In a stunning, though not surprising, display of the Progressive framework in action, a coalition of more than 220 housing activists has called for Biden to enact national rent control. They encouraged the President to “regulate rent through every available authority” as a part of the Administration’s efforts to reduce inflation.
The coalition wants the government to limit rent increases to 1.5 times the rate of inflation or 3 percent, whichever is lower. One doesn’t need an MBA to understand what this could mean for rental property owners. At the current rate of inflation (8.5 percent for the twelve months that ended July 31) landlords would lose 5.5 percent each month.
Housing activists don’t care what happens to landlords. In their mind, we are nothing more than greedy parasites who suck money out of renters. The fact that we produce a value that those renters desperately want is irrelevant. The fact that our financial ability to continue producing rental housing is threatened by policies like this is of no concern. They concoct a solution for today’s problem, and they could care less about the long-term consequences.
The Progressive framework explicitly rejects long-term thinking. Indeed, the framework holds that it is impossible to predict the future consequences of a policy. All we can do is enact a policy, study the result in a few years, and then make adjustments to the policy. This is a recipe for disaster.
The coalition essentially wants to make it illegal for property owners to profit from rental housing. When profiting from the production of a value is illegal, it isn’t hard to predict how those producers will react. They will quit producing that value.
On the one hand, housing activists complain about the shortage of affordable housing. On the other hand, they repeatedly endorse policies that disincentivize the production of more housing. Villainizing the producers of a value is not an effective way to increase the supply of that value.
The Progressive framework demands that we look only at the immediate and easily identified consequences. It is a framework that eschews principles and the consideration of the full context. In the short-term, some will benefit from national rent control. In the long-term, all will be harmed.