Posts Tagged ‘Rent Control’


June 14, 2010


Rent control is just one example of price controls. My experience with rent control in Chicago, after World War 2, amply demonstrated the results: the resulting shortage and the makeshift adaptations of the market which provided housing of sorts. That’s economics; people act to provide their wants within their means.

During WW2 housing shortages developed in Chicago. Rent controls, installed during the war, remained in force for years after the war. My wife and I, newlyweds, spent 5 months trying to find a rental within our budget. Rents were frozen on existing housing. New apartments were being built out in the suburbs, but charging much higher rents. With inflation, and frozen rent, existing apartments became relatively cheap, if you could find a vacant one. The only one we found was teeming with cockroaches. We passed that by.

Furnished apartments were not rent controlled. What qualified as a furnished apartment was pretty bad. The furniture was mostly cast-off junk. The “apartment” was usually 1 room with a hot plate for a stove, share the bathroom. One “furnished apartment” had its own bathroom because it was a bathroom, with bunk beds and a tiny table built in.

One “apartment” was a corner of a basement partitioned off by hanging bed sheets. When we arrived, there were 50 couples waiting to be interviewed by the owner. To qualify for that, you had to own a car and provide the owner 24/7 taxi service. We didn’t have a car.

What we finally took was one room with a couch which folded down to a bed. We had our own sink, a tiny gas stove, a small table and chairs, and a small closet, share the bathroom. When the bed was open, there was no room to walk around it.

We lived in 3 more furnished rooms in the next few years until we finally got lucky. A waitress in a café took pity on us, phoned a friend who had a friend who knew of an available place: a vacant, unfurnished apartment with a controlled rent.. We snapped it up.

The apartment, a third floor walk-up, was scorching hot in summer and freezing cold in winter. The steam heat would rattle in the pipes, and then shut down just as it reached our radiators. I went down to the owner’s apartment to explain this to him. Then I found out: he and his wife were freezing too; the rent they collected was barely enough to pay for the oil for heating the building. It left absolutely nothing for maintenance. Rent controls and inflation had destroyed the economic viability of the apartment building, which was to be their retirement pension plan.

Moving with my job, we moved to a far-out suburb, and found an apartment with uncontrolled rent, at more than twice the rent we’d been paying.

My next job took us to Los Angeles. There were no rent controls, and plenty of available apartments. We took a nice one bedroom apartment at half the rent of our last one, and little more than what we had paid for any of those makeshift furnished rooms.

My conclusion from those 6 years of house hunting; a rent freeze, rather than making cheaper rentals available, simply produce a shortage of rentals. Like all price controls, and all government interventions, it solves no problems but instead creates more problems. But makeshift though it was, the market, not the government, at least gave us somewhere to sleep and eat. When government creates problems, the market provides solutions.