Recently – and this says a lot about my life – a friend texted to see if I’d weigh in on the issue of rent stabilization for commercial leases. She and her husband had been arguing since they read about a small independent bookstore that was closing in Manhattan because of rising rents; she felt that protecting local businesses was worth price controls, and he did not.
I said that I hadn’t thought about it very much, but in the case of Manhattan, I was sympathetic to that sort of thing.
But having thought about it a bit more, I think I didn’t go far enough. We shouldn’t just have price controls on commercial real estate in Manhattan; we should really just nationalize the whole island.
For one, the conflicting realities of the social and physical worlds – nearly unending desire for real estate in Manhattan, along with relatively limited capacity to actually create that real estate – mean that there’s no way supply will ever catch up with demand and make prices anywhere close to reasonable. (Note that this isn’t true for the vast majority of the rest of metropolitan New York, where there really is room to meaningfully improve the supply of housing.)
Moreover, there are lots and lots of really iconic historic neighborhoods in Manhattan, and I think it’s perfectly understandable to strongly oppose the redevelopment of, say, Greenwich Village, or parts of Harlem, or Soho, or whatever. But of course if you take those off the table, you’re restricting supply even more.
So, faced with the prospect of turning market-rate Manhattan into the world’s largest ghetto of the rich in perpetuity, I propose transferring the whole thing to the public sector. This isn’t a painless tradeoff, of course. If housing units are no longer distributed according to who can pay the most, they’ll have to be distributed according to some other principle: probably, in an ideal world, just a wait list. In which case we’ll have a Scandanavian-type situation where people have to wait five or ten years to move to the Upper West Side. Locals and older folks would have serious advantages over domestic and international migrants and younger people. And of course that sort of thing would open itself to corruption, and so on. But I think that’s probably still preferable to allowing such massive segregation of privilege.
And, I should point out, taking all of Manhattan off the open market isn’t nearly as radical an idea as it sounds. There are pleasant northern European cities that do that, more or less, for one. But also Manhattan’s housing is already close to half non-market-rate, if you roll together public housing plus rent-controlled and rent-stabilized apartments. Those units have already demonstrated both the pluses and minuses of non-market housing, maintaining a bulwark of diversity in some neighborhoods while making things more difficult for anyone who doesn’t already have a unit.
Nationalizing Manhattan wouldn’t have to mean an end to new construction, either. Allowing more people to live on the island and reducing wait times on the housing list would still be in the public interest, so the government could contract to build out as many new units as possible. They could pay for it, maybe, by allowing developers to keep the buildings private for five or ten years, or however long it took to recoup their investment and make a little profit.
And then, happily, the units would return to the public sector, ready for whoever had signed up for them several years before.