Central Planning is always destined to fail, and central planners (at everyone else's expense) always do whatever they can to delay the inevitable. Negative interest rates (that is, getting paid to borrow money) would never occur in a free market monetary system. Such a ludicrous idea will only further exacerbate the end of central banking. Debt continues to skyrocket, and the interest payments will only get more unbearable. It's time to audit and then End The Fed.
By Gregory Bresiger
Governments can and do try to fix prices, but history tells us it never works.
From the price-control dikats of the Roman Empire’s Diocletian, to the wage and price controls of President Richard Nixon, governments have tried and failed.
The historian Edward Gibbon said the Roman Empire imploded owing to economic disasters and less to barbarians at the gate. More recently, President Nixon imposed wage and price controls before the 1972 elections. He was re-elected when they seemed to be working. However, owing to the Watergate scandal, he wasn’t around when his price control scheme failed and dragged down millions of Americans in the disastrous decade-long horror show called stagflation.
New York's Economic Madness
Yet governments continue to try various kinds of price controls, even though most people with even the barest acquaintance with economic history or basic economics understand they’re the equivalent of economic crack. However, most New York pols, for instance, are economic illiterates.
They support continued rent controls because they are politically popular, at least in the short run. In the case of rent controls, the New York political classes recently extended them. They believe, almost uniformly, that they provide better housing at decent prices. But history and many economists say otherwise.
I believe some pols are privately convinced that they are witchcraft but they are not going to say so because they might then no longer be on the public payroll.
The politics are why New York’s state and city lawmakers have consistently backed rent control laws. That’s even though most economists, both left and right, agree they lead to housing shortages; that they’re a good deal for the minority of people who get coverage while the rest of New Yorker pay excessive rents.
Why Don’t They Work?
Supply dries up. Builders spooked by controls won’t build new units. The minority of those who get cheap rents won’t leave their units no matter what. Turnover rates decline. Most New Yorkers paying free market rents pay through the nose.
If you have a rent-controlled apartment: stay forever. You have cheap rent. If not, be prepared to pay very high housing prices as the housing stock can’t keep pace with demand. The quality of life in the city declines as more and more people pay a high percentage of their income for housing.
“In many cases, rent control appears to be the most efficient technique presently known to destroy a city — except for bombing,” wrote Swedish economist Assar Lindbeck, a Social Democrat.
This comment is part of a historical arsenal of rent control/stabilization critiques. They’re a piece of a federal lawsuit challenging the recent extension of New York rent controls, which are supported by most elected officials.
“The passage of these historic bills is a victory for housing justice and for hardworking tenants across New York,” New York City Comptroller Scott Stringer wrote in a press release. Stringer declined repeated requests for comment on a story I recently did for the New York Post Business section about the economic aspects of controls.
The extension immortalizes rent control rules for some one million New York City units. And yet no one disagrees with that, after generations of rent controls in New York, that the average New Yorkers pay huge housing bills, despite these laws.
They come at a time many New Yorkers “pay half or more of their income for housing,” says State Comptroller DiNapoli. There are about 3.2 million units in New York City.
A Helping Hand for the Big Apple’s Rich
Rent control critics warn these new laws will raise rents on most people except those New Yorkers living in rent-controlled apartments, who are sometimes well heeled.
“In 2017 upper-income households occupied 12 percent of pre-1974 rent stabilized units, or 98,780 units,” according to a report by the Citizens Budget Commission (CBC) report “Reconsidering Rent Regulation Reforms.”
CBC wrote that “Of these upper income stabilized households, 28,377 earn more than $200,000 a year.” The CBC report also finds that rent-controlled/rent stabilized tenants have a greater chance of having apartment problems than unregulated units.
This rent stabilization law (RSL) often helping the rich theme is cited in the lawsuit.
“The RSL does not in any way target its relief to low income populations. There is no financial qualification or standard at all for retaining or obtaining a rent stabilized unit,” the complaint says.
Due Process of Law
The lawsuit charges rent regulations violate the property and Fourteenth Amendment due-process rights of property owners forced to rent at below market prices. The laws, the suit continues, are a violation of the United States Constitution’s Takings Clause. That bars “forcing some people alone to bear public burdens.”
About 45 percent of rental units in New York City are rent regulated, according to a New York University Furman Center report.
