Last week, New York City Mayor Zohran Mamdani announced a citywide freeze on rents.
The response from economists can be summarized as “oy.”
Economists are famous for arguing “on one hand” this and “on the other hand” that. This is why President Truman famously wanted to hire a one-handed economist. Nonetheless, there are few issues that enjoy a broader consensus among economists than the conclusion that rent control is counterproductive.
Surveys of leading economists going back nearly four decades confirm this. A 1990 poll of 464 economists found that 93% of American respondents agreed that “a ceiling on rents reduces the quantity and quality of housing available” — 95% of Canadian economists had a similar opinion. And another survey in 2012 had a similar result.
As Jason Furman, who chaired President Obama’s economic advisory council, put it, “Rent control has been about as disgraced as any economic policy in the tool kit.” The Swedish economist Assar Lindbeck — a socialist, mind you — was pithier: “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
In response to the controversy over Mamdani’s rent control scheme, progressive writer Jill Filipovic posted on X, “Am I the only person who has no strong feeling about the rent freeze other than ‘cool to try out a policy like this on a short-term basis so we can test if it actually works?’ My only hope is we all learn some important information from this experiment and are honest about the results, whatever it brings.”
But I don’t really want to write about rent control, a provably dumb policy that has been around for more than a century. The bigger issue is this attitude, which is running wild within the Democratic Party and on the increasingly confident hard left. Specifically, the idea that anything the democratic socialist insurgency is proposing is new.
“Together, we will usher in a generation of change,” Mamdani declared upon taking office in January as the new democratic socialist mayor of New York City. He vowed to take a “brave new course” and “chart a new path.” His rent freeze is seen as a fulfillment of his pledge.
That’s fair enough. But virtually everything on their agenda was old before anyone reading this was born. Take price controls. Sens. Elizabeth Warren and Bernie Sanders, along with numerous other progressive politicians (and a few Republican ones), respond to every price hike and inflation report by arguing for price controls of one kind or another.
Price controls are older than Christianity.
If you don’t believe me, pick up a copy of “Forty Centuries of Price Controls,” by Robert Schuettinger and Eamonn Butler. Hammurabi set prices 4,000 years ago. Diocletian issued his Edict on Maximum Prices in 301 A.D. President Nixon did it to disastrous effect in 1971.
Price controls are lies, fueling corruption and hiding economic reality. Prices reveal where supply and demand are, even when we cannot know all of the things that inform supply or demand. Prices, in the words of economist Alex Tabbarok, are “a signal wrapped up in an incentive.” Mask the signal and you remove the incentive. Controls on rent, food, gas, pharmaceuticals, etc. don’t just conceal the real costs of a good or service, they pass those costs elsewhere. Unable to recoup on the investment in housing, crops, oil development, medicine, there is less — or no — investment.
Oil-rich Venezuela became an economic basket case because the government fixed the price of fuel to a political benchmark. Its vast oil industry couldn’t afford to maintain itself and collapsed.
Some progressives, like Sen. Sanders, at least admit their ideas are old — how could he do otherwise, given that he hasn’t had a new idea since the Pleistocene? But they point to Scandinavian countries that abandoned command-and-control economic planning decades ago. In other words, they point to “new ideas” from the old world that are now considered old over there.
Speaking of old, the new hotness on the left is wealth taxes. California Gov. Gavin Newsom has endorsed the idea of a national wealth tax to catch up with the cool kids. This, too, is a very old idea that began in prehistory as mere plunder. It’s also a failed idea, which is why most of the countries that adopt them end up repealing them.
Much has been written — including by me — about how Trump appeals to low-information voters who don’t know the history or facts behind a given policy (like, say, tariffs). That’s fine. But the most ardent opponents of Trump, the ones promising a bold and fresh alternative agenda, are appealing to the same kinds of voters — and journalists.
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