TGIF: Free the Housing Market!

Economist Bryan Caplan has done it again. His latest graphic nonfiction book is Build, Baby, Build: The Science and Ethics of Housing Regulation, illustrated by Ady Branzei and published by the Cato Institute. (His first was Open Borders: The Science and Ethics of Immigration.)

Caplan's target is a worthy one: zoning and other (anti-)housing regulations, which damage many people in various ways, some that will surprise you. While he could have written a conventional book, it almost certainly would have been dreadfully dull and accessible to only a few academics and policy wonks. That is no reflection on Caplan, an excellent writer. It's in the nature of the subject. I probably don't need to persuade many people of that statement.

So what's the problem? All state and local governments suppress the supply of houses and apartments throughout the country—and the problem has gotten worse for most of the country. Let's be clear: many more dwellings of all types, including high-rise apartments, would exist and be much cheaper were it not for government prohibitions, requirements, and other cost-boosting impediments.

The housing shortage, then, is not caused by greedy construction executives trying to squeeze buyers and renters into poverty or by immigrants. It's caused by do-gooder politicians and bureaucrats along with members of the public who just don't get it. Construction companies would love to build, sell, and, rent more units, which would drive down the price. Governments won't let them. That's criminal.

Basic economics teaches that market prices result from supply and demand. If government restricts the supply of something people want, whether or not by design, prices will rise. For housing, this is most aggravated in the most desirable parts of the country, where the demand for homes is high because of the many amenities, including high-paying jobs. In a free market, high prices beckon new competitors and increase supply, thereby lowering prices. It's a beautiful process when allowed to work.

Few things are more certain than the relationship between supply and demand on the one hand and price on the other. Yet many people don't get it.

According to Caplan, "Americans spend about 20% of their budget on housing." If builders were free to build, the average price of housing would fall to half of what it is today, he writes. This would raise living standards appreciably for nearly everyone. The effect on lower-income people would be stunning. Many aspects of life would dramatically improve: "the labor market, poverty, social mobility, family formation, long commutes, the environment, and the American dream." (See the book for details.)

The benefits would be so immense that Caplan calls housing deregulation a "panacea": so many problems would be alleviated. This includes not just obvious ones, such as the barrier to job mobility. Under current conditions the higher wage in the big coastal cities is not enough to offset the exorbitant price of houses and apartments. Why would a person relocate if he wouldn't be able to afford a home near his workplace? But it's not only that frustrated person who loses. Locations with higher pay are that way because worker productivity is higher. If regulation locks people out of high-productivity locations, everyone loses because fewer goods will be produced.

Housing deregulation would also relieve problems less obviously connected to housing. For example, with freedom the number of construction jobs would explode all over the country. That would primarily benefit young men without college diplomas, who now have a tough time getting good-paying jobs. Such unemployment or underemployment creates all kinds of problems. Caplan supplies more examples to justify his use of the descriptor panacea.

So who's against housing deregulation? For one, bureaucrats corrupted by the social-engineering mentality. They think they know better than market participants how cities and suburbs ought to look. Many regular people also oppose new housing developments. We usually think that the NIMBY crowd is trying to protect the value of their houses. However, Caplan doesn't believe that narrow economic interest is the best answer. For one thing, renters tend to oppose development too. As he puts it, "Political scientists have long known that objective self-interest poorly predicts voting. Self-interest poorly predicts partisanship. Self-interest poorly predicts issue views."

Then why do so many people oppose housing deregulation? Caplan has three explanations: economic ignorance, innumeracy, and status-quo bias. This adds up to an attitude that minimizes or overlooks the benefits of more housing and exaggerates the downside. Caplan presents reasons why housing-deregulation foes ought to change their mind: namely, they have much to gain that they never thought. For instance, cheaper housing would mean that many people's grown children could move out of their basements, start families, and afford housing close by. Deregulation would also mean that people could enjoy windfalls from the new freedom to subdivide their single-family-home lots for multifamily dwellings. How many people would rank those things over preserving the status quo?

