Dear Marama

Dear Marama,

As I?ve never met you before I choose to assume the best and refuse to accept you?re as ridiculously stupid as this recent Tweet of yours suggests.


Now, I?m not going to spend much time focusing on the obvious problems with your apparent laziness when it comes to spelling. I myself find spelling to be quite a challenge at the best of times and am forever relying on either spell check or a good old-fashioned dictionary.

Rather, I would like to focus on how unhelpful and mindless your suggestion for the adoption of rent controls are.

Almost all economists from Milton Friedman on the right to Paul Krugman on the left agree that rent controls not only do not help with housing availability but they actually lead to a far greater disparity between the rich and the poor. The primary reason for this is that these controls you so earnestly believe in inevitably lead to price distortions.

Rent controls are not based on supply and demand in the housing market but factor in other costs associated with living expenses such as fuel and food prices.

So, why would anyone ever leave their rent-controlled tenancy when they are paying below market rents? Well, the simple answer is that they do not. If they can afford to, that is.

The inevitable outcome of this is that those with higher incomes (subsidised in part by the savings they make on paying below market value) can afford to not only remain in a tenancy indefinitely but also add to it by means of improvement, while those on lower incomes do not. Landlords whose tenants are not well off, which is most, find it increasingly hard to cover their costs and oftentimes find themselves in a position where they can no longer improve their properties or sometimes even keep up with basic maintenance, thus driving them out of the market entirely and thereby decreasing the overall supply of accommodation available. This increases the demand and further worsens the very problem in the first place.

On top of all this, we come to the effect rent controls have on new building projects. Why would property investors build new housing for anyone but the relatively well off in a nation where rents are controlled by the state? The simple answer, again, is that they do not. They either?focus their business elsewhere in other markets or only adopt building projects aimed towards the well off who can afford to pay above market value and provide a profit for an investor?s enterprise. Thus an overwhelming majority of new housing is geared towards a relatively small section of the population while the majority are slowly squeezed out more and more.

I?ve only touched on a few of the problems associated with rent controls in the housing market and haven?t even begun to outline the untold number of knock-on effects that can influence the wider economy. Well, a capitalist-based one anyway. But, I imagine you may have thoughts on this. Critiques on the capitalist economy? I’m of a mind that you do.

In all truth, I couldn’t even begin to understand the results of rent controls on our overall economy as these effects are numerous and difficult to measure.

But, perhaps the most significant point is that rent controls are also exceedingly difficult to remove once implemented as they become a dominant voting issue for those powerful few who profit from their ongoing existence and an easy sales pitch for career politicians.

I understand that you’re young but that?s no excuse. If you?re going to make public comments on economic policy then, at the very least, take the time to research what you?re talking about. It?s not difficult and doesn?t take much?effort either. If someone like me, with a fairly limited understanding of economics, can grasp this then why can?t you?

I believe you will soon be in a much greater position of power and influence. With this comes a responsibility to know what you?re advocating for and the possible outcomes of the policies you champion.

I am of the belief that you hold a truly genuine regard for those whom you deem to be not as well off as others. In light of this, I reckon you need to challenge yourself a bit more in areas where perhaps your knowledge is still a bit lacking before making such public comment.