Coronavirus

Politicians Declare Eviction Moratoriums To Combat Coronavirus. Will They Give Up That Power After the Virus Fades?

Emergency measures can easily become routine policy.

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To prevent the spread of the coronavirus and cushion people from its economic impact, activists and politicians are pushing for moratoriums on evictions and foreclosures, and even for straight suspensions of rent payments.

The thinking is that forcing people to move out of their homes during a global pandemic—when we should all be practicing social distancing—will only make it easier for the virus to spread.

That's an entirely reasonable concern. But we should also avoid any permanent expansion of government's power to ignore property rights and private contracts.

Not that those long-term concerns are motivating government officials right now. Instead, they are emphasizing fast, immediate action.

"In this economic crisis, we need to place an immediate moratorium on evictions, foreclosures, and utility shut-offs," tweeted Sen. Bernie Sanders (I–Vt.) yesterday.

"As we move through the COVID-19 emergency, people must be able to focus on our community's health—slowing the virus's spread—and not on economic survival," said California state Sen. Scott Wiener (D–San Francisco) yesterday, in a statement similarly calling for a nationwide freeze on evictions (of commercial and residential tenants) and foreclosures.

The same day, 24 New York state senators sent a letter to New York State Court of Appeals Chief Judge Janet DiFiore, asking her to suspend all eviction proceedings.

"Many individuals and families who are evicted from their homes will be forced to live in public spaces, in shelters, or in other temporary and often precarious circumstances—limiting their ability to self-quarantine," the senators wrote, citing as precedent past eviction moratoriums that'd been issued in the wake of 9/11 and Hurricane Sandy.

Signing onto the letter is democratic socialist Sen. Julia Salazar (D/WF–Brooklyn) who has been a major proponent of the public health benefits of an eviction freeze—while also yesterday sending out campaign volunteers to collect signatures for her reelection bid.

The real policy movement so far has been at the local level.

On Tuesday, the San Jose city council advanced a 30-day moratorium on evictions for those who can prove—via pay stubs, employer or doctor notes, etc.—that their health or income has been affected by the coronavirus. The moratorium is expected to be finalized within the next week or two, reports the Mercury News.

San Francisco Mayor London Breed has also committed to using her emergency powers to declare some form of eviction moratorium by the end of this week.

City councilmembers in Los Angeles plan to introduce some sort of moratorium legislation next week. The Los Angeles Times reports that it could apply to all renters in the city.

These are just a few examples. A CityLab article from Wednesday notes these efforts are being considered by cities across the country. Italy, one of the countries most affected by the spread of the coronavirus, has also suspended mortgage payments.

Individual landlords and their trade associations are giving these proposals mixed receptions, acknowledging the public health benefits while also complaining that they are being made to shoulder the entire cost of responding to the epidemic.

Daniel Yukelson, the executive director of Los Angeles's Apartment Association, criticized that city's proposed eviction moratorium to the Times, calling it "yet another horrible regulation that would unleash an undeserved and excessive amount of punishment on unsuspecting [landlords]." Yukelson said that eviction is a last resort, and landlords have been willing to make accommodations for good renters affected by the virus.

"Rents pay for property taxes, insurance, mortgages, maintenance, and the salaries of building supers and staff," said the Community Housing Improvement Program (CHIP), an association representing smaller landlords in New York City, in a statement to Reason. "Missing an entire month of revenue would have a devastating effect on their ability to pay their expenses."

CHIP has asked that any eviction moratorium be coupled with compensation to building owners to cover any financial losses.

At a moment, the public health response is all about slowing the rate of infection through social distancing so that the number of new cases stays within hospitals' capacity to treat them. Having fewer people being forced to move or show up to crowded courthouses to contest eviction notices would certainly help with that.

Yet landlords are correct in noting that government officials are effectively shifting the economic costs of the coronavirus from renters to them, often with only the vaguest promise of compensation. The fewer landlords that are able to make their mortgage payments because of lost rent only further imperils a financial system that has already proven shaky in response to the coronavirus.

As economist Pierre Lemieux noted on Twitter in response to Italy's suspension of mortgage payments, that's not a good thing for governments who will soon need additional funds to cope with the continued fallout from the pandemic.

