His plans increase the deficit, which is inflationary.
Large and broad tariffs are inflationary.
A massive crackdown on illegal immigration will also be inflationary as without cheap labor, making products will be more expensive or won’t happen here at all–particularly agricultural goods and housing.
Trump wants to end the independence of the Federal Reserve. Trump has been in favor of lower interest rates, which will increase inflation.
“Argentina’s 2020 Rental Law, intended to protect tenants, ended up making housing unaffordable for the average Buenos Aires resident. The issue isn’t unique to Argentina—rent control measures have had similar outcomes elsewhere. In San Francisco, expanded rent control laws led to in a spike in evictions. Meanwhile, in the Netherlands, rent caps have prompted property owners to sell their buildings and exit the rental market, according to Reason’s Christian Britschgi.
Argentina’s experience should serve as a cautionary tale for policymakers: Well-intentioned policies aimed at protecting tenants can sometimes backfire, causing more harm than good.”
“The most generic definition of a commodity is something of value that’s bought and sold. A not insignificant segment of the left uses this generic definition when they say we should “decommodify” housing—it should not be something that’s bought and sold like a normal product.
Hear Rep. Alexandria Ocasio-Cortez (D–N.Y.) decry the “privatization” of real estate development at a recent event promoting her Homes Act. That bill, jointly authored with Sen. Tina Smith (D–Minn.), would get the federal government back into the business of building and operating public housing units.
Their debate remarks notwithstanding, there’s no indication that Vance and Walz want to go so far as to completely end private housing markets.
Rather, they want to stop certain types of people from buying and selling housing—corporate speculators in Walz’s case, illegal immigrants in Vance’s. (In past remarks, Vance has also said we should squeeze corporate investors out of the housing market.) Once we get rid of the demand of Wall Street and illegal immigrants for housing, there’ll be more left for normal, decent Americans, the thinking goes.
As I wrote on Tuesday, that’s a mistaken attitude. There’s plenty of evidence that corporate investors and immigrants lower the cost of housing. The former provides the capital, the latter the labor, to get needed housing built.
There’s also no reason to think that a free market would transmute rising demand into ever higher prices. There’s not some fixed number of housing units. Increased demand might raise prices in the short run. But higher prices also encourage more homebuilding. That brings prices back down.
If it was profitable for developers to sell homes at $300,000 a unit and then more immigrants or speculators swoop in and buy houses, pushing the price up to $400,000, developers will respond by building more housing until the price falls back down to $300,000. If they were making money producing homes at that price, there’s no reason they’d suddenly stop just because demand increased.
Over time, capitalist innovation will lower production costs such that more and more housing is available at a lower price. This is what it actually means to make something into a “commodity” and we see examples of it everywhere in the economy.
There are more people and more demand than ever. Yet, somehow the price of common commodities and mass-produced consumer products keeps falling.
Real prices falling in the face of ever-rising demand is what it actually means to “commodify” something.”
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“With zoning codes limiting how much new housing can be built at one time, the size of home-building firms has fallen, reducing economies of scale and construction productivity. Building codes dictating how homes have to be built has further helped to close off innovative construction methods.
Those regulatory restrictions on new supply never went away, with the result being that the price of housing has risen in tandem with rising demand. Additionally, new technology that promised to automate construction tasks has repeatedly failed to take off.
Rather than becoming a commodity, home-building has stayed a cottage industry (no pun intended). Real prices continue to rise and housing affordability has become an issue of national concern debated by candidates for federal office.
In this context, Walz and Vance have decided to double down on the zero-sum nature of the housing market. They say we need to decommodify housing by preventing the wrong people from buying a fixed stock of housing.
This is exactly backwards. Housing supply is fixed by regulation, not nature. If we stripped away regulations on homebuilding, supply would rise and prices would fall.
We’ve failed to make housing a commodity and that’s exactly the problem.”
“So far, most solutions to this housing crisis have focused on subsidizing prospective buyers. But what if there were a way to make housing cheaper at every step of the process: cheaper to build, cheaper to buy, and still affordable for the next resident?
In San Bernardino, a sunny California city located about 60 miles east of Los Angeles, a first-of-its-kind experiment is underway to test these ideas on a single plot of land. Think of it as an affordable housing policy trifecta: three different strategies to bring down housing costs — all at once.
The first innovation is to streamline manufacturing. About 90 percent of homes are built on the land they rest on, but in San Bernardino, manufacturers assembled a modest house — 1,462 square feet, three bedrooms — in a factory before transporting it to its final destination on Ramona Avenue.
The existence of a new moderately sized single-family house is itself a coup when most new homes far exceed 2,000 square feet. Back in the 1940s, nearly 70 percent of new homes were 1,400 square feet or less. Today, that number hovers around 10 percent because rising land and construction costs — along with arduous permitting regulations and a preference for larger projects from lenders and investors — have made smaller homes nearly impossible to build using traditional production techniques.
In the case of San Bernardino, not only are smaller houses less expensive for residents, but factory manufacturing further lowers the price by allowing developers to complete projects more quickly. Manufactured homes cost 45 percent less per square foot than their “site-built” counterparts, according to Freddie Mac.
