Price Controls: The Greatest Hits III
Economists thought price controls had been vanquished, but we live in a world where people are warming up to them. In this series, based on an article originally published at The Independent Institute, I'll revisit some of the craziest consequences of price controls.
Every Econ 101 instructor describes the shortage that results from a binding price ceiling. Some stop short, however, of describing the colorful ways a shortage, or queue, plays itself out.
In a classic little essay aptly-titled “No Vacancies,” Bertrand de Jouvenel describes the housing situation in rent-controlled post-WWII Paris. Under shortage conditions, apartment units turn over quickly.
One consequence of this rapid turnover can be disturbing, even ghastly behavior.
Deaths are the only opportunity.
Young couples must live with in-laws, and the wife’s major activity consists in watching out for deaths. Tottering old people out to sun themselves in public gardens will be shadowed back to their flat by an eager young wife who will strike a bargain with the janitor, the concierge, so as to be first warned when the demise occurs and to be first in at the death. Other apartment-chasers have an understanding with funeral parlors.
De Jouvenel is being delicate here. In Paris, rent control generated stalker behavior. It also incentivized Coasian side payments from prospective tenants to undertakers. Not the sort of dignified behavior that contributes to social cohesion.