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CAPITALISM: |
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The Clearest and
Most Comprehensive Contemporary Defense of the Capitalist
Economic System Available |
Literature and Lectures by Edith Packer, George Reisman, and Others |
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From Chapter 7: How Repeal of Rent Controls Would Restore Harmony Between Landlords and Tenants (pp. 240-241)This excerpt is taken from George Reisman, Capitalism: A Treatise on Economics. Ottawa, Illinois: Jameson Books, 1996. Copyright © 1996 by George Reisman. All rights reserved. May not be reproduced in any form without written permission of the author. The following limited exception is granted: Namely, provided they are reproduced in full and include this copyright notice and are made for noncommercial use, i.e., for use other than for sale, including use as part of any publication that is sold, copies of this excerpt may be downloaded into personal computers and distributed electronically or on paper printouts from a personal computer; reproduction on the internet is permitted provided the copy of the excerpt is accompanied by the following link to the Jefferson School's home page (which may, and hopefully will, be displayed elsewhere and more prominently): The Jefferson School of Philosophy, Economics, and Psychology. The hatred between landlords and tenants would disappear in a rental market that was free of controls. Such a market would restore economic power to the tenants: it would give tenants the power to make landlords serve them out of self-interest. Consider how a free market would bring this about. The first effect of the establishment of a free rental market would be a jump in the previously controlled rents. This jump in rents would eliminate the shortage of rental housing. Immediately, even before any increase in the supply of rental housing could occur, the rise in rents would level the quantity of living space demanded down to equality with the limited supply that exists. In fact, the quantity of living space demanded would be reduced to a point somewhat below the supply that exists: landlords would have some vacancies on their hands at free-market rents. Precisely these vacancies are what would restore to tenants their economic power over landlords. At free-market rents, each tenant would be able to choose from a large number of apartments available in his price range. If he did not like the service his present landlord gave him, he would simply move when his lease expired. He would not be in the position of having to regard his present apartment as the only one in the world, and feel obliged to stay no matter how bad conditions in it became. By the same token, his landlord would no longer be able to count on easily replacing him. At free-market rents, his landlord would not have a waiting list of potential tenants, but vacancies on his hands. If he were to act in such a way as to make too many tenants move, he would either be unable to replace those tenants or he would have to reduce his rents below the general market in order to attract replacements. In this way, a landlord who did not satisfy his tenants would suffer financial loss. The landlord's self-interest would once again make him want to gain and keep tenants. Landlords would once again begin to compete with each other in terms of improved quality and service. They would have to, because they would need tenants once again, while tenants would no longer need any particular one of them. |
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