Somebody needs to report to Tim Worstall for training:
Croissants at LaGuardia are going for SEVEN DOLLARS A PIECE ????
Yet some people think getting a whole hour of personal, dedicated human labor for $15 is too expensive??
— Alexandria Ocasio-Cortez (@AOC) April 1, 2019
Anyone want to take a punt on what the rent is for a croissant stall at LaGuardia? It was actually the section on coffee prices which interested me most in Tim Harford’s The Undercover Economist, in which he pointed out that even in busy London stations coffee sellers don’t make much money because the landowner simply increases the rent. In other words, it’s the landowners via rents who make money in prime locations, not the operators of businesses. I’ve recently begun to realise that is a problem: any economic system where ownership of land generates enormous returns while people working 8-12 hour shifts actually doing something have their rewards capped at a few percent probably isn’t going to last very long. Eventually people who don’t own land will get fed up with those that do and start voting in socialists – such as Jeremy Corbyn, whose base is made up of Millennials who will never be able to afford a house because previous generations, in cahoots with the government, inflated prices and pulled the ladder up after them.
If AOC had acknowledged the problem of enormous rents accruing to landowners at the expense of productive workers, she might have been onto something (although I doubt she could find a solution to a squeaky door let alone a complex problem at the intersection of economics, politics, and liberty). Instead she dived head-first into labour theory of value nonsense, presumably believing if stall vendors at LaGuardia made $15 per hour croissants would be more affordable. But that probably won’t make any difference: people vote for socialists like AOC because they feel the current system is stacked against them. The trouble is they’re probably right, but they don’t know how or why. The challenge for non-socialists is to do what Thatcher did, and give ordinary people a reason to embrace capitalism which works for them. In practice, this means an economy in which an ordinary young couple can afford to buy a house and raise a family without being the offspring of a millionnaire or going to Harvard. Unfortunately, we appear to be heading in the opposite direction which is why, despite the economic idiocy behind AOC’s tweet, we’ll be seeing a lot more of her ilk in future.