We have a lot to say this week, but that’s OK, we’ll be off next week for Thanksgiving. So pace yourself, put this in the fridge after that second helping and go out for a walk, it will taste just as good tomorrow, maybe on a sandwich.
Daniel is serving up the appetizer:
The cost of living was on the ballot earlier this month, and Democrats deployed an “affordability theory of everything” that helped carry ideologically diverse candidates in New York City, New Jersey, and Virginia across the finish line. A pocketbook-first message alone won’t erase the party’s ideological baggage or abysmal favorability rating. But the lesson for Republicans is straightforward: Take ownership of the affordability concern—foremost housing and homeownership—or risk losing Congress in 2026 and the White House in 2028.
The YIMBY movement has heretofore provided the go-to answer to the housing crunch in policy circles—build more, primarily by building up. Its main objective is to reduce rents, and its toolkit includes up-zoning and by-right approvals, constructing mid-rises near transit, and scrapping parking and lot-size mandates. This approach aligns with basic principles of supply and demand and is congruent with a supply-side agenda that conservatives have long supported.
And yet, as a professional-class project that’s progressive in its orientation, the YIMBY movement faces obvious limitations. Informed by a Yuppie reference point, it often defaults to densifying places where most Americans don’t live or want to move, and that treats suburban growth and single-family neighborhoods as problems to fix.
The American people have other preferences. Survey research from American Compass finds that, by an 80–20 margin, Americans value “building a decent life in [one’s] hometown, raising and supporting a family, and contributing to the community” over “moving to a place of great opportunity and reaching the top of a prestigious field.” At the same time, the Institute for Family Studies has found that when asked to visualize their ideal home, nearly 80% of respondents choose “detached single‑family housing.”
The YIMBY movement’s ideological blinders present a political opportunity for conservatives to deliver a housing agenda that’s responsive to what Americans actually want. Such an agenda must begin with an accurate diagnosis of the problem, which is not an abstract shortage of “units” but rather the inability of working- and middle-class Americans to buy single-family homes in or near the communities where they grew up. This plays to conservatives’ advantage because they respect where and how people want to live. They do not presume that every ambitious 18-year-old should leave for a four-year college and then a coastal “opportunity hub” to climb a narrow professional ladder. The goal, instead, should be a geographic redistribution of opportunity—more good jobs in more places—so people can stay rooted and still achieve middle-class security for their families.
At the same time, conservatives should be explicit that policy can affect demand—a fundamental truth that progressives find difficult to acknowledge. Commentators with a more permissive immigration posture are happy to admit that immigration raises housing demand and prices, then tell struggling renters and would-be buyers that “that’s okay.” A conservative answer is the opposite: it is not okay to keep bidding up rents and entry-level home prices in already tight markets while American families are shut out.
Border enforcement and a more restrictive legal immigration policy should therefore be understood partly as housing policy: calibrating inflows to what our housing stock and construction capacity can actually absorb, and relieving pressure in the metros where affordability is strained. Policymakers, economists, and business leaders should be laughed out of any room in which they declare building homes to be somehow a “job Americans won’t do.” Rather than push unskilled and even illegal immigration as the only way to fill essential jobs, they should train their sights on the failures that have led the sector’s productivity to decline for half a century.
Policy can also influence demand by refusing to treat Wall Street and absentee investors as neutral actors in the housing market. Federal policy has been far too accommodating to investors buying up single-family houses. We should tighten the screws. Limit Fannie and Freddie’s support for investor loans beyond primary residences; adjust tax rules to discourage bulk purchases of starter homes by REITs and private equity funds; and scrutinize non-resident and foreign ownership.
On the supply side, the federal government should resist the easy, politically attractive mistake of juicing demand with more subsidies and looser credit while construction is constrained. Instead, Washington should use the levers it controls to make it cheaper and faster to build family-sized homes in the places people want to live. Put federal land to work for owner-occupied subdivisions; tie infrastructure dollars to states and metros that are actually permitting new single-family and family-sized units, not just luxury apartments; and encourage the housing finance system to favor mortgages for modest primary residences in non-superstar regions over high-end urban speculation.
