Wednesday, April 1, 2020

NYC Covid-19 and Conservative Business Interests

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” – Adam Smith, The Wealth of Nations, (Book I, X “Wages and Profit,” Part I)

Writing for The Savvy Street and cross-linked for discussion on Galt’s Gulch Online, Objectivist scholar Walter Donway identified New York City’s long history of business regulations as the root cause of its horrific Covid-19 death toll. Writing primarily for an audience that supports President Donald Trump’s populism, Donway sprinkled his essay with a pejorative use of “liberal” via the redundant “left-liberal.” But his facts would have been the same and more damning if he had called the failed political policies “service to conservative business interests.”
Donway wrote: “But the city is the most ideologically left-liberal city in America. ...  Here is the briefest rundown on the left-liberal ideological principles and policies that have left New York City spread-eagled, utterly vulnerable to violation by the new epidemic. It was inevitable, an accident waiting to happen. ...  Understand that almost every university, government agency, foundation, and think tank in New York City has a left-liberal bent, tending to support and further these housing policies....  NYC is the U.S. epicenter of the  coronavirus because it is the U.S. epicenter of left-liberal economic intervention that in every possible way has increased the cost and decreased the pace of building ordinary housing for ordinary people.”
Donway has two targets: rent control and labor unions. Donway conflates rent control and rent stabilization. NYC has only 22000 rent-controlled apartments. About half the housing in NYC is “rent stabilized.” 
NYC as seen by the New York Times
Onerous as the regulations are, though, realize that they are business regulations that benefit a special interest: renters. Many capital goods are leased: personal automobiles, taxicabs, semi-trucks and trailers, railroad engines and cars, construction equipment, aircraft, computers, telephones, and office space. If semi-truck rentals were subject to onerous government-mandated pricing, it would be wrong, but we would all know how to analyze the problem. It would be a business interest using civic legal authority for its own profits. And so it is with apartment renters. 

Rent-stabilized housing distorts those markets. Landlords seek and find escapes. Rentals become condominiums. Owners sell and go into other businesses that they hope to enjoy more. Tenants also could find escapes. My brother was an executive for a classical music label headquartered in the City. When I found out how little he paid his warehouse workers, I was shocked. “How can they afford to live in the City?” I asked. “They don’t,” he replied. “They live in New Jersey and take the train.” So did junk bond billionaire Michael Milken. Everyone knows that Warren Buffett enjoys his middle class home in Omaha. No one has to live in NYC, though Walter Donway himself is among the 20 million who choose to.

Labor unions are also businesses, no less than are our local chambers of commerce. Their members pay dues. The unions set up their own qualifications, including specialized training; and in that they are in the same category as university MBA programs. The political advantage that labor unions enjoy is a direct consequence of one-person-one-vote. But they are voting for their business interests. 
NYC as seen by the New York Post
 Among the business interests that Donway disparages—I say that he sleights it as left-liberal snobbery—is the explosion in “historical” properties. It may be true that zealous urban planners at city hall hunt for such opportunities, but largely, the historical marker plaque is sought, applied for, fought for, and won by the property owner who seeks a marketable cachet, whether for a building or a vacant lot. It is the hallmark of conservatism to find intrinsic value in that which went before and to fear change. So, we must preserve barns and tenements just as we protect markets and job titles.

In excoriating renters and laborers (and left-liberals), Donway engages in a strategy explained succinctly in The True Believer by Eric Hoffer. A mass movement can succeed without God, Hoffer noted, but none can succeed without a devil. In modern language, we “otherize” our enemies: they are essentially different from us and therefore essentially evil. I believe that in otherizing labor unions and renters as beneficiaries of left-liberal government intervention Walter Donway’s goal is to seduce pro-Trump conservatives into accepting Ayn Rand’s Objectivism. See his two essays on The Savvy Street, “The Unquiet Grave: Ayn Rand Declared Conservatism Dead in 1960,” and “The Unquiet Grave Part II : Edmund Burke’s Challenge for Objectivism.” He could have made the same argument that I just did: disasterous as such government interventions have proved to be, they were motivated by conservatism in service to business interests.

For context, remember that Ayn Rand was radically opposed to racism and that the central figures of her three novels were independent women. Moreover, she was in favor of open immigration. And she was proud of having gotten around the laws limiting her own immigration. In addition, she was also an atheist. No surprise, she advocated for a woman’s right to end her pregnancy. In her novels and in her own life, she rejected the social traditions of family as the foundation for society. And among all of the very many political interventions in the economy, she was opposed to tariffs. 

Even more to the point here, many of the villians in her novels are businessmen, some of inherited wealth, all with close ties to government regulators. On the other hand, when we first meet the architect Howard Roark, he is wearing blue jeans, sandals, and a shirt missing most of its buttons. Before going to the dean's office to be expelled, he tosses his long hair into a semblance of order. 
Ayn Rand on Wall Street
(Cover of The Virtue of Selfishness)
Those are all points of failure for anyone who wants to sell her utopia to conservatives. The reason why is fundamental. Conservatism absolutely requires other people for its practice because it is a social philosophy. Objectivism is a personal philosophy. If your neighbors play loud music at 3:00 in the morning, the conservative response is to call the cops because their anti-social behavior deprives you of your right to property. The Objectivist response is to move. Objectivist ethics of selfishness recognize that you might find it much easier (and satisfying) to call the cops. But that would be your choice based on your values and your decision on how best to minimize your losses and discomforts. You might take your guitar over there and join them. But the choice remains yours because Objectivism is a personal philosophy. 

Walter Donway's major premise is empirically undeniable: New York City's terrible losses from the novel coronavirus are a direct consequence of over-crowding. It is population density rather than population alone that spreads the infection. In response to Donway's discussion on Galt's Gulch, I posted these comparisions.

New York City Population 18 million (Metro area 21 million)
Covid-19 cases 40,900 (31 March)

Houston area: Population 7 million
2020 Estimate 2.4 million for the city proper
1,266 cases
12 dead
168 recovered
(31 March Fox News 26)

The City of Houston does not have zoning but development is governed by codes that address how property can be subdivided. The City codes do not address land use.-- Oct 1, 2018; Planning and Development - City of Houston at

Corona Virus Cases Metropolitan Dallas-Ft. Worth
Total Population 7.5 million
Dallas Dallas County - 549
North Suburbs Collin County - 160
Northwest Suburbs Denton County 191
Fort Worth Tarrant County - 161
Dallas Metro total case: 1061 (31 March)


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