Cities are complicated and subject to the laws of unintended consequences like almost nothing else.
Rent control is a very difficult subject to deal with. Few subjects will get the ire of people as high, and it is no surprise why; we are dealing with peoples' homes, or at least peoples' potential homes. Michael Sorkin spends a fair bit of time musing about rent control in the first section of Twenty Minutes in Manhattan
without coming to any hard conclusions. He certainly does a decent job defending the good parts of rent control; his idea of allowing the bards, in his terms, of the neighborhood to keep their residence and thus to preserve the neighborhood's continuity is compelling. His almost 'liberal guilt,' the idea that we should keep prices low as reparations for modernist urban planning, is less so. To his credit Sorkin does try to be balanced; he spends some time talking about the negative sides of rent control. He bemoans the unfairness of the system, at least in as far as it doesn't discriminate between the person who is scraping by and those who are doing well but have simply lived there a long time. But Sorkin never touches on the real problem of rent control, perhaps because he is in the privileged position of an existing, long-term resident: he never considers the perspective of someone who wishes to move into a neighborhood.
Rent control drives prices up. This is true of limited price controls of any sort, and is one of the few simple, relatively universal laws of economics. By limiting the available supply of an item, in this case, rental apartments, demand is spread over a lower number of units, and price must go up. Real world studies comparing cities with rent control to those without, for instance New York and Philadelphia, almost universally find a massive increase in market housing cost; often up to or even greater than 100%. It is of course difficult to compare the housing market across cities, but these studies try to compensate by looking at long term trends, acknowledging in advance that certain areas and certain cities cost more or less, adjusting for desirability to isolate the variable of rent control. Rent control has another effect, as well: it creates a large black market of appeasement space. If an individual has a deeply below market rate apartment and the means to rent another, higher quality one, they will often illegally sublet the older space and pocket the difference. Not only do prices therefore continue to rise, but because this subletting is prima facie illegal, it is not subject to the usual legal scrutinies, such as making sure it is not driven by racial or other prejudicial ideas.
. Note: I hate to link to the Cato institute as much as anyone; I find their work to be biased and unfortunate in many ways. But the graph presented above is both clear and based on the hard data. Even if I don't agree with most of their politics, in this case, there numerical analysis seems fair.
Michael Sorkin seems to have a deep misunderstanding of what a market fundamentally is. It is essentially a way of distributing a limited good, in this case housing, amongst a large group of people; it does so by means of money, a substance transferable for other goods or services, and thus makes sure that there is a moral hazard, for the spending of money means there is less to spend on other goods. It is not always a perfect way of distributing goods, but a lot of the time it seems the fairest we can come up with. To distribute housing based on merit, for instance, would require giving some agency, more than likely a government one, the ability to decide quite literally who deserves what housing, a position that should rightly make anyone pause. The art critic Dave Hickey, himself not at all on the right side of the political spectrum, has a quote he uses to defend his love for his home of Los Vegas*: "They think it is all about money, which, I always agree, is the worst way of discriminating among individuals, except for all the others."
*From A Home in the Neon
in the book Air Guitar
, p. 21.
This is not to say that rent control cannot be justified; it is rather to point out its vastly problematic nature. To call those who do not support it free market fundamentalists, as Sorkin essentially does at one point, is to draw a line in the sand so far to one side of a political debate as to make it seem purposeless; all that can follow are ad hominem attacks. To deal with the idea on his own terms, let us take up his idea of the perfect city, one where an individual has a huge degree of freedom to choose where they live but thence it is difficult if not impossible to remove them if they choose not to leave. On paper, this seems a wonderful ideal. And rent control, let it be said, deals with the second half of this equation beautifully; it allows an individual to essentially stay in their home in perpetuity at a price far less than perhaps many other would be willing and able to pay. But in doing so, it breaks the first half of the equation: fewer and fewer people can in turn decide that the Village, for example, is a place they want to live; the rising price, due directly to the lack of available housing, prohibits it. This is only made worse by those who decry the creation of new housing, such as Sorkin does, at least in part, about the new apartments on West Street. New housing is one way of lowering the unit cost of apartment space and giving more people the option to live there, perhaps not in this latest building, but in the then vacated, older structures around it. Again, there are reasons to be against such a development, one may truly feel it does not fit into the neighborhood, for instance (though in this particular case, I'm not sure I'd agree), but either way, if we overly limit production of new housing, prices will only continue to rise.
I've spent a long time ruminating about this, as does Sorkin, and like him, I don't have a great solution, either. As he says, the system is in many ways broken, and in some ways, vital, and the correct response is hard to divine. Perhaps, for example, rent control should be limited to some length of time, say ten or twenty years, enough to slow seismic-level shifts in the population of a neighborhood without allowing individuals to stay paying the same price they paid forty or fifty years prior. Or, perhaps a long-term, but still more highly sloped graduated rise could start to bring rent controlled spaces towards the market rate. This would too eventually lead to one no longer being able to afford their house, but would greatly slow the process. The real solution, of course, is the most difficult, and the one that can least be handled on the local level: to reduce income inequality. Neighborhood redevelopment is now often ridiculed as "gentrification" even when in the minds of most it makes a region more pleasant. It's not hard to see why; this increase of pleasantness brings a concurrent increase of prices. If we could all afford something similar, this would be less of a concern, but if we can't, well, they system is then not working well, and it should be repaired.
On the one hand, rent control solves the problem of keeping people in their home. On the other, it privileges those who rented their apartment at one time to a huge degree from those who would rent now. This is not an easy trade off, and one which should not be taken lightly.
One last thought is that city's should not be beholden of a sort of historic conservatism: that because a neighborhood is made up of x group of people and y structures, it should always stay that way. Cities are constantly changing, and thrive on change; a city which allows no neighborhood to ever change is a dead one, a theme park at best or a hollow shell at the worst (I'll leave it to the reader to decide how fine a distinction that may be). This needs to be balanced; to destroy Penn Station for Madison Square Garden is a travesty. To rip down five old-law tenements in a neighborhood of hundreds of them to erect something new may not be. And, if that process happens again and again, the calculus may change, to preserve a certain amount of those left. Cities change; it is a fact we need to appreciate.
Cities are complex organisms, and are subject to the laws of unintended consequences like almost no other entity. Rent control is one such system with a host of unintended consequences. I wonder how other ideas, such as Sorkin's greenways, would play out. I must admit, I like the idea of, at least in certain, dense areas, extending sidewalks, bringing them into the public domain and giving them public ownership; it could greatly enhance a city. On the other hand, especially if brought to areas that currently don't have the level of pedestrian traffic needed, it could be in essence reinventing the superblock- creating a vast amount of lonely, dangerous, almost empty and unpleasant land. This is not to say we should not try to fix the city for the future, but to recognize that our actions will have far flung consequences, and to realize that not every solution can work for every neighborhood. Such is the nature of urban complexity.