Rent Control is Wrong

By Gord Gekko
web posted July 1996

"Government intervention into the economy is an employment of force to induce men to do what would otherwise be contrary to their interests and inclinations." - Clarence B. Carson

Ontario Minister of Housing and Municipal Affairs Al Leach recently announced some proposals to modify rent control in Ontario. Hardly revolutionary, these proposals are seen as middle-of-the-road, designed to be palatable to both landlord and tenant. The major changes include:

  • Landlords will be able to hike rents on new or empty apartments. Established Ontario tenants who continue to stay in their apartments will be covered under rent control
  • Landlords can raise the rent of established tenants up to 4 per cent to cover capital costs
  • To prevent tenants from being 'bullied' from their apartments to take advantage of the new rules, an anti-harassment squad will be created. Fines for the harassment of tenants would be doubled to $10 000 for landlords and $50 000 for corporations
  • Disputes will be not mediated in a court of law, but an agency

Neither side particularly cares for the new rules. Landlords see them as not doing much to solve current problems, and tenants see it as a payoff to landlords. In March of this year, Gilles Bisson, housing critic for the NDP, stated, "It's a Conservative government trying to play to their friends in the development industry and some landlords."

Perhaps it is, but the changes themselves are the worst in politics. Neither truly affirming or denying free market principles, the changes themselves create the impression that tenants still have to be protected from landlords. The people who created rent control in the first place and the people who created these modifications clearly do not understand that capitalism and free trade must be the governing principle.

A few things to set out. Most people do not operate from this premise, but it is one that clearly needs to be stated aloud. The apartments that are being rented out are private property. The government does not have the right to regulate the private property of a human being.

Perhaps some people need a refresher on what a free society is. The best definition of capitalism I have seen is Ayn Rand's, so let us start there. In her book Capitalism: The Unknown Ideal, Rand states, "Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned...In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate."

If you accept the fact that humans trade under capitalism freely then you must also accept that government does not have the right to intrude in trade between human beings, in this case, the potential renter and the potential landlord. Each has a resource that the other desires -- the renter has money, the landlord has a space to lease. In a capitalist economy, the landlord and the tenant must come to an agreement without the coercive power of the government favouring one side over another. When this happens, as it does now, it is immoral.

Some will argue that without this coercive power, the landlord will have power over the tenant. The landlord, they argue, has the right to set any rent they wish, one that the tenant may not be able to afford. What these people clearly forget is that the market place is the most powerful determinant of how successful this landlord will be. If the landlord over prices the apartment, few will want to rent it. But it is that landlord's right to use that property anyway that they determine. The potential renter has no right to tell another human being what they can do with that property.

Each party in this situation is equal. Both has what the other wants. Neither is in a position of power. Both can accept an arrangement, and both can decide to go somewhere else. The landlord has no right to demand tenants, and the tenants have no right to demand housing.

The government of Ontario, and all other governments who enforce rent control, must realize that they do not have the right to regulate this (or any other) segment of the economy. This is not a case of political principles, it is a case of morality. Rather than deal in half-actions, the Harris government must re-evaluate their amendments to the law and simply remove all rent control laws.

This is a free nation, and in a free nation people have the right to deal with one another as they see fit. No government can be judge in matters of honest trading. Only the people involved, and the market place in general, can be judge. It is in your self-interest to fight to have rent control removed, whether you be a landlord or a tenant. It is a question of economic freedom, or subservience to a bureaucrat. You have no right to make that choice for me, but you do have the right to choose for yourself...choose wisely.

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