Progressives promise to densify the same handful of “opportunity metros,” wave in more people, and hope the cranes keep up. Building more in dense metros is fine—many people do want to live there, and no one who already lives there should have to leave. But there’s a big difference between solving the laptop class’s problem and solving the country’s. A conservative alternative would emphasize: We are going to move opportunity closer to where Americans already live; we are going to shape demand so that families, not financiers or foreigners, set the pace of the market; and we are going to make it possible again for a young father with an ordinary job to buy a single-family home. This should be the foundation of a pro-family, pro-nation policy program that takes voters’ preferences seriously and gives them a concrete reason to trust conservatives with power. — Daniel
STRUGGLES ON THE OLD RIGHT
The Wall Street Journal editorial board lectured congressional Republicans for their lack of an agenda, which, well, fair enough. But how should an agenda look? According to the Journal, item one is “immigration reform” (i.e., more immigration). Then comes “permitting for energy, mining or public works.” Sure. And, of course, a “health freedom agenda,” for which the Journal perhaps has concepts of a plan it just hasn’t shared yet? The rest is tax cuts and spending cuts.
This would be predictable, pointless, and boring, except for the bit at the end where the Journal laments, “this year’s One Big Beautiful Bill Act won’t be nearly enough if voters still feel sore about prices.” OB3, you may recall, had roughly $5 trillion in tax cuts and $1 trillion in spending cuts. To which the Journal says: unimpressive, how about some tax cuts and spending cuts? And what would the Journal say if Congress did another $5 trillion of tax cuts and $1 trillion of spending cuts? Take a guess.
The American Enterprise Institute had a rough week as well, with its black-tie gala overshadowed by the unfortunate choice to list CCP-controlled TikTok as a sponsor. Credit to President Robert Doar, the mistake was immediately acknowledged and the money returned. There’s a man who doesn’t spend too much time watching sports.
Of note, the AEI gala honored historian Gordon Wood, who delivered remarks in which he declared: “Immigration must be handled carefully. Because assimilation is not easy, no nation should allow the percentage of foreign born to exceed about 15 percent of its population.” Even at the peak of the late nineteenth-century wave, America’s immigrant population never exceeded that level. But in the Biden years, it did. Indeed, we are above 15% now. The implication would be that the United States now needs dramatic immigration restriction if not an outright moratorium—an interesting message for an AEI gala, indeed. Some things change.
And some things stay the same. Do read the appallingly bad Bret Stephens column in the New York Times on “The Case for Overthrowing Maduro.” It can be easy to forget, in this age of political polarization and hyperbole, that the neocon inclination to adventurism is as outlandish and ungrounded as any parody could attempt to offer. The “vital American interest at stake,” according to Stephens, is that Maduro’s regime is “an importer and exporter of instability.” He has ties to our enemies. His misgovernance has had ruinous results. Throughout the hemisphere. Though he links only to an obscure missive from a British university about possible preparations in “neighbouring Latin American nations.” That’s how you can tell when the results are ruinous throughout the hemisphere: the most relevant commentary comes from Europe.
Send in the 81st Airborne! Again, not a parody. Doing nothing is not even an option considered among “alternatives to conflict” (failure to entangle the United States in yet another conflict would embolden Russia and China). The correct path is a full, on-the-ground invasion of the country, with the “seizure of its major military bases” and the arrest of all senior officers. (We’ll be lenient on the ones who turn themselves in.) “Could this turn into another fiasco?” Stephens asks himself. He is encouraged by “the fact that we can learn from our past mistakes.” Less encouraging, this morning’s Times headline: “U.S. Ran a War Game on Ousting Maduro. Venezuela Fell Into Chaos.”
What would Napoleon do? Again, not a parody. Stephens concludes by offering President Trump the little corporal’s advice, “If you start to take Vienna, take Vienna.” Which perhaps seems a good reason not to start.
STRUGGLES IN THE ECONOMICS DEPARTMENT
What Is A Tariff Shock? So asks a new paper from the Federal Reserve Bank of San Francisco, yielding an answer that has our pointy headed friends in a tizzy: “we find that a tariff hike raises unemployment (lowers economic activity) and lowers inflation. Using only tariff changes driven by long-run considerations—a traditional narrative identification—gives similar results.”
