Guest Commentary: We Need Rent Control in Davis!

By Sam Houston

I wrote back in December, http://www.davisvanguard.org/2017/12/guest-commentary-time-rent-control-davis/ , that it was time to enact rent control in Davis in order to halt all future growth in Davis. I was very excited to see the article in the Davis Vanguard asking if rent control is the answer. As I pointed out previously imposing rent control on homes and apartments in Davis, assuming Prop. 10 passes, will decrease the already limited supply of rental properties for students and people unable to afford to buy homes in Davis. It will also eliminate the constant need to criticize new projects as mega dorms, too high, too dense, too small, not affordable, greedy developers and racists rules, because with rent control nothing will be built in Davis because projects will never be profitable to the developer.

Now I understand that some of you are going to be a little worried because people are saying that they will be able to draft rent control in Davis so that none of the things I mentioned above will happen. They say they will do things differently and not make the same mistakes that were made when price controls were put in place by other governments. You have absolutely nothing to worry about. Rent control is a form of price control and price controls have never worked. They only create shortages.

In 301 AD Roman Emperor Diocletian issued the Edict of Diocletian. The edict fixed prices on almost all goods sold in the Roman Empire. Those who did not follow the new laws sentenced to death. These “fair” prices were set by the Emperor at below market rates. Because of this, the Romans did not bring their goods to market to sell because they could not get a reasonable price causing shortages. The price control measures were such an economic disaster that they were abandoned four years later. These price control laws didn’t work, but our price control laws will be different and will work this time……

Richard Nixon imposed wage and price controls in 1971 on gasoline and oil. These below market rates caused domestic oil exploration and production to decrease dramatically. When the OPEC oil embargo came along in 1973 the price controls helped create a gas shortage. For those of you not old enough to remember at times supplies became so short that you had to use the last digit of your license plate to determine if you were able to fill up your car. Odd numbers on odd days, even numbers on even days. Gas stations would post flags to let you know if they still had any gas to sell. Then you would sit and wait in long lines. These price control laws didn’t work, but our price control laws will be different and will work this time……

Venezuela is the best current example of how price controls cause shortages. I know some of you believe that the drop of oil prices caused the collapse of the Venezuelan economy. From the 1950’s to the 90’s Venezuela was the richest country in South America. The price of oil fluctuated from $25-$120 per barrel. When Hugo Chavez enacted his price controls in 2003 oil was about $35 a barrel, today it is $73 per barrel. I am not sure how a 109% increase in oil prices would destroy the economy of a country with the largest oil reserves in the world and prompt the government to urge its citizens to breed rabbits so they have something to eat. I think the government fixing prices and currency controls has more to do with their collapse.

In 2003, Hugo Chavez put in place strict price controls to try and reduce the rate of inflation. These “fair” prices set by the government had the same effect on the economy as it did 1,702 years ago. Sellers made the choice to no longer bring their goods to market in Venezuela and sell them at below market rates. By 2006, there were shortages of basic goods like coffee, sugar and beans because often the cost to produce those items was higher than the sales price the government allowed. Chavez decided to “fix” this problem by simply seizing those goods from “greedy” suppliers and having the government sell them at market. Once the seizures started foreign investment dried up. The seized businesses were now run by the State and were very inefficient. Over the next twelve years, the Venezuelan economy continued to crumble. Today the average Venezuelan has lost 24 pounds due to food shortages. These price control laws didn’t work, but our price control laws will be different and will work this time……

These are only three examples of government price controls causing shortages, there are many more and the stories are basically the same. A government implements price controls below market value and that creates a shortage of those items. If Davis or Yolo Country can force landlords to rent homes and apartments at “fair” and “affordable” rents that are below market value then we will have a shortage of rental units in Davis. I am in no way saying that the current or future members of the Davis City Council, City employees, Yolo County Board of Supervisors, all of their staff and all of the people that advocate for new laws in Davis and Yolo County are not intelligent. What I am saying is that I do not have confidence that they will be able to craft a law to control the cost of housing that will be “different this time” and won’t cause an increase in the shortage of rental housing. I believe this because nobody has ever been able to do this in the last 1,500 years and you can find thousands of examples where price controls have caused shortages. So vote YES on Prop 10 and then push for rent control in Davis so we can have less renters, fewer low-income families and no new development projects in Davis!

Sam Houston is a Davis resident


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6 thoughts on “Guest Commentary: We Need Rent Control in Davis!”

  1. Tia Will

    price controls have never worked”

    This is not an entirely accurate statement. Price controls do work, depending on what you perceive as the desired goal. If your goal is a society based on materialism and consumption, I would have to agree, price controls do not work. However, at times when higher values are believed to be at stake, this is not true. I would note the World Wars as times when price controls were highly effective as people more or less willingly did with far less in order to allow more resources to be diverted to what was considered the common good.

    Probably not in our lifetimes, but eventually we are going to automate ourselves out of our current “job” dependency. We are sooner or later going to have to devise  different means of supporting the earth’s human population. Housing is only one part of the equation but it is a vital part. I see allowing local communities to experiment with different forms of housing initiatives as “pilot projects” on the local level to see what helps and what does not in differing types of communities. It is certainly no panacea, but in some settings might provide some help for those in need currently.

    1. Ken A

      I’m pretty sure Tia said she was born after the war, but my parents were around (and my Dad made money selling rationed black market items).  The site below says: “Rationing resulted in one serious side effect: the black market, where people could buy rationed items on the sly, but at higher prices.”

      https://www.u-s-history.com/pages/h1674.html

      I lived in SF for ten years so I know first hand what a disaster rent control is for almost everyone but a select few people who have decided to be renters forever that moved in when rent was cheap and have landlords locked in to below market/below CPI rent increases until they leave (or hit the jackpot with a $100K+ lease buyout).

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