BUENOS AIRES—For years, Argentina imposed one of the world’s strictest rent-control laws. It was meant to keep homes such as the stately belle epoque apartments of Buenos Aires affordable, but instead, officials here say, rents soared.
Now, the country’s new president, Javier Milei, has scrapped the rental law, along with most government price controls, in a fiscal experiment that he is conducting to revive South America’s second-biggest economy.
The result: The Argentine capital is undergoing a rental-market boom. Landlords are rushing to put their properties back on the market, with Buenos Aires rental supplies increasing by over 170%. While rents are still up in nominal terms, many renters are getting better deals than ever, with a 40% decline in the real price of rental properties when adjusted for inflation since last October, said Federico González Rouco, an economist at Buenos Aires-based Empiria Consultores.
Milei’s move to undo rent-control regulations has resulted in one of the clearest-cut victories for what he calls “economic shock therapy.” He is methodically taking apart a system of price controls, closing government agencies and lifting trade restrictions built up over eight decades of socialist and military rule in an effort that has upended the lives of many Argentines.
Rent controls, like all price controls, disincentivize the production and maintenance of rental housing. The supply of such housing will always be lower than the demand. Americans who live in large cities have learned this since World War II, even as the folks on the Left whine about “affordable housing,” “greed,” and “compassion toward the less fortunate.” Milei, may God guard and guide him, understands this – and better yet, isn’t afraid to act on it.
Of course, there will always be carpers pointing at the margins and claiming that freedom is “unfair:”
Many new contracts—now permitted in dollars as well as pesos—stipulate rent increases every three months, real-estate agents and tenants say. That has made housing costs unaffordable for some people already struggling to pay higher food and utility prices, said Gervasio Muñoz, who represents an association of tenants in Buenos Aires.
Romina Misenta, a 40-year-old teacher, said rent on her small apartment increased almost threefold when her previous contract ended.
Note that we’re not told where Miss Misenta teaches or what she earns.
“By freeing up prices, it’s very difficult for all these people, including us, to get to the end of the month,” said Amalia Roggero, whose soup kitchen in La Plata has experienced a surge in people seeking food.
Yes: There are poor people in Argentina. But among the undiscussed effects of price controls is that the very goods whose prices are “compassionately” controlled become particularly unavailable to the poor. Only those who can pay black-market prices for such goods – to say nothing of the time and effort required to find the black-marketers who have them – get access to them. During a transition back to freedom, the onus is on the well-to-do to bridge the gap with voluntary charity, until supply and demand come together once again. (Argentina is a Christian country, isn’t it?)
One of the wonders of our time is how Javier Milei got elected in the first place. The Argentinean Establishment couldn’t have been happy about it. South American “conservatism” differs greatly from that in the U.S. It’s mostly about “keeping the peones in their place.” For a lover of freedom to rise to the pinnacle of Argentinean executive power despite the resistance of the landed gentry is even more astounding than the ascendancy of Donald Trump is here.
I hope President Milei has first-rate security. By the way: Argentina is named that because when it was first colonized, it was exploited for its silver. Any chance you’ll be making the Argentinean peso into actual money, President Milei?
