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Rent Control Is Terrible: So Keep it Local

Summary:
In recent decades, a number of states enacted statewide law preempting local ordinances enacting rent control. Now, some state governments are beginning to move in the opposite direction. State-level policymakers are attempting to repeal these bans in some states with the hope that local governments will then enact rent-control measures of their own. Two recent ...

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In recent decades, a number of states enacted statewide law preempting local ordinances enacting rent control. Now, some state governments are beginning to move in the opposite direction. State-level policymakers are attempting to repeal these bans in some states with the hope that local governments will then enact rent-control measures of their own.

Two recent examples are California and Colorado. In California, for example, the measure was submitted to the voters in a statewide referendum in 2018. The measure was defeated.

This year, the Colorado state legislature is attempting the same thing. A new bill in the Senate has been proposed which would allow local governments to enact their own rent control measures.

The measure does not mandate that any county or city or local government of any kind enact rent control. It simply decentralizes the legal authority as to which legislative body decides whether or not rent control ought to be implemented.

If the bill passes, then it will be up to county commissioners and city councils to adopt or enact rent control.

Of course, those who support the measure almost certainly support the implementation of rent control in general. If they thought they could get away with it, they might also support a statewide mandate of rent control. The political realities of the present, however, do not allow this.

Regardless of what supporters might hypothetically do, the fact remains that the bill only hands over prerogatives to local governments.

This puts the bill's supporters in a good place politically. In a state like Colorado, which has long tended to sympathize with the idea of "local control" and "home rule," the bill's supporters need only say "we're letting the local voters decide."

Opponents of the bill, meanwhile, find themselves in an awkward position. Their position ends up being a call for state politicians to boss local politicians around.

Anti-rent control advocates can argue until they're blue in the face as to the damaging effects of rent control — which are real. Rent control is overwhelmingly negative for low-income people, and it only benefits the minority of renters who are able to obtain the few rent-controlled units that become available. The majority of renters will face greater hardship. Since rent control will cause housing developers to produce fewer housing units, the long term effects of rentcontrol will be a smaller supply of housing units overall within the rent-controlled jurisdiction. Most renters are likely to end up with longer commutes, or will be living in more crowded conditions in aging units. They'll have fewer housing choices, and lower-quality housing.

But all of this fails to address the issue of local control, and advocates for the bill need only reiterate they're not necessarily pushing rent control. They're simply putting it in the hands of locals.

To a great many people, this approach may strike them as quite reasonable. After all, it's unclear why the state government should have a role in local housing regulations at all. While statewide laws such as the rent-control ban have long been justified as a matter of "statewide interest," the concept is among one of the most arcane and vague in legislation. What constitutes a statewide interest has long been little more than a matter of opinion. Moreover, the claim doesn't appear to apply much in the matter of rent control. Housing markets, home prices, and housing regulations have always been eminently local matters.

Meanwhile, the anti-rent-control advocates — many of whom tend to be Republicans and conservatives — end up arguing against decentralization and local control, even though these same groups profess to support these two ideals in other contexts.

Local Control Is Best

But even if one agrees that rent control is disastrous for most low-income renters, that doesn't justify statewide legislation on the matter.

The benefits of decentralization have always been apparent. It creates more choices for voters and taxpayers in finding jurisdictions that reflect their values. Smaller jurisdictions make it easier to escape onerous laws and regulations. Decentralized laws allow for diverse populations to more easily live in peace rather than be constantly at war to control a single centralized lawmaking body. Moreover, lawmaking at the local level is more responsive to local citizens, and lawmakers are more accessible.

Many Americans tend to see these arguments strictly in terms of state-federal realtions. But the same arguments for favoring states in the state-federal balance apply equally in the state-local balance as well. After all, there's nothing magical about state-level government, and there's no non-arbitrary reason being given as to why voters and policymakers at the local level ought not be allowed to decide for themselves. Are we really to believe that state-level politicians are more educated, more reasonable, or more insightful than local politicians? In many cases, the these two groups include the same people, as many politicians move up and down between local government and state government positions.

Moreover, some US states are larger than many nation-states, thus making a mockery of the idea that there's anything local about statewide government. States like California, Texas, Florida, and New York are all as large as medium-sized European countries.

Some will still claim "but it's all just a Democrat scheme to spread rent control!" Yes, I get it. But decentralization works in a whole variety of directions. For example, as federal courts have tolerated more local autonomy on the abortion issue, we've seen state governments use this de facto decentralization to legislate against abortion. Local governments have been more successful than federal reformers at scaling back police abuse of asset forfeiture laws. State governments have increased the freedoms of gun owners in many states. Thus, we see that decentralization in a federal context has been used to increase property rights in a number of cases. There's no reason to assume further decentralization to locals necessarily works in the opposite direction.

The problem we now see in the rent-control drive isn't that advocates want de-centralization, per se. The problem is that their proposal is limited to a single issue. If local governments ought to have control in matters of rent control, they should gave control in a variety of other matters too.

For instance, there should be no statewide minimum wage. If communities want something above the federal minimum wage, leave it up to cities and counties. Indeed, there should be no statewide business licensing or labor regulations at all. Statewide blue laws should all be out the window as well, with no state regulations on who can sell alcohol — or recreational drugs — when or where. Gun laws, too, ought to be for county sheriffs to decide.

In typical fashion, many conservatives will scoff at this, and say "that seems unlikely to happen!" But for this, we mostly have so-called advocates for "local control" to blame. Rarely do these supposed local-control advocates ever actually push for any meaningful decentralization down to the local level. Most have always been content to lazily accept the status quo in which state-level politics dictates to local governments on an endless number of issues. Even when these groups are in power, they rarely push for locally-focused reforms.

Now that some rent-control advocates are using the strategy to benefit themselves, we're now all supposed to buy the idea that state-level policy is necessarily better than local policy.  It's an unconvincing claim.

Ryan McMaken
Ryan W. McMaken is the editor of Mises Daily and The Austrian. He has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014.

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