In a recent video explainer, CNBC’s Juhohn Lee argued that economists were “widely against the [policy] idea” of rent control due to its impacts on housing supply. Lee arrived at this conclusion, which makes for quite the comforting headline to CNBC’s core audience, after speaking to three prominent “experts” on the subject.
The problem? Each of these three either represents or is closely tied to corporate landlord lobbying groups and Wall Street – facts that Lee failed to include in his video.
The first of these so-called experts is Sharon Wilson Géno, president of the National Multifamily Housing Council (NMHC). NMHC is a lobbying front for private equity speculators in the rental housing market, including Blackstone, Starwood Capital, and other predatory corporate landlords who evicted thousands of tenants at the height of the pandemic. (I wrote about them previously for our blog.) NMHC has spent millions lobbying in support of lucrative corporate tax loopholes for its members and against rent stabilization and tenant protection measures (including the CDC’s eviction moratorium) that cut into its members’ profits. The expert supposedly giving independent analysis of rent control policies to CNBC literally spends all day campaigning against tenant protections like rent control, on behalf of landlords. Not exactly independent!
These facts — conveniently left out of the video — make Wilson Géno’s comments to CNBC particularly galling. She argues that rent control is a “politically expedient, short-term solution” that stifles long-term housing supply. She claims people of color are among those who are most hurt by rent control’s purported unintended consequences.
This is projection, pure and simple. In reality, Wilson Géno’s group is the one that is fuelling the shortage of affordable units: their corporate landlord members are gobbling up millions of units around the country and jacking up rents, while NMHC itself has lobbied against corporate tax increases that would have financed sorely-needed investments in public housing which were in the shuttered Build Back Better Act. Note that NMHC featured private equity darling and BBB-killer Sen. Kyrsten Sinema as a guest of honor at its Fall 2022 meeting.
NMHC has also made life harder for people of color: the CDC eviction moratorium they lobbied to kill disproportionately protected Black and brown renters from predatory landlords, while their members’ property acquisition and luxury development sprees in low- and middle-income Black neighborhoods are locking a generation out of homeownership altogether. When several Black and brown renters interrupted NMHC’s fall conference to highlight the pain that corporate landlords cause them, they were met with boos and jeers from a ballroom of industry insiders.
But Wilson Géno isn’t the only conflicted source in CNBC’s story. Next is Jay Parsons, chief economist at property management software company RealPage.
Parsons argues that rent control stifles overall rental housing supply, citing a 2012 University of Chicago survey of economists who opposed local rent control ordinances in New York and San Francisco. There are two major issues with Parsons’ citing of the UChicago survey, as Rutgers economist Mark Paul has noted: it asks about things rent control is not intended to do on its own (such as increase supply), and relies on outdated theoretical thinking that runs counter to more recent empirical evidence (new studies on rent control from the University of Southern California, the University of California-Berkeley, and the University of California-Los Angeles have cast massive doubt on the housing industry’s claims that the policy stifles supply or hurts renters). Economists should consider updating their priors on rent control in light of new, empirical evidence – as they similarly did on raising the minimum wage only a few decades ago.
At another point in the video, Parsons calls for increasing federal funding for housing vouchers and praises the Low-Income Housing Tax Credit program as an acceptable alternative to rent control. While a boost in vouchers is indeed sorely needed, they cannot alone solve the crisis: thanks to industry greed and speculation, America would still have a massive shortage of affordable units even if housing vouchers were universal. Parsons also never discusses rising discrimination by landlords against voucher holders — a trend that highlights the limits of subsidizing private landlords as opposed to direct investment in public housing.
Parsons’ praise of LIHTC is also quite suspect: the program is rife with abuse by corporate landlords like Blackstone, who receive a tax windfall from the federal government and state credit allocating agencies, but are not required to keep rents affordable. Today, Indiana University’s Fran Quigley notes, LIHTC has all but halted public investment in the nation’s affordable housing stock, enriching investors while depriving poor renters of an affordable place to live.
If you consider information about his employer omitted from the CNBC video, you can understand why Parsons is parroting industry-friendly talking points. RealPage, according to a bombshell report from ProPublica last October, has helped a nationwide cartel of corporate landlords and property managers (including LIHTC participants like Blackstone!) artificially jack up rents. The company and its YieldStar clients are now facing over 20 lawsuits from affected tenants.
Several Democratic Senators have called on both the Federal Trade Commission and Department of Justice Antitrust Division to investigate RealPage’s potential violation of federal antitrust laws. The latter opened a probe into the company in November. Despite previously pitching the Yieldstar software at industry conferences, and (according to his own LinkedIn) leading a company team focused on RealPage software revenue management, Parsons has thus far refused to comment publicly on the scandal. CNBC passed up a golden opportunity to confront him on it.
