The Coronavirus Pandemic Permanently Destroyed Property Rights

The Coronavirus Pandemic Permanently Destroyed Property Rights

By Steven Greenhut

I don’t usually pay particular attention to health scares, so when talk of a spreading pandemic started dominating the news cycle I largely shrugged and went about my business. I was staying at a cheap motel in Calexico, taking photos of the New River and the Salton Sea for my book about California water policy, when my wife called from Sacramento and said, “You better get home. And I mean now.”

That was the weekend when the shutdowns began.

I recall stopping at a grocery store near Modesto when I noticed meandering lines and a run on toilet paper. The rest, as they say, is history. Like most people, I never could have predicted the coming shutdown of the economy, government orders to stay at home, an end to restaurant dining and public gatherings, and profligate “relief” payments. As that (probably fake) George Washington quotation put it, “Government is not reason, it is not eloquence – it is force.” Government officials aren’t wiser than the rest of us, so when they tried to deal with a serious public-health problem, they did so in a forceful, ineloquent and unreasonable manner. Unfortunately, many of its worst approaches have left us with permanent scars.

In my column last year summarizing lessons from COVID-19, I concluded that it left us as a “nation of rulers, not laws.” American governors – and California Governor Gavin Newsom in particular – quickly and eagerly used their broad emergency powers to begin issuing edicts. Given the extent of the public-health threat, some of the more modest and temporary ones were understandable, but they bypassed the normal legislative process in cynical and expansive ways. One Republican lawmaker published a 138-page document detailing the 400 laws that Governor Newsom unilaterally imposed or changed – many of them that only tangentially had anything to do with protecting public health.

In particular, California’s officials used the crisis to impose policies they already supported but couldn’t get through the normal legislative process. The worst example involved anti-eviction orders that have literally destroyed our property rights. Virtually all “mom-and-pop” landlords depend on the rental income. With one fell swoop, governors (and the federal Centers for Disease Control) declared that tenants no longer had to pay their full rent if they faced a pandemic-related hardship. Sure, landlords could potentially collect rent in the future in civil court, but good luck with that.

In making it virtually impossible to evict non-paying tenants, policymakers imposed the full cost of their public-health plans on individual property owners, who could no longer count on getting a return on their investment. Often, property owners have mortgages – and they always have tax and insurance bills. When a heating system or roof leaks, they’re still required (ethically and legally) to make repairs. But they no longer could count on receiving rents. Someone posted my column detailing the plight of landlords on a liberal housing-related news group, and you can probably guess the ensuing negative responses. No landlord I know expects any sympathy given that it’s the type of investment they freely chose.

However, I thought that most people – even renters who have had less-than-stellar rental experiences – might understand that if the government deprives owners of their supposed state constitutional right to a fair return on their investment, fewer people will go into the business and even fewer will upgrade their properties. That helps no one.

The result seems very obvious: fewer available rentals and fewer rentals in tip-top condition. Investing in rental property has always been a prime means for middle-class people to build wealth. My grandfather was an immigrant paperhanger (remember wallpaper?) who invested in Philadelphia row houses decades ago. Now, I talk to many people who won’t dare buy a rental house out of the legitimate fear that the government can suspend rent payments at will. Tenants often outnumber owners, especially in larger cities such as Los Angeles. We see groups of activists lobbying for rent controls in Costa Mesa (and previously in Santa Ana). By eliminating property rights and shifting decisions to city councils (and tenant-dominated rental boards), the government has made owners’ livelihoods dependent on the political system. As the saying goes, democracy is two wolves and a sheep voting on what’s for dinner.

Certainly, many cities (San Francisco, Santa Monica, Berkeley, New York) embraced strict rent control long before the pandemic was a “thing.” They largely destroyed their housing markets of course, as renters stayed put in under-market units while investors high-tailed it elsewhere. But COVID added a new level of uncertainty. Look at how Los Angeles continually extended its anti-eviction provisions.

Any time I hear of a bad flu season or other health scare, I fully expect Newsom and others to return to their COVID-19 anti-eviction playbook. In other words, we no longer have property rights when officials can eliminate them by executive order, legislation or regulatory fiat. That is COVID’s lasting legacy – and the lasting result will not be pretty.

Steven Greenhut is the Western region director for the R Street Institute and a member of the Southern California News Group editorial board. Write to him at sgreenhut@rstreet.org.  This article first appeared in the Orange County Register.  This article is being republished with permission from its author.