When Government Doesn’t Know Best

          In 15 years and some 80 deals for investment properties in the student housing market, I have seen how the off-kilter effects of too much government can hurt business.

          Forty years ago, Ronald Reagan famously said, “The most terrifying words in the English language are, ‘I’m from the government, and I’m here to help.’” If only he could have lived to see how Nostradamus that really was.

          The more heavily involved government gets in any activity, the more it seeks to rein it in, scrutinize it, guard against scams, and regulate it for safety; or, alternatively, the more its spending inflates prices in a given market and disrupts its proper workings.

          In California, zoning and environmental regulations make it impossible to build new apartment complexes from scratch. This adds to a shortage of affordable housing.

          For the past eight years, the state set a goal of 1.2 million new homes and built less than half that sum, says a new report from the California Department of Housing. Now the state needs 2.5 million new homes in the next eight years. I’d say the chances of this happening are zero.

          In education, the Obama administration’s takeover of college student move to push private banks out of college lending saturated the market with new debt, now at more than $1.7 trillion in government-backed, low-interest loans.

          This windfall was handed out without regard to credit ratings or past defaults—anyone who applied for a loan got one. The richer your university tuition, the bigger the loan.

          This fueled tuition inflation, big time. The cost of tuition and fees at a four-year public university is up 180% in 20 years, an average rise of 9% a year. The cost of private schools is up 125%, a 6% annual increase for 20 years.

          Government largesse also has driven healthcare spending higher and higher. In 1960, all U.S. healthcare spending totaled $27 billion and 5% of Gross Domestic Product. Last year we hit $4.12 TRILLION dollars, up more than 150-fold in 60 years. Now healthcare consumes 20% of GDP, up four-fold in six decades.

          The intrusive role of government in education and healthcare only intensified in early 2020 when the Covid-19 pandemic descended on the nation—and university campuses.

          Universities and colleges got upwards of $115 billion in aid during the Covid crisis. The feds suspended college loan payments for 43 million people, forgiving up to $70 billion a year in interest without offering relief to the lenders.

          Several million kids were sent home, deprived of half of their four-year college experience. They took classes online, yet their schools charged the same high tuition.

          The exodus from campuses hurt thousands of small businesses, including mine and what was it all for, really? Stats already show this:

--A total one million people have died from Covid since early 2020, and 75% were age 65 or older; 95% had heart disease, diabetes or other co-morbidities.

--Among those younger than 18, fewer than 1,000 died—of 74 million in this group.

--Kids under age 18 comprise 22.3% of the population and only 0.1% of deaths.

--People ages 18 to 29 comprise 16.4% of the population and 0.7% of Covid deaths. The death risk is four times as high in people ages 30 to 39, 10 times as high for 40-to-49-year-olds, 25 times as high for 65-to-74-year-olds, and 140 times as high for people over age 75.

          One day, when those who imposed the Covid lockdowns are long gone, we will hear the truth—that, really, universities could have avoided any shutdown at all. And most of the nation could have done the same.

          Government officials acted decisively in the pandemic, unhindered by second-guessing or any regard for the devastating consequences of their decisions. In a crisis, politicians want to show they are taking action, even if they don’t know what they are doing.

          We will be feeling the after-effects of their knee-jerk response for years to come.