Economists oppose rent control almost as unanimously as climate scientists oppose attempts to deny the reality of client change. 93 percent of economists (including liberals like Paul Krugman) agree that ceilings on rents reduce the quantity and quality of housing. And economists' views seem borne out by experience: most major cities with rent control (such as New York and San Francisco) tend to have very high rents, indicating that rent control is perhaps not functioning as effectively as its creators had wished. And yet urban planners and citizen activists are much more closely divided. What do they not understand?

To understand the risks of rent control, imagine the strictest possible policy. Government freezes rents forever, prohibiting any landlord from increasing rents. As the costs of labor and utilities increase, landlords realize they are losing money by continuing to be landlords. So eventually landlords start to abandon property; if they cannot legally do so by converting apartments to condominiums, they do so illegally by letting property decay until a suspicious fire wipes out the landlords' problem. No new apartments replace these housing units, because no one will invest in housing if they can't make a profit by doing so. Eventually, renter-dominated areas turn into wastelands, like the South Bronx in the 1970s.

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In sum, the difference between strict rent control and moderate rent control is like the difference between smoking two packs of cigarettes a day and smoking two cigarettes a day. Smoking two packs of cigarettes a day, like strict rent control, is likely to create toxic results. Smoking two cigarettes a day, like moderate rent control, is far less harmful though still not ideal. (via Planetiuzen)