Berliners voted in September to expropriate apartments from large landlords. 56 percent voted for the proposal in a referendum, which would put around 243,000 of the city’s 1.5 million rental apartments in public ownership.
I argued against expropriation at the time, and have written a follow-up for the Dutch opinion website Wynia’s Week in which I argue the city is unlikely to go through with it. It is a bad proposal, one that is opposed by even the center-left, and it may not stand up in court.
Housing is one of the top issues in the German election on Sunday. Proposals reveal a traditional left-right divide: the Social Democrats and Greens seek to rein in prices with rent controls; the Christian Democrats and liberal Free Democrats call for more construction, including by relaxing planning laws and other regulatory requirements.
Coinciding with the federal election, a referendum in Berlin will decide whether the city-state expropriates about 200,000 homes.
The proposal is for private landlords owning more than 3,000 properties to be “socialized”. Supporters argue this would lower prices, as the houses would no longer need to be profitable, but this betrays a simplistic understanding of the market. If the government makes it impossible for developers and landlords to turn a profit, they will develop and rent out fewer apartments and the housing shortage will grow, not shrink.
That’s exactly what happened when Berlin froze rents last year: the number of apartments on the market dropped 57 percent. Owners kept their flats empty while the Constitutional Court reviewed the new law. It ruled in April that the freeze was unlawful. Renters had to suddenly pay a year’s worth of missed rent increases.
Stefan Löfven may be Europe’s first prime minister brought down by a housing crisis, but he is unlikely to be the last.
Löfven, a social democrat, lost the support of the far left over a proposal to allow landlords to freely set rents for newly-built apartments.
Rents in Sweden are usually negotiated between landlords and tenants’ associations.
Other countries struggle to find the right balance between public and private in housing too. Berlin instituted a citywide rent freeze last year, but it was struck down as unconstitutional by Germany’s highest court. Spain’s central government is challenging a Catalan rent cap. Authorities in Barcelona want to extend a moratorium on evictions that has been in place since the beginning of the COVID-19 pandemic.
If you’re trying to control housing costs in your city, don’t look to Berlin for inspiration.
The German capital is due to implement a five-year, across-the-board rent freeze in March. The measure is expected to save around 340,000 tenants money during that period, but it will come at the expense of housing affordability in the long term.
The German Economic Institute in Cologne estimates that Berlin’s policy will reduce the value of some properties by more than 40 percent.
A consequence of that will be underinvestment. The BBU, a trade association of developers in the Berlin and Brandenburg region, says its members expect to reduce investments by €5.5 billion and construction by a quarter.
Will Wilkinson has another excellent op-ed in The New York Times about the maldistribution of power in the United States between rural and urban areas.
Part of the problem is that America’s federal system gives sparsely populated parts of the country way more power than the cities. That wasn’t such a big problem until the rural-urban divide became partisan. Now the largely white countryside and small towns vote overwhelmingly Republican while multicultural cities elect mostly Democrats. American democracy has been thrown into a crisis of legitimacy and dysfunction as a result.
Our politics is cracking up over the density divide. Big cities and their distinctive interests are suffering a density penalty and need more visibility in our scheme of representation.
Andrew Sullivan is always worth reading, but, in the case of his latest column, I do think Noah Smith has a point and Sullivan falls into the trap of conflating Brexit and Donald Trump voters with “real England” and “real America”.
This is a mistake conservatives on both sides of the Atlantic make. The small towns and countryside aren’t the “real” country. They’re half the country. Or, in the case of Trumpists, a third of the country. Their views deserve to be taken seriously, but so do those of big-city liberals.
Or as Smith puts it:
What we should NOT do is elevate one segment of the populace to Special Real American status, simply because they fit a certain classic stereotype or because they are more intolerant and angry than the rest.
Related to this discussion is Nabila Ramdani’s argument in UnHerd for retiring the label “Gaullist” in France. (Charles de Gaulle is to French politics what Ronald Reagan is to American conservatism.)
de Gaulle’s base consisted of white, Roman Catholic conservatives who had a quasi-mystical faith in their rural nation. There was no place in Gaullism for the millions of immigrants from France’s former colonies, nor did it adapt to globalization and the spread of Anglo-Saxon culture.
The Netherlands’ Mark Rutte has been reprimanded by opposition parties for failing to disclose memos to parliament about internal government deliberations over the repeal of a business tax.
Rutte claimed he had not been aware of the papers, which were drafted by the Finance Ministry during the formation of his current government. The four parties in his coalition, which have a one-seat majority, accepted this explanation. All opposition parties but one voted to censure him.
Rutte surprised other parties by eliminating the dividend tax when he returned to power in October. Repeal had not been part of his election program. The suspicion in The Hague is that Rutte’s former employer, Unilever, and Royal Dutch Shell — two of the Netherlands’ largest companies — lobbied him to eliminate the tax. Read more “Rutte Survives Tax Debacle, Middle America Not Doing So Badly”
Will Wilkinson of the libertarian Niskanen Center tells The Washington Post that expanding affordable housing in America’s major cities is the key to reducing inequality.
Wages have barely budged in decades, yet housing costs have soared due to restrictive zoning and land-use policies. Young and working Americans are now unable to save. Homeowners are getting richer.
Kevin D. Williamson, a conservative columnist who was recently hired and then fired by The Atlantic for his right-wing views (more on that here), has similarly argued in National Review that working-class Americans left behind in the Rust Belt need to move to the coasts. He partly blames them for staying put, but recognizes that policy plays a role.
Consider California, where so many of the jobs in the new economy are. Its housing crisis (you can buy a private island or a castle in Europe for the price of a San Francisco apartment) is entirely man-made, “a result of extraordinarily restrictive zoning and environmental codes and epic NIMBYism of a uniquely Californian variety.”
A Republican Party wishing to renew its prospects in California (which it once dominated) or in American cities could — and should — make affordable housing the centerpiece of its agenda for the cities.
A little over a year ago, I described Brexit and the election of Donald Trump as revenge against the city. Left-behind towns and the countryside, which enjoy disproportionate power in both countries’ electoral systems, voted against the interests of urbanites.
Janan Ganesh later warned that, at some point, city dwellers may decide they have had enough of subsidizing provincials who vote against their heathen ways from a distance. He pointed to the independence movements in Catalonia and the wealthy northern provinces of Italy as examples.
Now Ronald Brownstein worries that the same could happen in the United States. President Trump, he points out, is prioritizing the interests of inland areas by reviving manufacturing and deregulating the energy industry while threatening coastal cities by restricting immigration and trade and limiting the deductibility of state and local taxes. Read more “How Long Will Booming Metropoles Put Up With Being Overruled?”