Who Wants Market Regulation?

“Those who profit from the current situation – and those indifferent to it – will say that the housing market should be left alone to regulate itself. They don’t really mean that,” writes Matthew Desmond in his book Evicted.  In the world that Desmond investigated, the world of low-income housing, the ones who don’t think any government action needs to be taken to regulate or stabilize the market are the landlords and people able to make money from slum housing. The people exploiting market failures and extracting rents say they don’t want any changes in housing policy because they favor a free market, but what Desmond’s quote hints at is that they don’t really exist within a free-market, and they currently profit from existing government action (not just inaction) on housing policy.
The quote from Desmond reminds me of senior citizens who protest changes to Medicare with signs that say “Keep your government hands off my Medicare,” seemingly unaware that Medicare is a government run health program. The line between government and markets is not always clear to people, and what people actually want in terms of government market regulation doesn’t always line up with people’s stated political beliefs or stated beliefs about government intervention. We can have high minded opinions about the proper role of government relative to markets, and we sound better and more impressive when we do, but the bottom line is that we are all likely driven more by our own self-interest than our high minded opinions of governments and markets.
I am currently listening to Ron Chernow’s Hamilton biography on audiobook. I am struck by how our nation’s founding fathers quickly broke down into self-interested policy quarrels that were couched in high minded political rhetoric, but seemed to perfectly back the self-interest of the given founding father. Jefferson in particular seemed to be a master of this kind of deception, arguing that America should have a minimal government and reflect a populist standpoint. However, Jefferson owned slaves and had a vast agrarian plantation and his policies seemed to clearly favor his own lifestyle. His actions can be well understood when viewed through the lens of The Elephant in the Brain by Kevin Simler and Robin Hanson who suggest that most of our behavior is signaling and that we generally (and deceptively) act on self-interest more than we would ever admit.
All of this is to suggest that most people don’t really have any independent and objective views of government regulations of markets. Desmond’s quote about housing markets shows that people are driven by self-interest, that they discount regulations that favor their financial interests, and that they misrepresent government policies that make them better off. When our own self-interest, our own bottom line, and our social status are on the line, we are willing to compromise our high minded positions to adopt the view that is expedient to our own interests. This was true of Jefferson and Hamilton in the first Presidential Administration after the adoption of the Constitution, and it is true today in housing, Medicare, and other government and market areas. Landlords, real-estate agents, and others who currently profit in the housing market are in favor of government tax breaks on mortgage interest, of housing vouchers, and other policies that help ensure people can afford high rents. They view the market as being free without fully acknowledging these interventions and how they benefit from them.

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