Fed officials rate as much ridicule as does New York City Mayor-elect Zohran Mamdani. Arguably central bankers rate more.
To see why, stop and contemplate how politics, pundits and economists have fallen all over themselves to elevate their own grasp of basic economics via Mamdani’s rhetorical confusion. Doesn’t New York City’s socialist mayor know that “rent freezes” and other attempts to decree cheap what is not cheap will result in scarce supply of the very apartments Mamdani wants to decree affordable?
What’s important and also obvious is that Mamdani’s critics aren’t incorrect. A freeze on rent would, if real, place a chill on new development of apartment buildings in NYC, and it would exist as a disincentive to the improvement of existing apartment buildings. Why build or enhance what won’t fetch a market rate? And it’s not just rent freezes.
Mamdani has promised wage floors that could do for hiring in the City what rent freezes would do for development. Such is the chaos that results when politicians and government officialdom more broadly substitute their microscopically narrow knowledge of the marketplace for the marketplace itself. Scarcity of the market good decreed affordable is a certain consequence, as is unemployment, and frequently crisis when it’s remembered that crises are never financial, but always and everywhere an effect of government intervention.
That government meddling is the crisis brings to mind Kevin Hassett. Widely viewed as the front runner to be tapped by President Trump as the next Fed Chairman, Hassett publicly asserted last week that he wanted to “get to a much lower rate” over the long run. Notable about Hassett’s proclamation is that while it was news, it landed far from the front pages of major newspapers. That’s assuming it made it into them at all. More notably, Hassett’s proclamation hasn’t been a subject of feverish editorializing from the right. Unknown is why.
While Mamdani was correctly pilloried by deep thinking types for his adamancy about price floors on wages and ceilings on NYC dwellings, Hassett is much more than one-upping the Mayor-elect with his calls for cheaper access to the dollars not just exchangeable for apartments in New York, but every single market good available not just stateside, but around the world given the dollar’s global acceptance. Where’s the outrage?
In particular, where’s the outrage when the majesty of compound returns is considered? While it’s bothersome to think of Mamdani imposing his economic illiteracy on NYC property owners, renters, and would-be renters alike, it can’t be said enough that nearly every American earns in dollars, and of substantial importance, saves in dollars. Despite this, Hassett isn’t merely calling for a rate freeze a la Mamdani, he implies that his Fed will make Gracie Mansion appear Adam Smith by comparison. Which is the point, or should be about the Fed.
Dumb as the economics are of politicians from both sides of the political aisle, the economics of the biggest employer of economists in the world are a monument to just how ridiculous the profession is, and realistically always was. It’s often said that economists are monolithic in their beliefs about things as though unanimity among PhDs is somehow indicative of wise. It’s not.
It’s accepted wisdom inside the walls of the Fed that economic growth causes inflation, that war brings with it an economic upside, not to mention that the central bank can turn economic growth on and off by decreeing rates of interest high or low depending on the economy’s “temperature.” With his most recent comments, it’s evident that Hassett shares these beliefs about the Fed’s power.
Or maybe he doesn’t. Which arguably calls into question his thinking even more, that he would say anything to please the man charged with appointing him. Either way, why do Mamdani’s droolings rate scorn where Hassett’s rate admiring reverence?
