15 June 1998
Source: Hardcopy The New York Times
Magazine, June 14, 1998, pp. 32, 34
JOHN TIERNEY
THE BIG CITY
To negotiate the city's morass of rent-control laws, one must become either cheater or victim--or both.
TO BRIBE OR NOT TO BRIBE? That is the question if you want a good deal on a New York apartment, and the answer is usually yes. But a friend of mine, new to the city and to the intricate morality of rent control, is struggling with her conscience, not to mention her wallet.
She is a subtenant--call her S.-- occupying an enormous apartment worth at least $6,000 a month on the open market. The regulated rent is only $3,000. The primary tenant--call him P.--is a friend of hers who has moved far from New York and isn't coming back. S. has a legal two-year sublease at the regulated rent, but she's also paying another $1,250 each month under the table.
"I hate writing that extra check," she says. "He's abusing the system that gave him an affordable home, and forcing me to be corrupt, too. I feel so ripped off when I total up the bribes. I'm essentially buying him a car when I can't afford a car myself."
My first instinct was that S. ought to honor the contract with her friend even though it violates the law. That seemed to jibe with the principles of "Anarchy, State and Utopia," the libertarian classic published in 1974 by the philosopher Robert Nozick, who criticized rent control and most other regulations. In arguing that the minimalist state is the most just state, he faulted governments that "forbid capitalist acts between consenting adults." Since S. freely consented to the contract with P., she ought to honor it.
But then I remembered that Nozick seemed to offer an exemption when the capitalist act involved a rent-controlled apartment--or at least his rent-controlled apartment. In 1983, Nozick, a professor at Harvard, agreed to pay $1,900 a month to rent a large condominium on the Charles River from a fellow consenting adult the novelist Erich Segal. The next year, when Segal raised the rent $500, the philosopher began contemplating the personal implications of Cambridge's rent regulations. Nozick forced Segal to retract the increase and then, after a two-year legal battle, got the rent lowered to $1,300. Segal, whose monthly expenses on the apartment were more than $2,000, ended up paying Nozick $21,000 in "overcharges" and another $10,000 to get him to move out so the apartment could be sold.
Nozick declined to offer a philosophical justification for his actions when they were subsequently revealed by William Tucker in The New Republic. But even Tucker, a libertarian appalled by Nozick's behavior, acknowledged that one could make a moral case for abrogating an illegal contract: "No one, not even a philosopher, is morally obligated to live as if the world were the way he wishes it were. Robert Nozick pays taxes and is entitled to enjoy the Government benefits they finance--even benefits he thinks should not exist."
So perhaps my friend is also entitled to stop paying the illegal rent. She could even go to court seeking triple damages for the bribes already paid-- $3,750 for each month. But suppose S. considers the matter less selfishly: does her exploiting the rent regulations contribute to the larger social good?
She could turn to another philosopher, John Rawls, whose 1971 book, "A Theory of Justice," established an elegant way to test the fairness of a social system. Rawls calls it the "veil of ignorance": a system is fair only if you would endorse it without knowing in advance what your social position would be. The antebellum South, for instance, was obviously unjust because no one would endorse slavery if there were a chance he'd be a slave. Using this test, Rawls deduces that society should strive for rules that apply equally to everyone and that don't worsen the condition of the least fortunate members of society.
Is rent control a just system? Would you endorse price controls on housing without knowing where you'd be living? Probably not. You wouldn't want to be an immigrant looking for an apartment in a city with a housing shortage fostered by rent regulations. You wouldn't want to be the owner of a regulated property. The public would be outraged if price controls, which now apply only to certain rental buildings, were imposed on all dwellings. No politician in New York would dare try telling owners of individual apartments and houses what to charge when renting or selling their home.
New York's rent-regulation system fails Rawls's test both because it's applied unequally and because it hurts the least fortunate members of society. Poor immigrants pay the price of a housing shortage while most of the benefits of rent regulation flow to entrenched tenants with above-average incomes --people like P., S. and, I hasten to admit, myself. If I were selflessly committed to social justice, I would refuse to participate in this system. But because the market in New York is so distorted by rent regulation--the few available unregulated apartments are much more expensive than they would be in a free market--I would pay a high price if I left my rent-regulated apartment. So I've tried to convince myself that there is no moral imperative for me to be a lone martyr.
My friend S., though, wouldn't have to be a martyr. It wouldn't cost her a penny to strike a blow against an unjust system. She could cut her own deal with the owner of the building: in return for helping him evict the primary tenant P., she gets to stay in the apartment at the current rent for the duration of her lease. (She might even negotiate for an extra year or two.) With the evidence she provides of P.'s rent-gouging, the landlord could start legal action to revoke P.'s lease. Meanwhile, S. could threaten to sue P. for triple damages. To avoid costly legal fights far from his new home, P. would have to surrender the lease.
Once S.'s special deal expired, the owner could charge whatever he wanted for the place, since all apartments over $2,000 are deregulated when a lease ends. Besides saving herself money and restoring the property to its rightful owner, S. would make New York's housing system a little more free and just. She would be doing well by doing good.
S. has still not decided whether to take this moral high road, mainly because she realizes that it would entail one personal sacrifice: her friendship with P. But she is beginning to wonder how much of a sacrifice that would be. As she says, "If I go on paying the $1,250-a-month bribe to him, after two years I doubt there'll be much of a friendship left."