Commonplace readers will be less confused. “Perhaps you could construct an inflation story from the concern expressed by many economists that tariffs will reduce output. But raising interest rates would be an odd response,” Oren wrote back in July. “Indeed, if one takes seriously the view that tariffs are likely to slow economic growth, then their imposition should strengthen the case for rate cuts.” Tariffs should always have biased the Federal Reserve toward rate cuts, and Jerome Powell’s bizarre concession that he would have cut sooner but for tariffs will go down as a major policy blunder and foolish politicization of the Fed.
If you’re an American Compass podcast subscriber, you heard Bloomberg chief economist Anna Wong in August, describing her own experience at the Federal Reserve, where the economic models in fact suggested that tariffs would be disinflationary. Wong reiterated the point this week on X: “This finding is similar to the conclusion in a simulation in a FOMC meeting presentation back in late 2018. Question is why finding like this was no where to be published or uttered in the last twelve months.” What could possibly explain such a failure from so noble, impartial, and scientific a profession as that of the economist?
Another interesting finding, meanwhile, over at Goldman Sachs, per the Wall Street Journal’s Greg Ip:
Fascinating and important report from Goldman Sachs. They have upgraded long-term GDP of China because of increased exports, but see this as reducing, not increasing, rest of world GDP. Chinese displacement of domestic manufacturing swamps any positives from cheaper goods.
This confirms what I have long suspected: Chinese growth does not “contribute” to global growth except in the purely arithmetic sense. It does not actually create positive feedbacks that lift other countries’ growth. That’s by design.
The point of Xi’s “dual circulation” is to make the world more dependent on the Chinese industrial supply chain, while making China self-sufficient, that is buying less from the rest of the world. The model is inherently “beggar thy neighbor” (as Goldman notes).
When the U.S. grows, its imports expand, which has positive spillovers to foreign growth (although Trump is trying to weaken this link). This does not happen under China’s model.
Commerce with China has benefits other than selling it exports. But its unique status as a “beggar thy neighbor” partner should motivate other nations into forming a trading system without it. There’s opportunity here for the U.S. if it knows how to seize it.
Who could’ve guessed, besides absolutely everyone watching events unfolding in the real world instead of listening to economists lecture incorrectly about how free trade really works.
Did someone say economists lecturing incorrectly? It must be Justin Wolfers time.
And indeed it is. Like the Kool-Aid Man bursting through the wall, he leapt excitedly into the room to accuse Vice President J.D. Vance of hating foreigners because Vance said:
No robot can replace a great blue-collar construction worker. You know, you see some of the houses, some of the things they do, the trim they’re able to do there, there’s an art there that I don’t think a robot’s ever gonna be able to replace. But can a robot maybe make it easier for a construction worker to put more nails in more walls over a shorter period of time?
Gee, you might think, that doesn’t seem racist. But as an Understanding America reader, you are neither as bad at economics, nor as good at missing the point, nor as desperate to appear on MSNBC as is Professor Wolfers. “It’s a revealing moment,” for him. “JD Vance welcomes a two-legged robot helping on the job site. But if that helper is a person named Jose, he calls it a threat. Same tasks, same productivity boost.”
Of course, that’s the opposite of what Vance said. Indeed, the distinction between technology that can augment human capabilities and technology that simply substitutes for human workers entirely is one of the key distinctions often emphasized by economists. That’s the difference between a robot and a person named Jose, which Vance explains articulately, and Wolfers pretends to forget.
Ironically, the argument Wolfers attempts to make cuts precisely the other way. Analysts who do think that AI will achieve “artificial general intelligence” such that its systems and robots can fully substitute for the work of human beings often worry that American workers will be driven out of the labor market. Which would be an argument against an uncontrolled influx of Joses.
STRUGGLES FOR ARTIFICIAL INTELLIGENCE
Speaking of artificial intelligence, the Wall Street Journal has the story of why leading researcher Yann LeCun believes large language models are leading the field astray. “He has been telling anyone who asks that he thinks large language models, or LLMs, are a dead end in the pursuit of computers that can truly outthink humans. He’s fond of comparing the current state-of-the-art models to the mind of a cat—and he believes the cat to be smarter.”
