More on Repealing the Laws of Economics

Summary

• Economies operate on underlying laws such as supply & demand & incentives, where people buy more as prices fall & allocate labor to best-rewarded activities.
• Governments sometimes enact rules to override these laws to achieve specific outcomes, including adopting socialism or communism.
• Rent control laws limit rent increases when demand exceeds supply, benefiting tenants & elected officials but causing landlords to stop investing & developers to refrain from building new units.
• Rent control creates winners & losers by favoring current occupants while harming landlords, developers, & new renters, reduces mobility, & discourages apartment upgrades or new construction.
• California fire insurance regulations prohibited insurers from using forward-looking catastrophe models & limited premium increases based on historical loss data.
• Major insurers including Chubb, Allstate, & State Farm withdrew from the California market or stopped writing new policies in fire-prone areas between 2021 & 2024.
• Regulatory delays in approving rate changes increased from an average of 157 days (2013–2019) to 293 days (2020–2022).
• Many homeowners became uninsured or underinsured due to premium hikes or insurer withdrawals, leaving fewer than a quarter of affected properties insured before the 2025 wildfires.
• Tariffs are defined as taxes imposed by governments on imported or exported goods that may be paid by exporting companies, importing companies, or end-consumers.
• President Trump raised tariffs in 2024 citing a $1.2 trillion negative trade balance in goods & a goal to shrink the trade deficit.
• Tariffs aim to support U.S. manufacturing, discourage imports, encourage exports, shrink the trade deficit, secure supply chains, deter unfair trade practices, force negotiations, & generate Treasury revenue.
• Trade allows goods to move from lower-cost regions to higher-cost regions, equalizing wages & prices over time, while tariffs act as barriers that impede foreign competition.
• Protectionism via tariffs may raise prices, lead to inferior domestic goods, & allow domestic workers to demand higher wages, making domestic products globally uncompetitive.
• Foreign cars accounted for only 0.03% of U.S. sales in 1949 but represented half of the 16 million vehicles sold in 2024.
• U.S. automakers faced competitive burdens from higher wages & fringe benefits compared to foreign manufacturers, leading to lost sales & production moving overseas.