I know nothing about politics and little about the intricacies about the process of laws so please forgive me if this is a dumb idea, just something I thought randomly and wondered. Like if we set the minimum wage at a high minimum like $15hr (federally) but made laws that capped on how much cities can charge for housing, stores can charge for essentials etc..that was capped well below the minimum wage so people could live comfortably on one income and possibly reduce the poverty levels in the US? Would that work?
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Of the two, that would be an exponentially worse choice.
I mean this in the nicest way possible, please…please, go read some essays on economics.
What you describe is literally impossible and at best would function briefly with a massive black market of goods and services.
Housing isn’t owned by cities, it is owned by private individuals.
Capping the amount of money one can sell their goods or services for would destroy simply as people stop offering their goods or services rather than take a loss by selling it. It costs to produce those things, those costs don’t decrease just because the selling price goes down, unless government also intends to put its finger on the scale there too, leading to a centrally planned and broken economy.
no
Price caps like these don’t improve living standards. You reach a point where the cost of increasing the supply of housing or a necessities exceeds the revenue generated.
If it costs me $100 to produce an item, but I’m only allowed to charge $50, what am I going to do? Simple, I won’t produce that item. As a result, there is going to be a shortage of the item I produce, lowering the standard of living. I also won’t hire people to make the product, so they lose too.
Alternatively I find a way to make that product for $40, at the cost of a lower quality product that people enjoy less. Because my product sucks, the demand decreases and I go out of business, once again creating a shortage in supply and creating unemployment.
So unfortunately your idea would not work. In fact it would increase poverty, not decrease it.
This sounds like a worse version of Soviet style communism.
You need to do some reading on how economics work.
Price ceilings (what capping prices is called) create short term affordability but lead to long term problems. Essentially, supply and demand would not be in equilibrium, resulting in what is called a deadweight loss – discouraging production and decreasing the supply of goods, services, or housing below what consumers truly demand. This would lead to severe shortages and producers would earn less profit than they otherwise would.
[Even Wikipedia says it’s not a good idea:](https://en.wikipedia.org/wiki/Price_controls)
> Although price controls are routinely used by governments, Western economists generally agree that price controls do not accomplish what they intend to, and many economists instead recommend such controls should be avoided.
> The primary criticism leveled against the price ceiling type of price controls is that by keeping prices artificially low, demand is increased to the point where supply cannot keep up, leading to shortages in the price-controlled product.
And then there is the [“Nixon Shock.”](https://en.wikipedia.org/wiki/Nixon_shock)
No
It’s way less practical to do that because what things count as necessities are different for different people and sometimes costs are affected by market forces that extend far beyond the local. You can easily accidentally make an essential good or service effectively illegal this way because people can charge enough to cover their own costs. Enforcing a minimum wage is something that is much easier to implement and is easier to adjust as markets adjust.
Price controls create shortages, every single time without exceptions. So no.
I don’t know if that would be legal for the federal government to do.
I also don’t know even if it was legal that it would produce the results you intend.
Price caps are ultimately counter-productive and cause more problems than they solve.
Price caps nothing to solve the demand side of the equation, but can perversely increase demand because the prices are artificially low (to include being well below the cost of supplying them). While doing that, they also reduce supply, as producers have no incentive (or are caused financial harms) because they can either make no profit or because it costs them more to supply the products than they bring in (sometimes significantly so). So, you can easily come up with something that’s relatively cheap because of the artificial price, but then there’s none of it to be had.
Do this for things across the economy and you end up with drastically reduced supply of all manner of items, increased unemployment (because the producers laid folks off or went out of business), and (perversely) folks thus not being able to buy things even at the artificially low price. The price caps will have made it harder to get the things that are price-capped.
Do a search on “rent control effects nyc” and you’ll see what price caps have done to real estate in New York City.
One article: [ Rent Control’s Self-Defeating Effects — New York’s expanded version of the policy is already depressing the city’s housing market](https://www.city-journal.org/self-defeating-effects-of-ny-rent-regulation)
> Enacted during World War II, controls squeezed landlords unable to increase rents for maintenance, repairs, and fuel prices until owners began abandoning buildings by the thousands during the late 1960s, driving out middle-class residents, stranding the poor in deteriorating apartments, and creating immense tracts of poverty in formerly stable blue-collar neighborhoods.
> New York’s latest rent regulations, which make it more difficult for landlords to raise prices on apartments that they upgrade or that become vacant, mark a return to the disastrous policies of the displacement era. But because New York’s progressive legislators can’t repeal the laws of the marketplace, the effects have already begun to show. Two owners of large portfolios of buildings with rent-regulated apartments have already started falling behind on mortgage payments. Sales of rental apartment buildings in New York plunged 50 percent in the first quarter after the legislation was enacted, and now some owners face the prospect of being saddled with buildings operating at a loss, with a value less than their mortgages.
> None of this should be surprising. Decades of bipartisan research tell us that controls on rent suppress real estate values, diminish property taxes, and reduce investments in housing. A 1988 Peat Marwick study estimated that rent controls resulted in a $4 billion loss of taxable assessed residential property in New York, depriving the city of $370 million in annual property taxes—the equivalent of more than $800 million in today’s dollars. A 1994 study in Berkeley, California, a city of 110,000 residents that had rent regulations for more than a decade, found that the city lost some $1.6 million a year in property taxes, the equivalent of $3 million in today’s dollars.
> Rent regulation has insidious consequences. Unable to recoup their costs, landlords invest less. Conditions in buildings, especially those with lower-income tenants, worsen. Higher-income renters spend their own money on upkeep, and the additional costs wipe out much of the money they save from cheaper rent. “The benefits of rent control, from the tenant’s standpoint, are likely to decline steadily over time,” a 1997 study by the Department of Housing and Urban Development found.
Pretty sure most businesses would look for ways to make/ sell products that don’t quite fit the definition of “essential.” Any essential product will be terrible. The premium non-essential version will be very expensive. It will make an even larger gap between the have’s and have not’s plus absolutely no middle ground.
For housing, most renters would live in derelict housing. You can’t maintain a property paying high wages to maintenance staff *and* have a lower rent revenue without going bankrupt. Nobody will want to own rental properties. They will be foreclosed and condemned as unsuitable for human habitation.
The result will be a nation of squatters and wealthy with no middle class at all. Sure you make $15/ hour, but anything beyond basics will be so unaffordable that $15/ hour means nothing.
Government subsidies for essentials is a better idea. We already do that with housing and food on the demand side. Food stamps and section 8 housing, but the results aren’t as good as we would like. Maybe if we did it more on the supply side like we do with corn producers, there might be better results.
But the government paying businesses to offer something at a lower cost doesn’t seem to fly well politically in many industries.
Thought experiment:
I sell apples for $3.50 a bag to my customers. In order to sell these, I make sure that I only sell the best quality apples I can, because nobody would want to buy a moldy bruised up bag of apples at that price.
The government says I can’t sell apples for more than $1 a bag. I can no longer make a profit on this unless I sell the worst, barely edible fruits I have. Customers don’t want to buy those fruits. I don’t want to sell those fruits. **Everybody loses in this situation.**
You don’t understand capitalism and why it works, or are a troll.
You would basically be creating a caste system. That is if you only lower the cost of living for a certain group of people.
Then what happens if they make more money. What happens to their children. And when do you implement it.