Wednesday, May 14, 2008


Defense of Landlords

In the Opinion pages of the Los Angeles Times today (May 14) a writer asserts that rent control is a form of thievery. Rent control prevents a landlord from obtaining the highest possible income from his property. Hence, it amounts to stealing from the landlord.

Well, we have capitalism and one of the principles of capitalism is that a seller is allowed to sell his product to the highest bidder. In that way, according to orthodox economic theory, resources are allocated and used in the most efficient way. I think the theorists had in mind that the seller who obtains the highest price for his product has created a product of the best quality. I don't think the theorists had in mind the case of a seller with a rare product, one based on a natural material that is in short supply. [That's just one of my opinions, of which this blog is full.]

Location is the product in short supply. There is still plenty of vacant land, or of land that's being used in a way that provides only a low income to the owner. What's in short supply is a residence in a convenient location.

It seems to me [another opinion] that it is unfair to consider only the rights of the landlord and not the rights of the tenant. Both are entitled to the pursuit of happiness and government should intervene in cases in which the natural result of capitalism is to favor the rights of one over the other. The landlord has a right to obtain income from his property. The tenant has a right to have a place to live. Otherwise, how can he pursue happiness if he is homeless? The constitution does not place one right above the other. Hence, a compromise is needed to protect the rights of the weaker party in the transaction. Rent control laws allow the landlord to increase rent in a manner proportional to the inflation in the cost of living. It is presumed that the tenant is employed and receives increases in his salary commensurate with the cost of living.

It is not thieving to try to achieve a balance between the rights of one and the rights of another in a transaction. For example, a grocer does not have the right to sell me a defective product at the price of a good product. If the grocer offers overripe fruit or tainted meat, he is obliged to inform the buyers of the condition of the food. In some cases, he is not allowed to sell the product at all. This restriction certainly limits the potential profit the grocer could make if he were not required to provide the quality information. However, we do not consider that the restrictions amount to stealing from the grocer.

All of which leads to my conclusion: Vote NO on Proposition 98. If it passes, rent control laws will be phased out in California.

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