Housing affordability is a real concern, but Washington lawmakers are proposing a deeply flawed solution: rent control. While Argentina reaps the benefits of repealing its disastrous rent control law, Washington legislators are hurling headlong down the path of ruinous third-world housing policy.
HB 1217 would limit rent increases to 7% per year, prohibit any increases during a tenant’s first 12 months, cap late fees at 1.5% of rent, and restrict move-in fees to one month’s rent. On the surface, this might sound like a win for tenants, but history and economics tell a different story. Price controls—whether housing, food, or wages—have repeatedly failed, leading to unintended consequences that hurt the people they aim to help.
Rent control is a blunt instrument that ignores the complexity of housing markets. Can legislators articulate the principle that requires them to stop at 7%? Why not 6%, 5%, or 2%? If lawmakers believe they have the third-party omniscience that intellectually and morally qualifies them to set caps on price increases, why not set the price of rent entirely? Or better yet, regulate the price of consumer goods, medical procedures, and pineapples? The answer is simple—because it would be absurd. Yet, housing is somehow seen as an exception, too important to be left to market forces.
Economic theory and history confirm that when prices are artificially suppressed, supply shrinks. Landlords, unable to make a return on investment, sell properties, convert them to short-term rentals, or leave them vacant. Prospective developers—already facing Washington’s onerous zoning, land use, and permitting requirements—become even less willing to build. The result? Fewer rental units and higher costs for tenants in the long run.
While rent control may be new for Washington, price controls are an ancient mechanism used by brutal, totalitarian empires leading to the same patterns of failure. Producers respond to artificial suppression of prices by slowing, stopping, or shifting production to non-regulated activities or goods, or resorting to black market activity. Instead of solving shortages, price controls exacerbate them, dragging entire economies into decline.
Price controls are not a novel idea. The Foundation for Economic Education’s Jonathan Miltimore usefully traces four millennia of price controls, which successively weakened each of the empires that attempted them.
Mesopotamian city-state of Eshnunna (circa 2000 BCE): One of the first recorded attempts at price controls, which imposed fixed prices on barley and oil. The result? Economic distortions and scarcity.
The Code of Hammurabi (1755 BCE): Created a maze of price control regulations in Babylon. The empire eventually declined, facing economic degradation.
Athenian grain price controls (388 BCE): Athens imposed strict controls on grain, leading to food shortages and economic distress. Hoarders were executed, yet the shortages persisted.
Roman Emperor Diocletian (301 AD): His Edict on Maximum Prices fixed prices on goods and labor under penalty of death. Merchants simply stopped selling, leading to black markets and further economic decline. The Western Roman Empire collapsed within a century.
The same principles apply today. Whether it’s New York City’s disastrous rent control laws, Nixon’s 1970s price freezes, or Venezuela’s economic collapse under price controls, these policies always lead to fewer goods, higher prices, and worse conditions for consumers.
20th-Century Price Controls Comparison
Country/Region | Period | Type of Price Control | Short-Term Effects | Long-Term Effects |
United States | WWI & WWII (1914–1945) | Price caps on food, fuel, wages | Prevented inflation, stabilized prices temporarily | Rationing, black markets, supply distortions |
United States | Nixon's Price Controls (1971–1974) | Freeze on wages and prices | Initially controlled inflation, boosted confidence | Severe shortages, inflation surge after lifting controls |
United States | NYC Rent Control (1940s–Present) | Rent control | Kept some rents low for existing tenants | Housing shortages, poor maintenance, black market for rentals |
Soviet Union | USSR (1917–1991) | Price controls on food, consumer goods, and wages | Kept basic goods affordable (artificially) | Chronic shortages, long lines, black market economy |
Venezuela | Venezuela (2003–Present) | Strict price caps on essential goods and services | Made some goods temporarily cheaper | Severe shortages, black markets, hyperinflation, economic collapse |
Setting aside the obvious problem that when the price of a good is artificially suppressed you get less of it, a free and virtuous society simply cannot tolerate committees of government agents collectively deciding the correct price of things. This is textbook collectivist lunacy. If legislators believe that rent is too high, they have the burden to explain why they are the authority figure on what “too high” means. Maybe someone should let them know they ought to stop restricting Washington’s housing supply through an oppressive regulatory environment.
Washington lawmakers are not only providing the wrong answer, they aren’t even asking the right question. Instead of asking, “Why is rent so high,?” lawmakers should be asking, “Why don’t we have enough housing?” Prices are an effect, not a cause. Policies that delay or discourage housing development—such as burdensome zoning laws, impact fees, restrictive building codes, and excessive labor regulations—are the real drivers of high rents. If the goal is affordability, the answer isn’t price controls—it’s more housing supply.
Rent control is antithetical to a free and virtuous society. It fails to address any of the key factors driving housing affordability and supply. A developer seeking to build an apartment complex in Washington faces years of delays and millions in fees before a single unit is constructed. They must navigate multiple environmental, labor, and land use regulations, often involving ten or more government agencies. If lawmakers truly wanted to lower rent, they would focus on reducing barriers to construction rather than distorting the rental market.
The United States became one of the most prosperous nations on Earth by embracing free markets and competition. In contrast, countries that have doubled down on economically illiterate price controls have faced stagnation and decline. If Washington legislators are serious about making housing more affordable, they should look at the real causes of the crisis, not double down on a policy that has already failed for four millennia.
As the saying goes, “When you’re in a hole, stop digging.” Lawmakers ignore this lesson at their peril.