This does not mean new building would have no downside, such as parking problems and road congestion. Caplan responds that these problems can and should be addressed in ways other than suppressing the supply of housing. What other ways? By letting the price system work. Just as there is no such thing as a free lunch, there's no such thing as truly free roads and parking. Congestion and aggravation are costs. Peak market pricing is a better answer than suppressing housing supply. Caplan discusses targeted "keyhole policies" that might be politically necessary to win adherents to the cause of house-building freedom.

In sum, he shows why people who embrace different approaches to social questions—utilitarians, egalitarians, cost-benefit trackers, and libertarians—can unite over housing deregulation.

Caplan is onto something. He demonstrates—graphically—that freedom really works.

 

National Greatness

“A nation which makes greatness its polestar can never be free; beneath national greatness sink individual greatness, honor, wealth and freedom. But though history, experience and reasoning confirm these ideas; yet all- powerful delusion has been able to make the people of every nation lend a helping hand in putting on their own fetters and rivetting their own chains, and in this service delusion always employs men too great to speak the truth, and yet too powerful to be doubted. Their statements are believed—their projects adopted—their ends answered and the deluded subjects of all this artifice are left to passive obedience through life, and to entail a condition of unqualified non-resistance to a ruined posterity.”

—Abraham Bishop (1800)

TGIF: Emergency! Emergency?

Look, as a libertarian I think the list of federal entities to be abolished soon should include the:

Consumer Financial Protection Board, Federal Trade Commission, Federal Communications Commission, Securities and Exchange Commission, Federal Reserve System, Department of Education, Department of Housing and Urban Development, Department of Health and Human Services, Department of Agriculture, Internal Revenue Service, U.S. Agency for International Development, Central Intelligence Agency and the rest of the "community," Consumer Product Safety Commission, Food and Drug Administration, Drug Enforcement Agency, Federal Bureau of Investigation, Environmental Protection, Agency, Federal Emergency Management, Agency, Department of Homeland Security, Department of Treasury, Department of Energy, Library of Congress, Department of the Interior, Office of the U.S. Trade Representative, Immigration and Customs Enforcement, Customs and Border Protection, Alcohol, Tobacco and Firearms, National Science Foundation, National Endowment for the Arts, National Endowment for Humanities, Corporation for Public Broadcasting, and all so-called government-sponsored enterprises (Fannie Mae, Freddie Mac, etc.).

That's a hastily compiled shortlist. You'll find more here. The absence of an agency is not to be construed as approval. I apologize if your favorite candidate for deletion is not there. No malice was intended. Perhaps some parts of the departments of Defense and Justice will need to be retained pending the full liberation of the free market. I'll leave that for another time.

Moreover, the national government should cease sending taxpayer money to "private" organizations around the world whether they do mischief—which I imagine dFescribes most of them—or not. In fact, it should stop taking the taxpayers' money and sending it anywhere. Government contracts should be viewed with suspicion.

While I want these agencies and departments zeroed out and their employees freed for productive work, as a libertarian I am also concerned with how this should be done. My worry is not over the government employees being retired. The government should not be a jobs program. Every government employee, who is paid through the theft known as taxation, could be producing goods in the market economy, where consumers rule through consent and exchange. Consumers have more agency than taxpayers do and will be able to let former government employees know whether they are productive or not. If the privatized workers are unproductive in some endeavors, they will have to find others. That's how the free market works.

In judging Trump's frenzy of activity, we should remember that he has not enunciated a coherent vision of the relationship between the individual and government. We can tell that he's a nationalist social engineer who sees the theoretically private sector as his to manipulate as he thinks necessary. Look at his use of tariffs, which interfere with private trade. Even using the tariff threat as a bargaining tool is objectionable, however. How, for example, are entrepreneurs to plan their businesses if any plan could be upset tomorrow by a presidential tariff threat that may or may not be carried out for who-knows-how-long? When Javier Milei slashed the government in Argentina, he had already set out a free-market vision, which allowed reasonable expectations to form. Compare that to Trump, whose mind must resemble an unmade bed.

