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NOTE 20. The Slumlord

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Chapter 20. The Slumlord To many people, the slumlord, alias ghetto

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landlord and rent gouger, is proof that man can, while still alive, attain a satanic image.

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Recipient of vile curses, pincushion for needle-bearing tenants with a penchant for voodoo, perceived

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as exploiter of the downtrodden, the slumlord is surely one of the most hated figures of

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of the Day.

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The indictment is manifold.

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He charges unconscionably high rents.

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He allows his buildings to fall into disrepair.

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His apartments are painted with cheap lead paint which poisons babies, and he allows

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junkies, rapists and drunks to harass the tenants.

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The falling plaster, the overflowing garbage, the omnipresent roaches, the leaky plumbing,

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The roof cave-ins and the fires are all integral parts of the slumlord's domain, and the only

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creatures who thrive in his premises are the rats.

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The indictment, highly charged though it is, is spurious.

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The owner of ghetto housing differs little from any other purveyor of low-cost merchandise.

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In fact, he is no different from any purveyor of any kind of merchandise.

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They all charge as much as they can.

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First consider the purveyors of cheap inferior and second-hand merchandise as a class.

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One thing above all else stands out about merchandise they buy and sell.

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It is cheaply built inferior in quality or second-hand.

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A rational person would not expect high-quality, exquisite workmanship or superior new merchandise

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at Bargain Rate Prices. He would not feel outraged and cheated if bargain rate merchandise

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proved to have only bargain rate qualities. Our expectations from margarine are not those

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of butter. We are satisfied with lesser qualities from a used car than from a new car. However,

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when it comes to housing, especially in the urban setting, people expect, even insist

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Based Upon Quality Housing at Bargain Prices.

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But what of the claim that the slumlord overcharges for his decrepit housing?

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This is erroneous.

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Everyone tries to obtain the highest price possible for what he produces, and to pay

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the lowest price possible for what he buys.

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Landlords operate this way as do workers, minority group members, socialists, babysitters,

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and Communal Farmers. Even widows and pensioners who save their money for an emergency try

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to get the highest interest rates possible for their savings. According to the reasoning

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which finds slumlords contemptible, all these people must also be condemned, for they exploit

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the people to whom they sell or rent their services and capital in the same way when

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and they try to obtain the highest return possible.

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But of course they are not contemptible, at least not because of their desire to obtain

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as high a return as possible from their products and services.

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And neither are slumlords.

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Landlords of dilapidated houses are singled out for something which is almost a basic

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part of human nature, the desire to barter and trade and to get the best possible bargain.

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The critics of the slumlord fail to distinguish between the desire to charge high prices, which everyone has, and the ability to do so, which not everyone has.

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Slumlords are distinct not because they want to charge high prices, but because they can.

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The question, which is therefore central to the issue, and which the critics totally disregard, is why this is so.

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What usually stops people from charging inordinately high prices is the competition which arises

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as soon as the price and profit margin of any given product or service begins to rise.

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If the price of frisbees, for example, starts to rise, established manufacturers will expand

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production, new entrepreneurs will enter the industry, used frisbees will perhaps be sold

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in Second Hand Markets, etc.

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All these activities tend to counter the original rise in price.

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If the price of rental apartments suddenly began to rise because of a sudden housing

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shortage, similar forces would come into play.

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New housing would be built by established real estate owners and by new ones who would

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be drawn into the industry by the price rise.

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Old housing would tend to be renovated. Basements and attics would be pressed into use. All

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these activities would tend to drive the price of housing down and cure the housing shortage.

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If landlords tried to raise the rents in the absence of a housing shortage, they would

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find it difficult to keep their apartments rented. For both old and new tenants would

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would be tempted away by the relatively lower rents charged elsewhere.

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Even if landlords banded together to raise rents, they would not be able to maintain

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the rise in the absence of a housing shortage.

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Such an attempt would be countered by new entrepreneurs, not party to the cartel agreement,

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who would rush in to meet the demand for lower-priced housing.

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They would buy existing housing and build new housing.

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This would, of course, flock to the non-cartel housing.

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Those who remained in the high-price buildings would tend to use less space, either by doubling

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up or by seeking less space than before.

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As this occurs, it would become more difficult for the cartel landlords to keep their buildings

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fully rented.

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Inevitably the cartel would break up, as the landlords sought to find and keep tenants

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in the only way possible by lowering rents. It is therefore specious to claim that landlords

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charge whatever they please. They charge whatever the market will bear, as does everyone else.

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An additional reason for calling the claim unwarranted is that there is at bottom no

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really legitimate sense to the concept of overcharging. Overcharging can only mean charging

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Paying more than the buyer would like to pay. But since we would all really like to pay

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nothing for our dwelling space, or perhaps minus infinity, which would be equivalent

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to the landlord paying the tenant an infinite amount of money for living in his building,

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landlords who charge anything at all can be said to be overcharging. Everyone who sells

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Prices at any price greater than zero can be said to be overcharging because we would

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all like to pay nothing or minus infinity for what we buy.

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Disregarding as spurious the claim that the slumlord overcharges, what of the vision of

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rats, garbage, falling plaster, etc.?

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Is the slumlord responsible for these conditions?

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Although it is fashionable in the extreme to say yes, this will not do.

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For the problem of slum housing is not really a problem of slums or of housing at all.

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It is a problem of poverty, a problem for which the landlord cannot be held responsible.

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And when it is not the result of poverty, it is not a social problem at all.

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Slum housing with all its horrors is not a problem when the inhabitants are people who

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can afford higher quality housing, but prefer to live in slum housing because of the money

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they can save thereby.

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Such a choice might not be a popular one, but other people's freely made choices which

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affect only them cannot be classified as a social problem.

