Why Do We So Readily ‘Kid Glove’ Those Who Don’t Pay Their Rent?

Written by Landlord Property Management Magazine on . Posted in Blog

By Walter Block, Professor of Economics, Loyola University New Orleans

The Centers for Disease Control and Prevention, operating under the U.S. Department of Health and Human Services, has effectively ended all evictions from residential rental units until the end of 2020.

It is interesting to note how very different the law treats food and clothing, on the one hand, from shelter, on the other. If someone breaks into a Walmart, grabs a cake and some shoes, and tries to leave without paying, the repercussions are clear: that person is a shoplifter, and will be treated harshly not only by the forces of law and order, but will also lose out in the court of public opinion (I abstract here from when the person is a looter; then all bets are off, amazingly).

But if a person occupies an apartment, and does not pay the rent, then, he or she is treated very differently. Yet, in both cases, there is theft. True, in one of them it is theft of services, in the other it is robbery of physical goods, but this can hardly explain the very different way the two are treated. For if someone obtains a massage, haircut, nail treatment, session with a psychologist and declines to pay, this is also a theft of services but the perpetrator will not be gently treated by the police or the courts.

What is it that is so special about domiciles that failure to pay for them should be singled out for kid glove treatment by all and sundry?  Who knows?  Perhaps the explanation lies deeply within us; maybe we are hard-wired from evolution when we lived in caves or trees to see home and hearth differently than all other items. All we can say for sure is that even under ordinary non-COVID circumstances, this bifurcation holds.  For example, if you engage in shop lifting during Christmas season, woe betide you. But if you are a few months behind in your rent payment, no court will grant the landlord an eviction notice until January arrives. However, both are theft.  Who needs rent control when tenants can live fully free for the last few months of every year?  Only a Bernie Sanders type of person can smile at this situation.

So much for the normative elements of freezing evictions.  Now let us consider the positive ones.  One bad effect of this slap in the face of landlords is that we will have less shelter for people than otherwise. Eviction prohibition is not pulled on owners of commercial real estate or office buildings; hence we do not have the equivalent of homeless people in those arenas (apart from a very few trucks and hot dog stands).

What is going on vis-a-vis COVID, in this connection?  We are now poorer than we would otherwise be, if the economy had not been to a great degree shut down. I abstract from the issue of whether this was wise or not.  But the undeniable fact is that poorer people can afford less housing than otherwise. If evictions are allowed, where will the evictees go?  Why, to smaller and/or cheaper accommodations.

Landlords don’t relish empty apartments!  If numerous people now occupy fewer rooms per person, there will be more space available. That is Adam Smith’s “Invisible Hand” at work. How else can the homeless be rescued from their plight?  We are not now building more rental units, for goodness sake. The mistake well-meaning people make in opposing evictions is that they think the evictees will be consigned to living in the street. As Henry Hazlitt reminds us in his excellent book “Economics in One Lesson,” we should look not only at the visible immediate narrow effects of any public policy but also at the long run results for the entire economy. Evictions economize on space; they are a necessary condition for downsizing. Preventing them means more homelessness, not less.

Landlords are no more mean-spirited than other profit maximizers (that means pretty much all of us). If they cannot collect rents, their property will be foreclosed on them by banks. Will the Centers for Disease Control and Prevention declare a moratorium on that sort of thing until the end of the year? Not bloody likely.

Evictions seem callous, but they are not. Rather, they are the way the market maximizes human welfare when we face economic difficulty

Walter Block holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the J. A. Butt School of Business at Loyola University New Orleans and is a senior fellow of the Ludwig von Mises Institute.  This editorial was first published by RealClear Markets and has been reprinted with the permission of the author.

(Editor’s Note: As of the date this editoria was written, the Centers for Disease Control and Prevention and other U.S. Government agencies were contemplating the extension of the Federal eviction moratorium.)

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