Imagine for a second you are a young person. Born and raised in San Francisco, you go to school, you study hard, you get great grades, and you graduate, top of your class. Your chosen profession? 7th grade math teacher. Or nurse. Or maybe talented musician in an orchestra.

Good for you. You’ve done well! Too bad you can’t live in the city you were born and raised.

Rent Control, as it exists in San Francisco, is a system that serves you well, as long as you:

Got your initial apartment many years ago, when rents were lower.

Managed to be able to stay in the same place, did not have to move around early in your career.

Make a high enough salary, or have a partner with a high enough salary, allowing you to “buy in” at market rates… while limiting your increases.

Who does this mean? It means rent control is great for techies, because they can get rent controlled apartments with their more generous techie salaries. There are tech executives with half million dollar salaries who love rent control, because it directly impacts their very flush bottom line.

It means it’s great for older people — the older the better, who’ve had the luxury of being able to live in the same city for a long period of time (i.e. if you’ve had to move for a job, this isn’t you). If you see someone paying 800 dollars a month for a two bedroom on Russian Hill, there is a good chance they are likely at least in their 50s.

Rent control, on the other hand, does nothing for a schoolteacher just entering her profession. Or the new social worker. Or frankly, the person struggling to come out of poverty after completing a drug treatment program and working their first job after recovery. Rent control is, in practice, a transfer of money and buying power from the young and relatively poor to the old and (often) relatively rich.

For those who are unfamiliar with how rent control works in San Francisco, the basics are that any apartment on the market — can be rented at the market rate. Only once occupied does rent control kick in. At that point, rent can increase at a low rate, about 1.5% per year, typically under inflation. There is some accommodation for additional rent for capital improvements, but even that is limited. Further, it does not apply to newer units (mostly, things built since June 1979), though there are exceptions.

So what happens? The system incentivizes people to stay in apartments for as long as possible. The longer you are there, the larger the gap becomes between the market rate and the rate you are paying under rent control. After 10 years or so, the effective rent control subsidy — the difference between what you pay and what a new place would cost you, becomes quite substantial. This fact, the reality that you are subsidized for not moving, has all sorts of unintended consequences.

The first main consequence is that it tends to make people stay in place longer. In normally functioning rental markets, there is a progression for a couple within the housing market. They might go from a studio when starting out, to a 1 bedroom apartment once careers are established, to a 2 bedroom when the first child is born, and so on. However, under rent control, this progression gets stymied, because each jump, especially if there are many years between steps, is essentially cost prohibitive. The sticker shock of going from a rent controlled one bedroom you rented 8 years ago to the market rate two bedroom you need is often so high that it drives couples out to the suburbs.

A second main consequence is that it disincentivizes landlords from putting older housing on the market. Imagine you are that couple starting out. You did well, and you ended up buying that two bedroom apartment. A few years later, you decide you want to move to a larger house in the suburbs somewhere for your growing family. Under normal circumstances, you might opt to rent out your apartment. In San Francisco, however, due to rent control — as well as other fairly onerous regulations that make it very difficult to evict problem tenants, you have very limited flexibility in what you can do with your rental. Should you need to sell, there is a very good chance you will be challenged in court. Especially if the person you have to evict as part of the sale can get sympathetic press.

Another incentive is more subtle. Imagine you are a landlord. You have an open house. One prospective renter is new in town, is just getting established in the city. A second prospective renter has a long rental history elsewhere in San Francisco, but is, perhaps, moving to a larger place or to a better neighborhood. Which do you choose, assuming equal income? The sane answer, if you are the landlord, is the person who is new in town, since there is a far higher likelihood that the person will either find a different neighborhood they really like, or possibly not adjust well and leave after a year. Far better outcome than the person who will stay forever. Why? The former can allow you to put the place on the market in another year or two at higher rent, while the former may end up locking you in at a lower rate for years. While some landlords will appreciate the stability of the latter — most, especially those that operate many properties and know how to properly manage churn, will rent to the more upwardly mobile or “likely to leave in 2–3 years” renter.

The sum of all this — is that rent control protects a small class of long term residents and rich people who can pay current market rates, at the expense of the young and the poor. It is, ironically, a system of privilege that masquerades as progressive.

What would a truly progressive system look like?

Rather than benefit rich techies who can pay market rates at the expense of the poor, a sane system would more directly target those in need of rent assistance. Imagine income based subsidies for rent, paid for by a progressive tax on rental income. Or by a wealth tax. Or some other more equitable means that doesn’t just support the poor, but does so in a way that doesn’t arbitrarily award longevity in a given location regardless of income.

Under such a system, no longer do we have wars over who gets to keep the rent controlled apartment in a divorce. We no longer have tragic stories of 98 year old widows with long standing rental histories being evicted, because there is far less incentive to do so. The fight over who is allowed to rent out their place on AirBNB is resolved, because no longer are “illegal hotels” a conversion mechanism of rent controlled housing to market rate housing.

Under such a system, people can move up, move around neighborhoods as their lives change, without fear of losing a rent control subsidy. Rich techies no longer arbitrarily get extra benefits of rent control — they end up paying market rent, as they would just about anywhere else in the country.

Changing San Francisco to make housing affordable means we have to take on what is essentially a third rail of San Francisco politics. It can’t happen until we take this on. I hope we do!