by Earick Ward
Let’s explain the answer, for Zohran Mamdani’s sake
With the election of Zohran Mamdani as Mayor of New York, much conversation has been made of his appeal to “affordability.”
As I’ve written previously, this is a noble conversation, but one
that has been dishonestly framed (by Democrats and media) to date. I
will use Mamdani’s comment in his acceptance speech to re-frame the debate.
We will prove that there is no problem too large for government to solve, and no concern too small for it to care about.
Mamdani and the Democrat party have effectively defined a binary
choice: Should government or “the market” control affordability? The
Democrats are seemingly all in on expanding the size and scope of
government, to the point of eventually seizing the means of production.
First let’s look at the role that government has already played and
its effect on affordability. What areas in the economy have seen the
greatest increase in costs for the consumer? Education, housing,
healthcare, and food. Ironically, these are all areas of the economy
that the government has interjected itself in the form of subsidies,
regulations, government-backed loans, and transfer payments.
In the 1960s, tuition costs were a reasonable expense. The best and
brightest pursued advanced degrees and had good-paying high-skilled jobs
available upon graduation. Government-backed loans were buffeted by a
competitive “private loan” market.
In 2010, Obama eliminated
the federal guaranteed loan program, which had let private
lenders offer student loans at low interest rates. Now the Department
of Education is the only place to go for such loans.
Private lenders (prior to 2010) would lend money based on a risk
model, where student loans could be obtained with the lender determining
their degree of risk associated with repayment. It didn’t serve their
interest to make loans to a large swath of students that might likely
not repay the loan. Tuition was mostly held in check, as students and
lenders evaluated the cost-benefit analysis of higher
education. Universities couldn’t raise tuitions beyond what “the
perceived market” for return on investment would support.
Eliminating the private lending market placed government as the sole
provider of student loans. The government abandoned risk-benefit
analysis and effectively provided loans to anyone and everyone who
wanted to attend university. This act ballooned the number of people
(qualified and unqualified) who obtained government-backed student loans
and removed the “market” pressure on tuitions, causing tuition rates to
rise exponentially.
Housing unaffordability has three distinct (government-created) problems.
One: Rent control. New York offers
us a glimpse at the impact of rent control programs on price and
availability. Controlling rents on some subset of housing creates
hyperactive demand on the balance of housing in a generalized
area. Wherever rent control has been instituted, rents throughout said
market rise above and beyond where “the market” might otherwise settle.
Two: Supply and demand (price controls and regulations). Wherever
rent controls have been instituted, local governments (i.e., New York,
San Francisco) alternately impose strict regulations on the building and
upkeep of housing within said market. These regulations, as we see
playing out in Pacific Palisades in California, make it near impossible
to rebuild and repair, and they discourage private investment.
Three: Illegal immigration. Unfettered illegal
immigration has placed extreme demand for housing above and beyond what
the market might otherwise require. Cost supports (transfer payments)
to illegal aliens, like government-backed student loans (above), removes
some cost pressure against entry for many, causing prices to rise above
what the market might otherwise demand, making housing unaffordable in
many, primarily urban markets.
Obamacare, or the inaptly named Affordable Care Act, we were
told, was necessary to “bend down the healthcare cost
curve.” Conservatives, Republicans, health care industry analysts, and
economists warned that the opposite would occur, with costs rising and
care becoming rationed to curb hospital outlays. This is exactly what
occurred, as we see with the debate over Obamacare subsidies as part of
the Democrats’ rationale for shutting down the government. Temporary
Obamacare subsidies implemented by Democrats in 2021, expiring at the
end of 2025, are necessary, say Democrats; otherwise, Americans (and
non-Americans) will see a doubling or tripling of their health insurance
premiums.
If only someone had warned Democrats that this might occur.
As for health care subsidies to illegal aliens, some untold amount
(billions) of federal tax subsidies has been paid out to states as
reimbursement for Medicaid outlays. California Medi-Cal (Medicaid)
provides full-scope coverage to all children and low income-eligible
adults regardless of immigration status, including illegal
aliens. Approximately $107.5 billion is reimbursed to California (for
Medicaid) with federal funds.
We are informed (again by the shutdown) that 42 million Americans (and non-Americans) receive SNAP (Supplemental
Nutrition Assistance Program) benefits. This number rose from 38
million in 2019. SNAP is supposed to be a temporary support program and
available to U.S. citizens only. The USDA requested SNAP participation
information from all 50 states. Twenty-one (Democrat-lead) states have
refused to provide these data. It’s believed that this is due to their
payouts of SNAP benefits to illegal aliens.
It is no wonder that Americans are concerned with affordability, but
they are sadly mistaken if they think “more government” is the
answer. Here’s why.
Government subsidies create a third-party payer economic (pricing) problem.
Prices and products’ and services’ range of quality in a “free
market” are arrived at organically, between a buyer (consumer) and a
seller (or provider).
Sellers determine the market for their product or service and
determine their costs in providing said product of service. They then
determine a reasonable profit that justifies the development of a
product or the providing (or not) of a particular service.
Buyers are placed in the position of determining the price they’re willing to pay for a particular price or service.
Competition causes other makers or providers to enter a market, if
they believe they can make a better or cheaper product. Competition and
choice apply downward pressure on costs, helping to ease affordability.
In a third-party payer model (as we see above in education, housing,
health care, food, etc.), the buyer has no “direct” incentive to find a
better product or service for less money. The money they’re spending is
not their money. It’s “other people’s money,” as Margaret Thatcher
once opined.
Democrats virtue-signal their care and concern for the American
people (and non-American illegal aliens) as they promote the
ever-burgeoning expansion of subsidies and transfer payments, because a
dependent populace is a loyal (voting) populace. Nothing more. Nothing
less.
They’ve systemically advanced Alexander Tytler’s missive in his Cycle of Democracy:
A democracy cannot exist as a permanent form of government. It can
only exist until the majority discovers it can vote itself largess out
of the public treasury. After that, the majority always votes for the
candidate promising the most benefits with the result the democracy
collapses because of the loose fiscal policy ensuing, always to be
followed by a dictatorship (or communism).
We thus face a binary choice. Democrats want to expand government, up to including seizing the means of production. Republicans
must make the case for reducing government subsidies (and removing
illegal aliens) and permitting the market to allow for competition to
lower the cost of goods and services.
Democrats and media will clamor that Republicans are dispassionate
about “the people.” What’s dispassionate is government-produced
unaffordability (documented above), leading to the eventual collapse of
our economy and our freedoms.
Communism is the end goal of Progressivism, as Cloward-Piven
documented in the 1960s. New York has fallen and will eventually
implode. The draw to “free stuff” is real.
Republicans must educate the American people that nothing is free when all are in chains.
Image: pasja1000 via Pixabay, Pixabay License.
Earick Ward
Source: https://www.americanthinker.com/articles/2025/11/why_are_things_unaffordable.html
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