Opinion: I try to keep up with the main trends in economic thought in my reading and listening. That no doubt makes me pretty boring to others but there is enough of a Marxist in me to think that much of what we call political and social life has a material economic base. I also hold in mind the John Maynard Keynes idea to the effect that often our political leaders are simply parroting the ideas of dead economists.

So my brain skips a beat when I hear a politician describe another as ※economically illiterate§. A gambler may safely bet that the description is right, even that both those involved deserve it.

The label was applied by Act housing spokesman Cameron Luxton to his Green Party equivalent Tamatha Paul after she had called for consideration of rent controls in the face of recent data on high (and no doubt very challenging) rental increases. Luxton went on to advocate further loosening of homebuilding regulations as a better option.

He also quoted a Swedish economist on the effectiveness of rent control to ※destroy a city§ better than ※bombing§. My guess is that his source was a 2021 Maxim Institute paper which prominently used that quote - one does not usually have to go back too far to find the source of parliamentary ※wisdom§. If he does believe the description I suggest he switches on his TV and sees what real bombing looks like.

There are many different types of rent control, and sweeping condemnation does not do that complexity credit. In the US you can find a good few rent control systems and while it may be that New York, Los Angeles, San Francisco and Washington DC are ※destroyed§ you have to be pretty negative to see cities in Germany, Sweden, the UK, Ireland, Austria, Spain or for that matter Japan, Hong Kong and Singapore as all in that state purely by way of their rent controls.

In fact the economic debate on rent controls is not at all one-sided. The essential point is that there are many ways to regulate for rental increases, and which are most effective and which have the least negative effects (yes, such actions do have a range of impacts) depend on the market conditions into which they are being applied. There is no universal answer. It will not always be right or wrong.

There is nothing wrong with the economic literacy of suggesting we should consider rental controls when rental prices are a significant part of persistent inflation and social pressure, but lots wrong with the economic literacy of suggesting they never work.

This is an important principle of economic thought and policy making. I was reminded of it when listening last week to a presentation by the International Monetary Fund economist Rui Mano as part of a regular Treasury Guest Lecture series. Mano traversed a recent IMF report on global economic growth highlighting relatively constrained growth in the next few years though with relatively constrained inflation (the latter significantly due to that dreaded practice of regulation, in this case interest rates and credit limitations, I might add).

The more absorbing bit, given my reservations about economic forecasting, was on how monetary policy conducted by central banks had its regulatory effect. The study disaggregated impacts across different economies and identified where the impacts were most and least effective. Fairly obviously, once it is analysed and described clearly, when and how a particular action by a central bank has impact depends on the market structure concerned, particularly the shape of the housing and housing finance markets. The bankers concerned understand all this but it rather gets lost in what we might most kindly describe as political debate.

A good policy discussion on rent controls, the various forms they might take, and the options surrounding such controls would be a valuable part of the response to housing crises and the social development of our major cities. I suspect such a policy discussion would raise many issues with unconstrained residential development and focus attention on positive options for public housing.

Those who may emotionally respond to the idea that rent controls are automatically negative might ponder how much of their current rental is being paid by government and whether they really want a ※free§ market. They will know that a good deal of the rental paid at lower price levels is paid by government, directly or indirectly. They might think that a government mindful of its expenditure might itself have an interest in seeing such payments constrained.

Unless the Government sees its role as income support for landlords to go along with tax relief.