I've been wondering what to write about lately. There are plenty of things to write about, I suppose. The Pope is in town, but I already called him a wolf in sheep's clothing before. I don't need to write another post about that ignorant shaman just to rehash what I had said earlier. There is also the murders/wrongful deaths that have occurred in the ROK Army as well as a spate of suicides. But I also wrote a bit about the military before and I really don't want to talk about this depressing topic again. At least not for a while.
So, with no intent to write anything, I was going through my Facebook feed when I saw a post from Gawker, a website that I had never heard of before, that was shared with the caption “It's just simple economics.”
I don't know how anyone can ever spend a single moment trying to understand the economy and somehow imagine it to be "simple."
Of course I had to give it a read. As expected, it was ridiculous and before I knew it, I wrote a comment. And I kept writing. When I finally hit the “Enter” key, however, I saw that it was long enough to be an actual post by itself. So I decided to repost it here.
(Well, I never denied that I suffer from long-windedness. And no, neither the original article nor my response to it is related to Korea. But, hey, it's economics and economic laws do not recognize national borders.)
So here are the reasons why this article, “Don't Let Rich People Own Apartments They Don't Live In” is really “simple” economics, and I do mean “simple” as in “mentally retarded:”
1) There was no mention of the original cause of why so many low income earners cannot afford low income housing – rent control.
2)There was no mention of the reason for why so many corporations purchase property in order to use them as tax shelters – New York has one of the worst business tax climates in America.
3) There was no mention of what such a law would do to landlords. You know, the people that the poor would have to rent from? If landlords can't keep their apartments because they can't afford to pay those high taxes because they don't live in them, then who are the poor going to rent from? Are the poor somehow magically going to find money under their mattresses to buy apartments in Manhattan suddenly?
Every poor person's bed
4) There was no proper definition of “public good.”
5) There was no information about who will oversee this “public good” (Does anyone really trust de Blasio or Cuomo or Spitzer or Paterson or Bloomberg or Giuliani to know what the public good is or even know how to achieve it?). There was also no mention that rent control has always been justified as being “necessary for the public good.”
6) There was no mention of how successful (but really, I want to say “unsuccessful” but that seems far too much of an understatement) “confiscating rich people's property for the public good” has been in any country in history that has ever attempted it.
7) There was no mention of how some renters have no choice but to leave for extended periods of time. Like, oh I don't know, military servicemen? And you can bet if there are exemptions made for one group of people, everyone else who can afford it, and their special interest groups (oh you can bet that there will be a multitude of special interest groups) will be lawyering up to get those sweet, sweet exemptions. Because why not clog up the courts more than they already are anyway? What's the worst that could possibly happen?
8) Basically, there was no mention of any kind of cause and effect; like as though people don't adapt and change their behaviors and actions depending on changing incentives and disincentives. Like as though all of this taxing and shaming will somehow magically take place and people will just accept their new lot in life without so much as a complaint. This may be difficult for many of the world's moralizing armchair pseudo-economists to take in, but the fact of the matter is that life is NOT static.
So how might people respond to such changes? Oh, I don't know, increased taxes on “excess” property could make businesses “rent” said property to their own shell companies or their own employees, who may or may not be full time, or part time, or union, or non-union, or contracted, or non-contracted employees; or just someone's grandparents that they happen to know. Which would then allow them to get tax breaks on top of owning the property.
Believe me, if I can think of such a loophole without even getting paid to do it, you can bet your mother's pension that there are a whole lot of well-paid accountants at Goldman Sachs who will come up with even more ingenious ways to get around those taxes that would make everyone feel like they just got knocked around by Mike Tyson.
The original author of this post, Hamilton Nolan, is a raging idiot. Or a really naive fool who can't see beyond his own nose. Or he's a brilliant troll.
The fact of the matter is that there is no such thing as a simple solution for the world's ills. Least of all a simple economic solution. The economy is far too complex for there ever to be a simple solution. If there were, people who are way smarter than us would have thought of them long ago. If anyone ever claims to have a simple economic solution, you can be sure that they are either peddling snake oil or sheer stupidity.
The following is a quote by Murray Rothbard that I have used many times before. I'll stop quoting it when pseudo-economists stop being stupid.
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”