It’s an election year, so there’s a lot of ideas and promises floating around to garner votes and win an election.

This election cycle includes the highly refuted idea of rent control. On one hand, if you’re a renter, rent (and the price of everything) is out of control.

Back before the Fed got involved with interest rate policies, it only took one income to provide for a family. Then, two income households became the norm. Now, two income households and a side hustle is often needed.

These are challenging times.

The challenge is that the “solution” makes the issue worse. Around 93% of economists say rent control is bad. How bad, you might ask?

Swedish Economist Assar Lindbeck said “rent control appears to be the most efficient technique presently known to destroy a city-except for bombing.”

Jason Furman, Obama’s top economic advisor has also come out against rent control.

The reason that economists are against rent control is that housing quality declines. Home conditions decline over time, and if a landlord can’t recoup the costs to make the home in a desired condition then the landlord won’t make the repairs.

It also reduces supply because investors invest to make money, not lose money. If they’re losing money, then they stop investing in that area.

Why do rents increase in the first place? Rents increase because of inflation (i.e. governments creating additional money supply). This causes insurance, labor costs, and taxes to go up.

This is one of the ironies: the government raises the landlord’s tax bill and inflationary tax bill, but prohibits them from recouping their costs through rent controls.

So what should we do? We need to focus on policies that create supply. Econ 101 taught us all that we have a supply vs. demand imbalance. We also need to stay within our budget and stop printing money.

That stance doesn’t help get politicians elected because people want “free stuff.” The challenge is this “free stuff” makes everything else cost more in the future, and it’s making it more challenging for renters to purchase their first home and build true wealth through homeownership.