Often when I advocate the repeal of a law, I am accused of thinking that my proposal is a solution. Usually, that’s a lie: I point out that it will move things in the right direction but it’s nowhere near a panacea.
I think that for many of the policies that he advocates, Bryan Caplan has the same reaction that I have. But he makes the case that deregulation is really the solution. He strongly argues, with data, that deregulation will reduce housing costs, and thereby reduce poverty, reduce income inequality, reduce traffic congestion, restore the mobility we elderly people experienced in the 1970s when we were young, provide construction jobs, and even reverse the decline in fertility.
A common estimate, says Caplan, and he backs it up with data in the footnotes, is that deregulation would reduce housing costs by about 50 percent. Because housing costs are about 20 percent of the average American family’s budget, the cost of living would be 90 percent of what it is now, which means the standard of living would increase by 11 percent (100 divided by 90 = 1.11.)
The effects of deregulation could be greater for low-income people, Caplan noted. The reason is simple: low-income people spend a large portion of their income on housing. That also means that deregulation will reduce income inequality.
This is from David R. Henderson, “Build, Baby, Build,” Defining IdeasJune 20, 2024. My review of Bryan Caplan’s book of the same name.
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