Rent control applies only to buildings built before February 1947 and to units occupied by a tenant who has lived in the unit continuously since before July 1, 1971, Furman said. Rent stabilization generally applies to buildings of six or more units built between February 1, 1947 and December 31, 1973.
Despite the popularity of rent control laws with politicians, the majority of people who have studied the issue are critics.
Economists Do Agree
Blair Jenkins, the editor of a compilation of rent research entitled, “Rent Controls: Do Economists Agree?” says most economists condemn them.
In the book, economist Peter Navarro wrote “the economics profession has reached a rare consensus: Rent control creates more problems than it solves.”
Pace University professor Joseph Salerno argues New York’s laws have made housing problems worse.
“If rent controls are imposed that are lower than rents dictated by market forces, an excess demand for apartments almost immediately appears,” he says “Over time, if the demand for apartments increases, the shortage grows worse leading to long waiting lists.”
“In the long run, as taxes, utilities, maintenance and other costs of operating an apartment building continue to rise, the supply of apartments actually decreases, as landlords convert their apartments into co-ops or condos or abandon them altogether,” Salerno adds, noting higher costs lead to reduced maintenance.
The Left and Right in Accord
Salerno is a libertarian economist. He is an opponent of the liberal Keynesian school. However, economist Paul Samuelson, who was a prominent Keynesian and Nobel Prize winner, agreed.
“New York City rent controls,” Samuelson wrote in his economics textbook, “do favor those lucky enough to find a cheap apartment; but they inhibit new private building of low-cost housing.”
This article was originally published at The Mises Institute.
The approach of negative interest rates in the US will transport us into a truly bizarro world where up is down and spending is saving. But it's not only an economic issue - there is a moral and political corrosion of our society that comes with negative interest rates. Mises Institute President Jeff Deist joins today's Liberty Report.
By Chris Rossini
"Social Engineers," with their delusions of of total information awareness and total control, are nothing new. We humans are free to think whatever we want. We have imaginations, so naturally there will always be those who imagine they are here (not just to run their lives) but to run the world and organize everything in it to their own liking.
It's an all-too-common error in thinking, and the consequences that these individuals have produced once they get a hold of the reins of power have been beyond horrific.
These individuals destroy not only themselves, but those who believe them, and the unfortunate innocents who happen to be in the wrong place at the wrong time. A great example would be the Polish people when Hitler and Stalin invaded Poland from both sides. Poland was not the place to be when the Socialist 'engineers' were on the march from every angle.
So the power-hungry engineers and tyrants are not to be dismissed, of course. Their futile quests definitely create enormous destruction. It's quite rational to want to avoid them and even fear being in their path.
But what should not be feared is the social engineers ever succeeding in creating their utopias or dystopias. This will not happen. They have been chasing their delusions for thousands of years, and will surely continue to do so for thousands more.
You can chase after 2+2=5 for as long as you want. But 2+2 will never equal 5.
Social Engineers do not understand the human nature that they wish to re-create. They see people like inanimate physical objects that they can just manipulate, or like mixing two chemicals in a test tube to get their result.
But while there may be constants in the physical sciences, there are no such constants with conscious individual human beings.
Human beings are not like stones, or electricity, or chemicals in a test tube. We are conscious. We choose what to think. We choose what to believe. We choose our own purposes and goals. We choose the means that we will use in striving to achieve our goals.
Every single second of human life is different and unique from every second that was or will be. No two seconds of human existence are ever exactly alike.
Social Engineers sentence themselves to a life of never-ending frustration. They perpetually try to stamp out human choice with their prohibitions and mandates, yet it's no different than trying to nail JELL-O to a wall.
The JELL-O merely slides away from the nail, and moves on.
"Ban XYZ!" the Social Engineers pronounce.
Well, people will just find a workaround, a loophole, or even get XYZ on the black (i.e., free) market.
People have imagination. You cannot box in imagination, or put a fence around it.
You cannot see imagination.
You can't touch it.
But it is.
This is a major reason why every single military empire fails, and every scheme of trying to 'perfect' humanity with violent force (or threat of violent force) always collapses onto itself.
Humans are not meant to be perfect.
Errors are a necessary and unavoidable part of life.
It's not necessary to fear technocratic dystopias, or socialist utopias ever actually succeeding.
It's always just a chase for the impossible.
Instead, it's much better to celebrate and honor that innate and ever-present ability to choose.
Liberty can't help but succeed.