One place the Big AI companies continue to excel, though, is creepiness. At Compact, Michael Toscano has an excellent essay on How Trump Can Save the Future. “America has long been attached to three doctrines about the adoption of new technologies: that it is inevitable, that it advances social progress, and that it will work neutrally. As recently as the 1990s, these ideas enabled the unlimited expansion of the internet, social media, and the screen. Now, belief in all three has been profoundly shaken.”
“Stop Hiring Humans” provides a great example. You may have seen the controversy surrounding the bizarre billboard campaign featuring that slogan, launched by a company called Artisan. The full story is even stranger. As they explain in a truly creepy blog post:
We didn’t expect people to get so mad. The goal of the campaign was always to rage bait, but we never expected the level of backlash we ended up seeing. … Luckily, the people who were mad aren’t our target audience. We target tech companies, and the vast majority of people who work at and run tech companies loved the campaign. … Finally, we learned that when something works, double down.
At least they’re doing really important and groundbreaking work on…
Actually, their best example of their biggest product, featured on their homepage, is a bot that will scan social media to find personal details about you so that it can then send you spam congratulating you on your recreational tennis victory before trying to sell you an “all-in-one product that can centralize your support across channels.”
How long before they offer another product, detecting crappy marketing messages from their spamming product to keep your inbox clear?
There does seem to be some tension between the two key messages from AI developers: “trust us” and “we are clearly lunatics who should never be trusted.” Wonder how that resolves…
STRUGGLES FOR THE KIDS
In High School: The Screen That Ate Your Child’s Education (New York Times)
In College: What happens when even college students can’t do math anymore? (The Atlantic)
In Recruiting: A Campus Backlash Is Brewing Over Wall Street’s Ivy League Recruitment Drive (Wall Street Journal)
What Does Peter Thiel Think? Capitalism Isn’t Working for Young People (The Free Press). “The rupture of the generational compact isn’t limited to student debt, either. I think you can reduce 80 percent of culture wars to questions of economics—like a libertarian or a Marxist would.”
And How About Some Statistics?
Young Adults are Growing Increasingly Economically Dislocated (Financial Times): The share of Americans ages 20 to 24 who are not working, not looking for work, not studying, and not raising kids has just cracked 10%, roughly doubling over the past two decades.
Millions of Kids Are on ADHD Pills. For Many, It’s the Start of a Drug Cascade (Wall Street Journal): “Tens of thousands of kids who take prescription ADHD medication also wind up on other powerful psychotropic drugs—including antipsychotics and antidepressants, studies show. For some of them, the ADHD drugs themselves can be a trigger, according to doctors, patients and psychologists, who say additional medications are often prescribed to manage side effects such as insomnia, despite limited scientific evidence supporting these combinations in young, developing brains.”
Record Numbers of Younger Women Want to Leave the U.S. (Gallup): “In 2025, 40% of women aged 15 to 44 say they would move abroad permanently if they had the opportunity. The current figure is four times higher than the 10% who shared this desire in 2014, when it was generally in line with other age and gender groups.”
12th Grade Girls are Less Likely Than Boys to Say They Want to Get Married Someday (Pew Research): “The drop in the share of 12th graders who say they want to get married reflects shifting views among girls. ... The share of boys saying this is virtually unchanged over the 30-year period. But the share among girls dropped by 22 percentage points.”
NOT STRUGGLING? REINDUSTRIALIZATION
Decoupling continues apace, as businesses accept that the era of free trade with China is over. That’s Why Factories Will Keep Looking for Alternatives to China (New York Times):
So executives like Mr. Lichtenberg are opting out of China for their U.S. business, motivated by a fear of getting caught on the wrong side of what they expect to be an even more unpredictable bilateral relationship. Where it once seemed like having a factory outside China was a fallback, it is starting to look like an economic imperative. “Nobody trusts that there is stability between China and the U.S.,” Mr. Lichtenberg said.”
Et tu, Elon? Yes, even Tesla Wants Its American Cars to Be Built Without Any Chinese Parts (Wall Street Journal).
