Tuesday, February 15, 2005

The Danger of Law Profs Doing Public Policy

When you let people who do not fathom economics (for example, most law professors not in law and economics) do policy, this is the sort of housing policy recommendations you end up with- the study says that under the right conditions it would make financial sense to have developers set aside 10 to 20 percent of their units for lower-income residents. And, "[i]n certain market conditions, it could actually work," said Michael H. Schill, a former New York University professor who helped conduct the study and is now dean of the School of Law at the University of California, Los Angeles. So then, obviously those conditions have not been met or the market would have provided the aforementioned number of set asides.

I understand that NYC is a tight housing market made all the worse by decades of rent control. But, if the city were to impose these sorts of requirements on developers, what might we expect to happen? Oh.. wait... I know the answer to that one.. perhaps something similar to what happened during rent control where, absent the ability to make profits in the rental markets, landlords converted to condos and development in the apartment market was inhibited. And, of course, it is primarily those at the lower end of the economic specturm who are most afflicted by such a situation.

Of course, I am not so cavalier as to be opposed to efforts to make housing available to lower income folks. But let the government shoulder the cost of providing it. If we decide that housing poor people is a priority (and I would argue that it is) then we, acting as a government, ought to be putting up the dollars to do so, instead of imposing our will on the market. Not because we have no right to, but because there are serious negative consequences for doing so.


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