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  • Here’s How Biden Is Making It Even Harder to Buy a Home

    The US housing market is extremely competitive right now; prices are high and houses are selling fast.

    When Molly Rodela — who is a wife as well as a mother to two kids — was finally able to find a suitable house for a reasonable price online, she could not spend any time considering the decision. She contacted her agent, visited the house without her husband, and then put in an offer $20,000 above the asking price all in the same day.

    With her quick action, the Rodelas were able to get the house. But many have not been so lucky.

    Moreover, the factors behind the tight housing market are concerning.

    For homebuilders across the country, it has become harder and harder to create affordably-priced housing. One of the reasons is the increased labor costs associated with a shortage of skilled workers.

    And a huge factor has been the recent spike in the price of lumber. In fact, the National Association of Homebuilders recently reported that the cost of building a new house has gone up by $24,000 due to soaring lumber prices alone.

    For homebuyers, the issue may go from bad to worse.

    The Biden administration recently took the first step to double tariffs on Canadian lumber from roughly nine to 18 percent.

    In doing so, the administration is falling for an age-old economic fallacy.

    In his timeless book, Economics In One Lesson, Henry Hazlitt argued that “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.”

    In other words, Hazlitt believes that we must not assess policy with blinders on, but rather with a broad understanding of the policy’s consequences.

    In the chapter titled “Who’s ‘Protected’ by Tariffs,” he applied this principle to anti-trade protectionism specifically, pointing out that people who support tariffs fall for the fallacy of “considering merely the immediate effects of a tariff on special groups, and neglecting to consider its long-run effects on the whole community.”

    In this case, Biden is justifying his tariff hike by its immediate effects on the American lumber industry. He argues that when Canada subsidizes their lumber industry, they are able to undercut US producers in an unfair way. So, by implementing a tariff on Canadian lumber, Biden is making Canadian lumber more expensive, thus giving American lumber companies a competitive advantage.

    But a true practitioner of the art of economics would then ask: who else does the tariff impact, and how?

    One important question to ask, for instance, would be how does the tariff impact American industries that purchase lumber? The answer: they have to pay higher prices.

    The burden of these increased production costs inevitably ends up being passed onto consumers. Basic economics tells us that when the price of one resource used to produce a good goes up, the price that the consumer eventually pays for that good rises as well.

    This is exactly why home buyers — and consumers of products that use lumber in general — will be the victims of Biden’s lumber tariff.

    A shortage of lumber as a result of the pandemic led to its price in May being up nearly 400 percent over the past year. But prices have begun to drop again because production has started to ramp up. To increase the tariff — which is just an import tax — would serve to restrict the supply of lumber. This would not allow prices to decrease back to pre-pandemic levels.

    The natural consequence of high lumber prices is the increase in price for all of the goods that use lumber in their production. This does not just stop at houses, but rather includes things such as furniture and storage appliances as well. The average consumer will then have to pay a higher price for all of them.

    Tariffs are not only harmful to individual consumers, but the economy as a whole. As Hazlitt points out, “Higher prices in one area mean that they will not be able to spend that money on something else, thus hurting other industries as well.”

    For example, if, because of Biden’s tariff hike, people have to spend more on houses and other things made with lumber, they will have less money to spend on things such as restaurants, tourism, and consumer technology. Therefore, workers and investors in those industries will be economically disadvantaged by the tariffs, too.

    As Hazlitt says, “In order that one industry might grow or come into existence, a hundred other industries would have to shrink.”

    At the core of the matter, President Biden is making the mistake of only looking at the effect of this tariff on a special group — the US lumber industry. But, in doing so, he is neglecting the millions of Americans who — far from being protected — will be economically harmed by the tariff hike, including consumers (especially homebuyers), workers, and investors.

    Tariffs, much like any number of other well-meaning government programs, seem like a plausible solution to certain problems we face. But, if we think like an economist and widen our lens to encompass the bigger picture, it becomes clear that they will primarily hurt the American people.

    Buy Economics in One Lesson from the FEE Store.


    Jack Elbaum

    Jack Elbaum is a Hazlitt Writing Fellow at FEE and an incoming sophomore at George Washington University. His writing has been featured in The Wall Street Journal, Newsweek, The New York Post, and the Washington Examiner. You can contact him at jackelbaum16@gmail.com and follow him on Twitter @Jack_Elbaum.

    This article was originally published on FEE.org. Read the original article.


  • Biden Says ‘Generous’ Unemployment Benefits Not Responsible for Biggest Jobs Report Miss in History. He’s Wrong

    Following a dismal April jobs report, President Joe Biden took to the podium Monday to defend his administration’s economic policies.

    “There’s been a lot of discussion since Friday’s report that people are being paid to stay home rather than go to work,” Biden said. “We don’t see much evidence of that.”

    A US employment report released Friday showed the economy added just 266,000 jobs in April, down substantially from the 770,000 jobs added in March and about one quarter of what forecasters had predicted.

    “Economists were hoping for a figure roughly 1 million jobs larger,” Axios reported, “making this the biggest miss, relative to expectations, in the history of the payrolls report.”

    Bloomberg writer Mohamed A. El-Erian, an economic adviser at Allianz SE, said the report constituted “the biggest data miss on record.”

