IN ECONOMY, LAW, PROPERTY RIGHTS
President Biden’s lawless decision to extend the eviction moratorium is even too much for the Washington Post‘s editorial board:
The CDC’s eviction moratorium is almost certainly illegal
The CDC’s action was almost certainly illegal. Under pressure from House Speaker Nancy Pelosi (D-Calif.) and progressive Democrats, President Biden and the CDC may have muted accusations that they failed to stick up for desperate renters. The administration also may succeed in giving many Americans a short reprieve from eviction. But perhaps not as long as advertised — because courts may strike it down before October — and at the expense of the rule of law. . .
If the Trump administration had ignored a direct warning from the Supreme Court, Democrats would rightfully line up to condemn the president. Mr. Biden does not get a pass on the rule of law because his heart is in the right place.
The eviction moratorium is essentially a backdoor means of rent control (if not an indirect means of wealth redistribution—a progressive call for “rent forgiveness” can’t be long in coming), and the old comment that rent control is the most effective way to destroy a city aside from bombing came back to me. Keep in mind that many urban rent control programs began as “temporary” wartime measures—starting back in World War I, and the economic disruptions of the pandemic are similar to the two great wars. Which sent me back to one of Milton Friedman’s first classic essays (written with George Stigler) attacking rent control back in 1946, called “Roofs or Ceilings?“
While an eviction moratorium is not identical to rent control, its effects are much the same, especially amidst the similar condition to wartime in that we have a housing shortage in much of the country today, chiefly because of excessive land use regulation. In other words, it is easy to predict that the effects of the eviction moratorium will be hardest on the very people the progressives think they are helping, as landlords will inevitably tighten credit requirements, increase deposit amounts, and reject more prospective tenants. Would you want to build or own rental property if the CDC can legalize squatting at the sign of the first sniffle?
Hence, some excerpts from “Roofs or Ceilings?” are highly relevant:
Rent ceilings do nothing to alleviate this [housing] shortage. Indeed, they are far more likely to perpetuate it: the implications of the rent ceilings for new construction are ominous. . .
Unless, then, we are lucky (a revolutionary reduction in the cost of building apartments and houses), or unlucky (a violent deflation), or especially unwise (the use of subsidies), the “housing shortage” will remain as long as rents are held down by legal controls. As long as the shortage created by rent ceilings remains, there will be a clamor for continued rent controls. This is perhaps the strongest indictment of ceilings on rents. They, and the accompanying shortage of dwellings to rent, perpetuate themselves, and the progeny are even less attractive than the parents. . .
Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building. Formal rationing by public authority would probably make matters still worse.
Today we’d need to rewrite this essay only slightly, to take account for the fact that the progressives all seem to be on roofies.
https://www.powerlineblog.com/archives/2021/08/roofies-or-ceilings.php
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