Postwar Rent Controls
[Forty Centuries of Wage and Price Controls: How Not to Fight Inflation (1978)]
The rent that a landlord charges for his accommodation is merely an instance of a price for a commodity, like all other prices for all other commodities. And like all other prices and all other commodities, rents have been a prime target for government restrictions. The postwar experience with rent control has been particularly revealing in regard to the adequacy of controls in general.
Governments have three main reasons for imposing rent control. The first is the fear that those who can pay will get all the housing and the poor will be left in the cold. The second is that landlords benefit too much from rents that can be indefinitely raised. The third is that a rise in rents is a form of inflation, and so should not be allowed.
The Housing Record of San Francisco
In a particularly penetrating article Milton Friedman and George Stigler examined the housing record of San Francisco.[1] After the earthquake of April 18, 1906, the heart of the city was utterly destroyed by fire. Some 225,000 people were homeless. “Yet,” say the authors, “when one turns to the San Francisco Chronicle of May 24,1906 — the first available issue after the earthquake — there is not a single mention of a housing shortage! The classified advertisments listed 64 offers (some for more than one dwelling) of flats and houses for rent, and 19 of houses for sale, against five advertisements of flats or houses wanted. Then and thereafter a considerable number of all types of accommodation except hotel rooms were offered for rents.”
In 1906, San Francisco allowed the free market mechanism to allocate accommodation, allowing rents to find their own level after the disaster. Even so, there was a great deal of low-cost accommodation available in San Francisco at that time. (Friedman and Stigler quote the 1906 advertisement “Six-room house and bath, with 2 additional rooms in basement having fire-places, nicely furnished; fine piano; … $45.”)
To take another example of housing shortage, in 1946 the population of San
You can read the rest of this article at: http://mises.org/daily/5871/Postwar-Rent-Controls
Short URL: http://www.txwclp.org/?p=3968
Posted by rbutler
on Feb 8 2012. Filed under Libertarian News.
You can follow any responses to this entry through the RSS 2.0.
You can leave a response or trackback to this entry
