Overwhelmed by Homeless, CA Leftists Keep Trying To Make It Worse, Push RENT CONTROL

P. Gardner Goldsmith | March 12, 2020

Perhaps because of the magnetic “David v. Goliath” appeal, perhaps because leftists aren’t familiar with economic fundamentals, or perhaps because of other, less noble, reasons, fascistic ideas to control other people’s property keep popping up in government like the proverbial “Bad Penny”.

And nowhere is this more evident than in California, a state that has become infamous for its skyrocketing rate of homelessness, open-air “bathroom” use, drug use, and deficit spending. So, in a state where the homeless population is more than four-times higher than that of its three neighboring states combined, what could be a better idea than to teach two profound lessons – one in economics, the other in the dangers of “democracy” – by pushing for rent control?!

As Hannah Wiley reports for the Sacramento Bee, just two years after a similar initiative was defeated, pushers of “do it our way” rent-fascism are at it again, trying to EXPAND the already strangling control local governments wield over property owners.

The initiative takes aim at the 25-year-old Costa Hawkins Rental Act, which limits the ability of local governments to establish rent control in buildings constructed after 1995 and in single-family homes and condos. While some cities have established certain rent restrictions, including in Sacramento, the current law is considered an obstacle to stronger protections.

And, of course, one must note the “reporter’s” strange insertion of the word “protections”, since, first, a threat by politicians telling property owners to not exceed a certain price when they merely offer rentals to people is far, far from a “protection” of the property owner, and, second, if one understands economics, placing a politically mandated price cap on something will cause a shortage.

The latter is, of course, the economic lesson we can take with us and apply anytime, anywhere, when agents of the state attempt to impose price caps on anything. In particular, when “rent control” is instituted, it destroys the price system necessary to reveal higher demand, destroys the profit incentive for new sellers to enter the market, destroys margins for current landlords to add beneficial safety and aesthetic changes to their properties, and leads to a stifling clog in the dynamic movements of populations into and out of rental properties.

This in a state with, according to Wiley, a 3.5 million unit housing shortage.

Not a good idea. Not an idea that will lead to more units to host those homeless folks.

Indeed, as Bradley Thomas writes for The Mises Institute, the effect of “rent control” shows itself with more glaring evidence over time, because building and rental demand are less “elastic” (i.e. they don’t change quickly) than other items or demand. But, over time:

Both supply and demand for housing units are far more price elastic over the long term. On the supply side, landlords will respond by building fewer units. With rents suppressed by law, there is less incentive to build new units. Over time some housing units will be transitioned into office space or some other more profitable use. On the demand side, renters and potential renters will respond over time to the lowered rents by increasing their demand for housing units. For instance, some young people will see the affordable rents as an opportunity to move out of their parents’ house, while others will be less likely to take on roommates and will instead occupy a unit of their own.

So, despite frustration over people trying to employ the government to institute policies that will backfire, we can derive a long-term lesson on the practical side, at least.

And there’s a second lesson, on the political level itself. This move is a ballot initiative, which often is touted as “direct democracy”, as “the people, speaking.” But it exposes the fact that “majority rule” is really a mask for gang thuggery, that “democracy” is really just the tyranny of the majority to tell the minority that, well, guess what, you never really had rights to your property or your earnings or yourself. 

According to the framers of the US government in 1789, and the philosophers on which they based their ideas, that was not why “the state” was instituted. Supposedly, it was created to PROTECT property and people from encroachments by others.

Well, it certainly seems that we can learn a fundamental lesson thanks to yet another “democratic” move to run other people’s property and lives, all with the “excuse” of trying to “help the poor and downtrodden.”

One doesn’t help “David” against a supposed “Goliath” by turning to the biggest Goliath in the history of man: the state. 

It’s not okay, and it’s not economically smart.

It’s destructive, and makes us all potential victims of whatever the “majority” at any given time wants to do to us or take from us.

Best to learn the lessons before we make more mistakes.