How To Destroy a City Without Bombing

Mayor Zohran Mamdani’s pledge to “freeze the rent” faces its first hurdle this evening when the city’s Rent Guidelines Board, a panel packed with Hizzoner’s appointees, takes an initial vote on this abridgement of property rights. The board is purportedly independent. Yet the mayor campaigned on a vow to bar price increases for rent-stabilized and rent-controlled apartments, which comprise about half of the city’s rental stock. Such a move raises constitutional questions about a breach of the Fifth Amendment’s Takings Clause. That bars any “person” from being “deprived of life, liberty, or property, without due process of law,” and forbids any “private property” from being “taken for public use, without just compensation.” The Supreme Court, though, has proven reluctant to take up the question of whether rent control laws like New York’s traverse the Constitution.Mr. Mamdani’s price controls on such a vast swath of the city’s housing supply, despite the inflation and higher costs borne by landlords, could have unintended consequences. Count on the cost of leasing a non-rent stabilized apartment to surge as property owners turn to these units to make up for their losses on the regulated properties. Plus, too, expect landlords to cut corners on maintenance and services, harming the quality of the city’s housing. Even under a mayor friendlier to capitalism, Eric Adams, the Rent Guidelines Board only approved rent increases of about half the cumulative rate of inflation since 2021. That already leaves property owners behind the curve when it comes to a foundation of the free market system, return on investment. Under Mr. Mamdani’s socialist zero-percent rent regime, what property owners or builders would be incentivized to deploy their capital in apartments?The mayor’s eagerness to prohibit profits for property owners undermines, too, the left’s claims to be promoting affordability for all New Yorkers. A freeze on rents, no matter the duration, will have a chilling effect on investment. That risks a repeat of the bad old days of the 1970s, when, due to strict rent controls, landlords “often abandoned their buildings, removing them from the tax rolls,” per journalist Ken Auletta.The landlords found it was preferable to stop providing housing, Mr. Auletta cautioned, because they “were not getting a return on their investment.” Yet this problem persists today for hundreds of small property owners across New York, Housing analyst Howard Husock has reported in these pages. Some 26,000 units are currently vacant, Mr. Husock adds, because the landlords would “lose money on each apartment.”This tenet of economics appears to be lost on Mr. Mamdani and his camarilla, for whom a kind of animus toward property owners and “the rich” seems to outweigh any appreciation for the logic of free markets. Ahead of the vote, the mayor has been mum on his campaign pledge to freeze the rent. This is due to what Gothamist calls “legal questions over intervention and undue influence” over the Rent Guidelines Board, which is meant to “act independently.”This evening’s vote, which is expected to feature tenant activists calling for free housing, will test the board’s freedom from political influence. We’re not holding our breath, however. The anticipated rent freeze would likely offer further vindication of a quip Milton Friedman liked to borrow from a Swedish economist, Assar Lindbeck, who called rent control “the most efficient technique presently known to destroy a city — except for bombing.”

How To Destroy a City Without Bombing

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