More worrisome still is the potential for a ratchet effect, whereby any suspension of evictions, while seemingly necessary or at least advisable at this moment, will lead to a permanent expansion of the government's power to suspend rent or loan payments in the future.

In his book Crisis and Leviathan, economic historian Robert Higgs describes how major crises in the 20th century led to dramatic expansions in the scope of government power that persisted long after each individual crisis has passed.

During a crisis, argued Higgs, government officials are often unable or unwilling to transparently impose the full costs of their crisis-response measures onto the public. They, therefore, look to hide those costs behind coercive policies. Higgs writes:

"Modern democratic governments expand the scope of their effective authority over economic decision-making during crisis because citizens insist they 'do something,' and the alternative means of implementing the chosen policies, which is full reliance on pecuniary fiscal and market mechanisms, would reveal the costs of the government's policies so clearly as to threaten the viability of both the policies and the ruling, somewhat autonomous governments themselves."

In other words, governments unwilling to pay the market price for soldiers and steel during a war will adopt new powers to forcibly requisition men and materials instead.

This expansion of power, according to Higgs, doesn't recede once a crisis is over. Rather, it leaves behind a legacy of more government power that can then be used in less extraordinary circumstances. Emergency powers become routine.

Something very similar could happen with eviction moratoriums.

There is no shortage of options governments have to help renters harmed by the coronavirus, and to do so transparently. Cities could give individual tenants subsidies to help pay their rent. They could also subsidize landlords, either through cash or tax breaks, who are losing out on rent because of the pandemic. They could even funnel money to banks to forestall foreclosures on rental properties.

These aren't ideal free market policies, but in the current context of a global pandemic, they might be advisable public health measures.

Instead, governments are embracing a more drastic expansion of their power to freeze the enforcement of private legal contracts. To cut checks to affected parties would require either new revenue or service cuts, something few politicians want to consider in a time of looming recession.

The vague promises that landlords will be made whole by city governments are not encouraging. If that were true, there'd be no need for eviction moratoriums in the first place.

This is particularly concerning given that some of these moratoriums are being proposed for entire cities and states—and even the entire country—with no concern for whether someone has contracted the disease or lost income because of it.

If politicians are willing to do this now, in response to this current crisis, what would be the argument against returning to these policies the next time there is a (man-made) economic recession?

The immediacy of the coronavirus crisis is creating demands for immediate action. That's understandable and, in a lot of cases, necessary.

So far, however, it's been private actors and civil society that have responded best to the current pandemic. Private banks in Europe and the United Kingdom are already giving borrowers more time to pay their mortgages. Surely private actors here in the states can work out similar arrangements.

To rely on coercive government action leaves open the possibility for dangerous expansion of emergency regulatory powers that will be with us long after coronavirus is brought under control.

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  1. “As we move through the COVID-19 emergency, people must be able to focus on our community’s health—slowing the virus’s spread—and not on economic survival,” said California state Sen. Scott Wiener (D–San Francisco) yesterday, in a statement similarly calling for a nationwide freeze on evictions (of commercial and residential tenants) and foreclosures.

    Not sure how someone survives economic suicide.

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  2. and even for straight suspensions of rent payments.

    lol

    1. So is Bernie gonna cough up the difference?

      1. No, property owners will go bankrupt and then the state will seize the failed properties and turn them into state-run collectives.

  3. Routine policy is right in fact next years virus will have the same results from now on, public shut downs and school closures. it just gives to much power and it lets the politicians get what they want and with the freebies their handing out now, the people will gladly obey.
    you can’t have the people gathering for thats when they plot and act against the government.

  4. A taking is a taking, no matter how small – – – – – – – –

    As soon as the lawyers come out of quarantine, expect a flood of lawsuits against these unconstitutional actions.

    1. If only the courts saw it that way.

  5. gimme gimme gimme.

  6. “”To rely on coercive government action leaves open the possibility for dangerous expansion of emergency regulatory powers that will be with us long after coronavirus is brought under control.””

    Feature, not a bug.