Liberty just is.
President Trump has named Robert O'Brien, who served as foreign affairs advisor to Mitt Romney's presidential campaign, as his replacement for fired National Security Advisor John Bolton. O'Brien is cut from the exact same neoconservative cloth as Bolton and represents, at most, change in style and physical appearance. With pressure mounting on Trump to attack Iran after unproven accusations that it was involved in an attack on Saudi oil facilities, the President's national security team may find itself without allies in the effort. Will O'Brien put the brakes on Trump's neocons...or will he hit the accelerator?
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By Liberty Report Staff
Jeff Deist, President of The Mises Institute explains:
Secretary of State Mike Pompeo was sure of who was responsible for the attack on Saudi oil facilities shortly after the attack. Neocons followed suit, one by one blaming Iran and calling for the war they've been drooling over for years. But not only are Washington's European partners skeptical of the claims - even Gulf allies are not outright blaming Iran. Lies grease the wheels of the war machine and with the latest attack the grease is flowing freely. What will Trump do?
By Ron Paul
The recent attacks on Saudi oil facilities by Yemeni Houthi forces demonstrate once again that an aggressive foreign policy often brings unintended consequences and can result in blowback. In 2015 Saudi Arabia attacked its neighbor, Yemen, because a coup in that country ousted the Saudi-backed dictator. Four years later Yemen is in ruins, with nearly 100,000 Yemenis killed and millions more facing death by starvation. It has been rightly called the worst humanitarian catastrophe on the planet.
But rich and powerful Saudi Arabia did not defeat Yemen. In fact, the Saudis last month asked the Trump Administration to help facilitate talks with the Houthis in hopes that the war, which has cost Saudi Arabia tens of billions of dollars, could finally end without Saudi crown prince Mohammad bin Salman losing too much face. Washington admitted earlier this month that those talks had begun.
The surprise Houthi attack on Saturday disrupted half of Saudi Arabia’s oil and gas production and shocked Washington. Predictably, however, the neocons are using the attack to call for war with Iran!
Sen. Lindsay Graham, one of the few people in Washington who makes John Bolton look like a dove, Tweeted yesterday that, “It is now time for the US to put on the table an attack on Iranian oil refineries…” Graham is the perfect embodiment of the saying, “when all you have is a hammer, everything looks like a nail.” No matter what the problem, for Graham the solution is war.
Likewise, Secretary of State Mike Pompeo – who is supposed to represent US diplomacy – jumped to blame Iran for the attack on Saudi Arabia, Tweeting that, “Iran has now launched an unprecedented attack on the world’s energy supply.” Of course, he provided no evidence even as the Houthis themselves took responsibility for the bombing.
What is remarkable is that all of Washington’s warmongers are ready for war over what is actually a retaliatory strike by a country that is the victim of Saudi aggression, not the aggressor itself. Yemen did not attack Saudi Arabia in 2015. It was the other way around. If you start a war and the other country fights back, you should not be entitled to complain about how unfair the whole thing is.
The establishment reaction to the Yemeni oilfield strike reminds me of a hearing in the House Foreign Affairs Committee just before the US launched the 2003 Iraq war. As I was arguing against the authorization for that war, I pointed out that Iraq had never attacked the United States. One of my colleagues stopped me in mid-sentence, saying, “let me remind the gentleman that the Iraqis have been shooting at our planes for years.” True, but those planes were bombing Iraq!
The neocons want a US war on Iran at any cost. They may feel temporarily at a disadvantage with the departure of their ally in the Trump Administration, John Bolton. However, the sad truth is that there are plenty more John Boltons in the Administration. And they have allies in the Lindsay Grahams in Congress.
Yemen has demonstrated that it can fight back against Saudi aggression. The only sensible way forward is for a rapid end to this four-year travesty, and the Saudis would be wise to wake up to the mess they’ve created for themselves. Whatever the case, US participation in Saudi Arabia’s war on Yemen must end immediately and neocon lies about Iran’s role in the war must be refuted and resisted.
After Saturday's attacks on Saudi oil facilities, President Trump Tweeted that the US is "locked and loaded" and ready to do whatever Saudi Arabia deems appropriate to whoever the Saudis blame for the attack. Will Trump let the Saudis dictate when and where the United States goes to war? Who did it and why? Evidence? False flag? So many questions.
By Liberty Report Staff