On the West Coast Price Control Obsession Continues

A long, long time ago in an empire far away, an emperor decreed that prices were going up too fast and too high and he imposed a regime of price controls on everything from wheat to labor. The penalty for violating the controls was death. The emperor was Dioclectian, and in spite of his track record of following through with threats, the price controls he established were universally violated.  This was 2000 years ago, and from then until now, price controls — including those on rent — always fail, causing scarcity and even higher prices. Still, areas with fast growth like California and Washington still want to try to make them work.

It’s in this context that a study has just emerged pointing out that rent control has accelerated the things proponents claim they’re worried about, rising prices and gentrification. Curbed wrote a post about the study with it’s arms folded:

Those who have griped about rent-control laws all along will point to this research as vindication.

Well, maybe because it does?

From the study:

We find that six percent decrease in housing supply led to seven percent increase in rental prices. These caused an aggregate welfare loss to renters of $5 Billion. This is almost as large as the benefits accrued by the lucky beneficiaries of rent control

I already wrote about this study and how in spite of it people in town still want to do it, even though it it’s harmful to poor people. The answer to the chaos created in the market by bad policy is that the market doesn’t work.

I still keep writing about this because I guess someone had to and the proponents have the momentum. I find the tone of the Curbed post weird, like some academics interrupted the march toward utopia with a bunch of annoying math. I expect a lot more sentimental appeals to people’s deep sense of angst and anger about having to pay for housing every month.









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