  7. People not being paid and unable to pay rent or mortgage would lead to evictions and also financial hardships for the landlords and others. Which would lead to more lob loss. This is a real issue that could tank the economy. Ideas such as moratoriums on rent, mortgage payments, utilities, and others loans are very much worth thinking about. That may be a least painful way of avoiding long term economic disaster.

    1. Why doesn’t the state just own all real property anyway? I mean, we’re halfway there already.

    2. This just in: they didn’t get Ebola they got the flu. If you can’t pay rent because you got the flu, you’re already fucked regardless of if it’s COVID or something else.

      If you want economic disaster, seize people’s property without recompense against the terms of their private contract.

      1. Not seizing property, just a pause on recurring payments for a bit so we don’t have a repeat of 1929. It won’t do the landlords or banks any good if a large chunk of the population is broke and homeless.

        1. So putting every landlord in the nation out of business helps…how exactly? And if we’re all that close to the edge, we’re already fucked.

          1. Not putting them out of business. The landlords would get relief from their payments also.

            1. Really? Why not just pay the tenants’ rent directly now then? That way everyone wins (except taxpayers) AND there’s no disruptions. This is a Wimpy-esque promise to pay you Tuesday for a hamburger today, floated on the backs of the landlords.

            2. Why not simplify things and suspend payment as a requirement of anybody for anything? That way everything’s free, nobody’s screwed.

              1. Robert, your sarcasm is obvious. I’m less sure about MollyGodiva; I think she’s serious.

        2. I agree, that help for people is in order. However, a public need should be paid for by the public, not by a private institution. If our government feels that these people need help, they can offer that assistance. Instead, they are forcing a minority of the population to offer assistance. The promise of help down the road is empty. If the landlords truly believed they would get just compensation, they would gladly offer to hold evictions. The idea that our government will help renters who can’t get to their jobs, then the landlords who are missing rent to pay their employees, then their employees who aren’t being paid by the landlords, then the banks who are missing payments seems much more complicated than offering to pay the rent of people who are unable to because of sickness/quarantine.

          1. That would also be an fine way of going about it. I think we should keep all options on the table.

            1. Uh, no. A fine way to go about it is to not hold a gun to my head, take my money and give it someone. A fine way to go about might be to verify the veracity of those that need help, and encourage private donation to help.

  8. “In this economic crisis, we need to place an immediate moratorium on evictions, foreclosures, and utility shut-offs,” tweeted Sen. Bernie Sanders (I–Vt.) yesterday.

    “And, of course, hoarders will be dealt with, uh, appropriately.”

  9. LOL. Halting evictions to ‘reduce economic impact’. As if entirely removing the revenue stream of places that rent to people as their entire business isn’t an economic impact in and of itself.

    They should just be honest and confiscate the property, since that’s what this amounts to. Should be unconstitutional at face value.

    1. Oh, and if they can’t pay rent today what makes people think they’ll be able to pay rent tomorrow after the ‘outbreak’ is done? They’re already broke, you see, so how far into the future exactly are we going to let people squat on other people’s private property at enormous loss to the renter?

      Wait, I already know the answer. Eat the rich, am I right?

    2. The idea is to pause or reduce payments for the entire chain, from renter all the way up to the Fed. We are going to be looking at unemployment levels that we have not seen since the 1930s. The idea is that after a few months we can try to get back to normal, and that can’t happen if we have mass evictions and foreclosures in the meantime.

      1. Jesus Christ, are people this gullible? I may need to rethink my stances on individual autonomy after COVID.

      2. I’m sure a lot of 80 year old people have had their income streams interrupted by their inability to get to work due to Covid-19.

        How many working people have lost income due to this sickness? Haven’t heard much about that. Implement this policy and I’m sure we will find out that billions of people need this help! Haha.

        Maybe we should just tap the brakes here.

      3. Market corrections bad, government driven market distortions good. We have to do something!

        If we didn’t know already, let this episode solidify the reality that statism is the official religion of this country.

  10. So how about we continue all the financial transactions as normal, even if the corresponding return is absent? Don’t go to work, but still get paid. Don’t see what you want in the store, but still pay the cashier. Don’t go on the flight or the cruise, but still pay the fare. Don’t go to the game or show, but still buy tickets.

    Genius, right?

