Paul: Economists Are Right To Hate Rent Control

Progressives keep trying to rehabilitate the reputation of rent control, and often misuse existing research to make their case that it’s an effective policy with few, if any downsides.

The most recent example comes in the form of an essay for The American Prospect from Rutgers University economics professor Mark Paul, who argues “the neoliberal convention” that rent control is counterproductive policy is dead wrong.

“As recent empirical work has shown, the neoclassical account’s core assumptions—one, that rent control restricts the supply of new housing; and two, that it misallocates existing housing, thereby causing an irrecoverable collective loss—fail to hold when it comes to the real world,” he writes.

Given the lack of ill effects, rent control is basically free money, says Paul. Housing could be made more affordable and overall welfare enhanced by adopting nationwide rent caps of 4 or 5 percent of inflation, a policy he says is indistinguishable from the “rent control” provided by a 30-year mortgage…

Reason, May 17, 2023