Lit Prof’s Economic Vision

When literature professors branch out into other fields, the result can be bizarre.  “Housing, which some feel to be not an entitlement but a basic human right, became for speculators a lure with which to enrich themselves,” David Palumbo-Liu writes in Profession, a journal published by the Modern Language Association (MLA). “Against the belief stated in the United Nations Habitat program that ‘within the overall context of an enabling approach, Governments should take appropriate action in order to promote, protect and ensure the full and progressive realization of the right to adequate housing’ (Housing Rights), speculators on Wall Street exploited the hopes of millions, especially the hopes held by lower-income minorities.”

Palumbo-Liu is a professor of comparative literature at Stanford. Perhaps he better stick to comparing literature.

Municipal governments have actually tried to implement the philosophy Palumbo-Liu espouses. They called it rent control and it is a dismal failure.

“Economists are virtually unanimous in concluding that rent controls are destructive,” Walter Block noted in the Concise Encyclopedia of Economics.” In a 1990 poll of 464 economists published in the May 1992 issue of the American Economic Review, 93 percent of U.S. respondents agreed, either completely or with provisos, that ‘a ceiling on rents reduces the quantity and quality of housing available.’”  Block holds the Harold E. Wirth Endowed Chair in Economics at Loyola University in New Orleans.

“There can be no doubt that rent control creates housing shortages,” William Tucker averred in a 1997 study published by the Cato Institute. “For almost 20 years, national vacancy rates have been at or above 7 percent–a figure generally considered normal. Cities such as Dallas, Houston, and Phoenix, where development is welcomed, have often had vacancy rates above 15 percent. In these areas of the country, there usually is a surplus of housing rather than a shortage. Landlords commonly advertise “move-in specials,” where rent is reduced for the first month or even where they pay moving expenses.”

“In rent-controlled cities, on the other hand, vacancy rates have been uniformly below normal. New York City has not had a vacancy rate above 5 percent since World War II. (The state’s rent control law, supposedly temporary, would automatically expire if it did.) Before giving up rent control, Boston’s vacancy rate was below 4 percent. (There are no figures as of yet on the rate since rent control ended.) In rent-controlled San Francisco, the vacancy rate is generally around 2 percent, and in San Jose the rate is 1 percent, the nation’s lowest. Meanwhile, comparable nonrent-controlled cities, such as Chicago, Philadelphia, San Diego, and Seattle have normal vacancy rates at or above 7 percent.”

“Rent-controlled cities absorb these shortages in a variety of ways. Higher rates of homelessness are a manifestation of rent control.”

Malcolm A. Kline is the Executive Director of Accuracy in Academia.

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