Europe continues to search for answers. Stellantis Chair Presses EU to Gut 2035 Combustion Engine Ban (Politico Pro). “It’s a tipping point,” says Stellantis Chair John Elkann. “We have this moment where growth can be a choice, which is what has been decided in different parts of the world, or we accelerate the decline.”
And the U.S. pushes ahead on nuclear, with a “$1 billion federal loan to restart the Three Mile Island nuclear power plant” (Wall Street Journal).
Finally, don’t miss a remarkable acknowledgement from Benn Steil, Director of International Economics at the Council on Foreign Relations: Free Trade Can’t Bring Peace.
The geopolitical case for free trade, however, rested on little more than wishful thinking. To be sure, Tennesseans like Hull, who decried the harm that Northern manufacturing tariffs inflicted on Southern farm exports, had legitimate economic reasons to champion freer markets. But in reality, the causal arrow points in the opposite direction. It is peace that makes trade possible – a crucial distinction for understanding both globalization and its current retreat.
Of course, “The economic argument was always marginal,” C. Fred Bergsten famously wrote in Foreign Affairs, back in 1971. “It was the foreign policy case which provided the real impetus for liberal trade policies in the United States in the postwar period.” So if that’s true, but the geopolitical case for free trade “rested on little more than wishful thinking,” then what exactly is the case?
SOME HOLIDAY READS
Here’s what else we’ve been reading this week, that you should read too when you have a minute:
Wall Street Journal: Why Ford Can’t Find Mechanics
“We are in trouble in our country. We are not talking about this enough,” Mr. Farley said. “We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen.” He said Ford is struggling to hire mechanics at salaries that Ivy League grads might envy.
City Journal: “The Largest Funder of Al-Shabaab Is the Minnesota Taxpayer”
Much like with the HSS program, autism claims to Medicaid in Minnesota have skyrocketed in recent years—from $3 million in 2018 to $54 million in 2019, $77 million in 2020, $183 million 2021, $279 million in 2022, and $399 million in 2023. Meantime, the number of autism providers in the state spiked from 41 to 328 over the same period, with many in the Somali community establishing their own autism treatment centers, citing the need for ‘culturally appropriate programming.’ By the time the fraud scheme was exposed, one in 16 Somali four-year-olds in the state had reportedly been diagnosed with autism—a rate more than triple the state average.
Lever: Wall Street Is Paywalling Your Kids’ Sports
As the $40 billion youth sports industry comes under private equity control, corporate-owned facilities and leagues — from hockey rinks to cheerleading arenas — have begun prohibiting parents from recording their own kids’ sports games. Instead, parents are forced to subscribe to these companies’ exclusive recording and streaming service, which can cost many times more than the streaming costs for professional sporting events.
Wall Street Journal: Medicaid Insurers Promise Lots of Doctors. Good Luck Seeing One.
“It’s a fake system,” said Elisha Yaghmai, a Kansas doctor who runs a company that provides physicians to rural hospitals. “It doesn’t actually get them care.”
Enjoy Thanksgiving!
"At the same time, the Institute for Family Studies has found that when asked to visualize their ideal home, nearly 80% of respondents choose “detached single‑family housing.”"
First of all, if government pays huge money to subsidize single family detached housing, and also makes laws so it's the main thing available, so of course people are gonna get used to it and tell themselves they like it.
Secondly, there is a difference between people liking detached single family homes and being free to build them. That's awesome. And for their being laws by government saying "YOU MUST BUILD SINGLE FAMILY DETACHED HOMES. You can buy land here, but we will centrally plan this out and tell you exactly what you can build there. Only single family detached homes!"
Third, if we want people to live and work and grow up and age in their towns, then a town based primarily around single family detached houses won't serve them well. That low density approach will force a spread out layout which forces driving. That in turn makes life much lower quality for kids and elderly. Elderly also may not need or even want detached single family homes, they may prefer smaller spaces, townhouses, apartment buildings, maybe a tiny house built on the same lot as their family. Many of these things are actually currently outlawed. Is it any surprise that people move away during different time periods in their life? Current zoning policies are very anti-family and anti-local living.
You lost me as soon as you implied immigration was driving up home prices. Rents, maybe, but the data is sketchy on that, but immigrants don’t buy homes since they can’t get mortgages. When you decide to correctly diagnose the problem, we can talk.