When demands for rent control were made to the city council of the small, middle-class community of Foster City, California, the members of the city council responded in a way that is very unusual. They relied on facts.
The facts they relied on were that cities with rent control almost invariably have run-down apartments and large homeless populations. Housing shortages and faster deterioration of housing, due to reduced maintenance, have followed the imposition of rent control laws in cities around the world. Why then do rent control laws get passed, given this history? Because rent control is seldom discussed by politicians or the media in terms of facts about consequences. Nor is rent control unique in this respect.
People who are for or against affirmative action are usually for or against the theory of affirmative action. Facts that would test these opposing beliefs are seldom asked or given. It’s “don’t ask, don’t tell” — not only in the United States, but also in other countries. There are tons of writings on the rationales, hopes, goals and fears involved in affirmative action policies. But ask for the hard facts on who actually benefits — and by how much — and you draw blank stares.
It is the same story with gun control. People argue fiercely on the basis of opposing beliefs and assumptions about what will or will not happen when gun ownership is either widely permitted or narrowly restricted. Although there have been large and careful empirical studies of this issue by John Lott of Yale and by Gary Kleck of Florida State, neither study is even mentioned in most controversies over gun control by either politicians or the media. People have made up their minds and do not want to be confused by the facts.
Politics has been called “the art of the possible.” But that is a complete misconception. Politics is the art of making things sound plausible, whether they are possible or not.
If people think that more money means better education, then all a politician has to do is vote for more money for the schools and he is immediately credited with being for better education. This strategy has worked for years for Congressional Democrats. The fact that test scores went down every year for more than a decade, while unprecedented amounts of money were being poured into the public schools, did not make a dent in this image. But how many people have bothered to find out the facts? Have you?
One of the things that makes politicians so dangerous when they intervene in the economy is that facts do not mean much to them or to the voters. Remember the 1992 political slogan, “It’s the economy, stupid”? President Bush lost because the economy looked bad. But, when the actual statistics became available, months later, it turned out that the economy was growing robustly when the 1992 elections were held. It was just that nobody knew it at the time when they entered the voting booth.
While markets can react immediately to ever-changing economic realities, by the time the government has all the facts collected, it is often too late. But, even when the facts are there, there is seldom the logic needed to go along with it.
Go back to rent control. What is the most common argument for it? That “greedy” landlords will take advantage otherwise. But no matter how greedy landlords might be, that will not cause rents to rise unless somebody else is willing to pay more than existing tenants are paying.
The real conflict is not between the landlord and the existing tenants, although that is almost always how it is presented in politics and in the media. The real conflict is between different sets of tenants who want the same housing and are bidding against each other.
That is how a market economy operates. There is never enough of anything to satisfy everyone completely. So we bid against each other. Since this applies to a whole range of goods and services — and has produced the highest standard of living in the world — why should rental housing be different? Why should the government favor those tenants who happen to be on the inside looking out over those who are on the outside looking in? The real issue is competition between tenants, not the “greed” of landlords.
If greed was all that it took, then anybody who sold or rented anything could be rich just by an act of will. The fact that grown men and women can really believe that rents depend on greed shows how little serious thought goes into political decisions.
Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University.
