Wednesday, 31 March 2021

Rent Control Did to Vietnam What US Bombers Couldn't [+ QUIZ]

 

THINK HIGH RENTS ARE BAD for your city? Then wait until you see what happens under rent control. Since we're all of a sudden debating rent control as if it's a (possible) thing, it's worth reminding ourselves of Swedish economist Assar Lindbeck's observation that "in many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing." Literally, as David Henderson reminds us in this short guest post ...

Rent Control Did to Vietnam What US Bombers Couldn't

by David R. Henderson

[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.
Unfortunately, Lindbeck was wrong. Rent control is the most efficient. Case in point, South-East Asia, where rent control did to Vietnam what millions of tons of US explosives couldn't:
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 realised it was stupid and that we must change policy,” he said.
—From a news report in the Journal of Commerce, quoted in Dan Seligman, “Keeping Up,” Fortune, February 27, 1989.

** Quotes are from Walter Block, “Rent Control,” in The Concise Encyclopedia of Economics.

** EXTRA: TAKE THIS SIMPLE QUIZ TO SEE IF YOU CAN TELL THE DIFFERENCE BETWEEN RENT CONTROL AND BOMBING.

** This post first appeared at FEE.

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