Markets work and markets for housing work.
This is what the new president of Argentina, Javier Milei, has sought to confirm by means of radically free-market economic policies. He is going as far as he can as fast as he can to make Argentina a freer and more prosperous country.
Can he succeed in the long run?
Many exploiters of the socialist status quo ante are bitterly opposed to his reforms and hope to undo them. We’ve seen before how quickly a relatively anticapitalist administration can kill the freedom-expanding reforms of a relatively procapitalist one.
But at least for now, Milei is proving his point, as witness the market for apartments in Buenos Aires.
The Buenos Aires newspaper El Cronista reports (with the help of Google Translate) that with the end of rent controls, the supply of rental units in Buenos Aires has doubled and prices for units have fallen by around 20%. The paper cites data by the Argentine Real Estate Chamber and the reports of brokers.
Under rent control, by 2023 the supply of rentals had shrunk to just 400 units. “Today we have a stock of more than 800 apartments, and it is growing day by day,” says Alejandro Bennazar, a director at
Eight hundred units is still low given the size of the capital city, but there’s light at the end of the tunnel. Getting rid of the controls caused supply to double instantly. An excellent start.
This is Common Sense. I’m Paul Jacob.
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4 replies on “Market Rents Work in Argentina”
Swedish socialist economist Assar Lindbeck acknowledged, in The Political Economy of the New Left [1972] p 39, “In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
The proclivity of the more ordinary leftist is, unfortunately, to imagine the stock of rental units not only as fixed in total number but as fixed in quality. No units are imagined as being withdrawn; no units are imagined as being allowed to slip into decline. Meanwhile, present renting households are imagined as the only customers. And most politicians either don’t bother to understand how rental markets really work, or ignore their understanding simply to pander to a constituency.
I look forward to the use of Argentina as an example of libertarian alternatives. Hide and watch. I gather from the previous comment that if we were to rent control neighborhoods in San Francisco or bomb it the result will be the same. I think that the subjective hyperbole is even less persuasive than holding up Argentina. But I think I’m just old.
Whatever might be said of subjective hyperbole more generally, hypocritical subjective hyperbole is definitely worse. And young leftists seem to as peevish and dependent upon formulaic sophistry as are old leftists, so I wouldn’t blame your age.
Wow. Thanks to Milei we have current examples of the power of free markets. Hopefully Argentina will become the next Hong Kong (except for the Chinese takeover part).