Featured photo by Scott Edmunds. CC BY 2.0.
Economics is not like public policy – you cannot merely speak conditions into existence. New York City mayoral candidate Zohran Mamdani, however, disagrees. He proposes a rent freeze, and about twenty so-called “expert economists” signed a letter endorsing it. They claim a rent freeze offers urgent relief to two million tenants in rent-stabilized apartments — stabilizing neighborhoods and reducing homelessness. They call it “commonsense policy.”
However, economics is clear: price ceilings lead to shortages. Freezing rents discourages investment in housing, and the shortages get worse. Developers are chosen based on political favors and ideological concerns. In the real market, developers are selected based on who gets the job done best. With rent control, the taxpayer ends up paying more than he would have in rent. Since 1943, various forms of rent control have been in place in New York City, yet housing problems persist. Maybe rent control itself is the issue.
The truth is, Mamdani and the so-called “experts” endorsing his plans are either unaware they cannot magically alter basic economic principles, or (more likely) they are purposefully dishonest. Price ceilings may sound appealing, but history shows they deepen problems instead of solving them. But radical socialists don’t care.
Rent is a price like anything else. Prices arise out of the clash of interests between buyers and sellers. We call these market prices. Market prices are crucial for the economy to function efficiently and allocate resources effectively. Every time the government meddles in market prices, everyone is worse off.
A rent freeze will worsen the housing situation in New York City. Property owners who cannot charge rent high enough to offset costs will opt to leave apartments empty. Mamdani’s magical thinking ignores economic truths and risks devastating consequences. Ultimately, tenants suffer the most, facing fewer housing options and deteriorating living conditions. Economic solutions must address supply and demand realistically, not ignore them through misguided policy.
New York City would do well to think through these issues carefully. Fairytale policies like those of self-proclaimed socialist Zohran Mamdani may sound like welcome relief, but the real cost will break the backs of our once-great American cities.
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This post originally appeared at https://phyllisschlafly.com/liberalism-and-conservatism/rent-control-and-economic-realities/