Ezra Klein and Derek Thompson have a new book entitled Abundance. This is part of the explanation on Amazon:
Rich explains that our problem today is not the result of the bad guys in Yesteryar. Rather, solutions for one generation have become a problem with the next generation. Rules and regulations designed to solve problems in the 1970s often prevent urban density and green Ergie projects that help solve problems in the 2020s. A law that makes the government recall that the recall of its actions take it into consideration? Over the past decades, the ability to see the problem you have shaped has diminished your ability to solve them.
The author is a supporter of the “Immy” movement, which aims to boost housing by reducing construction barriers. Thompson was recently interviewed on CNBC (see this link for interviews):
Thompson is rightly pissed at people who confuse the decline in housing prices caused by the economic recession and the decline in housing prices caused by the rise in supply. Previous governance is suitable for potential home buyers, but the latter is bad. The low supply of Brie and low Su-end results lead to lower home prices, but only the former increases the volume of homes.
I complain frequently about people who are “reasons because of price changes.” We might assume that this kind of mistake is made only by Studnt in the freshman economics class. In fact, many of the most powerful people on Wall Street make the same mistake.
Thompson also pushes back the claim that stock prices don’t need to worry about falling. I hear people claim that a decline in stock prices reflects the fact that in the short term, Taiffs is hurting the economy, but in the long term, helping the economy. This claim has serious problems.
1. That’s not how the asset market works. If investors think that tariffs will help the economy in the long term, you won’t see a significant drop in stock prices, and you won’t see a weaker dollar. “Crowd Wisdom” suggests that tension is likely to hurt long-term economic growth. We don’t have an industrial-produced futures market, but if we did that, it’s very likely that we’re showing signer drops these days.
2. Commerce proponents did not predict the response of these markets. So it’s not just the question of “Wall Street is not Main Street.” That excuse might work if we were removed from stocks, commodities and forex markets responding to tariffs this way, but in fact, the market response was not something merchantarian experienced.
