Jonah Goldberg: Mamdani ignoring 40 centuries of economic lessons
Economists are famous for arguing “on one hand” this and “on the other hand” that. That’s why President Truman famously wanted to hire a one-handed economist.
But one of the few issues enjoying a broad consensus among economists is the conclusion that rent control is counterproductive. Surveys of leading economists going back several decades confirm this.
In a 1990 poll of 464 economists, 93% of respondents agreed “a ceiling on rents reduces the quantity and quality of housing available” — and 95% of Canadian economists had a similar opinion. Another survey in 2012 produced a similar result.
As Jason Furman, who chaired President Obama’s Council of Economic Advisers, put it, “Rent control has been about as disgraced as any economic policy in the tool kit.”
The Swedish economist Assar Lindbeck — a socialist, mind you — was pithier: “In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
In response to the controversy over Mamdani’s rent control scheme, which applies to roughly 1 million of the city’s rent-stabilized apartments, progressive writer Jill Filipovic posted on X: “Am I the only person who has no strong feeling about the rent freeze other than, ‘Cool to try out a policy like this on a short-term basis so we can test if it actually works?’ My only hope is we all learn some important information from this experiment and are honest about the results, whatever it brings.”
But I don’t really want to write about rent control, a provably dumb policy with a long track record. The bigger issue is this attitude, which is running wild within the Democratic Party and on the increasingly confident hard left. Specifically, the idea that anything the democratic socialist insurgency is proposing is new.
“Together, we will usher in a generation of change,” Mamdani declared upon being elected last November as the new democratic socialist mayor of New York City. He vowed to take a “brave new course” and “chart a new path.”
His rent freeze is seen as a fulfillment of that pledge.
Fair enough. But virtually everything on this agenda was old before anyone reading this was born.
Take price controls.
Sens. Elizabeth Warren and Bernie Sanders, along with numerous other progressive politicians, and a few Republican ones, respond to every price hike and inflation report by arguing for price controls of one kind or another. But price controls are older than Christianity.
If you don’t believe me, pick up a copy of “Forty Centuries of Wage and Price Controls,” by Robert Schuettinger and Eamonn Butler. Hammurabi set prices 4,000 years ago. Diocletian issued his Edict on Maximum Prices in A.D. 301 And more contemporarily, President Nixon did it to disastrous effect in 1971.
Price controls are lies, fueling corruption and hiding economic reality. Prices reveal where supply and demand are, even when we cannot know all of the things that inform supply or demand.
Prices, in the words of economist Alex Tabarrok, are “a signal wrapped up in an incentive.” Mask the signal and you remove the incentive.
Controls on rent, food, gas, pharmaceuticals, etc., don’t just conceal the real costs of a good or service, they pass those costs elsewhere. Unable to recoup on the investment in housing, crops, oil development, medicine, there is less — or no — investment.
Oil-rich Venezuela became an economic basket case because the government pegged the price of fuel to a political benchmark. Its vast oil industry couldn’t afford to maintain itself and collapsed.
Some progressives, like Sen. Sanders, at least admit their ideas are old. How could he do otherwise, given that he hasn’t had a new idea since the Pleistocene?
But these progressives point to Scandinavian countries that abandoned command-and-control economic planning decades ago. In other words, they point to “new ideas” from the old world that are now considered old even over there.
Speaking of old, the new hotness on the left is wealth taxes.
To catch up with the cool kids, California Gov. Gavin Newsom has endorsed the idea of a national wealth tax.
This, too, is a very old idea — one that began in prehistory as mere plunder. It’s also a failed idea, which is why most countries that adopt it end up reversing course later.
Much has been written, some of it by me, about how Trump appeals to low-information voters who don’t know the history or facts behind a given policy — like, say, tariffs. That’s fine. But the most ardent opponents of Trump, the ones promising a bold and fresh alternative agenda, are appealing to the same kinds of voters — and journalists.
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