Don't Just Do Something… Sit There!

From today's Wall Street Journal editorial (reg. required):

Unless new legislation is passed and signed by Monday, New York's World War II-era rent-control laws will simply expire. As any economist can tell you, that would mean a tremendous boom, ending a system that subsidizes the affluent while inflicting a perennial housing shortage on those lower down the economic ladder. Alas, it looks as though asking Governor Pataki to do nothing might be asking too much.

The problem, of course, is that the "boom" takes a while to manifest itself. Even in Manhattan, the supply of housing takes a while to adjust to the real demand level. Therefore extending rent control is always going to be more politically palatable: current tenants would be outraged if it expired, even if their kids (or, if they're young, their future selves) would benefit. Perversely, the more distortionary (and, therefore, the more destructive in the long term) the regulation is, the greater the short-term hit when it's repealed. So the worse the policy is, the harder it is to get rid of.