    The jobs miss comes two months after Biden signed into law a $1.9 trillion COVID-19 relief package that included a six-month expansion of federal unemployment benefits, which pay unemployed workers an additional $300 per week on top of their state unemployment benefits.

    These increased benefits mean in many cases people make less money returning to work, which economists warned prior to passage of the legislation would create a disincentive for workers to return to the labor force.

    “Expanding unemployment benefits during a recession has a predictable result: slower employment recovery,” Texas Tech economist Alex Salter told FEE in February. “We should be helping people get back to work—not making it more financially attractive to stay home.”

    This is precisely what the Biden administration did, however. The results have been a weak economic recovery and a record labor shortage. For some, like Larry and Roxane Maggio, who ran a deli in New Jersey for a decade, the labor shortage has proven fatal to their business.

    “We just can’t find anyone to work,” the Maggios recently told The Philadelphia Inquirer, as they prepared their final catering orders at Ludovico’s.

    The Maggios’s experience is not unique. The weak jobs report, the New York Times notes, is an indication the labor shortage business owners have been describing is quite real.

    “These numbers are consistent with the story many business leaders are telling, of severe labor shortages — that demand has surged back but employers cannot find enough workers to fulfill it,” writes senior economics correspondent Neil Irwin.

    Biden, however, is reluctant to admit that the dismal April jobs report stems from the government’s “generous unemployment benefits.”

    “Americans want to work,” Biden told reporters. “As my dad used to say, a job is about a lot more than a paycheck. It’s about your dignity.”

    Biden’s father was not wrong that employment is about much more than a paycheck. I’ve pointed this out myself.

    My first job, a groundskeeper on a golf course, paid me $5 an hour—which doesn’t sound like much. But the job offered me much more than compensation. It taught me how to get up really early and punch a time clock on time, and how to drive a stick-shift and operate light machinery. I received a crash course in landscaping, learned how to take orders, and execute directions. I even managed to improve my slice (just a little) while working there that summer.

    It was one of the most rewarding and important jobs of my life, but it would not have happened if someone had said I could make more money by not showing up at 5:30 a.m. each day and working under the hot sun for eight hours. It wasn’t that I was lazy. It’s just that you can’t expect people to go to work for less money than they’d be getting to stay at home. Incentives matter.

    Indeed one of the first lessons in economics is that if you tax something, you get less of it. If you subsidize something, you get more of it. This is why economists warn lawmakers must be especially careful about what types of behavior they subsidize.

    “You cannot subsidize irresponsibility and expect people to become more responsible,” the economist Thomas Sowell has observed.

    It’s not complicated stuff. This is why it was obvious to economists from Salter to Lawrence Summers, who served in the Clinton and Obama administrations, predicted that Biden’s juiced unemployment benefits would have negative consequences.

    They were right, and those consequences are becoming visible now.

    The best thing the Biden administration could do is call a special session and terminate the perverse incentives that are causing people to choose unemployment over work. This is unlikely to happen, however, because it violates the first rule in politics: never admit a mistake.

    Fortunately, thanks to federalism, some states are taking matters into their own hands. South Carolina, Arkansas, and Montana, recently fully opted out of the federal unemployment benefit program.

    “Continuing these programs until the planned expiration date of September 4, 2021, is not necessary and actually interferes with the ability of employers to fill over 40,000 job vacancies in Arkansas,” Gov. Asa Hutchinson wrote in a letter.

    Turning away federal money is not an easy thing to do, but it is the proper course.

    Joe Biden’s father was right. Work isn’t just about a paycheck; it offers dignity and more, which is precisely why we should reject policies that discourage it.


    Jon Miltimore

    Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.

    Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

    This article was originally published on FEE.org. Read the original article.


  • Biden’s ‘Green’ Infrastructure Plan Would Actually Hurt the Environment, Top Economist Warns

    President Biden’s multi-trillion-dollar “infrastructure” proposal is about a lot more than traditional transportation infrastructure. In some ways, it’s a light version of the Green New Deal, including $10 billion to create a “Civilian Climate Corps,” $20 billion for “racial equity and environmental justice,” $175 billion for electric vehicle subsidies, and even money to make school lunches “greener.”

    But one prominent economist is warning that the supposedly “green” plan would actually backfire and leave the global environment worse off. In a new analysis, Mercatus Center Senior Research Fellow Veronique de Rugy argues that the plan would lead to more pollution because it would push economic activity abroad to poorer countries with lower standards.

    “Higher income taxes on top of the many costly labor and environmental mandates in the bill would… raise production costs in the United States,” she writes. “That would shift production of many products to other countries that have more competitive tax rates and lower production costs—but also, oftentimes, questionable environmental standards.”

    In this way, Biden’s multi-trillion-dollar green spending boondoggle could actually lead to higher carbon emissions and more pollution. Moreover, an Ivy League analysis found that this plan would reduce economic growth in the long run—and growth is the key to a clean environment.   

    “Ultimately, we know that the best green policy is the prosperity made possible only by economic growth,” de Rugy concludes. “The wealthier we are, the more we can afford to attend to the environment. Unfortunately, the Biden administration’s preferred path of more taxes, and more politically motivated spending and regulations will not just make us financially poorer; it also comes at a high cost for the environment.”

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    Brad Polumbo

    Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.

    This article was originally published on FEE.org. Read the original article.