I often hear people on the right suggest that the New York Times is a bad newspaper. This is not true, as they confuse quality and bias. The NYT is an excellent newspaper that has been marred by a negative bias toward left-wing views.
Someone once joked that they are not libertarians because of the “streets”. I guess I might answer that I’m a libertarian because of “elevators”. Or more specifically, elevators multiplied by a thousand.
A recent NYT piece he does an excellent job exposing the inefficiencies of the US elevator industry. Due to a complex network of unproductive government regulations, cashiers in America cost several times more than in Europe. No wonder America has so few elevators, even in buildings of some sort. (So it’s not just our choice of single-family homes—even our apartments with very few elevators.)
The lesson here is not that the US is worse than Europe; it would be easy to find hundreds of examples where the efficiency of the US was higher than that of Europe. Instead, the lesson here is that elevators are just one of thousands of examples of where government overreach leads to inefficiency.
When most people go about their daily lives, they don’t think about the ways government regulations make their lives more difficult. In almost every case I encounter systematic inefficiency, the main cause of which is conflicting rules. Free market firms work hard from time to time, however systematic problems it is almost always due to negative incentives created by regulation.
The inability of many Americans to understand the role of regulations leads to widespread misunderstanding of issues such as stagnant living standards. Ask most Americans why real wage growth has slowed since 1973, and they will cite factors such as “inflation”, “union decline”, “neoliberalism”, “profits for the masses”, “the China shock” and many other factors. .
In fact, the impact of all these factors is small compared to the inefficiencies caused by government regulations and subsidies.
1. Health care regulation and subsidies have driven health care spending in the US to 18% of GDP, compared to 5% in Singapore (or maybe 9% given the US population).
2. Government funding and regulations have led to huge spending on education, which does not lead to any improvement in learning.
3. Regulations have greatly increased the cost of new housing, especially in large cities and coastal regions.
And yet, I doubt that one American in a hundred would cite health care deregulation as a major factor in reducing real wages.
I can list many other such examples, but let’s focus on houses, because they are very important. In less regulated manufacturing industries, such as clothing, consumer electronics and home appliances, prices tend to rise much more slowly than incomes. Housing is different, and given its share of the consumer budget, it is an important difference.
To its credit, the NYT piece suggests that the problems in buildings go beyond elevators:
Beyond the elevator itself, you’ll find a byzantine mess of absurdities and contradictions behind the US construction industry’s slowness, inefficiencies and costs. For example, Americans cannot use the latest heat pumps – an important tool to combat climate change by electrifying heating systems – due to the same types of restrictions imposed by US regulators. Instead, Americans instead rely on outdated heat pumps that have no market abroad. And plumbing codes in America require an entire network of ventilation ducts that are considered unnecessary around the world.
They also discuss the problem of residential design, and note that changing residential areas is not enough. Regulatory constraints are particularly important in the construction of large multifamily buildings:
Construction costs for single-family detached homes average $153 per square foot. In America’s most in-demand coastal cities, the cost of multifamily construction has exploded. Even multi-family subsidized housing in California can cost $500 per square foot (or more).
A generation of young, home-owners locked out by rising housing costs have taken notice. Their first goal was a century of land use enforcement, where existing landowners enriched themselves by blocking development through restrictive zoning practices. In recent years, the rise of the so-called YIMBY — or “yes in my backyard” — movement has succeeded in all but eliminating single-family zoning on the West Coast.
But as zoning codes were released, architects and developers soon began sounding alarm bells about the obstacles buried in the best areas of building codes and standards, and other more technical regulations.
Here’s what many progressives don’t understand. It has stopped the original income is not about net worth; they are about “truth”. Ultimately, our standards of living depend on our ability to produce actual output. In the long run, you can help workers a little by redistributing money from capital to labor. But in the long run this will reduce capital formation and make workers worse off. The most important factor driving real wages is productivity. Swiss workers are not more leaders than Bangladeshi workers because of strong unions, they earn more because of higher productivity.
What things can improve the standard of living of workers? Cutting health care from 18% to 9% of GDP. A dramatic reduction in the cost of education. Deregulation of housing to significantly reduce housing prices. And there are thousands of other small changes that can increase productivity throughout the economy.
Elevators may seem trivial, but problems in the transportation industry are a sign of why real wage growth slowed after the early 1970s.
I am often frustrated with the NYT, which has a strong left wing bias. But honestly they’ve made a lot of great stories over the years. I would love to see someone dig up 30 or 40 NYT stories like the elevator story I linked to in this post. Then collect the stories into a book. Write a letter:
The New York Times Case for Libertarianism
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