Dakota Beacon

Freedom does work.  Just give it half a chance.  A society and economy based on freedom and free choice will flourish.  One that is contingent upon force and contrivance will sicken and deteriorate.

A month or two ago I heard a woman on a local talk show.  She was calling from a western community and she was spearheading a campaign to establish rent controls. Her complaint was that landlords were taking advantage of the housing shortage due to the economic boom out west and were “gouging”.  I would not take issue with her – I couldn’t argue since I am not there and she is.  But by the same token, I perhaps have a perspective that she does not.  To take this step-by-step, you begin with a shortage of a commodity – housing, in this case.  At first some of those who have a store of that commodity, landlords, will take advantage and figure they can get $1,000 for every $100 they could before, when the demand was low.  For this is a bare example of supply and demand at work.  That two-bedroom apartment that used to rent for $600 is now skyrocketed, along with the scarcity and the accompanying increase in wages. 

It’s not insoluble.  In fact, left alone, it could and would solve itself.  The best thing that the people of that community could do is everything they can think of to make landlording attractive there.  Look:  they want more, not less, rental property, don’t they?  If the supply increases, the demand lessens by comparison, landlords and their properties become competitive and the renter benefits – by a wider choice and lower rents.  It’s common sense.  The next thing to do is figure out what makes income property attractive to an investor/landlord.  For starters, we could dispose of the property tax.  Most of us recall that an effort was made to do that very thing.  Next time it gets on the ballot we should all hope it passes!  Landlords are just like you or me.  In fact, I was a happy landlord for several years prior to the Grand Forks flood debacle.  Would be again if the conditions were attractive. 

What attracts one to invest in homes to rent out?  First a strong demand.  That’s there.  Then freedom to go about one’s business, within the bounds of public health and safety, to choose his tenants, set his own rent rates and negotiate with willing tenants the terms of a lease without interference from third parties who don’t have a dog in the race.  When any of those conditions are not present, the investor will look elsewhere, and there is plenty of competition for his cash. 

Rent controls are the last thing you should want if you want a greater supply of homes to rent.  Just think how you would react if you were a landlord.  Years ago, my husband and I were considering buying a house in Winnipeg.  We spent a lot of time there and it was sometimes difficult with our dog to stay in hotels.  I discovered that apartments were generally poor.  They often were in a state of neglect or had been abused by a tenant.  Owners were unwilling to invest money in their repair or refurbishment.  They were also scarce.  Houses for sale, on the other hand, were less scarce; they were priced far below what would be a normal market value.  Some I saw had been in the rental market.  Landlords were running as fast as they could for the door.  Oh, there was rent control up there.  Tenants could not be evicted; many were far, far in arrears in their rent.  Rents could not be increased to cover rising costs – of repairs and maintenance as well as taxes and other costs.  Owners were losing money on their properties and no one was happy with the conditions.  Everyone felt cheated.  Winnipeg had decided to dispense with the marketplace and impose something “better” on the economy.  It was a royal mess.

Grand Forks, also, made the news last fall, when the City Council voted to require landlords to rent to gay couples.  This isn’t about gay couples.  This is about economic realities and the marketplace.  All that this could have accomplished is to try to force what was not going to happen – to force people who object to renting to gay couples to do so in contravention of their religious and moral beliefs.  It was a misguided attempt to force a different set of values on people through ordinance. 

Now, if, indeed, there is a shortage of housing being made available to gay couples, what is needed is more such housing.  If, instead, the city government tries to force people against their will to rent to those whose lifestyles are incompatible with their deeply held convictions, those landlords will opt out.  No law can make them conform.  So the result?  Fewer units in the marketplace.  Now, there has been no law that I know of in Grand Forks, at least in my lifetime, that would have outlawed a landlord renting to a gay couple.  If there is a market, the suppliers will meet the demand.  If Mr. A is unwilling, Mr. B will be delighted to fill the need.  If it comes to our attention that there aren’t enough landlords or enough property out there to meet the demand, it will not be long before there is.  This is a social and economic natural law – supply and demand.  It is powerful.  Now, on the other hand, if we try to circumvent this natural principle, those who have rented their basement or upstairs apartment but don’t want to rent to a gay couple, will shut down.  There will be one fewer unit each time this happens.  This means that the “straight” couple they MIGHT have rented to will now be competing for fewer units with the gay couple.  How will this help anyone?  Not the landlord, not the tax base, not the straight couple, not the gay couple.  No one, in other words.  How would you explain, if there is indeed a shortage, a demand for housing for gay couples, the dearth of such housing?  Doesn’t anyone want to make money in Grand Forks?  That doesn’t sound like the Grand Forks I know.  If no one else wishes to rent to the gay couple, why would not a gay landlord show up with property to rent?  Well, there is the property tax issue.  But in all seriousness, the law of supply and demand work.  If we let them.  If we don’t, if we try to avoid them for some reason, we don’t have a resultant balanced marketplace.

The flow of freedom is a powerful stream.  It can do fantastic things! 

There has been a lot said and written about the court decision to require the baker to bake a wedding cake for a gay couple.  There was no charge that the baker would not sell goods to the gay customers, but he refused to create a wedding cake – a symbol of what to him is a Christian sacrament – for people who, according to his religious beliefs were not marrying within his definition of marriage.  A wedding cake, besides being an important symbol and part of the ceremony of marriage in our society, is a very expensive item.  People spend hundreds of dollars on a wedding cake.  If there is a need for this product, a baker will be found to fill it.  Again, maybe a gay baker.  Or any baker whose convictions are not at odds with creating a wedding cake for the gay couple. 

Wherever freedom is given a chance it works to better society and economy.  If we want to depress the economy all we need to do is present obstacles to the free exchange of goods and services.  This is what rent controls do.  This is what laws do that decree that a service be provided when the provider is unwilling.  If this baker shuts his doors and takes down his shingle, there will be higher prices in the marketplace for everyone, gay and straight alike, which means, simply, higher prices, longer wait times, less competition for artistry and quality of goods.  Is this what we want?  Of course not.  What we want is for buyers and sellers, landlords and tenants, to find a happy accord and see the wheels of commerce turn smoothly.  If we want to put wood chips in the gears in the form of ordinances and court rulings against the common sense and natural law of the marketplace we will have accomplished nothing but distortion which leads to shortages, which mean higher prices and less choice and poorer quality.  Competition, on the other hand, works for abundance, reasonable prices and higher quality.  Isn’t that what we should really want?  Or do we just want to punish someone and make an example, to the detriment of everyone’s best interests?

Freedom in the economy works.  Greater freedom in the marketplace means better people competing with better products at better prices, and more people prospering on all sides.  Freedom in general works better than anything else we’ve tried.  The farther we move away from freedom, the farther from productivity and happiness.