As the Republican Party potentially sinks into two years of infighting, it’s worth asking what might unite conservatives in the meantime. Housing can be an issue that could create common ground.
Housing is becoming more and more expensive across the country, which is weighing on both renters and buyers. To fight housing inflation, policy makers should rely on three principles that are the basis of many conservatives: supply, freedom and opportunity.
Increasing the supply of housing is the most obvious and essential element in solving housing inflation. The influential libertarian economist Milton Friedman warned that inflation is the result of too much money for too few goods. Friedman said supply is a big player in the inflation saga, but as I’ve said before, restrictive housing regulations have the same effect as if local governments start printing money. silver. When cities stifle housing supply and housing prices rise accordingly, local governments respond by pouring more money into the housing market via subsidies.
Once the barriers to increased production are lifted, some amount of subsidy will still be needed for low-income home buyers. Instead of building expensive new units, the answer is to use the second principle – freedom – and just give people money.
I’ve described in the past how this might work; it could be as simple as requiring a quarterly deposit from people who are struggling to pay their rent. But for this and other potential reforms to succeed, government will need to be streamlined.
In today’s America, getting any kind of grant involves navigating a glove of bureaucracy. About a year ago, for example, Congress allocated $25 billion for pandemic-related rent relief. Instead of that money being quickly distributed to families who lost all their income through no fault of their own, much of it was lost to a state and local swamp. Conservatives should reduce unnecessary barriers to accessing aid.
The third axis of conservative housing policy should be opportunity. When housing is more plentiful, people have more choices – and when people have more choices, they often make choices that progressives don’t like. In housing, the best example of this attitude is the progressive opposition to “gentrification”. When black people move into white neighborhoods, progressives call it “integration” and support it. When white people move into black neighborhoods, they call it “gentrification” and oppose it. Libertarian-minded conservatives should accept that if housing is plentiful, neighborhoods will change.
Enabling free choice also makes housing markets more efficient. In his seminal essay “The Problem of Knowledge in Society”, Fredrich Von Hayek posits a world where decision makers “own all relevant information” and “command complete knowledge” of supply, price and disutility. He argues convincingly that such a world does not and cannot exist. Instead, he says,
The knowledge of the circumstances which we have to make use of never exists in a concentrated or integrated form, but only as the scattered fragments of incomplete and often contradictory knowledge which all separate individuals possess.
Receive weekly emails in your inbox
Order does not emerge in a market by government decree but spontaneously through the actions of individuals. When the government puts its finger on the scales, the result is an inefficient allocation of resources and more suffering for the poor. Price controls are the best example of this in the context of the housing market. While soaring rental prices often precipitate calls for rent controls, the consensus among economists is that all price controls create more inflation, which hits poorer families disproportionately.
Allowing housing markets to reach equilibrium will produce the most effective economic outcomes, especially competitive prices and expanded opportunities, both of which result in greater freedom of movement and choice for the poor. Solving housing inflation does not require more money, but it does require allowing the market to produce more housing. Republicans concerned about housing costs should listen to Ronald Reagan’s television ad about his successful bid for president in 1980. In a key section of his speech, he warned of the damage of runaway inflation and Taxation. His words could easily apply to the country’s housing crisis, which has been perpetuated by all levels of government on the population.
“The people did not create this disaster in our economy; the federal government has. It overspent, overestimated and overregulated. It has failed to provide services within the limits of the income it should be allowed to raise from taxes,” Reagan said. “You and I pay corporate taxes every time we go to the store. Only people pay taxes, and it is political grandstanding or economic illiteracy to try to tell us otherwise.