Zupan: Why rent control increases housing shortages
To the Editor:
That there would be talk of legislating rent control in a statist, government-knows-best type of legislature is hardly surprising here in Vermont. The problem that legislators are trying to solve is a shortage of affordable, rentable homes here in our State. The reflexive government-oriented reaction is to make a law limiting the amount landlords can charge their tenants. In a one-dimensional, non-cause and effect world, this might seem logical.
However, since every action government takes has a rippling ramifying effect, one must look at what happens next when the government effectually seizes some of a landlord's property rights by telling him what he can charge for his property.
Firstly, even ignoring the fact that rent control has failed everywhere it has been tried, pretend you are a developer who builds multifamily or apartment homes (I know this is hard for those who hate capitalism). Now, in making a decision to build new dwelling units, you must look at how you will recoup your investment and make a reasonable return (profit) on your sweat and equity. When a ceiling is placed on the revenue you can earn via rent control, you may very well decide that the investment isn't worth it. Thus, the housing shortage becomes exacerbated.
Of course, those legislators who just hate landlords and capitalists more than they love the young couple looking to rent their first home or apartment might not care. But we as citizens looking to encourage growth, construction, and availability of new and exciting dwellings ought to vote for people who care.
Want to bring down the price of housing? Really? I'll tell you how to do it: competition. Unshackle the construction industry from regulation, put a moratorium on Act 250, and watch the happy healthy hand of entrepreneurialism respond to the need as it always does. Watch the supply catch up with demand; watch the prices level off and even come down from one builder trying to surpass the other in his offerings of quality and price. This is the formula for supplying a need.
I know that the activist legislator has the mindset that every problem needs his legislative brilliance and intervention. But sometimes the best thing to do is nothing except celebrate the liberty and freedom of a market that thrives on solving people's problems and needs.
Try it, Representatives and Senators, you'll like it. I promise you.
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