How Politics in San Francisco Deepens the City’s Housing Crisis
A Residential “Right to Build” Amendment to the State Constitution Is Needed

The housing crisis in California is well documented (see, for example, my report How to Restore the California Dream). Perhaps nowhere is the crisis worse than in San Francisco. Two recent incidents reveal how political gamesmanship in San Francisco deepens the crisis by making it impossible to build housing quickly and affordably.

Brookfield Properties wants to build 2,930 residential units at San Francisco’s Stonestown Galleria mall. After years of community input, Brookfield submitted its proposal to the city’s planning department in December 2021.

Interest Rates and the First Rule of Holes
Fiscal Policy in the Wake of Rising Rates

The Peter G. Peterson Foundation is a think tank focusing on fiscal challenges to America’s future. To that end, the Foundation invites experts from across the political spectrum to contribute their insights about the challenges the U.S. faces from its fiscal policies. Specifically, they’ve asked them to answer two questions:

  1. What is the impact of inflation and rising interest rates on our nation’s fiscal outlook?
  2. How should fiscal policy be used in this period of high inflation?

Brian Riedl contributed a very timely essay on the topic of how rising interest rates threaten Washington’s solvency. In the following excerpt, he describes the fundamental problems that are leading to a new fiscal crisis for Americans:

For the past few years, short-sighted lawmakers, economists, and columnists have demanded that Congress take advantage of low interest rates by engaging in a massive borrowing spree. Indeed, President Biden’s enormous spending agenda was often justified by the low interest rates on government borrowing.

But this case never made sense for two reasons. First, Washington was already projected to add $100 trillion in baseline deficits over the next three decades due primarily to Social Security and Medicare shortfalls. Even with low rates, interest costs were projected by the Congressional Budget Office (CBO) to become the most expensive item in the federal budget and consume half of all tax revenues within a few decades. Additional borrowing would deepen the hole.

Second, Washington never locked in the recent low interest rates. In fact, the average maturity on the federal debt has fallen to 62 months. If interest rates rise at any point in the future, nearly the entire escalating national debt would roll over into those rates within a decade. Consequently, continued massive federal borrowing means gambling America’s economic future on the hope that interest rates never rise again in the future. And there is no backup plan if rates do rise.

Today’s Rising Interest Rates

It’s no accident that today’s inflation began accelerating with President Biden’s excessive spending through the American Rescue Plan Act. Fed by President Biden’s bad fiscal policies, inflation raced out of control and the Federal Reserve’s monetary policies quickly fell behind the curve of rising prices. Now they’re racing to hike interest rates to slow the U.S. economy because of the need to reduce inflation.

That’s the short summary of why the Federal Reserve is now engaged in a series of interest rate hikes and is sending signals they’re going to hike them a lot higher than they have so far. The cost of borrowing is rising rapidly as the Federal Reserve counters the inflationary effects of President Biden’s ongoing spending spree.

It might not be so bad, except the Federal Reserve isn’t getting help from the Biden administration or the U.S. Congress. Instead, it’s just the opposite.

There’s an old saying about the first rule of holes: “When you’re in one stop digging.” Riedl does offer a basic policy prescription for righting the situation:

The current inflation surge that shocked economists and markets should remind policymakers that markets are indeed unpredictable. The president and Congress cannot easily control future inflation or interest rates, but they can influence the size of the federal debt that will be subject to those rates. With the possibility of standard interest rate fluctuations pushing budget deficits to nearly $3 trillion within a decade, lawmakers should craft a responsible fiscal policy based on gradual, sustainable, deficit reduction, and with an eye on maintaining low inflation.

The easiest, least painful way to do that is to set the growth of government spending to be slower than the historic growth of the government’s tax collections. It’s not a difficult concept. Except perhaps for the politicians who never learned the first rule of holes when it comes to their excessive spending.

State Vehicle Inspections

A student of mine asks about annual, mandatory car inspections. In Pennsylvania, they’re required.

In states like Kentucky or Indiana (my home state), they’re not. To my eye, the distribution of cars looks roughly the same. Yes, you’re more likely, in Indiana, to see an outlier that looks something like this:

Economists have written extensively about price floors, spilling much less ink on quality floors. The most basic point to make is that a quality floor’s level is necessarily arbitrary. Don’t the good citizens of Pennsylvania deserve even better, in their automobiles, than the state government has legislated? I see so many, myself included in this number, driving around in cars that fall short of the luxuries provided by Lexus and Mercedes (and why stop there, either?).

