Vacant Storefronts and The New York Times

I gave a ride home a few nights ago to one of my fellow tennis players who works at the New York Times. He talked approvingly about an editorial advocating taxing storefront landlords if they keep their storefronts vacant for too long. Allegedly, there are too many vacant storefronts in New York City.

The theme is that landlords keep their storefronts vacant hoping for a tenant who is willing to pay a high rent, and then the landlord “gouges” (my friend’s word) the tenant and rents go higher and higher, thus driving out the kinds of business the Times presumably likes, such as small businesses.

I have not read the editorial and don’t plan to because reading this paper gets me upset with its ignorance of basic economics.

Some of the flaws in this proposal:

  • Why does the Times think it or the government has the right to tell landlords what to do with their own property? Sure, there are legitimate restrictions on landlords related to safety but this isn’t one of them.
  • Landlords obviously have an incentive to behave the way they do. There certainly are incentives to not let a store remain vacant because of all the taxes and regulations to which landlords are subject. Their behavior is rational when they sometimes choose to wait for a higher paying tenant.
  • Regulation upon regulation. That is the New York City and Times’ solution for most things. Does it ever occur to the Times and NYC liberals that regulations might be the cause of the problem? It is regulation such as zoning, building codes, and taxes that drive up the cost of owning a building, which drives up the rent. And getting around these restrictions causes delays. For example, if a different kind of business wants to rent space a zoning variance might be required, which requires bribes (or campaign contributions) for the local politicians as well as a lot of time.

Do tenants get ‘gouged’ by landlords? I dare say many tenants have more bargaining power than landlords. Why are landlords the bad guys and tenants the good guys? Why not punish tenants for not renting vacant stores?

The morality of imposing burdens upon other people’s private property is something that doesn’t seem to bother the Times and most of its readers.

The mentality of many of my liberal friends is that they are free to criticize the profit motive when pursued by persons or businesses they don’t like, but act in their own self-interest without hesitation. They would take a different tune if they owned commercial space. The Times certainly pursues the profit motive and one way it did so was to get City tax subsidies when it moved its offices to a new building in Times Square in 2007. Yet the Times regularly lambasts corporate recipients of government largesse.