    1. Brilliant!

      *pours a Guiness*

  11. I’m curious as to whether this protects all those college students that got tossed from UCLA. I dont know how those lawsuits aren’t filed yet.

  12. Hmmm. The income from my rentals covers my housing and food expenses as well as the money for me and my wife’s health insurance. So, if I can’t collect the rents, and certainly wouldn’t be able to sell such properties, either on short notice, or because — oh hey, they aren’t generating income, and no one would buy them, then I guess I have to sell my home, liquidate my personal property, and move into some one-bedroom hovel, if I can find one I can afford? (okay, a definitely exaggerated description of the reality, but still, two people, who rent from me, get housing, while me and my wife, a different two people, get screwed?)

    1. Yes. Exactly. But if your housing costs get reduced also, then you may be ok for a few months. And that all allows your renters to not go bankrupt before they go back to work. A few months of shared pain across the board is worth it if we prevent a mass economic disaster.

      1. Why stop at controlling what people can do with their private land? After all, we might need your car to move the dead that line our streets.

      2. So- basically, you’re advocating for the ability of people to live rent-free in other people’s properties forever. Because if it’s not this crisis, there will always be another one that prevents people from paying their rent “for a few months before they go back to work.”

        Right?

        1. Not forever, just till this passed. And history shows that this type of crisis is very rare.

          1. So if renters have a different problem that keeps them from paying the rent, it’s okay to evict them then?

            1. I am ok with that.

              1. Why is this different, then?

          2. “And history shows that this type of crisis is very rare.”
            Ahh, so you’re not only economically illiterate, you’re also historically ignorant.

      3. I just love how you are so generous with my money. Thanks, but no.

      4. Well aren’t you just an evil person. Why not just tell him he doesn’t deserve to have property to rent out, so it’ll be good that he can reduce his living expenses by selling all his property and renting from someone else?

      5. Yes, coercion is a good thing isn’t it?

  13. Thank God Bernie has no chance of becoming president.

  14. The thinking is that forcing people to move out of their homes during a global pandemic—when we should all be practicing social distancing—will only make it easier for the virus to spread.

    That’s an entirely reasonable concern.

    If owners feel like the rules can be changed on them whenever someone shouts “crisis”, they may stop providing rentals in the first place, so more people will be on the street, and that’s bad for future epidemics. Like the flu epidemic that occurs every year.

  15. Champaign Mayor Deborah Frank Feinen has issued an executive order that would give her office “extraordinary powers.” She has issued the order despite the town and surrounding area not having a single case of the disease.

    Here is the list of other items from the declaration/executive order, which also includes the ability to ban the sale of “food, water, fuel, clothing, and/or other commodities, materials, goods, services and resources,” in addition to alcohol and gasoline. Additionally, government agents or officials have the ability to seize private property and to cut off the city water supply. The mayor justifies everything “in the interest of public safety and wolf.”

    After the declaration of an emergency, the Mayor may in the interest of public safety and welfare make any or all of the following orders and provide the following direction:

    (1) Issue such other orders as are imminently necessary for the protection of life and property.

    (2) Order a general curfew applicable to such geographical areas of the City or to the City as a whole, as the Mayor deems advisable, and applicable during such hours of the day or night as the Mayor deems necessary in the interest of public safety and welfare.

    (3) Order the closing of all retail liquor stores, including taverns and private clubs or portions thereof wherein the consumption of intoxicating liquor and beer is permitted;

    (4) Order the discontinuance of the sale of alcoholic liquor by any wholesaler or retailer;

    (5) Order the discontinuance of selling, distributing, or giving away gasoline or other liquid flammable or combustible products in any container other than a gasoline tank properly affixed to a motor vehicle;

    (6) Order the discontinuance of selling, distributing, dispensing or giving away of explosives or explosive agents, firearms or ammunition of any character whatsoever;

    (7) Order the control, restriction and regulation within the City by rationing, issuing quotas, fixing or freezing prices, allocating the use, sale or distribution of food, fuel, clothing and other commodities, materials, goods or services or the necessities of life;

    (8) (a) Order City employees or agents, on behalf of the City, to take possession of any real or personal property of any person, or to acquire full title or such lesser interest as may be necessary to deal with a disaster or emergency, and to take possession of and for a limited time, occupy and use any real estate to accomplish alleviation of the disaster, or the effects thereof;

    (b) In the event any real or personal property is utilized by the City, the City shall be liable to the owner thereof for the reasonable value of the use or for just compensation as the case may be.

