Much of the zombified noise about rent control twists facts to fit theory, rather than adapting theory to fit discovered facts. made without a full appreciation of the potentially harmful impact of rent controls on the quality and quantity of a community’s housing stock.” Shades of Krugman! But then Downs qualifies his nod toward the standard theory: The strength of the controls determines the effects, bad and good. Downs found that “less stringent” rent controls have improved housing affordability in many communities, while more stringent, more draconian controls have caused rents to rise – harming, not helping, the less fortunate. Downs notes the clash “between basic housing costs and widespread poverty... cannot be eliminated or resolved by rent controls.” Instead, he dropped a bombshell: “ If American society wants all of its citizens to occupy decent dwelling units, it must adopt some other measure [than rent control] to deal with this tension ... either to fit discovered facts. In the 1970s, hundreds of American communities adopted residential rent controls. According to Downs, “The goal of such controls was to insulate low- and moderate-income renters from rising rental costs, which had increased as part of a rapid general inflation. Although well intentioned, these decisions to control rents were often
electorate has loosened restrictions on new development in return for affordable housing guarantees. San Francisco is “adding new housing units at a pace not seen in the city in decades [although] recent production has not matched... growth in higher income households,” planners report. Remarkably, in the past five years, 20,000 new housing units were added. A quarter of the new units are set aside by law for medium- and low-income renters: the back office and service workers necessary for the city to run smoothly for bigger spenders. The Bay Area Council is a consortium of blue-chip corporations and local governments. It reports that completing the four major development projects already in the city’s pipeline will create affordability for another 19,000 households. The Council is not in favor of ending rent controls. “While the end of rent control will have a small, positive supply shock, this effect is far outweighed by the [projected] loss of [16,222] affordable units.” Massive investment in new construction is proceeding apace because 80,000 newly arrived infotech and financial workers can afford the high rents in San Francisco... caused in some part by decades of rent control. So what is the future of rent control? In 1994, Anthony Downs of the Brookings Institute published an examination of the pros and cons of rent control. Downs’ findings are worth revisiting since much of the zombified noise about rent control twists facts to fit theory, rather than adapting theory
64 October 2018
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