March 28, 2006
New Orleans City Council President Oliver Thomas apparently wants to finish the job begun by Hurricane Katrina. New Orleans, not surprisingly, is short of places to put people; nearly 142,000 houses and apartments were damaged or destroyed when the city flooded. Thomas' plan? Impose rent controls on the rental houses and apartments that remain, says Reason magazine.
Why do rent controls fail? According to Reason:
- As any Econ 101 student -- or any longtime resident of certain parts of New York -- could tell you, landlords abandon their buildings when they can no longer make enough money to repair them.
- New Orleans is not immune to this phenomenon. In November, rental unit owner Edward Young told National Public Radio that, with controls, it would not make financial sense for him to spend the $40,000-$60,000 required to repair his building.
- There would probably never be enough apartments available for people who need them, explained Young, who considered just taking the insurance money and abandoning his property.
There is, however, a silver lining: Rent control is one way to make sure that the wetlands New Orleans once occupied are restored, says Reason.
Source: Ronald Bailey, "Breaking Rent: After Katrina" Reason, March 2006.
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