The Economics of Affordability: Why Government Can’t Make Life Cheaper

Politicians on both sides have found a new mantra to address concerns about the economy: “affordability.” Economics shows us how these same politicians are responsible for inflation, taxation, and regulation– three forces that inevitably make goods and services less affordable.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Lately, “affordability” has been the buzzword du jour driving political discourse. Essentials like food, housing, and healthcare cost more than most younger working people can afford to pay, leaving them to struggle without hope of being able to start their own families or purchase single-family homes in decent neighborhoods. In other words, for younger generations the American Dream is dying.

Even politicians and their lackeys—people who have no difficulties affording things at everyone else’s expense—have had to take notice of Gen Z’s discontents. They have responded with all sorts of crazy ideas about how government is supposed to fix this, including promises of free money and free stuff, imposition of price controls, and even a plan for fifty-year mortgages (default risks being subsidized by the government, of course). But what is the truth about affordability? What does economic theory have to say about how a worker can get the most stuff for each hour of his or her labor?