Matthew Yglesias - The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think

Heads in the Sand: How the Republicans Screw Up Foreign Policy and Foreign Policy Screws Up the Democrats

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Copyright 2012 by Matthew Yglesias

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First Simon & Schuster ebook edition March 2012

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For a brief, shining moment in October of 2010, the attention of the nation (or at least that portion of the nation that spends an unhealthy amount of time on the Internet) was riveted by the cost of housing in Americas most desirable places. The occasion was the 2010 New York gubernatorial debate. It was a snoozer. Carl Paladino, the Republican nominee, was a bit nutty and was consistently hopelessly far behind Democrat Andrew Cuomo, even in the best year for Republicans in a generation.

Whats more, the local cable TV organizers didnt just put together the customary Democrat-versus-Republican clash. Instead, we got a seven-candidate battle royal featuring contenders from the Freedom Party, the Green Party, the Libertarian Party, the Anti-Prohibition Party, andbest of allJimmy McMillan of the Rent Is Too Damn High Party.

McMillan, as it turns out, is a lovable crank born for the era of YouTube and Twitter. The sixty-four-year-old martial arts instructor, former mailman, and self-proclaimed Black Hulk Hogan was a sensation. With his silver mane, wild beard, black gloves, and concise, disciplined message (The rent is too damn high!), he was an instant star. Clips of the debate went viral on the Web the next day, McMillan was featured in a memorable Saturday Night Live sketch, and months after the debate, the memory of McMillan was resuscitated in WPIX local news promos as the man himself proclaimed, The weather is too damn cold, before touting the stations weather broadcasts as a potential solution.

Unfortunately, the package, the eccentricity, and the hoopla tended to obscure McMillans core point. Rent in New York City is, in fact, too damn high. Its too high in Manhattan, too high in fashionable parts of Brooklyn, and too high in neighborhoods adjacent to subway stations throughout the city. And its not just a New York problem. Nor is it just a city problem. Renting a home with any kind of convenient commute into Manhattan will cost you. Its the same on the west side of Los Angeles, throughout the bulk of the San Francisco Bay Area, and in the metro areas of Boston and Washington, DC. Indeed, the rent is too damn high across entire American states. To be sure, you can find a cheap place in New Jersey or Connecticut if youre willing to live in a high-crime city with bad schools. But who wants that? Off the coasts, the problem is less widespread (though it still exists in select neighborhoods). Finding a place in a declining former industrial hub is downright cheap. Moving to the suburbs of Houston or Phoenix or other Sunbelt boomtowns is affordable, and indeed thats a large part of the reason their populations are rising so quickly. But even though the rent is too damn high in only a minority of the American landscape, these areas are very socially and economically consequential parts of the country.

Were so used to the idea that living in a desirable location should cost dramatically more than living elsewhere that complaining about it seems eccentric and naive.

Instead of a broad focus on the issue, Americas cities feature niche conversations about the availability of affordable housing for poor people. Expensive housing does pose unique problems to poor peoplethey dont have as much moneybut the phenomenon is a general one that afflicts middle-class and rich households and businesses large and small. The housing cost problem is largely obscured by the predominance of owner-occupied housing among middle-aged middle-class people who think of expensive housing as wealth and investment profits. That perception is a mistake. In order to sell your house, you need to find another place to live. Higher overall house prices cant really make you richer unless youre willing to move into your car or your parents basement. If you own a home and the price of buying a house rises faster than the price of renting one, then you can make money by selling your home and renting a new place. But as well see, this is a telltale sign of a bubble rather than a national strategy for wealth creation. Your house is a smart investment if its value grows faster than that of the average house, but we cant all be above average. Besides, if housing costs fall across the board, the people whose houses are falling slower than average still come out ahead.

Sometimes it takes nothing less than a crank to point to a problem so all-pervasive that nobody wants to point it out.

The truth is that high rent is a problem for all of us. Its a problem for big cities and suburbs, but its a problem even for people who dont live in the places where the rents are high. Like most problems, its impact on the poor is especially severe, but its a problem for the middle class as well. High rent is a drag on our countrys overall rate of economic growth, and its bad for the environment; it promotes long commutes, traffic jams, misery, and smog. Whats more, high rent is not a fact of nature. Its the result of bad public policy, and it deserves to be taken seriously as one of the critical problems we face. With his simple proclamation that the rent is too damn high, Jimmy McMillan has hit on a profound truth, one that reaches back to the core issues of classical economics.

The goal of this book is to convince you to take Jimmy McMillan and his claim seriouslyeven more seriously than McMillan takes himself. Land is a scarce resource, so some increase in the price of housing is bound to happen as the economy grows. But architects know how to design multifloor buildings and engineers can build elevators. Public policy that restricts their ability to do sonot construction costs, or the limited supply of landis the main cause of high rents in America. The larger goal of this book is to persuade you that this is a bigger deal than you realize. It is not the pet cause of a crank candidate, or a niche problem of the poor, but a devastating blow to the American economy that reduces wages, harms public health, and poisons the environment.