St. Paul Just Implemented the Nation’s Strictest Rent Control Law. It’s Already Backfiring Tremendously
It’s one of the strictest rent control measures in the US—if not the world.
Tuesday, November 16, 2021
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Swedish economist once remarked that rent control “appears to be the most efficient technique presently known to destroy a city—except for bombing.” Unfortunately, we may soon see the destructive consequences of laws limiting rent increases running rampant in St. Paul, Minnesota.
The city just approved a rent control measure that will limit landlords’ ability to increase rents on its 65,000+ rental properties. They will not be able to increase prices by more than 3 percent each year under the new law. Controversially, the initiative does not account for inflation and applies to new construction, not just existing properties. This makes the St. Paul rent control measure one of the strictest in the US—if not the world.
Opponents of the measure made all the usual critiques. They pointed out, for example, that a supermajority of economists, 81 percent per one survey, oppose rent control because of its long-run consequences. Yes, some renters save money in the short term by enjoying artificially low rents. But the restricted prices limit future construction and housing supply which ultimately leads to a housing shortage and less affordable housing in the long run.
In St. Paul, these consequences are already starting to materialize.
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Economics is call the “dismal science” because it forces us to acknowledge that resources are scarce and limited. Everything is a trade-off. You can have X or Y but not both. And no matter what a politician promises, they can’t make more of X or Y. If anything, they make less of both X and Y. Someone has to pay them for their “sage” “leadership”.
So now Saint Paul will have less housing in the future. And, what do you think that does to the cost of existing housing? If you said the price goes up, you get a gold star. And if the price is not alloweded to rise because of politicians, then what happens? Quality goes down. A black market emerges. There’s a shortage of available housing for people who really need it.
And, the people blame the “free market” and not the politicians who cause the problem.
It’s time to call them to account.
Too bad that cities are destroyed by “rent control”.
But that’s the cost of the lack of any education in economics.
Life is tough; it’s tougher when humans are stupid!