Tag Archives: political economy

Housing Affordability

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A letter-writer in The Wall Street Journal‘s Wednesday Letters section offered a number of ways to break the housing cost problem for folks on the lower end of our economic ladder, folks that include established families and newly graduated young adults. The most cogent way IMNSHO is this one:

The market badly needs deregulation to unlock capital. Tax regulations have frozen large swaths of our existing housing stock. And state and local land use regulations lock millions of acres of land out of higher and better uses by making it illegal to build starter homes on smaller lots.

Especially those starter homes on those smaller lots. Tax regulations, mostly on existing homes up for inheriting, can be handled directly and immediately by the Federal government. The land use regulations consist primarily of State and land use laws and local zoning ordinances, and those are the primary responsibility of the State and local governments. Still, the Federal government has considerable influence that it can bring to bear, from jawboning to financial carrots and sticks.

These starter homes and smaller lots are reminiscent of the Levittowns that were built right after WWII to open up housing for returning white GIs, and their rapid take-up both fired up the housing market and contributed heavily to the nation’s economic reconversion from war to peace and the associated private economic revival. The first Levittown house sold for $7,900, about $80,000-$85,000 in today’s money.

Today’s analog would be shorn of the racial bars and should be shorn, also, of ethnic and religious bars. But that larger target market would only enhance the salability and thereby contribute heavily to breaking the existing cost barrier.

Call them TrumpTowns.

Hardly Defiance

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The Centers for Disease Control and Prevention has reduced its vaccines for children recommendation from a schedule of 18 diseases to a recommendation of 11. The American Academy of Pediatrics still recommends children be vaccinated against 18 diseases. The Wall Street Journal calls the AAP defiant.

No.

HHS Secretary Robert Kennedy, Jr, and HHS’ CDC have all along recommended patients and parents of child patients consult with their physicians on ailments, treatments, and vaccines. Kennedy has emphasized that recommendation while he has had CDC scale back the recommendations.

Parents are heeding that CDC recommendation and are consulting. Pediatricians and their medical association are acting like physicians and treating their child patients rather than parroting those ancillary CDC recommendations.

Wrong Answer

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House and auto insurers’ profits and the rate increases they charge policy holders are coming under political scrutiny, but politicians’ proposed solutions are badly counterproductive.

New York Governor Kathy Hochul (D) this month became the latest state lawmaker to advocate profits caps on insurers, to tackle escalating home- and “crushingly expensive” auto-insurance rates.
Her plan would require home insurers with “outsized profit margins” to lower or justify their rates, and review the profits threshold at which auto-insurers are required to refund customers.
Also this month, lawmakers in states including Oklahoma proposed profit caps targeting insurance.

No.

Government definitions of “outsized profit margins” have nothing to do with business imperatives or what happens in a free market. Those definitions serve only the personal political ambitions of the politicians doing the defining, and they’ll vary across politicians and their political parties.

Beyond that, all price caps do is limit the availability of the product being capped—whether oil and natural gas and gasoline, rental housing availability and quality…or insurance policies. The limit on supply, too, hurts those on the lower economic rungs of our economy first and hardest.

Requiring insurers to justify their rates and the profit levels at which policy holder refunds are paid is a good idea, but government is the wrong crowd that must be satisfied.

Better simply to require insurers to disclose their profit margins and the basis on which they arrive at their definitions of profit. Their policy rates already are publicly available; making both sides of that process public would let the public more effectively shop for policies that suit their individual needs.

Doing that within an increasingly deregulated (not unregulated) insurance market environment would move the industry closer to a truly competitive market within which insurers would reap fair profits and insurees would pay fair premium amounts for the policies they want. And the Critical Item: “fair” would be defined within that competitive market by those market participants, not by any government.

An Overstated Case

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A couple of Wall Street Journal news writers have laid out the concerns in the Supreme Court’s consideration of whether President Donald Trump (R) can fire Lisa Cook, a Federal Reserve Bank governor.

It will test whether the court’s conservative majority, which has spent years eroding the independence of regulatory agencies, is willing to make an exception for the institution that controls interest rates, inflation, and the stability of the global financial system.

One out of three isn’t all that terribly bad, but the first and third items are of critical importance.

[E]roding the independence of regulatory agencies…. What independence? They were created as instruments of the Executive Branch. As such, under our Constitution, they cannot be independent, for all that Congress averred it so. That would be a violation of our Constitution’s carefully constructed separation of powers. Those agencies are entirely under the authority of the President as the Chief Executive of the Executive Branch. Far from years of eroding the independence, the Court has been glacially slow in recognizing the agencies’ lack of independence.

The stability of the global financial system? Really?

It’s certainly true that the US, with our enormous economy and the size of our market for the global economy, even in today’s tariff regime, exerts outsize influence on the global economy.

However, it exerts influence only, not control.

The impact of our central bank on the global economy is as much—at least—the outcome of other nations’ government decisions as it is that of our own decisions. They don’t get to hide behind us or our central bank in their decision-making, nor do they get to blame us or our central bank for the poor outcomes of their decision-making. The stability of the global financial system is an affair of collective responsibility, not one of unilaterality.

Too Typical

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The Wall Street Journal‘s editors had it down pat in their editorial of last Wednesday. The opening sentence of their lede laid it out:

As federal pandemic largesse ebbs, Democratic-run states are eyeing higher taxes rather than reform spending programs.

The rest of their piece expanded on that theme.

Nor does it get any clearer than this bit. In a nation overrun with Federal debt and with Progressive-Democrat-run States joining in on climbing the forest of trees in their world on which money grows, Progressive-Democratic Party politicians still cannot even conceive of cutting spending. Nor do they feel the need to; it’s not like they’re spending their own money. It’s all OPM.

Now it’s Rhode Island that’s fixing to get up into one of those trees. Rhode Island is another of those Progressive-Democrat-run States, this one with a Progressive-Democrat governor, a 38-seat Senate containing 33 Progressive-Democrats, and a 75-seat House filled with 65 Progressive-Democrats.

This is what we can expect nationwide if Party wins control of the House and Senate this fall, and it’ll get far worse if Pary wins the White House in the 2028 election cycle.