Some more scattered thoughts I neglected to include in the earlier parts:
One theme of the original op-ed was the implication that regulatory and tax burdens on private economic activity are inconsequential. Normally, for those who disagree with that implication, the focus is on how regulations make it harder for firms to be productive.
Our broken housing market bares the counterintuitive core of this disagreement, though. On the surface, it looks like those who emphasize the importance of a light-handed regulatory regime are defending corporations. Progressives frequently refer to these arguments as fronts for the rich and powerful, as if the rich and powerful are the source of the argument, and the idea that economic gains "trickle down" to the less powerful is just a sort of cover for the real motivations.
But, dismissing the effects of sloppy or overbearing regulatory regimes on private economic outcomes covers up the way those regulations help entrenched interests just as much as it covers us the way regulations hurt new competition.
A heuristic that ignores these effects tends to miss ways in which productivity and abundance are squelched. And, that is a problem. But, the far more damaging problem is that the heuristic misses the ways in which powerful entrenched interests benefit from overbearing regulations. Since it goes unnoticed, it spreads unabated. This seems to be ironic, but it shouldn't. Old money and entrenched corporations are to progressive egalitarianism as the Bootlegger is to the Baptist. The irony is crucial to the form. The most entrenched political economic rents are inevitably enabled by those who suppose that tax and regulatory policies aren't an important driver of private economic activity.
The dismissal of effects on private activity is what makes taxation and fair tax rates such a central theme. They act as a direct public transfer, so they operate in the realm of the seen. The central position of tax policy in the progressive story of the late 20th century is a product of that selective observation.
One irony is that as marginal tax rates declined on high income labor and rose on low income labor (mostly in the form of means tested subsidies), the historical norms of work and leisure flipped, with high income workers now working longer hours, in general, than low income workers. That certainly seems like a betrayal of the idea that second and third order effects of tax policies are unimportant. But, more to the point, the idea that changing tax rates, themselves, could explain more than a small portion of the measured changes at the highest income levels, requires an unspoken belief in those second and third order effects, mathematically if not rhetorically.
So, we are stuck in this endless loop, where overwhelming and obvious regulatory barriers prevent equity and broad affluence, and redistribution through taxation is the solution proposed to fix it. Those refugees from New York, Massachusetts, and California aren't moving to Arizona, Texas, Florida, and Georgia for the taxes. They are clearly moving because of the uncountable ways in which freely flowing capital and labor can do things like provide affordable housing. You know what has never sustainably created a city full of affordable housing? A public "affordable housing" policy framework. The only cities with aggressive "affordable housing" programs are cities filled with voters who presume that equitable capital allocation is public capital allocation and that private capital allocation is just so much "trickle down" economics.
The housing crisis has a megaphone, pointed at our ears, and it is yelling, "The crucial source of equitable abundance is the lightly regulated flow of capital." Freedom of entry is so key. One may argue against the dislocations it creates - whether those dislocations are laid off factory workers or neighborhoods losing their character - but one cannot honestly argue against freedom of entry while presuming to support shared prosperity.
One might hope that the relationship between careful regulation and freedom of entry could be parsed intelligently, so that important regulatory details could be maintained without being captured by entrenched interests. The endless flow of economic refugees out of our blue cities to places Hacker Pierson characterize as "cut and extract" suggests that the enlightened blue states haven't figured that out. Let's hope they can. Until they do, thank goodness for the second best alternative "cut and extract" states. Fortunately, the only thing standing in the way of the solution is the simple act of recognizing the best parts of the non-blue policy framework and implementing those - namely, the centrality of private capital in the pursuit of equitable growth.
This sort of discipline is common among those who compete in the world of private capital. Industrial espionage is usually meant to find the best of what competitors are doing. Political espionage is usually meant to find the worst of what competitors are doing. In this regard, the political homogeneity of the American academy does not engender hope.