Tweet [1]
My colleague Bryan Caplan is here his usual very insightful self [2].
Eric Boehm exposes the expensive truth about Biden’s Build Back Better budget buster [3]…
… and Casey Mulligan, writing in the Wall Street Journal, explains that provisions in Build Back Better will also make day care more expensive [4]. Two slices:
The bill’s latest draft proposes to reinvent child care with a trifecta of cost-increasing forces. First, it would remove much of the incentive to offer lower-cost care. Millions of families would have their child-care expenses capped by statute, which means they’d pay the same at an expensive facility as at a cheaper one.
Providers would quickly discover that lower prices no longer are much of a competitive advantage. Moreover, the providers would be reimbursed extra for what Congress calls “quality,” which is a euphemism for having more staff per child. The history of rate regulation is that cost-plus schemes result in needless waste and higher prices for consumers without quality improvements.
…..
Second, providers would need extra staff to comprehend and comply with all the new statutes, certifications and agency rules. Just as physicians complain about paperwork eating up time that could be spent with patients, child-care providers will lose time they could be spending with kids.
Third, the bill imposes “living wage” regulations on staff pay. In a study [5] for the Committee to Unleash Prosperity, I estimate these regulations alone would add 80% to child-care costs.
… and the price control called “rent control” won’t, as Christian Britschgi explains, work as promised [8].
Dan Pearson reveals some of the “nasty realities of steel protectionism.” [9] (HT Bryan Riley) A slice:
First, U.S. mills produce about 80% of the steel needed in this country; the remainder is imported. Import restrictions cause the price for all steel to rise, not just steel from overseas. Steel mills enjoy higher prices on the 80% of the market they serve; users must pay the higher costs on 100% of domestic consumption. Since costs to users are substantially greater than benefits to producers, the economy as a whole loses. America ends up poorer because of steel protection.
Second, steel producers constitute a much smaller portion of the economy than do steel consumers. As of 2019, there were 144,000 workers in steel mills. They added $31 billion of value to the economy, which is equivalent to 0.15% of GDP. Companies that buy steel and make useful things out of it, however, have a much bigger footprint. They employ 6.7 million workers and produce an economic value-add of $1.1 trillion (5.4% of GDP). So steel users employ 46 times more people and add 35 times more to GDP than do steel producers.
Although it may not be well understood by the Biden team, U.S. manufacturers of finished goods can find it exceedingly difficult to compete with imported products made with world-price steel. The reality is steel tariffs are a highly effective mechanism for decreasing the international competitiveness of the manufacturing sector. Imported finished goods made with world-price steel often can handily undersell U.S. products. It’s not easy to succeed in manufacturing when the government is going out of its way to raise your costs.