Now rent control is coming to Nashville. In city after city, we are seeing reports of 20, 30, even 40 percent increases in rents. Market forces are putting pressure on rents nationwide.

Governments have been trying to set maximum or minimum prices since ancient times. The Old Testament prohibited interest on loans, medieval governments fixed the maximum price of bread, and in recent years, governments in the United States have fixed the price of gasoline, the rent on apartments, and the wage of unskilled labor, to name a few. 

Price controls hold within them the promise of protecting groups that are hard-pressed to meet price increases. Like all price controls, rent controls are supposed to protect those who are renting when the demand for apartments exceeds the supply and landlords were preparing to “gouge” their tenants. But what price controls actually do is distort the allocation of resources. See Venezuela for the inevitable conclusion to that plan.

The unrealistic assumptions behind the logic of those who argue for price controls are amazing. The first of those assumptions is that hikes in prices apparently have no impact on consumers’ demand for goods.

Governments may not know much, but they do know how to produce a shortage or surplus. Price ceilings, which prevent prices from exceeding a certain maximum, cause shortages. If you mandate that a product be sold below its value, those holding that product simply refuse to sell. This spawns a black market where the product is sold at its new (even higher) value.

Price floors, which prohibit prices below a certain minimum, cause surpluses. That is, dictating that consumers buy a product for more than it is worth causes consumers to stop buying. The surplus means many can’t find jobs, which forces some to work (under the table) for an amount below that minimum. (See illegal immigrants)

The law of unintended consequences is at work always and everywhere. People outraged about high prices of plywood in areas devastated by hurricanes, for example, may advocate price controls to keep the prices closer to usual levels. An unintended consequence is that suppliers of plywood from outside the region, who would have been willing to drive in to supply plywood quickly at the higher market price, are less willing to do so at the government-controlled price. Thus results a shortage of a good where it is badly needed.

This entire cycle of inflating the currency before installing price controls is another means of increasing government power.

“Inflate the money stock; when prices rise, impose price controls to correct the situation. These controls lead to shortages which ‘require’ government intervention to assure appropriate use of the limited supply and to allocate it and even to control and nationalize the production of energy. The powers of political authorities are increased; the open society is suppressed.”

Armen Alchian, 1976

This entire exercise is a means of grabbing more power and control by a government keen on stealing private property.

Private property rights contain three key features: (1) the right to make decisions about the physical conditions and uses of specified goods, (2) the right to sell the rights of ownership to other people, and (3) the right to enjoy the resulting income and to bear the loss of the use decision.

Armen A. Alchian, Universal Economics

Read more here about the government’s motives.

Categories: Price Controls


Hedge · April 13, 2022 at 6:54 am

Please don’t buy a rental property in Nashville. We will never hear the end of your crying then. One property is enough for you apparently.

    Divemedic · April 13, 2022 at 8:43 am

    While I endeavor to allow all comments because I believe in debate and discussion, even with those with whom I disagree, I don’t allow spam, nor do I permit personal attacks.

    Especially not from drug dealing communists who only support the free market when it comes to their own product.
    At the end of the day, this is a website I maintain, hosted on a server that I pay for, posting content that I provide. That kind of makes me your landlord when you comment here.
    You have been warned multiple times. The last time, you were placed on moderation. I have now tired of moderating your insults. You have been evicted.

Big Ruckus D · April 13, 2022 at 10:19 am

Nashville was lost to the forces of leftist scum quite some time ago. That, and its present popularity (God only knows why, given the sort of cockroach people who now largely inhabit and run the place) have assured this sort of outcome; it was only a matter of time.

Given the political climate, and the fact a large swath of the population overall – but especially in blue hives like Nashville – is a bunch of inumerate and generally whiny little collectivist bitches who can’t manage their lives without fucking it all up, the cries of “big daddy govt has gotta do something” will only get louder and more frequent as the wheels fall off. Measures like this were inevitable as the stage for such stupidity was set long ago now.

Many owners of rental property bailed (sold their properties) after the hit from the covid rent moratorium, so as to avoid another financial kick in the nuts. I predict the govt imposed insults suffered by invetment property owners willl only get worse from here on out, so be exceedingly cautious about holding rentals. I won’t be surprised to see outright seizure of such properties under color of law occur at some point in the foreseeable future. It’ll be done for “the good of society”, you know.

Unfortunately, we willl suffer ever more of this kind of crap until the collapse finally occurs, sweeping away the govt’s ability to impose such garbage, and a whole lot of lives in the process.

TCK · April 13, 2022 at 3:53 pm

At this point, it should be blatantly obvious that there is nothing unintentional but the fact that liberal social and economic policies are destroying America.

Steve S · April 13, 2022 at 7:49 pm

Another episode in government meddling in the economy always screws things up. Always.

Comments are closed.