You often hear people on the right say that The New York Times is a terrible newspaper. This is not true, because they confuse quality with bias. The New York Times is a great newspaper, but unfortunately it is biased towards left-wing views.
Someone once joked that we’re not libertarian because we have “roads.” I might reply that we are libertarian because we have “elevators.” Or, more accurately, a thousand times more elevators.
a Recent New York Times article The book does an excellent job of exposing the inefficiencies of the U.S. elevator industry. A complex web of counterproductive government regulations means that elevators in the U.S. are several times more expensive than in Europe. Not surprisingly, the U.S. has far fewer elevators in the same types of buildings. (So this isn’t just a preference for single-family homes; even U.S. apartment buildings have far fewer elevators.)
The lesson here is not that the US is worse than Europe — it would be easy to find hundreds of examples where the US was more efficient than Europe. Instead, the lesson here is that elevators are just one example among thousands of examples where government overregulation led to inefficiency.
Most people who go about their daily lives never think about the ways that government regulations make their lives harder. In almost every case of systemic inefficiency I encounter, the root cause is counterproductive regulation. Free market enterprises may fail sometimes, but Systemic issues In most cases, this is due to perverse incentives created by regulations.
Most Americans cannot understand the role of regulation, which leads to widespread misunderstanding of problems such as stagnating living standards. Ask most Americans why real wage growth has slowed since 1973 and they will cite a long list of factors, including “inflation,” “the decline of labor unions,” “neoliberalism,” “monopoly profits,” and the “China shock.”
In fact, the impact of all these factors is insignificant compared to the inefficiencies caused by government regulations and subsidies.
1. Healthcare regulations and subsidies have driven up healthcare spending to 18% of GDP in the US, compared with 5% in Singapore (or around 9% given US demographics).
2. Government subsidies and regulations have dramatically increased the cost of education without leading to improved learning.
3. The restrictions caused prices of new homes to rise dramatically, especially in big cities and coastal states.
But I would bet that fewer than one in 100 Americans think that health care regulation is a major factor in lowering real wages.
I could give many other examples, but let’s focus on housing because it’s so important. In less heavily regulated manufacturing industries, such as apparel, consumer electronics, and home appliances, prices tend to rise much more slowly than incomes. Housing is an exception, and an important exception given its share of consumers’ budgets.
The New York Times article is worth noting that the construction industry’s problems go beyond elevators.
Beyond the elevators themselves, the slowness, inefficiency, and expense of America’s construction industry is a complex mess of absurdities and contradictions. For example, Americans are using modern heat pumps — a key tool in fighting climate change by electrifying heating systems — to build the same kind of barrier Restrictions imposed by U.S. regulators. Instead, Americans rely on outdated heat pumps that have no market overseas. And U.S. plumbing codes mandate a whole network of ventilation pipes that are considered largely unnecessary. In many parts of the world.
They also discuss the issue of residential zoning, noting that zoning reform alone is not enough: regulatory barriers are significant, especially in the construction of large apartment complexes.
The average cost of building a detached house is about $153 per square footThe cost of building apartment complexes is soaring in America’s most in-demand coastal cities. Subsidized housing complex In California it can cost $500 (or more) per square foot.
They are being targeted by younger generations who have given up on home buying due to soaring home prices. Their first target is the 1990s, when land use regulations were tightened and existing homeowners built their fortunes by blocking development through restrictive zoning measures. In recent years, the so-called YIMBY (Yes in My Backyard) Movement Successful all but abolish A single-family home neighborhood on the West Coast.
But as zoning restrictions were relaxed, architects and developers quickly began raising the alarm about obstacles lurking in the finer points of building codes, construction regulations and other more technical regulations.
What most progressives fail to understand is that we are stagnating. Genuine Income income; After all, our standard of living depends on our ability to produce. Actual OutputIn the short run, it helps workers a little by redistributing money from capital to labor. But in the long run, it reduces capital formation and makes workers worse off. The overwhelmingly dominant factor in determining real wages is productivity. The reason that a worker in Switzerland earns so much more than a worker in Bangladesh is not because of strong labor unions, but because productivity is dramatically higher.
What will improve workers’ standard of living? Medical cost reduction From 18% of GDP to 9%. Huge cuts in spending on education. Relaxing housing regulations to make house prices much cheaper. And thousands of other small reforms that could increase productivity across the economy.
Elevators may seem like a small problem, but the elevator industry’s problems are emblematic of why real wage growth has slowed since the early 1970s.
I often get annoyed with the New York Times for its strong left-leaning bias, but in all fairness, they’ve written a lot of good articles over the years. I’d love it if someone could dig up 30-40 New York Times articles similar to the elevator article I linked to in this post, and compile them into a book. The title of the book could be:
The New York Times’ Libertarian Argument
