Let's Talk About "Affordability"

because nobody knows what they are talking about

Our Democratic friends are pushing the idea of “affordability,” meaning, of course, that they intend to increase government programs and subsidies for voters likely to vote Democrat. Like real-estate down-payment assistance and child-care benefits.

Of course, the DSA crazies want to go much further. They want social housing for all, rent control, Medicare for all, free college, and so on.

Sam Raus wants Republicans to counter this with market-friendly reforms. But how do you fix healthcare when lots of people are getting subsidized healthcare already? How to you fix high home prices without hitting the various subsidies that got housing prices sky high already? I get that energy is pretty simple: “drill baby drill.”

I’m coming to the notion, after most of my adult life as a Hayek/Mises libertarian, that nobody understands the economy. Politicians don’t. Nor do activists. And forget professors and researchers and statisticians. Not even iconic figures like Mises and Hayek.

Take AI. I think it is fairly obvious that AI will turn the economy upside down, with a lot of people presently in the catbird seat losing their status, just like the buggy-whip makers in days of yore. But how will it change the economy? Everyone has their ideas, but nobody knows. And especially, nobody knows who is really going to get hammered by this. Lawyers? Teachers? Bureaucrats? Programmers? Hollywood? We literally have no idea.

But one thing we do know. When government meddles with the economy and spends money and creates subsidies and free stuff there are always unanticipated consequences.

My favorite example is homes and real-estate. Back before the Great Depression you had to put 50% down to get a home mortgage. There were no 30-year fixed-rate mortgages. The interest rate got repriced every ten years. Guess what: that kept real-estate prices down, because no subsidies. Do you see the point? Subsidies lower prices in the short term but often increase them in the long term.

What would be the long term effect of: e.g., universal free child care? Really, we have no idea, but my nickel says that all kinds of things would happen that nobody thought of.

We know that universal free government education for children has created a monstrous money-sucking Education Industrial Complex that underperforms and costs a fortune, and is almost impossible to reform because of teachers unions, activist groups, and parents that just don’t want things to change. But how to change things for the better? Very hard because of all the people benefiting from the Education Industrial Complex and saying you can take my pension out of my cold dead hands.

How do we make the United States “affordable?” Nobody knows. But one thing we do know: government programs make life unaffordable.

Politicians don’t know how to make life “affordable.”

Activists don’t know how to make life “affordable.”

Bureaucrats and administrators don’t know how to make life “affordable.”

Tippy-top investors like Warren Buffett don’t know how to make life “affordable.”

Economic professors don’t know how to make life “affordable.”

And nobody knows how to get there from here, from the mega-state spending 40% GDP down to about 14% GDP like Singapore.

But one thing we do know. Nobody presently touting “affordability” has a clue how to really make life in these United States affordable.