The Struggles of An Egyptian Woman’s Mother Shows the Human Cost of Rent Control

     Reading one of the more recent editions of Thomas Sowell’s classic Basic Economics in the chapter

on price controls includes an excerpt of a woman recounting what happened when rent control

was enacted in Egypt in 1960. Sowell writes: “An Egyptian woman who lived through that era and

wrote about it in 2006 reported: ‘The end result was that people stopped investing in apartment

buildings, and a huge shortage in rentals and housing forced many Egyptians to live in horrible

conditions with several families sharing one small apartment. The effects of the harsh rent control is

still felt today in Egypt. Mistakes like that can last for generations.’”

The quote in question that Sowell provides is from Nonie Darwish’s 2006 book Now They Call Me Infidel: Why I Renounced Jihad for America, Israel, and the War on Terror. While the neoconservative philosophy the title of the book indicates is certainly a major turn off for libertarians, we should not throw the baby out with the bathwater on what Darwish has to say in the book when it comes to bad economic policies or the human costs of living under them. Unfortunately, she was not just a witness to situations going on around her. Rent control ended up being personal for her and her family due to her mother’s reliance on rents to supplement her income. 

Living in Egypt in 1960 meant that she was in the height of Gamal Abdnel Nasser’s rule, who was internationally famous at that time for his nationalization of the Suez Canal just four years before. Nasser may not have been an outright communist under direct control of the Soviet Union, but his interventionist economic policies influenced by the Ba’athist ideology of uniting all of the Arab world under one government seemed to have all the same confirmed Ludwig von Mises’s hypothesis that even middle of the road policies inevitably leads to socialism. One would be hard pressed to argue Egypt was capitalist at the time with all the sweeping nationalizations of industries, direction of an excessive amount of government resources to the military, shortages of many goods and services subject to price controls, government rationing of food products in an attempt to cope with that, and of course, the harsh rent control mentioned above. One would think living under this would be hellish enough, but Darwish and her family were to become personal victims of the inanity.

While the vision of multiple families sharing one apartment due to a severe shortage is bad enough, what happened directly to Darwish’s mother is even more personal to the reader. Just one of the disastrous policies in this instance being that of rent control. Nasser attempted to control the price of housing in the same way Mises analogized about governments attempting to control the price of milk and the results were much the same. . 

Darwish’s mother was herself a small landlady who had relied on three rental units she had had built with a life insurance payment to supplement her income following her husband’s death. A single mother of five who had been collecting a government pension as the widow of a military officer, she could not afford to send Nonie and her four siblings to private school with that money alone. So, she charged 40 Egyptian pounds a month per unit (Roughly under $800 a month in 2022 USD) to supplement her income. Well, in the spirit of Arab socialism, wherein the economy was to still be a command economy, just with the Eagle of Saladin taking the place of the hammer and sickle, that meant that she was an “exploiter” and had to be punished for the crime of providing housing for tenants in a voluntary exchange wherein all parties benefited. Thus, by government fiat in 1960, the rental income that Egyptians had relied on was overnight cut by 75%. To top it off, the rent could not rise so long as the same tenants were occupying the housing unit and evictions were forbidden. One can understand why investment in housing, even in bustling Cairo, might have come to a halt in such a situation.

What did all this mean to Darwish’s mother? Why, that she had only 30 pounds a month instead of the 120 that she had been expecting and indeed needed to pay for her children’s education. Darwish understandably says this was a “devastating blow to our family’s finances”. She recalls with amazement how, after her father’s death and these injustices in a society that was largely intolerant of women living alone, that her mother did manage to put her and her siblings through private school, as well as keeping them fed, clothed, and even vacationed in such a situation. 

But while Darwish’s mother got lucky and was able to ride out that horrific violation of her property rights via having her rental income reduced to a quarter from a petty government, it should be considered that other smaller landlords might not be able to storm even a smaller decrease in their rental income and for that reason alone, recent follies like the national eviction moratorium in the wake of the pandemic or the new rent controls in cities like St. Paul, Minnesota or statewide in the case of Oregon should be avoided in the future. Repealing zoning laws and building regulations will always be a better alternative to arbitrary price ceilings. As Sowell explains later on in the same chapter, one need only look at San Francisco in the wake of their 1906 earthquake to see how the market houses all when left alone to function. Politicians should honor the memory of Nonie Darwish’s mother and abstain from capping housing prices.