The last “expert” in the CNBC video is Franklin Qian, Assistant Professor of Finance at UNC. Qian shows up to tell Lee about a 2019 paper he co-authored with Stanford University’s Rebecca Diamond and Tim McQuade, which argued that San Francisco’s rent control policy drove up rent and gentrification by inducing landlords to reduce available rental housing stock, either by selling to owner-occupants or redeveloping rental units into luxury properties.
Housing Is A Human Right, the housing advocacy division of the Los Angeles-based AIDS Healthcare Foundation, has pointed out several flaws with the Stanford study, including the authors’ use of an unrepresentative data set, a misleading timeframe, a lack of peer review, burying of the paper’s own positive conclusions about rent control, and a deliberate manipulation of mathematical models over three different versions of the study to make rent control look worse in each subsequent version.
Qian’s co-authors were also hardly impartial academics – Diamond is a former Goldman Sachs asset manager, while McQuade previously worked for UBS Investment Bank; both companies are invested in the rental housing market, with the latter regularly advocating against rent control and other tenant protections. Tim Redmond, investigative reporter for the San Francisco-based outlet 48 Hills, has also noted that the Stanford study blames the rent control law itself — rather than loopholes created and abused by speculators — for an estimated $5 billion in losses to renters and tenant displacement. When confronted by Redmond about this, Diamond offered a meandering and speculative response defending her anti-rent control conclusions. According to Redmond, this is directly contradicted by Bay Area historical eviction data.
Given how frequently the Stanford study’s flaws have been brought up since its first version was published in 2017, it is baffling that CNBC and Lee failed to ask Qian about them. The only explanations are that Lee is deeply ignorant about the debate over the very policy he purported to explain, that he had a vested interest in arguing that rent control doesn’t work, or both. None of these explanations are flattering to CNBC’s journalistic integrity.
Though CNBC did include some pro-rent control voices into the video — tenant Thalia Da Costa and legal expert Leah Simon-Weisberg — Lee subtly and repeatedly undermines whatever points they try to make. Take Simon-Weisberg for example — in the paltry 15 seconds she gets on screen, she calls for the federal government to “build more government-owned affordable housing,” correctly noting that the private market is failing to currently fill the gap. Lee undercuts her immediately, proclaiming in voiceover that tax incentives for private developers coud “boost construction of new affordable rental housing [and] provide a reason for landlords to keep rent prices low.” In other words, Lee reinterprets her comments to refer to existing incentives for the private market (such as LIHTC), rather than a call for novel government action. Moreover, LIHTC is already failing to do what Lee claims it could do. The video then cuts to NMHC’s Sharon Wilson Géno, who touts the benefits of tax credits for landlords.
It is also completely baffling that the topic of corporate landlords – a major player in the rental housing crisis – is never addressed directly in Lee’s video, particularly when two of his talking heads represent or work closely with corporate landlords! Surely he could have spared a minute or two to ask Wilson Géno and Parsons about the private equity industry’s activities in the rental housing market, or provide even a sentence describing what NMHC and RealPage are. Failure to do so actively misleads the audience.
As it stands, CNBC’s framing of its rent control video — “economic experts” on one side, “public sentiment” on the other — suggests to viewers that any pro-rent control voices in the video are naive non-experts prioritizing “feelings” over the cold, hard facts. Never mind that these so-called “experts” have clear financial incentives to say the things they are saying and that their “facts” are either bunk or severely misleading — thanks to CNBC’s omission of this information, viewers will never know.
This sadly fits a broader pattern of mainstream news outlets – including NPR, CNN, and Marketwatch — continuing to carry water for corporate landlords by presenting industry-aligned analysts and advocacy groups as neutral “experts”, without properly fact-checking their claims or disclosing their financial conflicts of interest. It’s also similar to how outlets framed the possible railroaders’ strike last September as a conflict between workers and the economy itself, rather than between workers and their bosses, as my colleague Dylan Gyauch-Lewis wrote at the time. It all betrays CNBC’s enormous bias toward libertarian economic theory, which thinks of economic policy as a battle between factual, rational economists against emotional, uninformed members of the public. We call this “The Sin of Progressive Hubris” in our economic punditry Trope Tracker.
In fact, rent control was the issue on which Milton Friedman, the American godfather of neoliberal economic theory, cut his teeth at the University of Chicago. His completely theoretical arguments about how rent control harms renters in the long run have mostly been empirically disproven, but people like Wilson Géno, Parsons, and Qian still trot them out. Conservative economists never let the facts get in the way of nice theory.
A properly informed, independent, and skeptical housing reporter should have immediately recognized these bunk arguments and called them out. Doing so isn’t partisan or ideological, it’s just showing that one knows the facts – the most fundamental value of journalism. Instead, Lee legitimated falsehoods and carried water for full-time ideologues. If CNBC is, in fact, a journalistic outlet and not just a propaganda machine for the financial industry, it ought to be ashamed.
IMAGE: “Apartments on Lombard Street below Jones Street” by bryan [Wikimedia Commons, 10/6/17]