The Memo by Howard Marks More on Repealing the Laws of Economics
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Jun 18, 2025 Government intervention in economies often leads to unintended consequences, as discussed through examples like rent control and tariffs. The risks of relying on foreign suppliers for critical resources are highlighted, especially post-COVID. Examining U.S. fiscal discipline reveals alarming trends in chronic deficit spending and its long-term effects. The dialogue underscores the tension between government policies and free market principles, emphasizing that while free markets aren't perfect, attempts to control them can exacerbate issues.
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Rent Control's Unintended Consequences
- Rent control creates winners and losers by favoring current tenants but disadvantaging landlords and future renters.
- It reduces housing mobility and discourages maintenance and new construction, harming overall societal welfare.
California Fire Insurance Crisis
- California's fire insurance crisis worsened after insurers were restricted from pricing policies based on wildfire risks.
- As insurers exited, many homeowners became uninsured or underinsured, leading to severe financial losses after fires.
Economic Transition Is Inevitable
- Economic development naturally shifts countries from manufacturing to service sectors as income rises.
- Trying to revert to a manufacturing-based economy is unrealistic and contradicts economic progress.