- Elizabeth Warren’s new housing plan promises to reduce rents and empower renters.
- But it follows the same formula that failed to improve housing before.
- To empower low-income Americans, you must grow the economy.
This week Senator Elizabeth Warren unveiled her plan, “Protecting and Empowering Renters,” which promises to reduce rent by 10% through several measures, most notably funding the construction or rehabilitation of 3 million housing units with a $500 billion tax increase over ten years.
Like every other one of Washington’s bright ideas and lofty campaign promises, Warren’s plan sounds good, but it’s short-sighted. CNBC’s Abigail Hess says Warren’s housing agenda is centered on “the economic principle of supply and demand.” But it’s centered on a dangerously unsophisticated account of the supply and demand forces at work in the housing market and broader economy.
As Stanford University economist Thomas Sowell once quipped:
The first lesson of economics is scarcity. The first lesson of politics is to disregard the first lesson of economics.
Warren’s plan to reduce rent disregards the first lesson of economics.
Washington Makes Everything More Expensive
Why should voters believe Warren’s plan will work when the federal government has such a dismal record of making anything more affordable for the American people?
In fact, Washington has a perverse ability to make anything it touches more expensive, and at the same time lower quality and less satisfactory.
The federal government has undertaken many similar initiatives over more than half a century to reduce prices and increase access to health services and insurance in this country. The result has been a byzantine mess of costly bureaucratic machinery, huge profits for special interests, and perverse incentives that drive up prices.
Like Warren, Barack Obama promised to lower the cost of health insurance and…