    (9) Order restrictions on ingress or egress to parts of the City to limit the occupancy of any premises;

    (10) To make provision for the availability and use of temporary emergency housing;

    (11) Temporarily suspend, limit, cancel, convene, reschedule, postpone, continue, or relocate all meetings of the City Council, and any City committee, commission, board, authority, or other City body as deemed appropriate by the Mayor.

    (12) Require closing of business establishments.

    (13) Prohibit the sale or distribution within the City of any products which could be employed in a manner which would constitute a danger to public safety.

    (14) Temporarily close any and all streets, alleys, sidewalks, bike paths, public parks or public ways.

    (15) Temporarily suspend or modify, for not more than sixty (60) days, any regulation or ordinance of the City, including, but not limited to, those regarding health, safety, and zoning. This period may be extended upon approval of the City Council.

    (16) Suspend or limit the use of the water resources or other infrastructure.

    (17) Control, restrict, allocate, or regulate the use, sale, production, or distribution of food, water, fuel, clothing, and/or other commodities, materials, goods, services and resources.

    (18) Suspend or limit burning of any items or property with the City limits and up to two (2) miles outside the corporate limits.

    (19) Direct and compel the evacuation of all or part of the population from any stricken or threatened areas within the City if the mayor deems this action is necessary for the preservation of life, property, or other disaster or emergency mitigation, response or recovery and to prescribe routes, modes of transportation and destination in connection with an evacuation.

    (21) Approve application for local, state, or federal assistance.

    (22) Establish and control routes of transportation, ingress or egress.

    (23) Control ingress and egress from any designated disaster or emergency area or home, building or structures located therein.

    (24) Approve the transfer the direction, personnel, or functions of City departments and agencies for the purpose of performing or facilitating emergency or disaster services.

    (25) Accept services, gifts, grants, loans, equipment, supplies, and/or materials whether from private, nonprofit, or governmental sources.

    (26) Require the continuation, termination, disconnection, or suspension of natural gas, electrical power, water, sewer, communication or other public utilities or infrastructure.

    (27) Close or cancel the use of any municipally owned or operated building or other public facility.

    (28) Declare, issue, enforce, modify and terminate orders for quarantine and isolation of persons or animals posing a threat to the public, not conflicting with the directions of the Health Officer of the community.

    (29) Exercise such powers and functions in light of the exigencies of emergency or disaster including the waiving of compliance with any time consuming procedures and formalities, including notices, as may be prescribed by law.

    (30) Issue any and all such other orders or undertake such other functions and activities as the Mayor reasonably believes is required to protect the health, safety, and welfare of persons or property within the City or otherwise preserve the public peace or abate, clean up, or mitigate the effects of any emergency or disaster.

    1. The mayor justifies everything “in the interest of public safety and wolf.”

      Autocorrect is genius!

  16. Will they give up that power?
    Not until they get smacked down by somebody bigger.

    And surprise surprise, the people claiming this power are the same assholes who shut everything down, actively fucking the service industry workers thus “requiring” these measures.

    Having said all that i know we’re all heartless libertarians here, but it would be nice if landlords and lenders could voluntarily do something like this for a short period of time (in light of the absolute retardation the world is currently suffering from).

  17. Let these politicians put their money where their mouths are and compensate landlords for the additional time granted the renters. I guarantee you that by doing this we would make this order short lived.

  18. Summary — You have to subsidize stupid. The rest just pays and takes care of itself. 🙂

  19. Wouldn’t is easier to just put all the evicted people in rooms at one of the extra houses owned by all those politicians espousing socialism? Surely there are enough rooms available.

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  21. Like it or not, true emergency situations sometimes require crazy shit to be done, because the alternative is even worse.

    The trick with emergency powers is the people must FORCE the politicians to give them up after the fact. There is no way to deal with this issue other than to be diligent.

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