This is exactly what happens when politicians dabble in economics

Those who do not understand economics tend to use the stick rather than the carrot; “Do this or you will be punished” rather than, “if you do this, you will be rewarded.” Unfortunately, the punishment only harms the economy while helping no one. Here is a classic example from the Sun Sentinel:

Law to encourage economy causing construction delays amid national housing crisis

By Charlotte Kramon, Associated Press It has a catchy name — Build America, Buy America — and the lauded goal of bringing manufacturing jobs back to the United States. But the law has spurred a bottleneck for affordable housing. Nearly everything from HVACs and lighting to sink hooks in affordable housing projects that get federal dollars must carry the Made in the USA label. But, developers say, numerous products do not, as they have long been imported from overseas markets with cheaper labor costs.

You might think lower prices would be good for America, but politicians don’t. They think in terms of votes, and because they and the working public don’t understand how economics works, they want to force two unnecessary and incompatible goals.

1. Make products cost millions of American consumers more so that
2. Thousands of American workers have jobs

See the problem? American workers ARE consumers, so each time the government “aids” a specific working group by forcing prices up, that group, and all other groups, pay more. Do that enough times, and you get inflation, which harms everyone.

It’s the classic “Rob Peter to pay Paul” scenario that union leaders and politicians love to brag about, and the public believes is beneficial.

Although builders can apply for waivers, the process has been at a near standstill as the Department of Housing and Urban Development, which has had its staff slashed by the Trump administration, has only greenlit a handful of projects.

The public has been trained to believe that government is oppressive and that “less is more.” It sounds so wise until the public needs the services that the government provides. Then suddenly, there is hand-wringing.

America is a large nation, and large nations require a substantial government. The chainsaw dismantling of federal departments by Trump/Musk idiocy has caused irreparable damage to our economy.

The waiver process has caused construction delays and hundreds of thousands of dollars in extra costs as the country faces an affordable housing crisis. “They need to be treating this like the fire that it is,” said Tyler Norod, president of Westbrook Development Corporation, which builds affordable housing in Maine. “We’ve sort of resigned ourselves that we’re just gonna build less units across the entire country during a housing crisis.”

Perfect. The political solution to the housing shortage is to build fewer houses.

President Joe Biden signed the Build America, Buy America Act as part of the Infrastructure Investment and Jobs Act in 2021, building on longstanding efforts to boost American manufacturing at a time when the U.S. economy was emerging from the pandemic-era recession.

Known as BABA, it applies to infrastructure projects funded by federal agencies, not just affordable housing.

Get it? The government is funding infrastructure projects. This not only pumps growth dollars into the economy, but also funds projects that the private sector would not find profitable.

So far, so good. However, the government imposes restrictions on these projects to ensure that fewer growth dollars are injected into the economy and to prevent the private sector from profiting. What the right hand giveth, the left hand taketh away.

Denver developer Julie Hoebel says she has spent over $60,000 just on a consultant to call suppliers to try to find American-made materials, not to mention the additional labor costs involved. But the waivers she submitted to HUD in November for around 125 materials in an 85-unit building haven’t been approved.

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“If they take much longer then we’ll come to a standstill,” she said. HUD is taking at least six months to approve many waivers. Even BABA advocates agree HUD must grant waivers more quickly and give the industry clearer instructions on how to prepare them, which they note other federal agencies are doing.

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HUD did not address questions from The Associated Press about waiver delays. In a statement, it said it’s committed to “ensuring that federal spending supports America’s industrial base” while “closely monitoring how compliance with these policies impact costs for builders.”

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And blah, blah, blah. Because of the Trump/Musk chainsaw, HUD has neither the time nor the personnel to do its job. It barely has time and personnel to issue platitudes like “ensuring . . .” and “closely monitoring . . .”

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Asked in January about whether the delays and cost increases mean affordable housing should be exempt from BABA rules, HUD Secretary Scott Turner said the agency was said the agency was looking into the issue, but did not provide details.

Yes, it’s the old “looking into it” line, aka the “I don’t care so long as I get paid” line.

The law itself isn’t the problem, supporters say. Unions representing the steel and manufacturing industries say taxpayer dollars should fund American-made materials and suppliers will adjust to meet demand for products that aren’t available.

Yes, that actually is the solution, but for one word: “taxpayer.”  Let’s be as clear as possible, here.

FEDERAL TAXPAYERS DO NOT FUND FEDERAL SPENDING.

While state and local governments are funded by taxpayer dollars, the Monetarily Sovereign federal government is funded by dollars it creates at the touch of a computer key — a completely different system.

The federal government neither needs nor uses taxpayers’ dollars.

If the federal government wished, it could spend an additional trillion, or ten trillion, or a hundred trillion dollars tomorrow, and it wouldn’t cost you, the taxpayer, one cent.

So the slightly restated, real solution is: use FEDERAL dollars to help fund American-made materials. That would:

1. Add growth dollars to the economy,
2. Support American workers,
3. Not penalize American consumers, and
4. Help assure that houses get built in America

“You’ve got a system in place that leans heavily on using imported materials to make a better profit,” said Scott Paul, president of the Alliance for American Manufacturing.

“I don’t know if that serves the public good.”

Mr. Paul, what doesn’t serve the public good is forcing millions of American consumers to pay more for thousands of American jobs, when paying is the government’s unique and unlimited ability

Until the public learns what Monetary Sovereignty means, the American people will continue to be abused by economic misstatements coming from thought leaders.

Bottom line: Facts count.

Rodger Malcolm Mitchell

Monetary Sovereignty

Twitter: @rodgermitchell

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY