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Comment by doubleunplussed | Hacker News Reader

Strange to use China's oversupply as a comparison when it too is the result of intentional government action.

Governments can cause oversupply, governments can cause undersupply. Bet you can think of plenty of examples without my help of government policy resulting in supply for some goods decreasing or increasing relative to demand.

Governments can do a lot. Like, they can pretty much dictate what you're allowed to make, how much they're gonna tax you on profits from making something, who you're allowed to sell it to - they can absolutely decide to cause an asset to appreciate.

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Yeah - sure. But basically every government intervention leads to some abominable result. Politicians get traction by promising to fix markets, then get rich by twisting them for their own benefit. China distorted the real estate market to the degree that they overbuilt. The theory here is that America has underbuilt due to local regulations? Okay, but if that's the case I don't think the answer is more government intervention.

In 1st year econ, students learn about market externalities and the usefulness of government intervention in addressing them. So this statement from you is not based in economic science, but rather ideology.

Really it was more of an observation. I do think governments have a role in regulating markets and preventing businesses from externalizing costs. I would really like if the DOJ and SEC stepped up antitrust and insider trading litigation.

Few markets are as distorted by government action as the US housing market. It decides where people work, where people can build, what they can build, and how they can build. We directly and indirectly both tax and subsidize sales, loans, insurance, rent, and just about anything else related to housing.

The vast increase in home prices has almost nothing to do with the housing market and is almost 100% driven by government policy combined with a slightly wealthier society.

Aside from federal loan programs and interest rates, how does the US federal government decide where people work or build? Seems like a lot of local state and city regulations, not some master plan.

There are some federal rules, but why would you exclude state and local levels from the US government?

> But basically every government intervention leads to some abominable result.

Some interventions do, some don't. Without environmental legislation, for example, companies would export their negative externalities, e.g. pumping sewage into water systems, onto the rest of us.

Saying that, however, there have been some bad housing policies in the UK, for example, "Help to Buy" which could just as easily be called "Help to Sell".

That's true. But that's of a different category. Governments should regulate the public sphere and public resources. That benefits individuals. Who in a democracy ostensibly are the ones who vote in the government. Notably, authoritarian governments which don't respect individuals don't spend much time on environmental regulation either.

Market manipulation or redistribution of individual (not corporate) wealth by governments -- as opposed to regulation -- is always a bad idea because (a) the people making those calls from within the government are getting rich by doing so, directly siphoning wealth from the citizenry by exercising inside knowledge and the power to tweak a market, and (b) those actions directly harm the golden goose that produces the economic uplift the government needs to survive - that is, the individual in the middle class.

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