The 2019 Budget introduced by the Liberal government includes one of the worst policies I’ve ever seen.
The CMHC First-Time Home Buyer Incentive provides up to 10% of the purchase price of a house (5% for existing homes, 10% for new homes) to any household buying a home for the first time with an annual income up to $120,000. To qualify, the total mortgage must be less than four times the household’s yearly income and the mortgage must be insured, which means that any house costing more than $590,0001 is ineligible for this program. The government will recoup its 5-10% stake when the home is sold.
The cap on eligible house price is this program’s only saving grace. Everything else about it is awful.
Now I want to be clear: housing affordability is a problem, especially in urban areas. Housing costs are increasing above...
There are many problems that face modern, developed economies. Unfortunately, no one agrees with what to do in response to them. Even economists are split, with libertarians championing deregulation, while liberals call for increased government spending to reduce inequality.
Or at least, that’s the conventional wisdom. The Captured Economy, by Dr. Brink Lindsey (libertarian) and Dr. Steven M. Teles (liberal) doesn’t have much time for conventional wisdom.
It’s a book about the perils of regulation, sure. But it’s a book that criticizes regulation that redistributes money upwards. This isn’t the sort of regulation that big pharma or big finance wants to cut. It’s the regulation they pay politicians to enact.
And if you believe Lindsey and Teles, upwardly redistributing regulation is strangling our economy and feeding inequality.
They’re talking, of course, about rent-seeking.
Now, if you don’t read economic literature, you probably have an idea of what “rent-seeking” might...
No, this isn’t a post about very pretty houses or positional goods. It’s about the type of beauty contest described by John Maynard Keynes.
Imagine a newspaper that publishes one hundred pictures of strapping young men. It asks everyone to send in the names of the five that they think are most attractive. They offer a prize: if your selection matches the five men most often appearing in everyone else’s selections, you’ll win $500.
You could just do what the newspaper asked and send in the names of those men that you think are especially good looking. But that’s not very likely to give you the win. Everyone’s tastes are different and the people you find attractive might not be very attractive to anyone else. If you’re playing the game a bit smarter, you’ll instead pick the five people that you think have the broadest appeal.
You could go even...
I don’t understand why people choose to go bankrupt living the most expensive cities, but I’m increasingly viewing this as a market failure and collective action problem to be fixed with intervention, not a failure of individual judgement.
There are many cities, like Brantford, Waterloo, or even Ottawa, where everything works properly. Rent isn’t really more expensive than suburban or rural areas. There’s public transit, which means you don’t necessarily need a car, if you choose where you live with enough care. There are plenty of jobs. Stuff happens.
But cities like Toronto, Vancouver, and San Francisco confuse the hell out of me. The cost of living is through the roof, but wages don’t even come close to following (the difference in salary between Toronto and Waterloo for someone with my qualifications is $5,000, which in no way would cover the...
There are two sides to every story. Zoning and maximum occupancy regulations are exclusionary and drive up the price of housing. They are also necessary to prevent exploitative landlords from leaving their tenants in squalor. Catastrophic health insurance plans leave patients uncovered for many of the services they might need. They’re also often the only plans that are rational for younger people to buy.
Where you come down on either of these – or any similar cases where there’s a clear trade-off between maximum access and minimum standards – is probably heavily dependent on your situation. If you’re an American millennial without an employer-provided or parental health care plan, you’re probably quite incensed about the lack of catastrophic health care insurance. For healthy young adults, those plans were an excellent deal.
Similarly, workaholics in the Bay Area sometimes want to...