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If that could be done, we would all be in danger of having our most deliberate choices,

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our most cherished tastes and desires, characterized as social problems by people whose taste differs

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from ours.

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Slum housing is a problem when the inhabitants live there of necessity, not wishing to remain

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there but unable to afford anything better.

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Your situation is certainly distressing, but the fault does not lie with the landlord.

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On the contrary, he is providing a necessary service given the poverty of the tenants.

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For proof, consider a law prohibiting the existence of slums, and therefore of slumlords,

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without making provisions for the slum dwellers in any other way, such as providing decent

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Housing for the Poor or an Adequate Income to Buy or Rent Good Housing.

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The argument is that if the slumlord truly harms the slum-dweller, then his elimination

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with everything else unchanged ought to increase the net well-being of the slum-tenant.

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But the law would not accomplish this.

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It would greatly harm not only the slumlords but the slum-dwellers as well.

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If anything, it would harm the slum dwellers even more, for the slumlords would lose only

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one of perhaps many sources of income.

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The slum dwellers would lose their very homes.

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They would be forced to rent more expensive dwelling space, with consequent decreases

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in the amount of money available for food, medicines and other necessities.

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No, the problem is not the slumlord, it is poverty.

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Only if the slumlord were the cause of poverty could he be legitimately blamed for the evils

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of slum housing.

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Why is it, then, if he is no more guilty of underhandedness than other merchants, that

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the slumlord has been singled out for vilification?

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After all, those who sell used clothes to bowery bums are not reviled, even though their

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Their wares are inferior, the prices high, and the purchasers poor and helpless.

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Instead of blaming the merchants, however, we seem to know where the blame lies, in the

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poverty and hopeless condition of the Bowery bum.

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In like manner, people do not blame the owners of junkyards for the poor condition of their

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wares or the dire straits of their customers.

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People do not blame the owners of day-old bakeries for the staleness of the bread.

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They realize instead that were it not for junkyards and these bakeries, poor people would be in

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an even worse condition than they are now in.

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Although the answer can only be speculative, it would seem that there is a positive relationship

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between the amount of governmental interference in an economic arena and the abuse and invective

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have heaped upon the businessmen serving that arena.

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There have been few laws interfering with the day-old bakeries or junkyards, but many

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in the housing area.

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The link between government involvement in the housing market and the plight of the slumlord's

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public image should therefore be pinpointed.

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That there is strong and varied government involvement in the housing market cannot be

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denied.

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Scatter-site housing projects, public housing and urban renewal projects, zoning ordinances

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and building codes are just a few examples.

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Each of these has created more problems than it has solved.

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More housing has been destroyed than created.

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Racial tensions have been exacerbated and neighborhoods and community life have been shattered.

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In each case it seems that the spillover effects of bureaucratic red tape and bungling are

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visited upon the slumlord.

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He bears the blame for much of the overcrowding engendered by the urban renewal program.

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He is blamed for not keeping his buildings up to the standards set forth in unrealistic

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building codes, which, if met, would radically worsen the situation of the slumdweller.

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Compelling Cadillac housing can only harm the inhabitants of Volkswagen housing.

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It puts all housing out of the financial reach of the poor.

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Perhaps the most critical link between the government and the disrepute in which the

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slumlord is held is the rent control law.

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For rent control legislation changes the usual profit incentives, which put the entrepreneur

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in the service of his customers, to incentives which make him the direct enemy of his tenant customers.

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Ordinarily, the landlord or any other businessman earns money by serving the needs of his tenants.

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If he fails to meet these needs, the tenants will tend to move out.

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Vacant apartments mean, of course, a loss of income.

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Advertising, rental agents, repairs, painting and other conditions involved in re-renting

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an apartment mean extra expenditures.

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In addition, the landlord who fails to meet the needs of the tenants may have to charge

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lower rents than he otherwise could.

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As in other businesses, the customer is always right, and the merchant ignores this dictum

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only at his own peril.

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But with rent control the incentive system is turned around.

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Here the landlord can earn the greatest return not by serving his tenants well, but by mistreating

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them, by malingering, by refusing to make repairs, by insulting them.

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When the rents are legally controlled at rates below their market value, the landlord earns

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the greatest return not by serving his tenants, but by getting rid of them.

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For then, he can replace them with higher-paying, non-rent-controlled tenants.

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If the incentive system is turned around under rent control, it is the self-selection process

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through which entry to the landlord industry is determined.

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The types of people attracted to an occupation are influenced by the type of work that must

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be done in the industry.

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If the occupation calls financially for service to consumers, one type of landlord will be

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attracted.

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If the occupation calls financially for harassment of consumers, then quite a different type

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of landlord will be attracted.

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In other words, in many cases, the reputation of the slumlord as cunning, avaricious, etc.,

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might be well deserved.

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And it is the rent control program in the first place which encourages people of this

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type to become landlords.

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If the slumlord were prohibited from lording over slums, and if this prohibition were actively

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enforced, the welfare of the poor slum-dweller would be immeasurably worsened, as we have

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seen.

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It is the prohibition of high rents by rent control and similar legislation that causes

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It is the prohibition of low-quality housing by housing codes and the like that causes landlords to leave the field of housing.

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The result is that tenants have fewer choices, and the choices they have are of low quality.

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If landlords cannot make as much profit in supplying housing to the poor as they can in other endeavors, they will leave the field.

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Attempts to lower rents and maintain high quality through prohibitions only lower profits and drive slumlords out of the field, leaving poor tenants immeasurably worse off.

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It should be remembered that the basic cause of slums is not the slumlord, and that the worst excesses of the slumlord are due to governmental programs, especially rent control.

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The slumlord does make a positive contribution to society.

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Without him, the economy would be worse off.

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That he continues in his thankless task amidst all the abuse and vilification

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can only be evidence of his basically heroic nature.