Biden’s “Cancer Moonshot” Boosts Bureaucracy

On September 12, the 60th anniversary of President Kennedy’s famous “moonshot” speech, Joe Biden proclaimed that “beating cancer is something we can do together and that’s why I’m here today.” Those gathered at the John Fitzgerald Kennedy Presidential Library in Boston, like many across the country, may have been unaware that this was a repeat performance. 

“The time has come in America when the same kind of concentrated effort that split the atom and took man to the moon should be turned toward conquering this dread disease,” President Richard Nixon proclaimed in his 1971 State of the Union address. “Let us make a total national commitment to achieve this goal.” On December 23, 1971, President Nixon signed the National Cancer Act, which gave the National Cancer Institute unique autonomy at the National Institutes of Health, with special budgetary authority. 

President Biden’s Student Loan Cancellation Scheme
What’s wrong with it?

President Joe Biden’s student loan cancellation scheme is a very bad fiscal policy. But now, it may soon be at risk of collapse. The President himself put it in jeopardy, thanks in no small part to his 60 Minutes interview that aired on Sunday, September 18, 2022.

Progressives, Leave the Senate Alone

Jack Rakove’s WSJ podcast (“James Madison’s Critique of the Senate Still Holds,” Sept. 16, 2022) is right on the history of the so-called Great Compromise, but wrong in arguing that representation by the states qua states in Congress’s upper chamber is a constitutional flaw.

It can be shown, as James Buchanan and Gordon Tullock do in The Calculus of Consent: Logical Foundations of Constitutional Democracy, that a bicameral legislature whose members vote by simple majority rule is equivalent to requiring a supermajority (two-thirds or three-quarters) for passing bills in a unicameral legislature, but only if the seats in the House and Senate are apportioned on different representational bases. In other words, it is harder for special-interest groups (Madison’s “factions”) to get legislation enacted when they must “buy” majorities in two chambers of unequal size elected from distinctive constituencies than if representatives and senators are beholden essentially to the same electorates, which would be true when seats in both chambers are apportioned based on population.

Former SF Public Works Director Gets Prison Time

“Disgraced former Public Works czar Mohammed Nuru will serve seven years in prison after pleading guilty to a federal fraud charge,” the San Francisco Chronicle reports, “closing one chapter in a corruption scandal that ensnared senior officials and business heavyweights, and shattered the public’s trust in city government.”

As we noted in January, Nuru was a favorite of Willie Brown and worked for his mayoral campaigns. In 2000, Brown hired Nuru as Department of Public Works deputy director of operations, and soon staff complaints rolled in about Nuru flaunting city rules and misusing public funds. In 2011, Nuru took over as DPW boss, and excrement began piling up on San Francisco streets. 

Economic Freedom Falls in the United States, Global Report Shows
The pandemic policies of 2020 flattened economic freedom in the United States.

The Fraser Institute’s 2022 Economic Freedom of the World Index report has been released. This year’s report covers the year 2020. The index development was led by Dr. James Gwartney in the late 1980s and early 1990s as a way of measuring economic freedom in each country.

Countries are rated on the basis of several categories and are put in four groups (quartiles) ranging from “most free” to “least free.”

Price Controls: The Greatest Hits
What Could Go Wrong?


That’s every economist’s reaction to renewed calls for price controls.

The theory is so airtight, the empirical evidence so overwhelming. The consensus among economists on price controls is impressive, and it stretches back decades.

What’s more, the assumptions required to oppose price controls are so minimal. Economics can’t tell you to favor prosperity and social harmony, but how many people truly don’t?

A Century of Advocating for Peace: Join Us!

Everyone above a certain age no doubt well remembers September 11th 21 years ago. I remember it most for the leadership, courage and principle that my husband and Independent’s founder and president, David Theroux, exhibited on the very day. He immediately worked with Independent staffers to craft and post on the home page a Statement on the Terrorist Attacks, later refined as a Press Release:

... history teaches that crisis periods produce even greater problems and suffering as the heavy hand of unchecked government power crowds out civil society.

... Americans seek security, but not as an end in itself. We seek security to enjoy the blessings of liberty. Attempts to “trade” liberty for security can only produce neither. Instead, we must achieve security in a manner consistent with a diverse and open society, individual liberty, and the rule of law.

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