Rent Control: a Popular Idea That Fails in Practice

Rent Control: a Popular Idea That Fails in Practice

The Minneapolis Star Tribune carried a story recently by leading business columnist Lee Schafer, who argues why rent control is a popular idea that never works. 

Schafer argues that when government caps the price of something, the market looks first at other markets where the expected rate of return on an investment is not artificially capped. Capital sometimes flows out of the rent-controlled markets, with property owners cutting maintenance budgets, putting off capital improvements, and investing elsewhere.
In Massachusetts, MIT economists analyzed what happened in Cambridge when rent controls were lifted, and the result was a flurry of renovation and investment. 
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