What will life be like then? None of us have known any other world.
Here’s my question: Doesn’t that fact that we (collectively) are even having a national discussion about affordable housing imply that we believe there are systemic problems in the American capitalist-democratic system that can never be cured? In other words, if laissez-faire capitalism works, then the invisible hand of the market would allocate scarce resources efficiently and all types of housing needs would be met, including affordable housing (because there is a demand for affordable housing). However, this does not happen. Therefore policy, a “band-aid,” becomes necessary to modify the natural behavior of the market.
In short, my assertion is that the mere existence of policy (of any sort) supports the notion that an unrestrained market doesn’t really allocate resources efficiently, or equitably.
Increasingly, U.S. multinational corporations are turning overseas for cheaper labor. This behavior has been reinforced by various U.S. trade policies. Cheaper labor enables U.S. companies to sell goods at prices below what would be achievable with U.S. labor. If companies were restricted from using foreign labor, prices of certain goods would rise beyond the point where consumers perceive value in those goods—i.e., a consumer may not purchase a pair of Nike shoes if the price was $300. In other words, being dependent on/accountable to our own labor and resource supplies could help reduce our proportion of global consumption by increasing prices of the many luxury goods that we Americans now incorrectly view as necessities.
An “isolationist” labor policy, if it increased the prices of U.S. consumer goods, would also have negative short-run economic impacts (inflation, possible recession, increase in unemployment). However, in the medium-run, the Fed and the government could use an appropriate mix of fiscal and monetary policy to bring the U.S. economy back into a state of lower inflation and reasonable growth (this policy mix would necessarily be too complicated to discuss in these short paragraphs). The government could also enact policies that encourage economic growth via services rather than consumer goods, since services do not have nearly as large an environmental impact as goods.