Don’t Put a State Ceiling on Rents; Abolish the State Floor Under Them

Translations of this material:

into Russian: Не устанавливайте государственный потолок арендной платы — разрушайте фундамент государства!. 22% translated in draft.
Submitted for translation by demetrious 24.12.2011


It’s a commonplace among right-wing critics of rent control that such policies lead to housing shortages; when rents are capped, landlords do the bare minimum maintenance and milk old buildings for whatever rents they can bring, without putting any new money into them.

But it occurs to me that rent controls may well be of no benefit even to current residents. When rents are capped, it’s in the interest of an incumbent tenant to hold onto her lease indefinitely — regardless of whether she actually lives in the apartment — and sublet it as a source of profit. So in rent-controlled buildings, you commonly see actual residents at the end of long chains of subleases, paying rents far higher than the original rents charged by the landlord.

It also occurs to me that, to whatever extent the state’s ceiling on rents actually lowers them, it does so only as a secondary counter-measure to its primary action of putting a floor under rents.

Think about it: The state’s collusion with landlord is probably the oldest system of class exploitation in the world. The first states were controlled by the people who owned the land, in order to extract rents from the slaves, serfs and tenants who worked it. This was true from the Patricians of the Roman Republic right down to the Whig landed oligarchy in the British parliament of the 19th century.

Today, real estate developers are the most powerful influence on just about every local government in the United States. Most local governments are showcase properties of the real estate industry. Government not only enforces artificial title to vacant and unimproved land held out of use for speculative purposes, but actively colludes with developers to promote a sprawl-based, monoculture model of development. The result is to drive up rents in older, centrally located neighborhoods and gentrify poor residents out of there.

So what the state does with its left hand, through rent control, is a feeble effort to partially offset what it already did with its strong right hand. It’s another example of the state breaking your legs and giving you crutches.

Our friends the Georgists — a venerable branch of left-wing free market thought — are pretty good at grasping the problem of rents and land monopoly; they’re just bad at understanding the root cause of the problem, and what to do about it. They advocate shifting all taxes onto the site value of land, in order to socialize artificial scarcity rents and make it costly to hold vacant land out of use. But most monopoly rents on land, arguably, result from state intervention.

Even holding vacant land out of use is a lot cheaper for land speculators, thanks to the state. As Scott Horton mentioned in a recent interview with C4SS board member Gary Chartier at Antiwar Radio, “you can be an absentee landlord for decades, and the sheriff will keep off squatters.”

One of the biggest points of dissension between different schools of anarchy is on the proper basis of land ownership. Lots of anarchists, including market anarchists in the individualist tradition like me, favor some sort of usufructory, or occupancy-and-use, basis for title. Some are Georgists, who want the community to own land in common and charge rents on it. Most of the folks at C4SS are Lockeans, who think that once land is legitimately appropriated via labor homesteading, absentee landlordism or simply holding it out of use is perfectly fine.

But once you remove the active role of the state in subsidizing absentee landlordism, much of the disagreement among us becomes theoretical rather than practical.

Even in a theoretically Lockean system, I suspect occupancy-and-use would be the default in relatively sparsely populated areas, simply because the cost of excluding squatters would exceed the likely income stream from the land. A stateless society with fully internalized security costs would have, in many ways, nearly the same effect on the cost of holding land out of use as a tax on land value. The divorce of ownership from occupancy and use is something that carries an economic cost — and that cost is currently borne by the taxpayers rather than by those who profit on divorcing ownership from occupancy.

Instead of minimal efforts to correct the side-effects of state-enforced privilege, we need to strike at the root of the problem and break the unholy alliance between state and landlord.