Anarchy, State, and Rent Control

(excerpted from _The New Republic_ Dec. 22 1986 pages 20-21) 
The underscore character indicates _italicized_ text. 
All emphasis and parenthetical comments are in the original.



Postcard Cambridge: ANARCHY, STATE, AND RENT CONTROL 

Robert Nozick, a philosophy professor at Harvard, is the intellectual
hero of libertarians. His book, _Anarchy, State, and Utopia_, winner
of the National Book Award in 1974, argues that "free minds and free
markets" are the key to a successful society. While endorsing personal
choice on social issues like drugs and pornography, Nozick mocked the
economic interventionism of contemporary liberals who, he said, are
"willing to tolerate every kind of behavior except capitalistic acts
between consenting adults." Alas, it now appears that like so many
other advocates of the free market, Nozick is willing to make one
small exception --himself.

In September 1983, Nozick signed a one-year lease on a condominium
apartment in Cambridge, Massachusetts, owned by Eric Segal, the
eminent classical scholar and author of _Love Story_. Segal, who
bought the place in 1972, has lived there only occasionally and now
resides in England. The apartment is a beauty, actually two combined
units with 2,500 square feet of space, a wine "safe", Jacuzzi, sauna,
and a 50-foot balcony overlooking the Charles River. As a consenting
adult, Nozick agreed to pay Segal $1,900 a month.

When the lease came up for renewal a year later, Segal bumped the rent
up to $2,400. A lot, but Cambridge is a hot real estate market and
Nozick, as a consenting adult, signed again for another year. But he
apparently was miffed. Cambridge, after all, has one of the nation's
most draconic rent control ordinances --as do many college communities
where students and junior professors have imposed economic regulations
on the "townies" who rent them apartments during the school year. Was
it possible, Nozick wondered, that Segal might be violating the law?
Less than a month later, Nozick showed up at the offices of the
Cambridge Rent Control Board and asked if the city rent regulation
applied to his apartment. "We told him it certainly did," said Bernard
"Buddy" Packer, who makes sure all rents are fair and square in
Cambridge. "The final, legal, maximum rent on that apartment should
have been $1,900." And so the matter was settled, as far as Buddy
Packer and the Rent Control Board were concerned. Nozick's rent was
rolled back to $1,900. He received a $500 refund on his first month's
rent.  But Nozick wasn't satisfied. Like the son of a missionary
discovering pornography, Nozick apparently became fascinated with rent
control. "I was up there showing the apartment to some brokers at one
point," says Ken Edelman, a New York attorney who was soon
representing Segal. "There was a copy of the Cambridge Rent Control
Ordinance sitting on the coffee table."

Nozick decided the situation was more grave than even the rent control
board had suspected. In Cambridge, rent increases are allowed only
through occasional citywide raises, or through individual exceptions
granted to petitioning landlords. But how was the _original_ rent
determined? The law says it is the rent at which the apartment was let
when the ordinance first went into effect. Multifamily unit housing
was regulated in 1970 and owner-occupied condominiums were brought
under the law as of March 31, 1976.

If an apartment was not being rented at the time, the first rent at
which it was let becomes the base rent. All subsequent raises are
figured by a complicated formula only the Cambridge Rent Control Board
seems to understand.

Nozick knew he had not been the first tenant. Segal had rented out the
apartment several times before to friends and acquaintances. After
some investigating, Nozick turned up a couple in the building who
house-sat the apartment for six months in 1976, without a lease,
paying only $675 a month.

In September 1985, Nozick's second lease expired. Even though he had
no contractual right to stay in Segal's apartment, he did not want to
move out. The interventionist state to the rescue once again! Under
Cambridge's rent control ordinance, even a tenant without a lease is
evictable only if the owner himself wanted to move into the apartment.
Not only did Nozick stay put, but a month later he filed suit against
Segal in Cambridge District Court. Nozick argued the rent --based on
the $675 base figure-- should now be only about $800. He demanded a
$25,000 refund for two years of "overpayment" --plus triple damages.
The case dragged on for two years. In May 1986 the Cambridge Rent
Control Board issued a new ruling. Basing the rent on a 1977 lease
where the tenant had paid $1,000, the board decided the final, legal,
maximum rent should be $1,303. (Rent control boards always seem to
choose mysterious figures in order to give themselves an air of
authority.  Segal's monthly maintenance, property tax, and mortgage
costs were more than $2,000.)

This fall the parties settled out of court. Nozick agreed to move out
of the apartment on September 15, and Segal agreed to pay his tenant
$31,000. "We thought it was a pretty good settlement," said Edelman,
Segal's attorney. "Cambridge's rent control ordinance is one of the
strictest in the country. Nozick was in a very strong position."
Based on the $1,303 figure, however, the refund for the entire
three-year "overcharge" should have been about $21,000. Why the extra
$10,000? "Eric wants to sell the place," said Edelman. "With Nozick in
there, the apartment was virtually unmarketable. Any new owner would
inherit the problem. Basically, we had to pay off Nozick to get rid of
him. Otherwise, he might have been there forever."  Nozick refused all
comment.

No one, not even a philosopher, is morally obligated to live as if the
world were the way he wishes it were. Robert Nozick pays taxes and is
entitled to enjoy the government benefits they finance --even benefits
he thinks should not exist. Perhaps the libertarian philosopher should
not be expected to opt out of rent control voluntarily. But should he be
pursuing his landlord through the maze of rent control regulations like
a man possessed? And should he be using his ability to make a nuisance
of himself under these regulations for simple, if lawful, cash
extortion? 

They say that policeman make the best burglars. After a few years on
the job, they know all the tricks. The same thing seems to be true of
philosophers. If you're looking for someone to manipulate a rent
control ordinance, find an advocate of the free market.  

William Tucker