The Maker of Shortages
to builders, and it subsidized renters. The builders overvalued the housing projects they undertook, so that the bankers would make large loans, which the State guaranteed to pay in case of default, and in that way the entrepreneurs received what they would have lost had they depended on the low-rent payments fixed by law. The difference between market rent and legal rent was made up by taxes, and the dignity of the law was upheld. One consequence of this maneuver was to put upon the taxpayer a continuing load; another, and that is most important from the State's point of view, was the establishment of a permanent bureaucracy to manage the problems that subsidized housing entails: the evaluation of loan applications, the setting up and supervision of construction standards, the checking of amortization and interest payments, the enforcement of rules and regulations for subsidized renters. In the offing is another bureaucracy for the execution of foreclosures. Society acquired taxes and the State acquired power.
This is true whenever the State presumes to regulate the market place. The rent-control business is used here as an illustration. Price control of any kind must produce scarcities and therefore cause prices to rise to still higher levels, simply because the fictitious price discourages the production of the abundance that would automatically reduce price; price control has the same effect on the output of a factory as the subsistence wage has on the output of a slave. And in an integrated economy, where each specialized field of activity impinges on and is dependent on other fields, the attempt to fix a price of one commodity compels an attempt to fix other prices; a fixed price on a cup of coffee necessitates control of the price of cream, sugar, coffee beans, transportation, and all the services involved in bringing the beverage to the con- 132
