We live in a world where we can get information on so many different topics at the click of a button through search engines. Wikipedia is the largest collaborative project in the history of humanity. Scholarly articles are available to anyone with an internet connection. You can have food delivered to your house without picking up a phone. We carry faster and more powerful computers than the computers that send people to the moon in our pockets everywhere we go. In less than 24 hours, you can fly anywhere. High speed rail whisks people across the land in many countries at 300 km/h.
It is natural to expect that anything can be fixed quickly with how quickly so many things are improving.
But we still can’t go faster than the speed of light.
In a world of exponential growth and constantly increasing expectations, we still face the realities of scientific barriers. Unless our understanding of physics is fundamentally wrong, we will never travel faster than the speed of light.
It is good to envision a better world. It is what people are best at. However, poorly thought-out policies can end up hurting the people they intend to help. You can’t regulate your way out of economic fundamentals.
A classic example in economics is when politicians promise to help poor people by implementing a price cap on a good. What ends up happening is the amount of the good supplied by the market will be less than the amount demanded, which is a shortage. No company will produce a good at a loss, and the marginal cost curve, aka supply curve, will hit the cap at a lower level than the amount people want to buy.
In this classic example, you have only moved from price discrimination to time discrimination. You have not fixed the fundamentals! It does not solve the fundamental problem of economics.
We see this with the increasing housing prices in the United States and Canada. Politicians are going to every imaginable populist solution under the sun, but none of them solve the fundamental imbalance in the housing market. So they are not going to bring housing prices down.
New York City has the most low-income housing in the country, and it is one of the most unaffordable markets in the world. If these solutions worked, New York would have the cheapest housing in America.
Eventually, after all of these populist policies are tried, we will have to fall back on the fundamentals, and then prices will go down.
President Biden just issued an executive order requiring all space ships to include warp drives capable of traveling twice the speed of light tomorrow. We will now be in Alpha Centauri in two years.
Sounds absurd, right?
That’s America’s affordable housing policy in a nutshell.