I was on YouTube the other day and came upon a 1959 interview where Mike Wallace introduced Ayn Rand to the American television audience. During the interview, Rand declared, “I am for an absolute, laissez-faire, free, unregulated economy. Let me put it briefly: I’m for the separation of state and economics, just as we had separation of state and church, which led to peaceful coexistence among different religions after a period of religious wars. So, the same applies to economics. If you separate the government from economics, if you do not regulate production and trade, you will have peaceful cooperation and harmony and justice among men.”
I am not an unquestioning advocate of Rand’s Objectivism approach to sociopolitical issues, especially in her call for an unregulated economy. Regulations exist because companies and industries allowed greed, slipshod operations and dangerous practices to create great harm to the wider society.
But regulations and the agencies designed to enact them have historically been reactive to crises – think of FDR’s regulatory agencies created in the wake of the Great Depression. Sometimes the crises arise from public outrage sparked by uncommonly persuasive writers – think of food safety laws inspired by Upton Sinclair’s “The Jungle,” environmental protection laws sparked by Rachel Carson’s “Silent Spring” or automobile safety standards fueled (pardon the pun) by Ralph Nader’s “Unsafe at Any Speed.”
The problem with regulations and regulatory agencies is their bureaucracy – the mix of political pressures from without and incompetence from within. Quite frankly, many of these agencies fail to do their job correctly – an argument could be made that we would never be cursed with the Consumer Financial Protection Bureau if the existing federal agencies put the brakes on the housing bubble before it started to metastasize.
Today, Ayn Rand’s vision resonates with me because I’m viewing a Biden administration that is using regulation in a proactive manner to corrupt capitalism by rewarding special interests at the expense of the free market. Let’s take the Department of Energy (DOE) and the manufactured housing sector as an example. In May 2022, DOE pushed forth new energy efficiency standards for manufactured homes that involved different conservation requirements for single- and multi-section structures. These standards were expected to become law in May 2023.
“The rules will hold manufacturers of these U.S. homes to cost-saving efficiency standards, giving residents more comfortable living environments and a much-needed break on their annual utility costs,” declared Secretary of Energy Jennifer Granholm when the standards went into effect.
But the manufacturers saw things very differently. Last February, the Manufactured Housing Institute and the Texas Manufactured Housing Association filed a court action against the DOE in the U.S. District Court for the Western District of Texas. The trade groups not only questioned the DOE’s authority in creating these standards – whatever happened to the Department of Housing and Urban Development? – but also argued that onerous requirements being placed on manufacturers would drive up the costs of this housing sector, which has traditionally been a shelter for those seeking affordable homeownership options.
Further, Granholm’s bizarre claim that the new standards would save the owners of manufactured homes between $177 to $475 a year in energy costs is ridiculous when one considers the delivery costs of energy have gone up dramatically during the Biden years. A homeowner isn’t saving any money in an allegedly energy efficient residence if the utilities are doubling or tripling their energy delivery costs – a situation that Granholm has conspicuously ignored during her DOE reign.
Elsewhere in the housing world, Mortgage Bankers Association President and CEO Bob Broeksmit used his speech before his organization’s Secondary Marketing Conference last month to warn about new regulations that will add unwanted to tumult to all stakeholders in the homebuying process. He stated mortgage bankers are facing a new wave of “one-size-fits-all mandates that will do extraordinary damage,” citing CFPB proposals that “push for prudential standards for non-banks, including IMBs and mortgage servicers” and to possibly put nonbank financial companies under Federal Reserve supervision.
He also pointed out regulatory proposals to make lenders liable for the problematic actions of independent appraisers and demands by the government-sponsored enterprises that “lenders repurchase more and more loans” and the LLPA controversy as examples of government authority being abused.
“To be blunt, this looks like a power grab,” he declared. “And not only that, it looks like a clear-cut attempt to punish an industry that some policymakers seem to personally dislike or distrust.”
Broeksmit also observed that the recent mini-wave of regional bank failures would not have occurred if the existing regulations were properly enforced. And speaking of being asleep at the wheel, just what is the Biden administration doing about the unregulated cryptocurrency market? Why is mortgage banking being weighed down with regulations while the Bitcoin-Ethereum-Dogecoin crowd are allowed to run amok?
Ayn Rand, admittedly, is not everyone’s cup of political tea. But maybe more Americans need to revisit her ideas and concerns regarding the free market. After all being quiet at a time over regulatory abuse is not a solution – as Rand remarked, “You can avoid reality, but you cannot avoid the consequences of avoiding reality.”
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Previous Phil Hall Op-Ed columns included:
Disputing Gary Vee: https://wrenews.com/a-phil-hall-op-ed-disputing-gary-vee/
The Disney Real Estate Dead Pool: https://wrenews.com/a-phil-hall-op-ed-the-disney-real-estate-dead-pool/
Living in ProPublica’s Glass House: https://wrenews.com/a-phil-hall-op-ed-living-in-propublicas-glass-house/
The Disastrous Silence on Urban Crime: https://wrenews.com/a-phil-hall-op-ed-the-disastrous-silence-on-urban-crime/
Photo courtesy of the U.S. Postal Service
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