Tag: government intervention
Study: Banning Investors From Buying Homes Leads to Higher Rents, More Gentrification
“They found that banning investors from buying and converting housing to rentals worked in one sense: The share of investor-owned rental properties in affected neighborhoods fell, and the number of properties bought by first-time homebuyers increased.
On the other hand, however, these new homeowners tended to be richer than the renters they were replacing, and the costs of rental housing increased overall.
“The ban has successfully increased middle-income households’ access to homeownership, at the expense of buy-to-let investors. However, the policy also drove up rents in affected neighborhoods, thereby damaging housing affordability for individuals reliant on private rental housing, undermining some of the intentions of the law,” write researchers in the study published on SSRN.”
Nigeria Looks To Reduce State Role in Energy Sector
States Spend Billions on Economic Development Deals With Little Return
The origins of Biden’s most important policy, explained
“At its heart, industrial policy strives to solve a “classic Keynesian political problem,” says economic historian Yakov Feygin, director of the Berggruen Institute’s Future of Capitalism program: The only way to grow the economy is ultimately through productivity-enhancing investment — but there are enormous upfront costs to building new plants or buying new equipment, especially at the technological bleeding edge, while returns are years in the future if they ever come at all.
If only capitalists get to decide when to invest, they may — rightfully — decide that the unpredictability of future demand and credit conditions make it difficult to justify expanding capacity in crucial sectors even in the face of soaring prices. They fear the “bullwhip effect,” where investors may put up cash for new plants or equipment to respond to higher prices, only for those prices to fall before new production can actually come online.”
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“The government, for better or worse, has the unique ability to stabilize the investment cycle and goad risk-averse private capital into making desperately needed, but enormously costly, long-term investments.”
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“Biden’s economic team is betting on something Hamilton knew: Long-term investment in the real economy is essential, but private investors might not provide it. That’s where government can — and should — step in.”
Great Moments in Unintended Consequences: Subsidized Trees, Day Care Late Fees, New York Alcohol Ban (Vol. 11)
“The year: 2019
The problem: Mexico needs trees!
The solution: the Sowing Life project, a $3.4 billion program that pays farmers to plant fruit and timber trees on barren land. Not only will this help spruce up the environment, but it will fight poverty and inequality by paying the farmers to maintain the new trees.
Sounds like a great idea, with the best of intentions. What could possibly go wrong?
It turns out poor farmers need money. And since standing trees didn’t qualify for the program, the system incentivized farmers to cut down mature trees to make way for new ones.
In one village, two-thirds of the program’s participants cut down forests to get that cash.
One study found the program caused the deforestation of more than 280 square miles.”
Biden’s ‘Economic Plan’ Is Industrial Policy That Will Be Terrible for Workers and Consumers
“Biden’s industrial policy is, not surprisingly, far more expansive than Trump’s. And unlike the Foxconn facility, which was subsidized by the state of Wisconsin, it has been bolstered by major legislation from Congress. Biden’s industrial policy rests primarily on three pieces of legislation: the bipartisan infrastructure law signed in 2021, and the Inflation Reduction Act and the CHIPS Act signed last year. Together, this trio of bills provided hundreds of billions in subsidies, tax breaks, and inducements for domestic manufacturing, with a particular emphasis on semiconductor production and clean energy and transportation.
But these subsidies are already being used as vehicles to pursue unrelated goals: The Commerce Department, for example, recently announced that companies receiving subsidies from the CHIPS Act would have to provide child care for their workers.
In addition, the rules say beneficiaries should try to use union labor and pay union wages to construction workers. Biden, of course, is a self-described “union man,” but these provisions will inevitably drive up costs and make it more difficult to find suitable workers, since, as Cato Institute scholar Scott Lincicome has noted, only about 12 percent of U.S. construction workers are unionized.
Similarly, Biden’s infrastructure plans have been stymied by a requirement to “buy American,” since many of the products needed to build domestic infrastructure are no longer made in the United States.
Domestic production requirements have proven more than a headache for builders. When a Michigan baby formula plant stopped production last year following a bacterial infection, Americans struggled to find a replacement because federal rules make it nearly impossible to import baby formula from Europe. At best, “buy American” requirements raise costs. At worst, they put American lives at risk by making vital goods more difficult to procure in emergencies.”
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“As a bevy of experts from the Cato Institute point out in the recent book Empowering the New American Worker, policy makers should pursue policies that make employment more flexible—like remote work and gig employment, rather than make it more rigidly defined. And they should recognize that factory jobs are not the best or only path for non-college graduates: Retail managers increasingly command six-figure salaries. Occupational licensing laws that require dozens or hundreds of hours of training before certification to work in a profession have mostly served as barriers to entry for aspiring professionals. Eliminating state licensing boards and licensing types can go a long way to making the work force more accessible. Ending the Jones Act, meanwhile, would not only lower prices for American households: It would also mean the end of regulation-driven shipping emergencies like the one in Puerto Rico.”
Hospitals Are Still Reporting New Mothers for Neglect Based on Drug Tests Triggered by Poppy Seeds
GOP to energy companies: We’re here to help. Industry: Meh.
“NEPA itself isn’t really the main problem, former regulators say.
While the NEPA process gets the blame for hold-ups, it’s merely a tracking process for all agency and permitting decisions along the timeline of a project, said Ted Boling, a partner at the law firm Perkins Coie who represents the companies building Cardinal-Hickory Creek.
Delays are more often a result of agency capacity and inadequate information provided by project sponsors, he said. He noted that Congress used the Inflation Reduction Act to provide $1 billion for beefing up agencies’ permitting staff, but that effort has not yet been realized.
“Everyone’s looking for their bright idea on how to make it all taste better and be less filling,” said Boling, who was a permitting official at the Interior Department and CEQ during both Republican and Democratic administrations. “Everybody is in relentless pursuit of improvements to the point where we’re tripping over ourselves.”
In addition, the vast majority of energy projects nationwide fall outside NEPA, so the changes Republicans are seeking would not affect them.”
When the Government Makes Poverty Worse
“a survey of more than 1,000 low-income Pennsylvanians found that taxes are often a major barrier to economic security—ranking ahead of more commonly discussed problems such as credit card debt and student loans. Among those surveyed, all of whom have incomes below 200 percent of the federal poverty level (about $53,000 annually for a family of four), the average respondent reported paying $4,575 per year in taxes.”
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“The paper asks officials to consider a counterfactual history: If Pennsylvania had enacted a rule in 2003 that capped future government spending increases at a combination of inflation and population growth (and had returned the surplus to taxpayers), the average low-income resident of the state would have an extra $20,000 in the bank today, simply due to the lower tax burden.”