The Story of Rent Control

Once upon a time, New York City government came up with the thought that rents were too high. It decided to do something about it: it would regulate what rents could be charged. In doing so, no thought was given to basic economic principles, namely, if the capitalist lacks sufficient economic incentive to invest his capital in one venture, he'll simply move on to something more lucrative. In fact, in many cases, rent control made property ownership untenable, so much so that buildings essentially became worthless. Many owners simply stopped paying property tax and walked away from their buildings, and when the city threatened to take ownership, the landlords said, "You can have it. I can't make money on it, and no one else can either, so I can't even sell it." Not all of these landlords were money-grubbing thieves; many were likely ordinary folks who did the math and found that they couldn't just keep dumping money into the buildings indefinitely. As buildings were abandoned left and right, large portions of the South Bronx became like war zones, and crime soared. Many parts of the South Bronx still have not recovered from this disastrous intervention by government.

Today, we are beginning to see the similarly disastrous effects of government intervention in the case of Covid-19. Part of the problem is that arrogant government thinks it can solve anything with more government. A depression? No problem, we'll just print a trillion dollars and fix it, causing hyperinflation. Or they'll lower interest rates even more, forcing elderly retirees who should be in more conservative investments into the stock market again. Or we'll just pass laws prohibiting business from laying people off or lowering wages, or we'll arrest anyone who closes his business because it is no longer economically viable. They learned nothing from the failure of rent control, and they just keep at it.

Mark this well: Laws don't fix everything. If a business is insolvent, it will close. The workers will be laid off. They may not be able to get new jobs, especially in a depression. When a large number of businesses become insolvent because of a depression, it will have ripple effects. It will have consquences. Even in good times, most new businesses fail within five years. What about in hard times? Government can't take an insolvent business and legislate it to be solvent. The idiotic, reckless leaders who have been bent on destroying our economy at all costs will be held responsible at the polls, and it will become someone else's problem, but the problem will remain. It matters not if the government passes laws protecting workers when a business closes altogether. If a business has only enough money to pay twenty workers, the other thirty it may have employed will not have jobs regardless of what the government says, or all fifty will be out of work when the business closes altogether. This is the legacy of socialism: not everyone wins, but everyone loses.

With coronavirus, everyone is losing, and for a long, long time to come. The so-called "cure" is far worse than the disease, and it's about time we admitted it and ended the insane travel bans and anti-social distancing and assembly restrictions while we might still have time to salvage what is left of our wrecked economy and society. Mental illness is just as much a concern as physical illness-- perhaps more so-- and clearly our leaders have become afflicted with the same mental illness as the majority of the population.

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