Who’s to blame for the $120 bucks it took to fill his Ford F-150 pickup? In the Journal, Andy Kessler explains why the government is to blame.
Cries from Bernie and AOC last December that the American people want leaders who are laser-focused on making life affordable for all. From Bernie, “Life Affordability’ can’t be another poll-tested slogan that politicians throw around.”
Affordability Blame Game
In the State of the Union speech, Donald Trump said, “Now, the same people in this chamber who voted for those disasters” (like the Orwellian-named Inflation Reduction Act) “suddenly used the word ‘affordability,’ a word—they just used it because somebody gave it to them, knowing full well that they caused and created the increased prices.”
Sen. Elizabeth Warren Gets into the Act
Sen. Warren bemoaned at a Senate hearing last month that grocery, electricity, health care, and building prices are up. Why, asks Kessler. The comic strip Pogo has the response, “We have met the enemy, and he is us.”
In economist Mark J. Perry’s Chart of the Century, famous since 2000 for showing prices on things that the government touches – hospital services, college tuition, textbooks, housing and food— you can see that those prices have risen faster than overall inflation. Free market items, things like computers, software, televisions, cellphone service, clothing, furniture, toys, and even new cars (thanks to Silicon Valley and globalization), have dropped in price or risen less than inflation after taking into account the increased value of technology (like 75-inch smart TVs). Kessler suggests you try streaming March Madness on your 1980s 50-pound 19-inch Sony Trinitron.
Housing:
According to Bankrate, “Nationally, over 75% of U.S. homes on the market are unaffordable to the typical household.” That means carrying costs of more than 30% of income. Kessler says it’s no mystery why.
Zoning restrictions, permitting delays, environmental reviews, rent control and eviction hurdles. In California, a mandate requiring solar hookups adds up to $10,000 to the upfront cost of new homes, according to California’s own Energy Commission.
Solutions make it worse. New York’s socialist mayor Zohran Mamdani made a campaign promise to construct 200,000 “permanently affordable, union-built, rent-stabilized homes.” Almost every word of that means higher housing prices.
Medical Care:
ObamaCare in 2010 added gold-plated mandates with coverage for everything under the sun. Since it passed, premiums have tripled, according to researcher Avik Roy. Medicare and Medicaid distort market pricing. Sen. Rand Paul (R., Ky.) has a healthcare bill that would solve many of healthcare’s problems with health savings accounts and pooled insurance buying. It can’t get arrested in Washington.
College.
Tuition rises like a helium balloon. Why? Former Sallie Mae boss Al Lord told the Journal in 2021, “Schools were able to hike tuition since students now had expanded access to loans” backed by the government. Now check how much the average professor makes at your alma mater.
Food:
Government is like white on rice as to why $10 lunches are now $20. Sugar import restrictions, ethanol mandates, minimum wage, tariffs, fuel costs, even war in wheat-exporting Ukraine.
Energy.
Higher gasoline prices were avoidable with more U.S. oil production. The U.S. Geological Survey says we may be sitting on 29 billion barrels of “undiscovered technically recoverable” oil reserves. Almost half in Alaska. California is oil-rich yet imports oil, 18% of it from Iraq. Crazy. Add green and renewable mandates. No new nuclear power.
Too many taxes: property, sales, transfer, hotel, and even food. Delivery taxes added to DoorDash? Add Minnesota and now California Medicaid fraud.
Kessler admits that the government’s ability to mandate affordability whenever it wants scares him. “Simply announce price controls. When you fix prices, you get shortages.“ (think Soviet style supermarkets with empty shelves or available apartments in rent-controlled NYC).
Can’t get home insurance? Many state price caps sent insurers scurrying away, especially in coastal and flood prone areas. Drug shortages are next. And consumer credit if we cap credit-card interest rates.
Sectors with affordability problems?
Adam Smith’s invisible hand got smashed by a giant regulatory gavel. Competition and freedom from constraints lower prices.
The Bernies and AOCs of the world complain about capitalism. Naive, but on brand. By invoking affordability, what they’re really protesting, with zero self-awareness, is the socialism-inspired heavy hand of the U.S. government: feds, meds and eds.
Make a case for affordability, and you make a case for smaller government.
