Opinion: Rent control may not be theft. But will Nathenson get an “A”?

The ‘serious debate’ about rent control...is long since over. The adverse social consequences it produces -- including reduced apartment construction, deteriorating housing, shortages, increased discrimination and landlord-tenant hostility -- are among the most universally accepted propositions among economists. And they exist because rent control is theft.

Rent control is theft because it removes landlords’ rights to accept better rental offers, taking a large portion of their property values (shown in plummeting market values when it is enacted) and giving it to current tenants (which is why those tenants almost never leave). That is also why rent control issues are not best decided by voters. When a majority of voters in a jurisdiction (current renters) take the property of a minority (landlords), it is no different than if they held up those landlords at gunpoint each month -- except that would land them in jail.

Rent control is theft? Like holding up landlords at gunpoint? Is professor Gary M. Galles serious? Rent control would be theft only if landlords had a right to a specific amount of rental income. But in the course I am currently taking with Galles at UCLA Extension, he has taught me that there is no fixed fair price for anything. Suppose a developer builds a large apartment complex in anticipation of population growth that doesn’t occur. Or suppose a factory closes and some of the workers move out of town. Either scenario would lead to an oversupply of rental housing and lower rents. Have the developer and factory owner stolen from local landlords? Of course not. But the effect of such market fluctuations on landlords’ income is the same as rent control, more so than a holdup at gunpoint. Rent control may or may not be bad policy, but it is not theft. Economics is a science whose findings may help us decide political issues, but this sort of hyperbole is not helpful.

Larry Nathenson claims rent control isn’t theft because landlords don’t have a right to specific amount of rent and because unexpected market conditions that lower rent al offers is not theft. While true, those facts do nothing to refute that rent control is theft. While landlords do not have a right to a specific amount of rent, they do have a right to accept what tenants would willingly offer for their units. Market conditions that lower rents are not theft, because landlords’ property rights are not violated. But rent control, which forcibly lowers rents below what willing tenants would offer, takes away that right and much of the value of landlords’ properties in the process. That is theft, enforced by government guns rather than robbers’ guns. Worse, it directly violates the central role of government—the protection of citizens’ existing property rights—as Locke explained long ago, echoed by America’s founders. There is no difference in results between tenants robbing their landlords of $500 they already have each month and tenants voting themselves $500 monthly rent reductions, except rent control takes the money before landlords get it. But taking the value of someone’s property before they receive it rather than after does not transform what we would all recognize as theft into something legitimate, unless someone is determined not to recognize their equivalence.