California Proposition 98 and Rent Control II - Why Bundling Rent Control and Eminent Domain Reform Was a Political Mistake:

In my last post on California Proposition 98, I explained why its phaseout of rent control would have only a modest impact - one that is likely to be positive. In this one, I will suggest that the inclusion of rent control in an initiative primarily focused on protecting property rights against eminent domain was nonetheless a serious tactical error. By greatly reducing the chance that Prop 98 will pass, making property rights advocates seem dishonest, and closing off possible alliances with groups on the left, the "bundling" of rent control and eminent domain issues has done more harm than good - even from the standpoint of those who favor the abolition of rent control (as I do).

I. Including Rent Control Reduces the Chance of Passage.

Proposition 98's sponsors were not totally wrong to hope that their initiative might pass even with the rent control provision included. Back in 1995, Massachusetts voters abolished rent control in a stand-alone referendum; as MIT economist Henry O. Pollakowski showed in this study, the Massachusetts referendum predictably led to an expansion in the quantity and quality of housing available in Massachusetts cities that had previously been subject to rent control. If that could happen in one of the country's most liberal states, the Prop 98 forces could reasonably hope that it could also happen in California as part of an initiative bundling rent control with the vastly more popular issue of restricting eminent domain authority.

Nonetheless, given the popularity of rent control, including it in the initiative at least significantly reduced the chances that Prop 98 would pass. Experience with eminent domain referenda in 2006 shows that they pass by overwhelming margins if limited to banning government efforts to condemn property for "economic development" and other similar purposes (as occurred in Kelo v. City of New London). All nine "clean" anti-Kelo referenda on the ballot in 2006 passed easily. By contrast, two of the three referenda that tried to bundle anti-Kelo laws with more controversial restrictions on "regulatory takings" were defeated. Significantly, one of thes failed initiatives was California's Proposition 90, which was defeated by a narrow 52-48 margin. I summarized this data in a November 2006 post, where I concluded that "[t]ying anti-Kelo referenda to the much less popular regulatory takings referenda has turned out to be a serious political mistake." Bundling the anti-Kelo cause with an anti-rent control initiative is risky for similar reasons.

II. The Disastrous Interaction with Proposition 99.

Even so, it is possible that Prop 98, as written, could have succeeded if it were the only eminent domain initiative on the ballot. Rent control has fewer avid supporters than the many different regulatory programs potentially affected by Proposition 90.

Be that as it may, the situation changed radically once Proposition 99 - the rival intiative sponsored by pro-condemnation forces - entered the picture. Prop 99 greatly increased the difficulty of passing Prop 98 in two ways. First, as I have documented in my LA Times op ed, it would invalidate Prop 98 even if the latter also passes - so long as 99 gets the greater number of votes of the two. This means that Prop 98 can't be enacted unless it not only gets a majority, but more votes than Prop 99. Most voters are unlikely to realize the technical legal connection between the two ballot measures and are likely to support Prop 99 simply because it seems like a measure that will genuinely protect property rights against takings (even, though, as I explained in the LA Times piece, it won't actually do so).

Second, Prop 99 gives voters an apparent way to protect property rights without also taking on the rent control issue. Nonexpert voters are unlikely to realize that Prop 99 is deliberately structured to avoid giving property rights any real protection. This too increases the odds against Prop 98, and may be enough to cause its outright defeat.

The Proposition 99 ploy is so cleverly designed that it might have doomed Proposition 98 even if the latter didn't include a phaseout of rent control. With rent control included, failure becomes almost certain. Proposition 99 has been in the works for a long time. I first blogged about it more than a year ago. It was a mistake for Prop 98 advocates not to take it more seriously from the start.

III. The Dangers of Appearing Deceptive and Undermining Potential Alliances with the Left.

The inclusion of rent control in Prop 98 is also politically damaging for two other reasons. First, it exposes property rights supporters to charges of lying and deception. And such charges have in fact been repeatedly made by opponents of Prop 98, who have focused their campaign almost entirely on the rent control issue. For reasons I outlined in this post, I think that the charge of deception is wrong or at least greatly overstated. The sponsors of Prop 98 don't deny that it will phase out rent control; the official Prop 98 website specifically notes that it will. They merely focus on other more popular aspects of the initiative in their public rhetoric. Certainly, any deception by the Pro-98 side pales in comparison to that practiced by the sponsors of Prop 99, who are promoting an initiative intended to achieve the exact opposite of its stated objectives.

Nonetheless, the charge of deception is easy to make and impossible to refute in a succint way that ordinary voters can quickly grasp. It effectively diverts public attention away from the issue of eminent domain, and from the far greater deception perpetrated by the sponsors of Proposition 99. Since the Pro-99/Anti-98 side includes most of California's political establishment and major media outlets, these were predictable results. Like Caesar's wife, the cause of property rights must not only be pure; it also has to be perceived as such. That imperative is particularly important when the other side has vastly greater resources and media support.

Finally, the inclusion of rent control in Prop 98 closed off potentially promising alliances with forces on the political left. As documented in Part I of my academic article on post-Kelo reform, the Kelo decision and economic development takings are extremely unpopular among many liberals and leftists because they tend to victimize the poor and minorities. Ralph Nader, Bill Clinton, Howard Dean, Maxine Waters, and the NAACP (all cited in the paper) were among those who denounced Kelo in very strong terms. Surveys (also cited in the paper) show that 77 percent of self-described liberals oppose Kelo, and almost as many favor state laws banning economic development takings.

On the other hand, most liberals also strongly support rent control. An initiative that packages the anti-Kelo effort together with a rent control phaseout is likely to forfeit the support of many liberal voters who would be willing to support a pure anti-Kelo measure. In a generally liberal Democratic state like California, that is a major political drawback. It is particularly serious in a vote that takes place on June 3, where the absence of major statewide races leads to a low turnout - thereby ensuring that ideologically more extreme voters (who turn out at higher rates than moderates) will be a higher percentage of the total. Obviously, a liberal state like California has many more strongly ideological liberals than conservatives and libertarians.

Worse still, the bundling of rent control and eminent domain reform will lead many liberal activists to think that conservative and libertarian opposition to Kelo is just a cover for other causes that liberals oppose. That might reduce their willingness to ally with us on property rights issues in the future, not just in the case of Proposition 98. As a result, Proposition 98's bundling of rent control and eminent domain reform might have negative effects that go beyond Prop 98's own probable failure. I'm not sure how serious those effects are going to be. But I doubt they will be completely negligible.