The Outstater

September 18, 2021

Save the Babies; Don’t Pay Rent

THE INDIANAPOLIS STAR has its entry for the 2022 Pulitzer Prize. It is “Do it for the Baby: Indianapolis Renters Plead to Stave off Evictions as Moratorium Ends.” The co-authors are Ko Lyn Cheang and Binghui Huang. Published yesterday, it is a certain winner.

If you are too busy to read the entire thing, here is the gist: Rent is unfair.

Ms. Cheang and Ms. Huang observe the cardinal rule of any good Pulitzer entry by never seriously testing the premise on which their article is based. It is their assumption that the 93,000 Indiana households (including 84,000 children) that the Star counts as in danger of eviction have good reasons for being behind on their rent — every single one of them. 

But the article also reports that Indianapolis has received $187.6 million in federal money to help households cover rent. Added to that is the unreported resources of thousands of relatives, churches and charities willing to help with cash gifts in emergencies. 

That amounts to a lot of money, which raises a question: Why didn’t Ms. Cheang and Ms. Huang think to ask any of their subjects how they were spending their money if not for rent? And if the pandemic left the 93,000 flat broke wouldn’t that be driving a sharp increase in applications for township relief payments?

These payments, granted, are not typical government handouts. They require documentation of real and immediate need. The check goes directly to the landlord in most cases, and townships can require proof of Income, receipts for payments (bills, etc.), tax returns for the previous year, identification and birth certificates (for children) – dependable data, in other words, not political estimates.

So could there be factors at work other than landlord avarice and a willingness to sacrifice babies? Could a Republican governor enforcing a rent moratorium, perhaps, give people the idea that paying rent is optional, that they can move their rent dollars to another budget category?

We don’t know because neither up-to-date township numbers nor the mal-incentives of political agency were part of the Cheang-Huang analysis. What you got was a heap of teary nihilism, something that modern Pulitzer judges not only appreciate but require. One paragraph summarized the Star’s approach:

“Indiana law effectively requires judges to only consider one primary factor when deciding eviction cases — whether you have paid rent. Given there are few, if any, viable legal defenses for non-payment of rent in Indiana, an eviction is virtually a foregone conclusion in many cases.”

So the problem, as shocking as it may sound, is that Indiana unfairly insists that the ultimate defense for not paying your rent is paying your rent, and if you don’t pay your rent the property owner can find someone who will pay the rent.

The solution, it is implied, is: 1) transfer more money, more quickly, from people paying their rent to people not paying their rent; 2) make eviction an abstract never actually applied in the real world; and 3) make all housing “affordable” by decree. 

That is certainly good Pulitzer material, but before the Star clears space in its trophy case it might want to take a closer look at the other half of this equation. 

Earlier this year The Indiana Policy Review asked a member of the hated landlord class to open his books. (Registration may be required.) We wanted to see how much blood he was sucking from the tenant body.

His annual income statement, the one he uses to file with the IRS, showed roughly $12,000 profit on $40,000 rental revenue, less $7,000 for debt service and $6,000 for depreciation, leaving a net taxable income of -$1,000.

“There’s no margin for rent moratoriums,” the landlord told the journal, “especially for those of us who have debt we are servicing. A few months of lost rents can result in a shortfall that prevents an owner from making mortgage payments, potentially falling into foreclosure himself.” 

Economics sure has a way of ruining a good story. — tcl



Comments...

Leave a Reply