Although we can enjoy the panic experienced by the advocates of big government, who fear losing power and access to our wealth, process does matter. Even the seeming chaos might be satisfying. But it's short-sighted. If someone were to seize control of the national government in a coup and abolish Congress and the courts along with the federal agencies, I'd be concerned. The reason is not that I like those branches; it's that as long as political power exists, we're better off if it is divided at the federal level and between the federal and state levels. Concentrated power is dangerous. No novel insight there.

Congress long ago began to create independent agencies—the so-called alphabet agencies—with the power to regulate our peaceful pursuits. As many people have long pointed out, Congress has in effect illegally created a fourth branch of government by fiat, not by constitutional amendment, which seems to be required. That needs to be reversed—but not autocratically, unless a specific statute permits it.

The new president has been signing executive orders apace. Some of them are to be applauded (for instance, the end of DEI, the ban on censorship); but some not so much (the attempted abolition of constitutionally acknowledged birthright citizenship). He's done some of this by declaring national emergencies, which is doubly worrying. The record of governments abusing people after declaring emergencies is horrible.

Over many years Congress has given the executive branch the unchecked power to declare emergencies, authorizing the exercise of extraordinary powers. Invoking an emergency is not new with Trump. (See the recent pandemic.) People who liked that power when other presidents exercised it now object. That's politics for you.

Trump indeed has declared emergencies related to immigration, energy, and trade. Where are these emergencies? They are invented. The immigrants are not a hostile foreign army; they are workers looking for better lives. The unsightly border mess could be fixed by legalizing immigration. On energy, U.S. oil and gas production is high, which is reflected in its prices. He doesn't need an emergency to get Congress to free the energy market. World trade delivers to consumers a cornucopia of affordable goods. That's no emergency requiring new taxes. Trump's emergencies are bogus excuses.

Jacob Sullum of Reason reports that libertarian legal scholar Ilya Somin demonstrates justifiable concern over Trump's emergency-mongering:

As George Mason law professor Ilya Somin notes, "an emergency is a sudden, unexpected crisis, not an ongoing policy issue on which the president wants to redirect resources in ways not authorized by Congress." The situation at the southern border "doesn't even come close to qualifying" as an emergency, Somin argues, especially since "illegal entries are down to their lowest level since August 2020, when the rate was unusually low due to the Covid pandemic." If the president "can declare an emergency and tap a vast range of special emergency powers anytime he wants for any reason he wants," Somin warns, "that makes a hash of the whole concept of an emergency, raises serious constitutional problems, and creates a dangerous concentration of power in the hands of a single person."

Sullum and Somin rightly point out that Trump's invocation of the notorious 1798 Alien Enemies Act and his labeling of drug cartels as terrorist organizations is ominous. Drug cartels are the products of U.S. drug prohibition and its inevitable black market.

For more insight let's turn to one of the great presidency watchers: Gene Healy of the Cato Institute, author of The Cult of the Presidency. In a blog post the other day Healy identified good, bad, and ominous actions in Trump's conduct. Lots of things Joe Biden did by executive order surely needed undoing. Unfortunately, that's not all Trump has done.

"[A]t some point," Healy writes, "you have to ask yourself, is this any way to run a country?" He goes on:

In Federalist 70, Alexander Hamilton insisted that “energy in the executive” would foster “steady administration of the laws.” But living with the turbocharged modern presidency means whipsawing between extremes as the law changes radically whenever the office changes hands. That system isn’t just stupid, it’s dangerous: By raising the stakes of the transfer of power, it risks making every presidential election a “Flight 93 election.”

He goes on to say how this threat might be addressed:

There’s no shortage of smart legislative proposals for reining in presidential power. If we don’t want the president to be able to unlock new statutory powers by saying the magic words “national emergency,” Congress could amend the National Emergencies Act so those powers quickly expire unless Congress votes to approve the national emergency declaration.

Sen. Rand Paul’s REPUBLIC Act aimed to do just that—while also blocking the use of the International Emergency Economic Powers Act as a trade-war weapon. Other bills from Senator Paul and Sen. Mike Lee would require congressional approval for presidentially imposed trade restrictions. But while the REPUBLIC Act cleared committee last September, none of these proposals even made it to the floor—let alone the president’s desk.

