You can’t keep a bad economic idea down. For proof, look at the November 2024 California ballot.

Proposition 33 is the third attempt in the past six years to alter or eliminate statewide rules limiting the scope of rent control.

Since 1995, single-family homes and housing built after Feb. 1, 1995, have been exempt from rent control. Those exemptions would end. State law forbidding restrictions on what a landlord can charge new tenants — known as vacancy decontrol — would end. The provision that prohibits most landlords from raising rent by more than 5% plus inflation (with a 10% cap) in a single year would end immediately rather than sunset in 2030.

While rent control is an appealing palliative, the deleterious long-term effects are well-known. The benefits to tenants who remain in place are dwarfed by negative long-term effects including:

• Lack of maintenance: When rents cannot be raised to profitably pay the costs of maintenance or improvements, properties deteriorate.

• Conversion: When rents do not provide adequate financial returns, units — whether single family homes or apartments converted to condos — may be sold to owner-occupants, “Airbnb’d” or kept vacant. As rental inventory shrinks, it is either harder to find a place to rent or more expensive to rent or both.

• Corruption: When rent cannot be raised upon vacancy, illegal workarounds abound. New tenants offer “key money” bribes to induce landlords to accept their application for a below-market rental. Existing tenants may move out and surreptitiously sublet at a higher rent than they themselves are paying.

• Maldistribution: Tenants with below market rent may be reluctant to right-size or relocate. Empty nesters stay in large units while growing families find it impossible to find larger spaces.

• Hoarding: If rent is low enough, tenants may change their primary residence but keep their rental as a pied-a-terre or second residence.

• Less new construction: Anyone interested in building new rental housing will think more than twice about sinking money into an asset whose rate of return can be limited by the government at any time.

It would be hard to find anyone who does not think housing in California is off-the-charts expensive for homeowners and renters alike. But, until the law of supply and demand is repealed, price controls — on wheat, gasoline, rents or anything else — only make a bad situation worse.

The cure for high prices is increased supply and reduced demand. Rent control does the opposite. It reduces supply by incentivizing conversion to owner occupancy, disincentivizing new construction and inviting disrepair and abandonment. It increases demand by making it possible for more people — including newcomers attracted by below-market rent — to live on their own rather than sharing housing.

Don’t believe it? Look at Argentina. Three years after Draconian rent control was imposed in 2020, one in seven houses in Buenos Aires sat vacant. Rents on remaining units outpaced inflation. After the law was repealed at the beginning of 2024, rental units available increased 170% while rents adjusted for inflation fell 40%.

Jeffrey Scharf welcomes your comments. Contact him at jeffreyrscharf@gmail.com.