We are doomed

blaming the workaround for the original problem is surprisingly politically effective

Kudos to AOC for really letting ‘er rip recently. It’s often a mystery to me why the progressives, who could run everything if they just calmed down a smidge, offer up such terrible policies. She kind of made it really clear:

Let’s break this down a bit. First what in the world is “market power” doing in there with “break rules” and “abuse labor laws”?

If you have to price at marginal cost, then you dang sure ain’t gonna be a billionaire!

I’m not sure she’d really want to live in a world where no firm had any market power.

There are two very different ways to get market power. You can earn it temporarily by doing something better than everyone else. Or you can get it more permanently by getting the government to keep competitors out. The first is capitalism doing its job. The second is not capitalism at all. It is state corporatism, and pretending otherwise is how we end up blaming markets for political failures.

Now let’s consider Airbnb

When it comes to politically created market power, housing is a target-rich environment. The major source of rents in housing is not Airbnb, it’s local governments deciding who can build, where they can build, what they can build, what they can charge, and how easily they can recover their property in the face of broken contracts.

Airbnb is not the disease. It is basically an escape hatch from a governmental nightmare.

Local governments made housing scarce. They made long-term rental less attractive. They made property rights less secure. Then, when owners looked for another margin, politicians blamed the margin for somehow causing the original problem

Also true for “private equity is causing the housing crisis” by the way.

If long-term rental becomes too risky, local owners can sell to private equity. And private equity is much better positioned to live with bad local policy than the local schmo who owns a duplex. It can diversify regulatory risk over various local governments. A small landlord gets one nightmare tenant and is underwater. The institutional landlord treats it as portfolio variance.

This is our big government blueprint for misery: Politicians make normal housing markets miserable. Owners find substitutes. Then politicians denounce the substitutes as the cause of the misery. Lather rinse repeat.