Incentives Matter: Universities and Rent Control

Greg Mankiw calls it a dastardly clever scheme:

In the end, the goal of the rent control laws is thwarted (the low rents are enjoyed by well-paid tenured faculty rather than the needy), the income tax laws are thwarted (a sizable part of compensation is untaxed), and all this is done by a nonprofit institution (the university) whose ostensible purpose is to serve the public interest.

Read the whole thing to understand this unneighborly hat-trick.