Splinter! #2: Single-Stage Thinking #TGDN #tcot


Have you tried to live in New York, San Francisco?  These two cities have rent control.  Rent control is probably the most destructive thing a city can do to itself.  And the Ku Klux Klan couldn’t have come up with a better way to chase {insert the race you despise here} out of the “good” neighborhoods and into slums-in-the-making.

So let me take you down this road a bit and explain to you what happens.  You’re a person who owns an apartment building in a town that doesn’t have rent control.  Prices of apartments are set by supply & demand.  It may be high rent; it may be low rent.  But the price you charge is the market average for the area and allows you to keep the apartments clean and in working order while still making a profit.  You look forward to the time when you’re able to take your profits and build more apartments creating more supply and lowering the overall prices of rents in your city!  Capitalism ROCKS!

The city then imposes rent control because they want the little people to love them and reelect them.  You are now forced to charge a price for your apartments that is determined by some bureaucracy in city government that comes up with a formula that is “fair” for the consumer.  At first, your tenants are happy…same place, lower price.  What could be better?  But then as time passes you realize that the price doesn’t allow you to keep the apartments in good working condition let alone make a profit.  You try to keep up the apartments but it takes all of your profits to keep them up.  You may even be losing money.  You have lost the ability and incentive to create decent housing for your customers.  The apartments slowly turn into slums.  The media labels you a “slumlord” and the consumer advocates on Channel 3 show the deteriorating conditions your tenants have to deal with now.  At some point, you try to sell the apartments to get out of your situation but who would be stupid enough to buy the building when they KNOW they’ll never be able to profit from the apartments?  You either abandon or burn the building and disappear to save yourself from financial ruin (if that hasn’t happened already)

Now…here’s the splinter…the IDEA I want you to walk away with:

Most of the economic issues we have today were created by politicians interfering with the natural course of business in this country.  Politicians rarely – if ever – think beyond the initial consequences of their decisions.  Why should they?  Most are not really deep thinkers in the first place and you must remember that politicians are not there to solve problems.  They are in office to stay in office.  That is their only purpose in life.

Politicians will all say they are there to serve the public but most are there to serve themselves and their “friends”.  You will never move forward in life without making that observation.

Generations before, politicians created nearly all of the economic problems we are encountering today because they NEVER thought beyond what Dr. Thomas Sowell calls the ‘first stage’ consequences of “solutions”.  The politicians that come after them see all these problems.  And having long forgotten the single-stage thinking that caused the problem in the first place, promise “reforms” and laws that will solve those problems using the exact same single-stage thinking.  Brilliant.

Henry Hazlitt wrote in his EPIC book, Economics In One Lesson:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Economist and philosopher Thomas Sowell calls this “Single-Stage” thinking in his book, Applied Economics.

And the media, either in-bed with the morons or as stupid as they are, write pap like this lame excuse for “journalism”.

Like Pushing Back on Facebook, visit politicalbrian.wordpress.com or hurl 140 characters at me on Twitter at @brianmcquaig

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