By Steve Levy
It’s essential that we start better explaining why young people are experiencing so much difficulty today. It’s not because of a failure of free market capitalism. Rather, it is because of bad policies enacted by big spenders who have distorted the free market.
Think back to 2019. Things were great economically. Did capitalism suddenly become the culprit overnight? Just seven years ago, we had 2% mortgages and 2% inflation. Homeownership and rents were within reach. Wages were increasing steadily.
Then Covid hit and the government went crazy.
Here are the six reasons why things have become so unaffordable:
1…Reckless Spending Led to Inflation.
The Trump administration poured a lot of money into the PPP loans, which were needed in an emergency. But then, the Biden administration unnecessarily spent another $4-6 trillion for various pet projects. There are consequences for that type of spending.
2… Inflation Raised Interest Rates, Crippling the Housing Market.
The Federal Reserve sees inflation going up to 9% because of all that spending (which diminishes the value of the dollar), so they jacked up the interest rate dramatically. A family that has a 6.5% mortgage on a $500,000 loan today or under the Biden administration, as opposed to the 2% rate in 2020 in the Trump years, is paying $14,000 more per year for their mortgage.
The answer is to stop all the reckless spending. The deficits and inflation will cool down and then the rates will come down. Unfortunately, neither side of the aisle is willing to do so.
3…The Illegal Alien Surge Raised Rents.
Housing has also increased because of the 10-20 million illegal aliens Joe Biden welcomed into our nation. They have to live somewhere, and according to a federal study, 20% of rent increases and 30% of housing increases were the result of the strain these undocumented individuals placed on the market.
4…Reckless Extreme Climate Policies Sent Electric Bills Soaring.
Young people are finding it hard to afford a house as well because they’re seeing electricity costs skyrocket. That’s not a failure of capitalism; that is a direct result of these extreme climate policies enacted since 2019 that have had no effect on protecting the environment, but have increased rates by as much as 70% over that time.
5…Blue States and Cities Are Less Affordable.
Notice how it’s no coincidence that the issue of affordability is more pronounced in blue states and cities rather than red ones.
That’s not an accident.
It’s blue states and cities that spend far more than the red ones. Their municipal unions control their governments, leading to unsustainable public benefits and pensions. They coddle trial lawyer groups that produce litigious societies and the enormous insurance rate increases that come with them. They oppose charter schools, which are less expensive and better-performing. They place enormous taxes on gas, which is why you pay more to fill up in blue states such as California.
Historically, blue cities such as Detroit and New York engaged in massive overspending, leading to financial calamities. Big-spending liberal leaders paid off everything through borrowing, with few restraints. It took financial control boards to get things back on track. We can do the same today by just curbing the spending and getting back to a sense of normalcy.
6… Covid Spending Became the New Normal.
In World War II, we had a dramatic increase in spending, but it came down to normal once the war was won. But with Covid, we had a similar meteoric rise in spending, but the higher level became a new normal — the new base. It was never reduced and that is why young people are experiencing all of these difficulties today.
It’s imperative that we teach this to our young people so that they don’t get so frustrated that, rather than going back to things that worked in the past, they double down on stupid, go even further left and adopt these ridiculous, vacuous promises from socialists who have never succeeded anywhere in the world in the past.