A Swedish socialist said: “Rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.” An official of the communist government in Hanoi: “The Americans couldn’t destroy Hanoi by bombing it during the war but we have destroyed our city by low rents.”
Rent control is the most studied subject in economics. It is presented in the first month of instruction in high school economics classes and then again in economics 101 in college. Even Paul Krugman calls rent controls “stupid” and yet, it exists in full glory in well educated Malibu with its two million dollar manufactured house and also in many places throughout California. 44 states have outlawed rent controls (price fixed rents). It is common knowledge rent controls are bad.
The record of price controls goes as far back as human history. They were imposed by the Pharaohs of ancient Egypt. They were decreed by king Hammurabi of Babylon in the eighteen century B.C. They were tried in ancient Athens. They were tried in the Roman Empire and of course, in the Soviet Union.
Rent controls are price fixing rents at below market prices. In the case of rent controls on mobile home parks (land) in Malibu this has been very profitable to those who have been able to sell their mobile homes for many times the value of their mobile homes. These renters have organized themselves into to a well-organized solid voting bloc. Politicians in Malibu and throughout California, for the sake of power, have jumped through hoops for this price fixing cartel.
The two mobile home parks in Malibu the Paradise Cove and the Dune Point comprise about 130 acres of some of the most valuable residential land in the world. They are currently assessed at about 11 million dollars. If they were to be brought into development as they would have been throughout the U.S.A. they would be (it is difficult to get a precise appraisal during these times) worth at least 500 million dollars. The financial damage to Malibu is literally as if it had received a B-52 carpet bombing. And there is even worse permanent damage in Santa Cruz and Capitola. Read on the internet: the end of rent control begins . . . “
About 80% of this information is on the internet. Six months ago, I contacted the few remaining lenders of mobile homes and told them what was happening in Santa Cruz (Bay Federal Credit Union, etc.). There has now been a crash. No financing, no market, no respect. I also believe rent control on mobile home parks with Malibu and its star quality will replace NYC as the premier study on rent controls. Rent control is the most studied subject in economics and rent control on mobile home parks in California will become one the best lesson plans in basic economics.
George Drysdale is a social science teacher and can be reached at malibuecon@gmail.