The resulting pamphlet, entitled “Roofs or Ceilings?,” argued that the pressing shortage of housing in the immediate postwar period was attributable to distortions in the market structure caused by rent controls. Friedman and Stigler exhibited their argument through a striking analogy, comparing the housing market in San Francisco after the massive destruction of the 1906 earthquake with its housing market in 1946. The housing situation quickly normalized in the period after the earthquake, they wrote, because of the ability to ration the available units through higher rents and the strong incentives those higher rents created to build more units as quickly as possible. In 1946, despite the absence of a comparable catastrophe, the housing situation was dire, a product, they concluded, of the disincentives fostered by rent control.

Angus Burgin, The Great Persuasion, loc. 420