The house the executive would not build

The BBC reports that Congress approved, in a rare bipartisan act, legislation designed to lower housing costs — and that President Trump then cancelled its signing. Let us be plain about what that means. A market for shelter, already made artificially dear by zoning restrictions, land-use monopolies, and the accumulated privileges of incumbent property owners, was offered a modest correction by the legislature. The executive declined to sign it.

I would have my readers understand a principle I set down in The Wealth of Nations: the price of any commodity, including a house, rises above its natural level whenever supply is artificially constrained. The causes of that constraint in modern housing markets — I reason from what has been reported and from general principles, not from recollection — appear to be restrictions on building, scarcity of developable land near employment, and the political influence of those who already own property and have every incentive to keep new supply off the market. A legislative remedy for such restrictions is precisely the kind of public correction the sovereign is sometimes required to make.

The bipartisan nature of this bill deserves remark. When merchants and their parliamentary representatives disagree about almost everything and yet agree on a particular measure, it is usually because the suffering of the public has become too visible to ignore. The BBC notes that housing affordability has become a pressing concern for American voters. That is the language of a public that can no longer house itself at a reasonable proportion of its income — the wage-earner whose rent consumes a share of earnings that leaves little room for food, clothing, or education.

Who gains from the cancellation? This is always the right question. Those who already hold housing as an asset gain; their capital appreciates the more tightly supply is held. The consumer — the renter, the young family, the worker who must live near where work is — loses. I observed in my own time that the interest of the merchant is never precisely aligned with the interest of the public, and that legislation drawn up in the interest of the producer tends toward restriction. Here, by inference, the cancellation of a bill that would have loosened restriction is a favor to those who profit from the restriction's continuation.

I will not speculate on the particular political calculation that led to this decision; that lies outside my proper province. But I will say this: the institutional question is the one that matters most. What framework ensures that a bill passed by both parties on behalf of the consuming public can actually become law? If a single executive can, at the last moment, withdraw a signature for reasons not stated in the public interest, then the consumer has no reliable protection. The rule of law that makes markets honest requires, at minimum, that the sovereign act on disclosed public grounds — not on the undisclosed interests of a narrow faction. That is not a modern principle. It is as old as the study of political economy itself.