If you believe that your government should respect science, should you not especially ask that your government respect the laws of science? Like the law of gravity, the law of supply and demand is called a “law” because no one disputes the fact of its existence. If you are a bridge engineer, one must hope that, for the good of us all, you respect the law of gravity. To ignore laws for the sake of political ideology can have very real negative consequences, often on those we intend to help. We might wish that someone who is unskilled could get a so-called “living wage” or wish that housing didn’t cost so much, but imposing our desires through price controls has been a tool of governments that has always had unintended consequences. When we try to soften the impact of market forces in ways that reflect our values, we must do it sensibly.

Unquestionably, people with no skills need opportunities to acquire them through employment. Let’s not unwisely stand in their way. Can we acknowledge that the number of people who are unskilled and the jobs available to them do not remain steady, and that the price for their services fluctuates based on the degree to which they are needed? Can we also agree that mandating a “livable wage” upon employers or capping the cost of housing on landlords is simply making someone else pay for our values? If we agree that helping the vulnerable is a value we hold collectively, isn’t it more honest to pay for it collectively?

Please don’t moralize the cost of anything unless you believe that anti-competitive factors are at play. Price spikes are self correcting when the invisible hand of capitalism is working, even when markets feel inhumane. Yes, people are getting squeezed, but price controls are never the answer.

There is no guarantee that the risk of owning a bagel shop or an apartment building will pay off, but to the extent that it does, the income is taxed. If you tell the bagel shop owner that they need to pay for a so-called “living wage” regardless of anyone’s actual circumstances, you are imposing, in addition to income tax, another tax that will have negative consequences for them and their hiring and firing decisions. Is it any wonder that McDonald’s now has self-service kiosks?

The negative consequences are true for housing as well. With rents controlled in Portland, landlords are no longer allowed to charge the market rate. The unintended consequence? The demand for housing is increased with the strong apartment applicants from out of state looking to take advantage of comparatively cheaper rents, further squeezing out our lower-income residents, while also increasing the chances that property owners don’t pay their own bills. And again: There are no guarantees that landlords generate income, but to the extent that they do, that income is taxed.

In Portland the well intentioned and civically minded voters who helped pass the recent referendums – some of whom believe, wrongly, that making a profit implies that the vulnerable lose – have passed on the expense of our values to those they consider less worthy of income. (The vulnerable certainly do when fewer jobs are available and they must compete for housing against those lured by the discounted prices.) Subsequently, we’ve forced business owners to pay a higher minimum wage for the impropriety of hiring the unskilled (a tax avoided by those who can do without them), and imposed a low-income tax on landlords because they’ve committed the impropriety of providing housing where more is needed and development should be encouraged.

Maybe we, collectively, should pay for our values ourselves through our graduated income taxes, not through the passions of a referendum to choose whose profits are deemed acceptable. The earned income tax credit or, better yet, negative income tax, as proposed by Milton Friedman, are humane ideas for how to help those who are financially vulnerable without distorting the true value of a good or service. If you want to help low-income people, vote to open your wallet with your income taxes – don’t just vote in a referendum to open someone else’s.


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