Conservative Student News

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Government has the ability to regulate markets in this country. They often do so with the best of intentions. The idea is to protect those who could not otherwise afford a certain product, which is usually a necessary good. The problem is that these government regulations often, if not always, hurt the exact people in which they intend to help.

Take New York City's rent control policy. The purpose of rent control in NYC is to help poor and working class citizen's to keep apartments which they surely would not otherwise be able to afford and to ease just one of the many burdens they may face. Without rent control, NYC's rental market would skyrocket. It is likely that many people would be forced to move, either to a new apartment or possibly a new city. However, these potentially skyrocketing prices are caused by shortages of supply, which are in turn caused by rent control itself.

Demand for new apartments in NYC is approximately 20,000 units per year. This is to keep up with the city's growing population. However, only about 6,000 new units are created every year by investors and property managers. This ever increasing shortage not only makes it very difficult for people to find apartments in NYC, but it creates substandard living conditions as well.

To understand how rent control economically impacts the city, one must understand supply and demand and their associated equilibrium prices. The equilibrium price is the point at which the demand curve meets the supply curve. At this point, all parties involved in the transactions are pleased. The amount of suppliers who are happy to sell at the equilibrium price is equal to the exact amount buyers who are pleased with purchasing at this price. In this scenario, the market is in perfect equilibrium.

With rent control, a price ceiling is established. At this controlled price, less investors are willing to establish more housing in NYC. On the other hand, many people desire to live in NYC, thus increasing demand for rent-controlled apartments. A huge economic shortage is established.

Because of this economic shortage, apartment managers have people knocking on their doors asking to rent their apartments non-stop. In this case, apartment managers can ignore problems with their apartment complexes such as leaking pipes or cockroach infestations. It makes no difference if renters are unhappy with the conditions. They could leave and the apartment manager will still have plenty of demand for his rent-controlled apartment.

Bottom line is that government regulations tamper with the free market. An unregulated free market is self-correcting. It can keep up with paradigm shifts and technological advances, whereas government regulations cannot. To make changes or eradicate government regulations takes a lot of time and costs a considerable amount of money.

Often, these regulations do not get changed because of negative political implications. If some politician did away with rent control, there exists a great chance that a commercial paid for by the rival political party would say something along the lines of, "[opposing rent control politician] voted for a bill that forced hundreds of thousands out of their homes, is that who you want running your district?" This sort of implications involved with government regulations adds to the difficulty of changing a regulation that needs to be changed.

It is not just rent control which tampers with the free market. Any regulation imposed by the government tampers with it and creates economical inefficiencies. Subsidized jobs allow a politician to claim how he or she created thousands of jobs for the economy. But those same subsidized jobs cost taxpayers' money for which they will likely only see a benefit equal to a portion of the cost to these taxpayers.

Minimum wage increases the wages of the poor and uneducated, but it eliminates thousands of jobs that are valued below minimum wage, thus making it difficult at times for poor and uneducated people to get jobs.

The free market is optimally efficient. It allows everyone to make decisions for themselves. This process is vastly more efficient and better for society than any and all government regulations.