Philadelphia has elected its first City Council member from the Working Families Party, a movement dedicated to ending poverty and inequality, making housing affordable and overcoming climate change.
Newly elected Councilwoman Kendra Brooks has some very specific ideas to help achieve these goals. Unfortunately, Brooks’ plans will not only fail to solve Philadelphia’s problems, they will also cause complicated new ones.
For example, Brooks intends to “enact rent control legislation” to “protect both renters, homeowners and people facing homelessness.” Like many government programs, this sounds perfectly beneficent. But unintended consequences invariably ensue when imposing restrictions on people’s free choices.
When landlords are forbidden from charging tenants above whatever arbitrary price the government decides, entrepreneurs have a reduced incentive to develop housing because profitability has been reduced. Rent control causes a diminishment in the number of rental units available compared with the number that would be available absent the government mandate. Less housing would certainly be an impediment to solving the homelessness crisis.
Brooks also hopes to “protect the dignity and respect of all work.” Again, who could disagree with such a noble goal? But never forget that the loss of property or liberty lurks behind every government statute, rule or regulation, compelling you do to as the government desires lest you be charged a fine, be deprived of your property or, most severely, tossed in jail.
When it comes to workplaces in the city, Brooks says “we need to make sure low-wage employers who fail to pay their employees a living wage pay back the city for the costs of poverty.” This vague standard would justify any amount of government confiscation of employers’ resources. Who decides what a low wage is? Or a living wage? Or “the costs of poverty”? The unintended consequences alone are grounds to resist this arbitrary fiat.
Beyond that, it’s hard to pin down the idea’s harmful economic effects because the goal is conveniently imprecise. But presumably Brooks is calling for some kind of redistribution scheme, in which case the consequences are unequivocal — among other things, productivity will decline and poverty will increase, compared to what they’d be absent Brooks’ coercive intervention in the economy. Imagine being fined, or worse, because Brooks and her cohorts do not consider what you pay your employees “fair.”
Long-tested economic principles tell us that whatever the government subsidizes will increase and whatever it taxes will decrease. It’s the principle behind “sin taxes.” If you want fewer cigarette smokers, tax the product. But the logic is universal and applies as well to productivity and poverty. So government confiscation of employers’ resources (the equivalent of a sin tax) reduces productivity and government welfare (equivalent of a subsidy) increases poverty.
Long-tested economic principles tell us that whatever the government subsidizes will increase and whatever it taxes will decrease.
Finally, Brooks wants to address climate change by implementing a Philadelphia Green New Deal, the local version of the national program backed by Working Families favorites Elizabeth Warren and Alexandria Ocasio-Cortez. For example, Brooks wants to “stop all new fossil fuel expansion.”
Putting aside municipal government’s ability to regulate such a wide swath of the economy, she is suggesting we trade a potential disaster for a definite one. If people choose to consume more fossil fuel, they are demonstrating a preference over the alternatives. That choice is making their lives easier or solving a problem. Therefore, forbidding such action without sound and economically feasible alternatives would reduce everyone’s quality of life.
Brooks seeks a better world, but cannot fathom that freedom leads to greater wealth for everyone. Instead, she seems to believe that problems can be solved top-down, with government curtailing the choices of free people — if only the right laws are passed, the right taxation imposed, then society will be fair, just and equitable.
We cannot summarily coerce our way out of homelessness or poverty or climate change. Freedom and creativity will always be necessary for wealth to grow and for humanity to solve its problems.
Logan Chipkin is a freelance writer in Philadelphia and a new contributor to Broad + Liberty.