As long as we are on price [in this case rent] controls, I must reference Dr Thomas Sowell who has thoroughly deconstructed the politically popular and entirely ineffective rent control. Here is a general sample:
Although there was no less housing space per person than before, the shortage was very real at existing prices, which were kept artificially lower than they would have been because of rent control laws that had been passed during the war. At these artificially low prices, more people had a demand for more housing space than before rent control laws were enacted. This is a practical consequence of the simple economic principle already noted in Chapter 2 that the quantity demanded varies with how high or low the price is.
Some people who would normally not be renting their own apartments, such as young adults still living with their parents or some single or widowed elderly people living with relatives, were enabled by the artificially low prices created by rent control to move out and into their own apartments. These artificially low prices also caused others to seek larger apartments than they would ordinarily be living in. More tenants seeking both more apartments and larger apartments created a shortage, not any greater physical scarcity of housing relative to the population. When rent control laws expired or were repealed, the housing shortage likewise quickly disappeared.
Read the whole excerpt.
And for the serious students of what works, check out Basic Economics: a Citizen’s Guide to the Economy. HERE is a large sample [PDF doc] and HERE is where you can buy the whole book.
It is a must read for anyone who is interested in politics and things like rent control. it will give you a little reality around this oh-so-popular subject–empirical data.
Oh: here is a review of Basic Economics.
March 24th, 2005 | Uncategorized