Economists don’t always agree, but one thing virtually all economists agree on is that rent control doesn’t make people better off. A 2024 University of Chicago survey of 45 leading economists showed striking agreement on two core questions: None of the economists agreed that a 5 percent rent-control cap would substantially reduce income inequality, while just one said a rent cap would make middle-income Americans better off over the next decade.
Rent control laws have many flaws, but the biggest is that they discourage the one thing that most effectively lowers housing prices: building new homes. By making it harder for landlords to turn a profit, rent control discourages the creation of new housing units (and disincentivizes maintenance of current units). Whether you’re looking at recent rent-control results in Europe and the US or historic examples in Latin America, the research tells a similar story: rent control makes housing affordability worse.
Lawmakers in my home state of Minnesota recently discovered this. In 2021, voters in St. Paul, the state capital, approved one of the toughest rent-control laws in the country. The following year, data showed building permits were down 80 percent—which prompted the city’s Democratic mayor to urge the city council to amend the law. Two years later, the St. Paul city council quietly gutted the measure.
A simple glance at Los Angeles’s housing stock reveals the city’s real problem. Los Angeles has seen a steady decline in residential property permits in recent years, which largely stems from the city’s four-year “rent freeze” and aggressive tenant-rights laws that make it extremely difficult to evict tenants, even if they’re not paying rent or are destroying property. “It’s really hard to tell investors, ‘Let’s take all this risk,’ in a city that hates landlords and developers,” developer John Gregorchuk told Politico.
John Cochrane rants productively about “the trouble with tariffs.” A slice:
And it doesn’t matter if trade is fair or balanced or if the other side does the same thing. If China puts in a tariff, i.e. puts rocks in their ports, why are we better off by putting rocks in our ports in exchange? The only thing that matters for trade is that it be mutually advantageous. We want to buy and they want to sell. That’s better for all of us.
Costco, America’s 12th-largest publicly traded company by revenue and 15th-largest by number of employees, has filed suit at the U.S. Court of International Trade seeking refunds of the tariff money it has paid so far.
This suit confirms that American businesses pay American tariffs. If, as Trump believes, foreigners were paying them, there would be no reason for Costco to seek a refund. And Costco’s suit is one of many that will be filed as the thousands of American businesses robbed by the president seek their just recompense.
Costco says imported goods account for about one-third of its sales. The warehouse club is famous for its ruthlessness in cutting prices for its members. Obstacles to lower prices don’t normally include American customs officials running roughshod over the law.
Trump may lash out against Costco with one of his Truth Social tirades. But attacking a company that has mostly kept its prices low won’t go over well with inflation-weary voters. Nearly one-third of Americans shop at Costco, and they’re concentrated in the suburban areas so crucial to electoral success.
Big business is now acting on what small businesses felt instantly: Tariffs are taxes on Americans. The largest companies had enough money to absorb some of those costs for a while, but time is running out, and they don’t want to pass them on to their customers.
Goldman: US companies with more exposure to tariffs and related policy uncertainty have disproportionately announced price hikes and cut job openings.
Kevin Williamson writes insightfully about capitalism. A slice:
But what about all that economic inequality we hear about? Surely that is a problem that is economic in origin? That is, at most, half right: economic—yes; a problem—no, not really.
An extraordinary thing has happened with the incomes and total wealth of the tippy-top of the distribution since the 1990s and the emergence of the internet and that vaguely defined collection of international phenomena we call, for lack of a better word, globalization. The fortunes acquired by such tech titans as Jeff Bezos and Elon Musk are indeed remarkable. They have almost nothing to do with the economic situation of the poor or the middle class, and they are not, in the main, the result of public policy. That is not to say that public policy could not diminish those fortunes (for instance, by simply seizing them, as many of my leftist friends desire), but Amazon and Apple and such have not exploded in value the way they have mainly because of government favoritism or political steering, though, the world being a fallen place, these exist and are factors. (Critics here will point to the subsidies enjoyed by Musk’s constellation of rent-collecting enterprises, and they are not wrong to do so. But even with these subsidies in mind, the broader point stands, for reasons that I hope the following lines will make clear.) What has made Bezos’ splendid fortune is the growth and integration of markets: If you have the most successful car dealership in Plainview, Texas, then you probably do pretty well—but you do a lot better if you have the most successful car dealership in Los Angeles. Same business, bigger market, hence, bigger returns to small improvements in margins.
If Jeff Bezos were the most successful shopkeeper in New York City, he’d be wealthier than if he were the most successful shopkeeper in Little Rock or Indiana—as it happens, he is the most successful shopkeeper in the world, serving hundreds of millions of users in more than 100 countries. Where markets are very large, returns to profitable innovation, efficiency, investment margins, excellence in corporate management—or luck!—also are very large. When Saks & Company was just a shop on Fifth Avenue, there was no way for its owners to make the kind of profits that a large, international chain of department stores could—to say nothing of the kind of profits Amazon can generate. But these profits are not, vulgar class-war rhetoric notwithstanding, deductions from the common good or from the share of wealth available for distribution—they are the result of wealth created, not merely wealth distributed.
The poor are not poor because the rich are rich. The poor are less poor because of the same economic factors that have made some of our rich guys so shockingly rich. Creating wealth makes societies—and the world—wealthier. Even with the returns going lopsidedly to a relatively small number of investors, wealth creation of the kind that makes billionaires also produces tons of economic benefits and secondary activity, tax revenue, etc. The thing about richer societies is, they’re richer.
But, strangely, when my progressive friends talk about economic inequality, they invariably talk about the incomes of the very wealthy—and almost never about the poor. And there is a reason for that: The story of the economic situation of the world’s poor does not offer very much rhetorical fodder for the enterprising anticapitalist.
America marks its 250th anniversary next year. Our founders understood that markets can unleash a nation’s dynamism as no monarch or government ministry possibly could. The securities markets soon emerged to unlock the most daring mobilization of capital in history. The steel that built our cities, the oil that powered our factories, and the electricity that illuminated our homes were carried forward by domestic and foreign investors willing to stake capital on an America still in formation.
As the 20th century unfolded and competing ideologies sought to engineer economic strength from the top down, our model steadily proved its value. The Soviet system collapsed under its own contradictions, while American life made giant leaps thanks to a system that rewards those who take risks.
But principles don’t preserve themselves. In recent years, our regulatory direction has veered from the founding ideals that helped the U.S. stand without peer as the world’s destination for public companies.
…..
The idea that disclosure requirements should scale with a public company’s size and maturity is hardly novel. The SEC first tailored disclosure requirements for smaller public companies in 1992. Two decades later Congress, through the bipartisan JOBS Act, gave certain newly public companies an “IPO on-ramp” and permitted them to comply with some of the SEC’s disclosure requirements on a delayed basis.
My goal is to examine all this anew through the lens of achieving disclosure that actually informs investors of the particular investment’s real risks and returns.
These remedies are long overdue, but they are only the first steps in a broader effort to realign our markets with their most fundamental purpose—placing American might in the hands of citizens instead of the regulatory state.
