Politics & Policy

Moral Melodrama on Markets

The simpler answers aren't as warm and fuzzy.

Let’s face it. Supply and demand will never replace “need” and “greed” in political discussions of economic issues.

Talking about the “need” for more affordable housing or more affordable medical care is what will get politicians more votes this election year.

Voters don’t want to hear about impersonal things like supply and demand. They want to hear about how their political heroes will stop the villains from “gouging” them or “exploiting” them with high prices.

#ad#Moral melodrama is where it’s at, politically.

Least of all do voters want to hear about the most fundamental reality of economics — that what everybody wants has always added up to more than there is.

That is called scarcity — and if there were no scarcity, there would be no economics. What would be the point, if we could all have everything we want, in whatever amount we want?

There were no economists in the Garden of Eden because everything was available in unlimited abundance.

A politician with good rhetorical skills can create a new Garden of Eden in people’s minds, though only in their minds. However, that is sufficient, if that vision or illusion can be kept alive until Election Day, and its failure to materialize afterwards can be explained away by the obstruction of villains.

One of the many ironies of politics is that those politicians who do the most to reduce supply often express the greatest outrage about high prices.

So long as the voters buy it, the politicians will keep selling it.

Make a list of those politicians who do the most to prevent our drilling for our own oil. Then make a list of those politicians who express the most outrage about the high price of gasoline. Don’t be surprised if you see the same names on both lists.

Make a list of those politicians who most loudly lament the lack of “affordable housing.” Then make a list of those politicians who have most consistently promoted restrictions on the building of housing, under the banner of “open space” laws, “farmland protection” policies, preventing “urban sprawl,” and other politically soothing phrases.

Again, do not be surprised at seeing the same folks on both lists.

Is it really too “complex” to figure out that taking vast amounts of land off the market will make the price of the remaining land far more expensive? Or that houses built on very expensive land will be very expensive housing?

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Despite the current decline in housing prices, a recent advertisement in a Palo Alto, California, newspaper listed a vacant lot for sale at $879,000. If you build anything more elaborate than a tent on that property, you are talking about a million-dollar home, be it ever so humble.

Many of the places with very high housing prices have very modest homes on very small amounts of land. The San Francisco Chronicle ran a story about a graduate student seeking a place to live, “visiting one exorbitantly priced hovel after another.”

It is not at all uncommon for land to cost more than the housing that is built on it, in those places where politicians have made housing unaffordable with land-use restrictions under pretty names — all the while lamenting the lack of affordable housing.

#ad#So long as politicians can get some people’s votes by publicly feeling their pain when it comes to housing costs, and other people’s votes by restricting the building of housing, they can have a winning coalition at election time, which is their bottom line.

Economists may point out that the different members of this coalition have conflicting interests that could be better resolved through competition in the marketplace. But how many economists have ever put together a winning coalition?

So long as voters prefer heroes and villains to supply and demand, this game will continue to be played. It is not because supply and demand is too “complex” to understand, but because it is not emotionally satisfying.

Thomas Sowell is a senior fellow at the Hoover Institution.

© 2008 CREATORS SYNDICATE, INC.

Thomas Sowell — Thomas Sowell is an American economist, social theorist, political philosopher, and author, whose books include Basic Economics. He is currently senior fellow at the Hoover Institution, Stanford University.

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