In 2014 in the UK and then 2018 in the U.S., I wrote papers arguing for a greater policy focus on the cost of living.

At a time when minimum wages were being raised aggressively and there were big pushes for higher fiscal transfers to those in work, I thought libertarians needed to explain that what mattered was people’s real incomes—how far their cash wages or welfare went in obtaining goods and services. A growing concern was the rising price of essentials like shelter, which was clearly becoming a politically salient issue.

Indeed, unlike most other libertarian and free-market conservative commentators, I still thought there was something in Oren Cass’s 2020 “cost-of-thriving index” that warranted pondering. Even if, overall, rising real wages meant things were getting more affordable for families given their increasing incomes, the sharply rising relative price of housing and labor-intensive services like education and childcare made people feel increasingly squeezed, and actually did squeeze them if they sought to operate as a one-earner household. As a result, high prices in core markets were becoming political again.

At the very least, to dampen prices elevated by bad policy, it would be prudent to liberalize these core sectors as far as possible, I said. There was a host of supply-side deregulation that might be bundled up into a political program to improve the affordability of the core goods and services that make up life’s basics.

Yes, there was deregulation of land-use planning and zoning to dampen pressure on home prices. But that same umbrella might also incorporate energy market liberalization, removing tariffs on food and clothes, removing credentialism and ratio regulation in childcare, and reforming a host of regulations that raise the price of cars and other transportation.

One could imagine similar supply-side pushes in healthcare and for universities too. The possibilities for better policy were endless under this affordability banner. And, in economic terms, at least, by improving efficiency, some of these would produce the double-dividend of raising pay somewhat too.

The most important reason for my advocacy, however, was that I could see how the rising cost of certain goods and services could quickly become claims of “market failure” in housing, childcare, and other industries, encouraging a push for highly damaging policies like price controls. Far better to have a market-friendly answer in the right direction than wait for others to devise interventionist ones.

Fail to take the cost of living seriously as politics, I said, and anti-market sentiment would likely prevail in the form of a reemergence of rent controls, more government subsidization of “cost disease” industries, and other bad ideas.

And what do you know: this week New York City voters elected a Democratic Socialist in Zohran Mamdani whose whole “affordability agenda” is a menu of this highly destructive War on Prices thinking.

Cowen’s Wisdom

In reaction to Mamdani’s success, some Republicans want to carve out their own affordability policy offer. Tyler Cowen has a good piece in The Free Press that warns about the consequences of both parties rushing headlong into fighting on this “affordability politics” front.

He is right, not least because the context has changed since I advocated for just such a focus. We’ve just lived through the sharpest burst of inflation since 1981, and inflation is still above target. Groceries (food-at-home) prices are up 30 percent since January 2020, having previously taken sixteen years to increase by that proportion. The pre-inflation price level is still recent enough that people remember how sharply prices have risen and hanker for those good ol’ days at the old price level.

Indeed, the fact that President Trump’s polling on inflation has worsened gradually since he took office (certainly with a helping hand from tariffs) suggests to me that many voters thought changing the President was a potential path to outright deflation and a return to the old price level under Trump in 2019. That was never on the agenda, of course, but the clearer it becomes that it ain’t gonna happen, the lower Trump’s inflation approval falls.

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For Republicans to thus now frame new economic promises around affordability would be a fool’s errand. For unless the policy has big and swift effects to lower the price targeted, all it will do is add to disappointment and boost Mamdani-ism.

Cowen explains why using the example of food: