Rent Control Fends Off Greed
RENT control isn't a favorite subject among economists these days. But one doesn't have to live in New York City very long to understand why residents here support it so strongly. For tens - perhaps hundreds - of thousands, a rent-stabilized apartment is what enables them to live in New York in the first place. It's also what enables them to work as school teachers and assistant district attorneys and other socially useful occupations. For the last few weeks, I have been looking for an apartment. Like most Americans, I was taught the virtues of home ownership - not least, its tax deductibility - and so I was looking at co-ops. (Many New York buildings have converted over the last decade.)
This is not fun. Prices are insane, and the city's co-op transfer process seems designed by a South American customs offical to exact the biggest possible toll.
But what concerns me most is what a ridiculous housing market like New York's does to people. When a home is so expensive, people become utterly preoccupied with the thought of making more money. The mental horizon narrows, and social concerns seem almost frivolous.
In this respect, Manhattan is just an extreme case of a problem afflicting much of America. The Reagan administration locked in its antispending policies by loading the federal government with debt; similarly it set the nation in an acquisitive groove by presiding over the real estate run-up of the '80s.
One way to understand the tone of New York these days, is to peruse the real estate pages of the Sunday New York Times.
``Affordable prewar 1 BR'' proclaimed a fairly typical ad in last Sunday's New York Times. Hope stirs. Affordable. ``A Gem! Reduced to ... $285,000.''
Brazenly effective, these little ads. Read enough of them, and one's whole scale of normality wafts subtly upwards towards the bizarre. Amidst the $435,000 Greenwich Village apartments, $285,000 seems a mere bank teller's cottage. Under $160,000 for a two-bedroom, sixth-floor walk-up begins to seem like the steal of the century. That's not even counting maintenance charges, monthly fees to the co-op building that can easily add another $500 and often more.
At these price levels, one feels suddenly vulnerable, on the financial edge. (``More money. I need more money.'') And if $285,000 is really ``affordable,'' what does that say about one's own salary and station in life?
Bottom fishing in the apartment ads can prompt stirrings of income envy, however hard one tries to repel such musings.
Not envy, actually. Something more concrete. Donald Trump, for example. I've never felt the slightest resentment regarding his fortune (though I wish he had a little taste). But now my mind latches onto one central fact: The man does not lie awake nights worrying about the maintenance charges on his apartment.
The moral compass begins to fray regarding the source of such money. ``Hmmmmm, maybe I could get in on one of those Wall Street quickies. Just this once. Nobody would have to know.''
In large measure, it was the bond market potlatch of the '80s that drove apartment prices to their present levels. In turn, those prices helped lock the Wall Street greed machine into overdrive and transferred its effects to the rest of New York. People were mortgaged to the new Olympian income levels; there was no going back. Sherman McCoy, the bond salesman in Tom Wolfe's best-selling book, ``Bonfire of the Vanities,'' lusts for the biggest deal of his life to pay off the $1.8 million debt on his 18-room, Park Avenue apartment.
There will always be apartments for the Sherman McCoys. The rest of us need shelter from the kind of economic storms they help create.
As it exists in New York, rent control leaves a lot to be desired. But the last decade has reminded us that an unfettered housing market leaves a lot to be desired too.
Rent control isn't just a matter of economics. It's also about a society in which people don't have to become greedheads just to afford an adequate place to live. If we want fewer Ivan Boesky's and more dedicated teachers and cops, that's no small consideration.
