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Liberty Is Worth the Abuse

May 21, 2008

Tags Free MarketsInterventionismPrivate Property

We get a lot of abuse, those of us who publicly defend private property rights and voluntary arrangements against the varied depredations of government. Having to constantly face such attacks is a substantial part of the cost of speaking out, and probably explains why more people don't take the risk.

For those who might be considering publicly taking up the cause of "life, liberty, and property," I offer the following example to give you a taste of what you can expect.

Note that it is far from the most egregious example I could relate; it is not intended to discourage you, but only to prepare you for the cost you may have to bear — to help you develop the requisite toughness.

In California, there are two competing eminent-domain propositions on the June 3 ballot. One (Proposition 98) would offer some real protection against such abuses, while the other (Proposition 99), written and qualified for the ballot by those who inflict the abuses (i.e., government entities) and those who gain from them (e.g., big developers), is designed to confuse voters into overriding the real reforms.

The misleading claims (repeated in endless ads) have focused on the fact that the real reform would also phase out rent control once current tenants leave, with horror stories of how terrible such a result would be for the poor, elderly, ad infinitum. Ignoring the massive literature on the effect of rent controls and the irony of opposing eminent-domain takings because similar rent-control takings might be threatened, the Los Angeles Times editorialized for the fake reform and against the real one with less than impeccable logic.

In response, I wrote the following letter to the editor, published (a surprise in itself, given the biases of the Times) May 14:

Right a wrong, support Prop. 98

Re "No bait-and-switch," editorial, May 12

The Times opposes Proposition 98 because it would phase out rent control in California. However, there are serious problems with this argument.

The "serious debate" about rent control that must supposedly come first is long since over. The adverse social consequences it produces — including reduced apartment construction, deteriorating housing, shortages, increased discrimination and landlord-tenant hostility — are among the most universally accepted propositions among economists. And they exist because rent control is theft.

Rent control is theft because it removes landlords' rights to accept better rental offers, taking a large portion of their property values (shown in plummeting market values when it is enacted) and giving it to current tenants (which is why those tenants almost never leave).

That is also why rent control issues are not best decided by voters. When a majority of voters in a jurisdiction (current renters) take the property of a minority (landlords), it is no different than if they held up those landlords at gunpoint each month — except that would land them in jail.

Some may call them "democracy in action," but majority votes do not legitimize theft, which is why many states ban rent control.

Gary M. Galles

Professor of Economics

That letter, abetted by the Times's choice to quote me that "Rent control is theft" in very large print at the top of the letters section, generated a great deal of response. A few people agreed with me, but most consisted of abusive rants, insults, and ad hominem attacks. There were many calls so illogical and abusive I would give up responding and hang up. One person claiming to be a donor even called my university "boss" demanding a formal university apology and disavowal of me (I guess they hadn't heard of academic freedom). My "favorite," if somewhat puzzling, email included the following paragraph:

Your position on Prop 98 and rent control suggests you think your putrid, ugly, hairy, germy orifices don't stink; but everyone else's do. In addition, you appear to be missing some parts — a heart, a soul, and a mind. Your philosophy would seem to be at odds with the supposedly spiritual thrust of the university you work for. I hate to think what you are teaching your students. You seem to think the city, which you apparently don't live in, belongs only to the wealthy, and "market value" is all. One day, maybe this species will do what Star Trek Next Generation suggested and abolish money. We've had this disgusting illusion for too long, and it's cost society more than we know. Until then, people like you should be spayed and thrown back into the wild. The world is not better for your being in it, and cause and effect will eventually catch up with you.

Even one of my own night class students, a lawyer who should have known better, managed to demonstrate his misunderstanding of essential issues with the following rebuttal, published May 21:

Rent control is theft? Like holding up landlords at gunpoint? Is professor Gary M. Galles serious?

Rent control would be theft only if landlords had a right to a specific amount of rental income. But in the course I am currently taking with Galles, he has taught me that there is no fixed fair price for anything.

Suppose a developer builds a large apartment complex in anticipation of population growth that doesn't occur. Or suppose a factory closes and some of the workers move out of town. Either scenario would lead to an oversupply of rental housing and lower rents. Have the developer and factory owner stolen from local landlords? Of course not. But the effect of such market fluctuations on landlords' income is the same as rent control, more so than a holdup at gunpoint.

Rent control may or may not be bad policy, but it is not theft. Economics is a science whose findings may help us decide political issues, but this sort of hyperbole is not helpful.

(name withheld)

After giving thought to flunking the student for his poor understanding and reasoning skills (I won't), I decided to try and make it into a teaching moment instead. Given that I have almost never seen a rebuttal to a letter published in the Times, I decided to push my luck further and offer the following re-rebuttal in hopes that some people might think carefully enough to improve their understanding and maybe even change their minds:

"Rent control is indeed theft," submitted May 21, 2008

[Name withheld] (5/21) claims rent control isn't theft because landlords don't have a right to a specific amount of rent and because unexpected market conditions that lower rental offers is not theft. While true, those facts do nothing to refute that rent control is theft.

While landlords do not have a right to a specific amount of rent, they do have a right to accept what tenants would willingly offer for their units. Market conditions that lower rents are not theft, because landlords' property rights are not violated. But rent control, which forcibly lowers rents below what willing tenants would offer, takes away that right and much of the value of landlords' properties in the process. That is theft, enforced by government guns rather than robbers' guns. Worse, it directly violates the central role of government — the protection of citizens' existing property rights — as Locke explained long ago, echoed by America's founders.

There is no difference in results between tenants robbing their landlords of $500 they already have each month and tenants voting themselves $500 monthly rent reductions, except rent control takes the money before landlords get it. But taking the value of someone's property before they receive it rather than after does not transform what we would all recognize as theft into something legitimate, unless someone is determined not to recognize their equivalence.

Given the prominent place the Times gave to my argument that rent control is theft, and all the abuse it has drawn, before I hit the send key, I spent a moment wondering whether reiterating it would be worth the follow-on attacks it would trigger. Despite my wife's frequent "what did you expect?" urgings when I share some of the crazier responses, I decided that the potential payoff (a better chance to successfully expand Californians' property-rights protections on June 3) was sufficiently large. So it now awaits the Times's decision.

While this note may seem discouraging, please do not let it deter you, if you are considering "coming out" more publicly in favor of self-ownership (the basis of property rights) and voluntary arrangements. Many people have written me over the years to encourage me — encouragement that is more valuable than the cost that must be endured. However, that encouragement has often been followed by a pitch for me to write about some abuse that they are aware of or have experienced. I almost always encourage them to join in defending what they believe, but I don't know of many who have taken that next step as a result. It is not true that "Sticks and stones may break my bones" (at least there have been no such threats so far this time) "but words will never hurt me." But defending the only basis on which society can possibly exist in peace is a worthy cause, and there are not nearly enough people doing it.


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