Scarcity by Design: The Legacy of New York City's Housing Policies.

• Author: Ihlanfeldt, Keith R.

Teachers of undergraduate economics love to use the example of New York City rent control to demonstrate to students the market distortions that result from ceiling price programs. Occasionally, the curious student will ask the question: "If rent control is so bad, why does it persist and how can we get rid of it?" The primary purpose of this book is to provide answers to these questions. But while the focus of the book is rent regulation, the authors also attribute the New York City housing crisis to overly restrictive land use regulation, overinvestment in public housing, and exorbitant property tax rates on rental housing. As the title suggests, the premise of the book is that the scarcity of affordable housing in New York City is the result of a long history of bad housing policies. The authors do a commendable job in their attempt to educate the reader that the government must be replaced by the market if the inefficiencies that plague the rental housing market of New York City are ever to be resolved.

This book would be of interest to noneconomists who have an interest in housing policy, economists who wish to learn more about the history and politics of rent control, and especially housing policy-makers. It should not be read by anybody looking for an academic treatise on the New York City housing market. The authors pay little attention to the many studies that have dealt with either rent control in general or New York City rent control, present no new data or results, and offer no novel policy prescriptions. The purpose of the book is one of advocacy and not to break new ground.

The introductory chapter concisely makes the authors' arguments. The rest of the book fleshes-out the points made in Chapter 1. Chapters 2-6 deal with rent regulation. Covered are the distributional effects (Chapter 2) and market effects (Chapter 3) of rent control, the conflicts that controls cause between tenants and landlords and how the state and city act as arbiters (Chapter 4), and the history of rent regulation at both the national and New York City levels (Chapter 5). Chapter 6 is entitled "Broken Promises" and shows by historical example why developers are likely to expect that their new apartment buildings will eventually be covered by rent regulation. The city and the state have changed the rules too often in the past for potential investors not to be scared away by rent regulation, even though existing statutes typically exempt newly built...