Shall We Repeal the Laws of Economics?

THE ARGUMENT

An election-season memo, and explicitly not an endorsement of either candidate. Governments can pass laws to encourage behavior, he argues, but in general cannot mandate outcomes — a case he tests against gouging bans, rent regulation, tariffs and wage floors. He grants government its essential roles, and that the income gap has widened a great deal of late.

What it actually claims

1. Behavior can be encouraged or even compelled by law, he argues; outcomes, in general, cannot be mandated.

2. Korea is his natural experiment: one people split in two, with a gap he thinks settles the argument about systems.

   • •GDP per person in purchasing power terms estimated at $2,000 in North Korea against $50,000 in the South, on data he calls scarce for the North

3. Gouging is defined with subjective words — unfair, excessive, exorbitant — which leaves open who decides and by what standard.

   • •grocery prices up 26 percent since 2019
   • •supermarket margins of about 1% to 2% of sales, changed only a little in 2021-22

4. Surge fares, concert tickets and a higher asking price on a house are the same act: markets clearing on supply and demand.

   • •Ford’s contract gave an 11% wage increase in the first year and 25% over 4.5 years, plus a $5,000 ratification bonus

5. New York rent regulation is his longest case: rents held down, supply barely growing, some apartments worth more empty than let.

   • •rental apartment growth of only 0.3% a year between 2002 and 2017
   • •roughly 20,000 vacant rent stabilized apartments as of 2022
   • •a vacant-and-available rate of 1.4%, the lowest since 1968, against a healthy 5 to 8 percent

6. He costs both sides’ proposals: down-payment help that would almost certainly lift home prices, and tax cuts nothing pays for.

   • •a million buyers at $25,000 each, or $25 billion in all
   • •Penn Wharton: $320 of 2026 tax relief for the average person in the bottom quintile against $47,220 for the top percentile
   • •$5.8 trillion added to the deficit over a decade, or $4.1 trillion allowing for trickle-down effects

7. He calls the deficit an embarrassment, and says the Social Security fund goes insolvent by arithmetic unless something changes.

   • •the last surplus in 2000
   • •annual interest on the national debt exceeding the Defense Department budget for the first time

8. China is the objection he takes on directly: its growth rests heavily on a private sector the state learned to accommodate.

   • •GDP growth of nearly 9% a year for the last 45 years
   • •private firms at 60% of GDP, 70% of innovative capacity, 80% of urban employment and 90% of new jobs

Figures are the author's own, as cited in the memo.

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