That would be a good—if modest—start. But we have to start somehow and somewhere. Those of us who want (at least) a radical downsizing of federal domestic and foreign powers should not get so caught up in current events that we ignore the long-term dangers and precedents of an autocratic presidency.

Abolish Antitrust!

"That there is inequality of ability or monetary income on the free market should surprise no one. As we have seen above, men are not “equal” in their tastes, interests, abilities, or locations. Resources are not distributed “equally” over the earth.16 This inequality or diversity in abilities and distribution of resources insures inequality of income on the free market. And, since a man’s monetary assets are derived from his and his ancestors’ abilities in serving consumers on the market, it is not surprising that there is inequality of monetary wealth as well.

"The term 'free competition,' then, will prove misleading unless it is interpreted to mean free action, i.e., freedom to compete or not to compete as the individual wills.

"It should be clear from the foregoing discussion that there is nothing particularly reprehensible or destructive of consumer freedom in the establishment of a 'monopoly price' or in a cartel action. A cartel action, if it is a voluntary one, cannot injure freedom of competition and, if it proves profitable, benefits rather than injures the consumers. It is perfectly consonant with a free society, with individual self-sovereignty, and with the earning of money through serving consumers.

As Benjamin R. Tucker brilliantly concluded in dealing with the problem of cartels and competition:

'That the right to cooperate is as unquestionable as the right to compete; the right to compete involves the right to refrain from competition; cooperation is often a method of competition, and competition is always, in the larger view, a method of cooperation ... each is a legitimate, orderly, non-invasive exercise of the individual will under the social law of equal liberty....

'Viewed in the light of these irrefutable propositions, the trust, then, like every other industrial combination endeavoring to do collectively nothing but what each member of the combination might fully endeavor to do individually, is, per se, an unimpeachable institution. To assail or control or deny this form of cooperation on the ground that it is itself a denial of competition is an absurdity. It is an absurdity, because it proves too much. The trust is a denial of competition in no other sense than that in which competition itself is a denial of competition. (Italics ours.) The trust denies competition only by producing and selling more cheaply than those outside of the trust can produce and sell; but in that sense every successful individual competitor also denies competition.... The fact is that there is one denial of competition which is the right of all, and that there is another denial of competition which is the right of none. All of us, whether out of a trust or in it, have a right to deny competition by competing, but none of us, whether in a trust or out of it, have a right to deny competition by arbitrary decree, by interference with voluntary effort, by forcible suppression of initiative.'

"This is not to say, of course, that joint co-operation or combination is necessarily 'better than' competition among firms. We simply conclude that the relative extent of areas within or between firms on the free market will be precisely that proportion most conducive to the well-being of consumers and producers alike. This is the same as our previous conclusion that the size of a firm will tend to be established at the level most serviceable to the consumers."

—Murray N. Rothbard, Man, Economy, and State

TGIF: Free Speech Restored?

Don't get accustomed to me praising Donald Trump, but exceptions will occur now and then. Trump is no principled friend of liberty, not by a long shot. Judging by most of his actions and words, he recognizes no impenetrable boundary between the government and the private sector, the market economy. We may infer that he sees the central government and the country itself as a company that he runs with few restraints. He seems to imagine himself as the chairman and CEO of the United States, with only a toothlessly subservient board of directors. I need only point to his trade and immigration policies to support this inference. It shows itself in many other ways.

Trump is a collectivist of the nationalist variety. He's a devotee of industrial policy, in which the central government aspires to guide the free-enterprise economy in lots of ways. For him, free-ish enterprise may be permitted when it doesn't conflict with his preferences—but only then. He decides. Put another way, he is an advocate of the corporate state in an earlier sense of the term. It doesn't mean that government does the bidding of large corporations. Rather, it means the nation-state is seen as a single organism with one set of interests. Society is the body (Latin: corpus), and the ruler—Trump—is the head.

