Economists aren't gods, and economics isn't a divine truth, but economists are good--better than most--at something critical for making public policy: They're good at identifying tradeoffs. "Rents are too high, so freeze them" is compelling politics. But in the absence of other pro-supply policies, if you make it illegal to increase rents, landlords will stop upgrading units and convert them to condos, which reduces the supply of units for rent, reduces mobility, and drives up rents for everybody else.
The left econ populists have some clear, and clearly stated, policy ideas:
- Rents are too high, so freeze them.
- Electricity is expensive, so stop rate increases.
- Homes are too expensive, so ban institutional investors.
- Power prices are rising, so ban data center construction.
... All these policies feel like solutions because they're brisk, they name enemies, and they take on the most visible source of frustration. But they are much better as villain-naming exercises than they are as a complete public policy. On their own, each creates other problems: less housing built, less clean electricity built, abdicating energy policy by encouraging AI firms to build data centers abroad in unsavory countries with more emissions, etc.
I can't think of a single economic populist idea that wouldn't be helped with a little dose of economics, which is why it's troubling when I see the left participating in, and even celebrating, the great unlearning of economics.
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