Socialism Won’t Fix “Affordability” Crisis – and the Data Proves It

As this week’s Democrat primary elections once again proved, more Americans – particularly those under 40 – are embracing socialism as frustration mounts over the rising cost of living. But while the left blames capitalism for the affordability crisis, the data tells a very different story. The goods and services that have grown most expensive in recent decades are those in sectors where government intervention has been heaviest, while many of the products left largely to the forces of competition and the free market have become dramatically more affordable.

This basic fact is captured in what’s known as the “Chart of the Century” series from American Enterprise Institute economist Mark J. Perry. Here’s the latest iteration, updated through December 2025:

Using Bureau of Labor Statistics (BLS) price data since 2000, the chart shows the cost of goods and services over time relative to inflation. Anything above the inflation line has become relatively more expensive since the turn of the century, while anything below the line has become relatively less expensive.

This one chart alone utterly dismantles socialist talking points about how more government involvement in private industry will make things more affordable and that greedy companies aren’t paying employees a “living wage.”

In fact, average hourly wages have risen faster than inflation since 2000 – up nearly 132 percent compared to 92 percent overall inflation. That leaves real hourly earnings roughly 20 percent higher than they were 25 years ago.

The problem is that a few major spending categories are eating up those wages – primarily hospital services (up 281 percent), college tuition (up 196 percent), childcare (up 158 percent), other medical services (up 147 percent), and housing (up 111 percent).

What do those categories have in common? They are all heavily regulated and subsidized by the government. Hospital service costs in particular have exploded since the passage of Obamacare, which was supposed to lower the cost of healthcare. Instead, as conservatives predicted from the beginning, it sent costs skyrocketing. Average premiums for employer-sponsored family coverage rose from $13,770 in 2010 to $26,993 in 2025, per KFF’s benchmark survey — nearly doubling.

Americans aren’t wrong to be upset about the cost of health insurance and healthcare. But capitalism and the free market aren’t to blame. The finger should be pointed at creeping socialist policies that stymie the free market and replace competition with endless layers of inefficient government bureaucracy.

This same pattern has played out in the housing market as well. Government-backed mortgages have expanded the pool of home buyers while more zoning and permitting rules have restricted supply, driving prices higher. Rent control and subsidized housing have further exacerbated the problem.

Economists don’t agree on much, but most agree that rent control is bad for both the quantity and quality of housing available. A Stanford study of San Francisco’s rent-control expansion found landlords cut rental supply 15 percent and pushed citywide rents up 5.1 percent.

In higher education, federal loans increase the amount of money chasing degrees, largely without regard to major or likely ability to repay. A private lender would never underwrite that way, but the government does. Colleges know the money is coming regardless, so tuition rises to meet it, even for families paying out of pocket.

Americans saw this phenomenon in reverse in real time earlier this year. For years, colleges have been raising costs as the government continues to raise the amount that it is willing to dish out in federal student loans. But after President Trump’s One Big Beautiful Bill capped the aggregate federal debt that students can take out, many colleges began slashing tuition costs for the first time in decades, in some cases by tens of thousands of dollars per year.

The simple cause-and-effect is impossible to miss. Producers in each sector treat government-backed loans and subsidies as a guaranteed payday and bake it into the price, rather than competing on affordability for people who have saved up to pay their own way.

Meanwhile, where the government hasn’t gotten involved, things are dramatically cheaper. The BLS price index for televisions has plunged 98 percent since 2000, while toys and computer software are down roughly 75 percent. Household furnishings and new cars are up 21 percent and 25 percent, respectively, far below the 92 percent overall inflation rate.

This data shows that the story of the affordability crisis isn’t about a failure of capitalism. In fact, it’s precisely the opposite. The heavy hand of government has inverted the incentive structure in critical sectors of the American economy, and everyday people are paying the price.

Socialism’s deceitful pitch is to simply double down on these failures through increasingly radical policies like rent control and even government-run grocery stores – an idea with its own dismal record. Kansas City spent $17 million to buy and run a nonprofit grocery store that closed for good in August 2025, plagued by empty shelves and crime. New York City Mayor Zohran Mamdani has announced that New York’s five planned city-run stores, the first set to open by the end of 2027, will sell staples at 30 percent below market prices.

But as clear as the data is that these policies will not work, too few Americans understand this reality. A Cato Institute survey conducted with Morning Consult last month found capitalism still edges out socialism in favorability among Americans overall, 52 percent to 37 percent. Among Gen Z, however, that flips: 53 percent view socialism favorably against 45 percent for capitalism, and 38 percent hold a favorable view of communism outright.

That generational divide should be a warning. Young Americans have every reason to be frustrated by an economy in which the essentials of middle-class life increasingly feel out of reach. But they are being sold the wrong diagnosis and an even worse cure.

The sectors crushed by government intervention do not need more socialism; they need more competition, more choice, and more freedom. If Americans want to make life affordable again, the answer is not to put government in charge of more of the economy, but to get government out of the way.