 16 cities by William Tucker of the Cato Institute showed "that the advertised rents of available apartments in rent-regulated cities are dramatically higher than they are in cities without rent control." In view of this, it is not surprising that he also found homelessness more prevalent in cities with rent control.

How can this be, when the whole purpose of rent control is to keep rents down? First of all, the purpose of any policy tells you absolutely nothing about what will actually happen under that policy. Too many disastrous laws get passed because those who pass them win political points for their good intentions and nobody bothers to check up later to see what actually happened.

The San Francisco Board of Supervisors has recently commissioned the first official study ever done of the effects of rent control in the city.

Imagine! The first rent control law was passed in 1979 and has been amended more than 50 times in the two decades since then -- usually tightening the controls -- but nobody in government has yet bothered to find out what the actual effect has been.

Politics is not about empirical realities, but about popular images. So long as the image of rent control is good, it wins votes at election time -- and that is what it is all about, as far as politicians are concerned.

Meanwhile, there is a whole movement of rent-control activists and tenants' rights advocates who say things like, "Housing is not a commodity." Mindless mantras like that make them look and feel like the morally anointed, and apparently that is good enough for them. Who needs facts when you have myths that serve your purposes?

The biggest myth is that rent control helps the poor. It helps those poor people who happen to have an apartment when rent control laws are passed -- but it also helps the affluent and even the rich who happen to be on the inside looking out. But, as the housing supply dries up, who gets left out?

The homeless people on the streets are certainly not the rich.

Studies in both Cambridge, Mass., and Berkeley, Calif., showed that "rent-controlled apartments were concentrated among highly educated professionals." In New York, people living in rent-controlled apartments have included the president of the New York Stock Exchange and even Hollywood stars who keep such apartments to use when they happen to be in town.

San Francisco's rent-control law, like those in other cities, was passed as a "temporary" measure to deal with some immediate crisis -- in this case, the runaway inflation of the late 1970s. A cynic once said that there is nothing more permanent than a temporary government policy. Rent control laws were also passed as "temporary" measures in London and Paris during the First World War -- and remained in force on past the Second World War.

Since there are always more tenants than landlords, and more people who don't understand economics than people who do, it is nearly impossible to get the voters in a community with rent control to vote it out. However, many state legislatures across the country have taken that decision out of local hands by passing laws forbidding cities and towns from having rent control. When rent control was gotten rid of this way in Massachusetts, new housing began to be built in formerly rent-controlled communities for the first time in decades.

It can be done. But it is unlikely to be done in San Francisco. Nor is the liberal state legislature likely to act.

There is in fact a measure on this year's ballot to tighten rent control in San Francisco some more.

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