The second innovation is an 800-square-foot accessory dwelling unit (ADU) located on the same plot of land, about 20 feet away from the house. The matching cream-colored unit provides two more bedrooms and bathrooms to another family, below market rate. In other words, the ADU increases affordable housing without requiring additional land, making more efficient use of the space.
The third innovation: the land itself is owned by a local affordable housing development group, which is using a community land trust to ensure that both the manufactured house and the ADU remain reasonably priced for generations. The community land trust, in effect, limits how much the homeowners could ever resell the property for when they’re ready to move on.
Dora Davila, a 42-year-old medical lab technician born and raised in San Bernardino, recently moved with her three children to the new manufactured home on Ramona Avenue. Her family had been living in an apartment, and despite months of searching, could find no houses available that were affordable.
“We were looking at mobile home parks but, the thing is, none of them had a yard and I wanted space for my kids,” she said.”
We need to build more housing to keep the cost of housing down. Localities prevent building because they don’t like it for a variety of reasons. The states and the country need to get localities to allow building so there is enough housing for the country. Or else, too many localities refuse to build for the narrow local interest of some of their current residents.
“Trump fans applauded when he said he’ll eliminate taxes on tips. Then Harris proposed that, too. Her audience applauded. Trump then proposed not taxing overtime. More applause.
But narrow tax exemptions are bad policy.
In my new video, economist Allison Schrager explains how they create nasty, unintended consequences.
“No one likes tipping,” says Schrager, “but all of a sudden, you’ll have to pay tips for everything.…More people will be paid in tips.””
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“Trump’s proposal to eliminate tax on overtime would reduce hiring.
“Employers may hire fewer people so they can give more overtime to employees they have already,” says Schrager.”
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“rent control is destructive. “Sounds really good,” says Schrager. “But all it means is that people are less inclined to rent to you.”
“Why would you enter a market where it seems like the government is actively trying to hurt you?” Adds Mercatus Center economist Salim Furth. “You’re providing an essential service, something human beings need to live, and the government views you as a hostile outsider. I wouldn’t want to bring any service into a market like that.”
Argentina’s new libertarian president just scrapped rent controls. The supply of rental apartments doubled, and prices declined by 40 percent! That’s good policy.
But Harris proposes the opposite!”
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“Trump’s (and Joe Biden’s) tariffs don’t just punish China, they reduce choice and raise prices in America.
“Free trade is good!” says Schrager. “It brings lower prices, making our own industries more dynamic, raising our income.”
“But trade does take away some Americans’ jobs,” I point out.
“But it creates a lot of other new jobs,” she replies.
It sure does. More and better jobs than those lost through trade.”
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“She proposes giving “first-time homebuyers” $25,000. Again, her fans applaud.
Schrager explains, “free” money from government doesn’t increase the supply of homes. When every buyer has $25,000 more, “they just bid up prices even higher!””
“In July, the Dutch government expanded nationwide rent controls—which had already covered about 80 percent of rental units—to almost all remaining rental properties. Fully 96 percent of Dutch rental housing is now subject to rent caps.
A report from Bloomberg published last week details the results: Owners of rental properties are selling their buildings and getting out of the rental housing market.
The tenants of those units are being forced to try and find one of the few remaining market-rate units or purchase a home in the Netherlands’ hot housing market. In either case, home hunters face spiking prices and limited availability.
These results are what one would expect from rent control. The economic literature is unambiguous that when rent control effectively holds rents below market levels, the result is a shortage of available rental housing.
More honest boosters of rent control will argue that while the policy limits housing supply, it increases stability for tenants. Protected from sudden, unaffordable rent increases, renters are able to stay in their homes for longer.
But in the Netherlands, at least, rent control is having a pro-displacement effect. Tenants who had an affordable rental unit are now being forced to move.
Proponents of rent control like to wave away the problems created by the policy as something that can be fixed with better and/or more sweeping controls of rental housing.
In fact, different rent control designs just produce different problems.
Apply rent control to new construction, and developers build less rental housing. Apply rent control to existing rental housing and landlords sell out to owner-occupiers. Prevent landlords from taking their units off the market, and housing quality deteriorates. (In the long run, this also reduces supply by preventing the redevelopment of existing rental housing.)”
“There’s a straightforward logic to both candidate’s claims. Increased demand for housing, whether from immigrants or corporate investors, would be expected to increase prices.
But increased demand should also be expected to increase supply, bringing prices back down.
Corporate investors and immigrants also play an important, direct role in increasing housing supply. Investors supply capital to build new homes. Immigrants supply labor for the same.
At least one study has found that the labor shortages caused by immigration restrictions do more to raise the cost of housing than they do to lower it through reduced demand.”
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“one study has found that restrictions on investor-owned rental housing raised rents and raised the incomes of residents in select neighborhoods by excluding lower-income renters. Studies on the effects of rent-recommendation software have found mixed effects on housing costs. In tight markets, such software raises rents. When supply is loose, it lowers them.
As always, the ability of builders to add new supply is what sets the price in the long term. Both candidates gestured at this in their own way, although Walz was more explicit about the relationship.”