But (cautious) credit should be given where it is due. Before that, however, something must be said about how even good things are done. Government by executive order and emergency declaration is ominous. The division of powers and the checks and balances among the three branches have at least the potential to stave off government threats to liberty. Those checks should be strengthened. The Department of Education and USAID, to name just two federal entities, should unquestionably be abolished! But is autocratic decree a good thing? It's certainly satisfying to see employees and supporters of those agencies panic over their closing, but the issue is bigger than that. The next president may undo any pro-liberty decrees and issue new ones inimical to liberty. Precedents matter.  An imperial presidency, one that can amend the Constitution unilaterally, does not serve freedom and the market economy.

Now for the credit. On Jan. 20, 2025, shortly after his inauguration, Trump signed an executive order titled "Restoring Freedom of Speech and Ending Federal Censorship" in response to one of the worst things Joe Biden and his administration did. They had effectively suppressed the speech of Americans by threatening—at least implicitly but in no uncertain terms—private social-media companies if they did not suppress lawful posts about the Covid pandemic and the Hunter Biden laptop. In other words, as a judge put it, Biden set up an Orwellian ministry of truth to crack down on dissent and inconvenient facts. Lawful speech was smeared as disinformation and misinformation, perhaps of foreign origin. Even true statements were to be suppressed, however subtly, if they undermined confidence in the government's objectives. Individuals were maligned.

That is not supposed to happen in a free society, where freedom of speech and press are enshrined in the First Amendment to the Constitution, which theoretically, if not actually, restrains the exercise of government power. The government may not censor; therefore it may not use private firms to do what it may not do. The government's bad conduct was challenged in court, initially successfully, but the Supreme Court eventually ruled against the free-speech advocates, claiming they had no standing. (See Murthy v. Missouri.)

So kudos to Trump for issuing an executive order to prevent such misconduct from happening again. The executive order spoke the truth with its opening words:

The First Amendment to the United States Constitution, an amendment essential to the success of our Republic, enshrines the right of the American people to speak freely in the public square without Government interference.  Over the last 4 years, the previous administration trampled free speech rights by censoring Americans’ speech on online platforms, often by exerting substantial coercive pressure on third parties, such as social media companies, to moderate, deplatform, or otherwise suppress speech that the Federal Government did not approve.  Under the guise of combatting “misinformation,” “disinformation,” and “malinformation,” the Federal Government infringed on the constitutionally protected speech rights of American citizens across the United States in a manner that advanced the Government’s preferred narrative about significant matters of public debate.  Government censorship of speech is intolerable in a free society.

The order goes on to declare that it is now the policy to

ensure that no Federal Government officer, employee, or agent engages in or facilitates any conduct that would unconstitutionally abridge the free speech of any American citizen;

ensure that no taxpayer resources are used to engage in or facilitate any conduct that would unconstitutionally abridge the free speech of any American citizen; and

identify and take appropriate action to correct past misconduct by the Federal Government related to censorship of protected speech.

It then declares that "no Federal department, agency, entity, officer, employee, or agent may act or use any Federal resources in a manner contrary to ... this order."

It also directs that the "Attorney General, in consultation with the heads of executive departments and agencies, shall investigate the activities of the Federal Government over the last 4 years that are inconsistent with the purposes and policies of this order and prepare a report ... with recommendations for appropriate remedial actions to be taken based on the findings of the report."

Why did I give only cautious credit? Here's why: "Media outlets must not cave to Trump’s lawfare." As the Foundation for Individual Rights and Expression (FIRE), put it. "What happens to freedom of the press when the president can bully media outlets he doesn’t like into paying big money to end his meritless lawsuits against them? Buckle up. We’re about to find out." FIRE points with alarm to "Trump’s dictatorial appetite to use lawfare to silence or punish outlets that publish content he doesn’t like." 

This is ominous. With Trump, there will be no rest.

Back on the Bob Murphy Show!

TGIF: Birthright Citizenship and the Constitution

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States....

—U.S. Constitution, Amendment XIV

Donald Trump says he wants a "revolution of common sense." If he means it, he will abandon his unilateral attempt to cancel birthright citizenship, which the 14th Amendment to the U.S. Constitution, ratified in 1868, expressly acknowledges. The opening words of that amendment have a common-sense meaning that requires grotesque mental contortions to evade.

