[Gunnar] Myrdal stated, “Rent control has in certain Western countries constituted, maybe, the worst example of poor planning by governments lacking courage and vision.”
His fellow Swedish economist (and socialist) Assar Lindbeck asserted,
In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.
This is from Walter Block, “Rent Control,” in The Concise Encyclopedia of Economics.
Rent Control Destroyed Hanoi
Unfortunately, Lindbeck was wrong.
NEW DELHI—A “romantic conception of socialism” … destroyed Vietnam’s economy in the years after the Vietnam war, Foreign Minister Nguyen Co Thach said Friday.
Addressing a crowded news conference in the Indian capital, Mr. Thach admitted that controls … had artificially encouraged demand and discouraged supply…. House rents had … been kept low … so all the houses in Hanoi had fallen into disrepair, said Mr. Thach.
“The Americans couldn’t destroy Hanoi, but we have destroyed our city by very low rents. We realized it was stupid and that we must change policy,” he said.
—From a news report in Journal of Commerce, quoted in Dan Seligman, “Keeping Up,” Fortune, February 27, 1989.
This is also from the Block entry on rent control.
Limited Rent Increases
Landlords are now limited to increases once per year that cannot exceed 7 percent plus the change in the consumer price index, which is used to calculate inflation.
So the really bad effects we generally associate with rent control may not show up.
The post Rent Control Did to Vietnam What US Bombers Couldn't was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.