Opponents of birthright citizenship will seek refuge in the amendment's legislative history and case law, but I don't see how that trumps the plain meaning of words. The amendment says that if you were born in the United States, you are a citizen unless a parent was a foreign diplomat. It's worth remembering that the debate over birthright citizenship is merely one part of the all-out assault on the freedom to move and work that Trump is spearheading. Since violations of this freedom affect foreigners as well as Americans, the controversy is worth paying attention to.

The Constitution does not instruct its readers on how to interpret its clauses. Common sense is called for, and no one applied common sense to the law more clearly than the 19th-century libertarian and constitutional scholar Lysander Spooner. Spooner was also an abolitionist during the slave era. He insisted, contrary to his fellow abolitionists, that the constitutional text did not sanction slavery. He spelled this out in The Unconstitutionality of Slavery.

Spooner insisted that the language of a constitution must not be interpreted contrary to the very purpose of the document itself unless the language was so unambiguous as to preclude any other interpretation. In the American case, a pro-liberty reading is required if it is not expressly ruled out. He proceeded to show that the purportedly pro-slave language of the Constitution had to be construed in a way that was consistent with individual natural rights and natural law because the purported aim of the Constitution was to protect natural rights. Nowhere in the original Constitution were the words slave or slavery used. He wasn't arguing that the framers did not intend to protect slavery. Rather, his point was that no one was bound by what the framers meant but did not say. That makes perfect sense. If those men wanted to say something, they should have said it. What stopped them? We have no obligation to perpetuate injustice.

"[I]n the interpretation of all statutes and constitutions," Spooner wrote, "the ordinary legal rules of interpretation be observed. The most important of these rules, and the one to which it will be necessary constantly to refer, is the one that all language must be construed 'strictly' in favor of natural right." (Spooner's emphasis.)

Also: "The legal rules of interpretation, heretofore laid down, imperatively require this preference of the right, over the wrong, in all cases where a word is susceptible of different meanings."

And "[A]n innocent meaning must be given to all words that are susceptible of it."

Surely, Spooner would have applied this principle to the opening words of the 14th Amendment. It's unclear what meaning, other than the natural-right meaning, could possibly be given to those words. Some will argue that the post-Civil War amendment was only meant to recognize the citizenship of the freed slaves. So why didn't they say that? We are not bound by a meaning that contradicts natural law if the text can be read otherwise. .

How do we know the plain meaning is consistent with natural rights and natural law? We know because only under the plain meaning will the state leave people alone who have violated no one's rights. That was the original American way. If you did not aggress against persons or property, you were unlikely to come into contact with government officers.

If Trump has his way, people who have harmed no innocent persons or property could be rounded up by armed government agents and exiled. That would violate those people's rights. Therefore, the pro-liberty meaning is the common-sense meaning and must prevail if the Constitution is to fulfill what we are told is its purpose: "establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity"

As Spooner put it, "[I]n order that the contract of government may be valid and lawful, it must purport to authorize nothing inconsistent with natural justice, and men’s natural rights. It cannot lawfully authorize government to destroy or take from men their natural rights: for natural rights are inalienable, and can no more be surrendered to government—which is but an association of individuals—than to a single individual."

The case presented here might seem to justify no more than legal residency. What about citizenship? To take that step, one need only consider that a legal resident is subject to the government's power to tax and regulate. Since his bid for exemption from U.S. government impositions would not be recognized, we are forced to the second-best disposition, namely, that the legal resident ought to have a say—as small as it is—over government policy, that is, the privileges and immunities of citizens. Those who are concerned that this could bring growth in an already overgrown government should turn their attention directly to the size and scope of the state, rather than seeking to limit individual rights. Besides, the offspring of American citizens have not exactly been genetically or culturally predisposed against big government, have they? Immigrants are not responsible for America's falling score on the world indices of freedom.

Ironically, anti-immigration action is what would make the government bigger and more intrusive. If you ask the state to "protect" the culture from foreigners, don't be surprised when you wake up in bed with a monster.

The Constitution has serious basic flaws, as Spooner himself would later elaborate in "The Constitution of No Authority," but as long as it's the supreme law of the land, liberty's advocates are obliged to push the interpretation that most constrains the state and expands freedom.