Despite occasional political friction, the United States and Canada remain deeply intertwined economically and culturally. Their similarities make them ideal for comparison — especially when investigating the causes of rising rents and housing prices, which have surged in lockstep in both countries.

Between 2019 and 2024, Canada’s median home price skyrocketed 45 percent to CN $481,745, according to Zoocasa. In the United States, the increase was 34 percent over the same period, landing at $426,800, per the St. Louis Fed.

Rental costs followed suit. Nerdwallet reported Canadian average earnings rose 74.3 percent from 2003 to 2023, but home prices ballooned 227 percent. US income grew 86 percent, but home prices climbed 135 percent. Rents nearly doubled in both nations.

So, what’s to blame for this housing inflation? According to regulators on both sides of the border, the culprit is property management software — specifically, artificial intelligence-driven pricing tools like RealPage’s rent optimization algorithm. These tools suggest optimal rent levels based on a property’s characteristics and local market conditions. Politicians allege these AI tools amount to collusion, functioning as high-tech price-fixing. This regulation-happy narrative couldn’t be further from the truth.

A Fallacy of Central Planning

In Canada, a class-action lawsuit filed last December targets RealPage and 14 property management firms. However, the AI pricing tool in question is barely used there — it accounts for no more than 1 percent of the Canadian rental market, and even then, the pricing algorithm is not used — the software is largely relegated to back-office bookkeeping. Yet, Canada’s rent still surged. The software didn’t cause the crisis — it’s merely a scapegoat for deeper systemic problems.

Still, politicians and the press are pressing forward.

In the US, the now-departed Biden DOJ launched an antitrust suit that mirrors the Canadian claims. Senator Amy Klobuchar has also introduced legislation aimed at “curbing” rental AI software.

As Friedrich Hayek warned, “The more the state ‘plans,’ the more difficult planning becomes for the individual.” 

This is a textbook case of regulatory overreach founded on a flawed assumption: that prices are made in boardrooms or by algorithms, rather than in the marketplace through voluntary exchange and supply-demand dynamics.

The Real Drivers: Cantillon Effects and Regulatory Distortion

If we’re serious about diagnosing the problem, we must consider the Austrian theory of malinvestment and Cantillon effects. Central banks’ decade-long policy of artificially low interest rates — pushed under the guise of stimulus — has distorted capital allocation. Cheap credit flooded into real estate markets, fueling speculative bubbles and driving up housing prices beyond what middle-class incomes could support.

At the same time, government-imposed zoning restrictions, construction permit delays, and rent control laws have stifled the supply of new housing. This is a classic example of what Ludwig von Mises called interventionism — a patchwork of state interference that produces unintended consequences worse than the problems it seeks to solve.

A Toronto survey by Simplydbs reveals the public understands what many policymakers do not. Renters cited inflation, limited housing construction, and high ownership costs as the primary causes of rising rents. Landlords ranked lowest. The market participants themselves see the truth.

Spontaneous Order, Not Bureaucratic Panic

The market process is decentralized. Prices convey knowledge dispersed among millions of actors — what Hayek called the “use of knowledge in society.” AI pricing tools merely aggregate this knowledge more efficiently. They do not override it. Banning such tools won’t bring prices down. It will only cripple landlords’ ability to respond to local conditions in real time — likely causing even more inefficiencies.

Moreover, this crackdown on AI rent tools is not a principled stand against monopoly or collusion. It’s a case of political theater — an attempt to externalize blame for inflation that was caused by governments and central banks themselves. As Mises wrote, “Government is the only agency that can take a useful commodity like paper, slap some ink on it, and make it totally worthless.”

We are living with the consequences of unsound money, bad regulation, and housing policy shaped by political expediency, not market principles. That is the root of rent inflation — not software, and certainly not landlords using modern tools to navigate distorted markets.

If the goal is affordable housing, the answer lies in removing the regulatory roadblocks, ending monetary inflation, and letting the market perform its coordinating function free from coercive interference. Anything else is just a detour on the road to serfdom.

On May 16, Moody’s Ratings downgraded the US government’s long-term issuer and senior unsecured ratings from Aaa (the highest possible rating) to Aa1 and revised the outlook to stable from negative. The rating agency cited the likelihood of “persistent, large fiscal deficits [that] will drive the government’s debt and interest burden higher” due to deficits driven by increasing entitlement spending and plateauing tax revenues.

Moody’s, however, was late to the party. S&P Global ratings downgraded the US government’s credit rating in 2011, and Fitch Ratings issued a downgrade in 2023. Both cited similar concerns over growing budget deficits and doubts about the ability to pay them.

Unfortunately, when the US cannot keep its finances in order, American families will feel the squeeze through higher borrowing costs, higher taxes, a more aggressive tax collection regime, and a weaker dollar.

Government Debt Hurts Private Borrowers

At a basic level, the yield curve (a visual representation of how much it costs the Treasury to borrow money for different periods of time) serves as a benchmark for market interest rates, including corporate bonds and mortgage rates. Much like when a credit score downgrade results in higher personal borrowing costs, the US credit downgrade will mean higher borrowing costs to offset the increased risk of lending. These higher borrowing costs will be reflected on the yield curve and prompt private creditors to raise interest rates to firms and individuals as well.

Nobel Prize-winning economist James Buchanan noted that when private investors purchase government debt, they forgo the next-highest valued use of their capital. As Buchanan put it, spending that is funded by debt is “in effect chopping up the apple trees for firewood, thereby reducing the yield of the orchard forever.” 

Government borrowing diverts capital from more productive private sector uses (i.e. research, innovation, and/or business expansion) that could help improve the standard of living for everyday Americans.

Furthermore, the government’s growing demand for loanable funds puts upward pressure on interest rates (the price of borrowing). Lenders will demand higher returns, and individual borrowers will need to offer more competitive terms to access credit. This means higher interest rates on mortgages, credit cards, and personal loans.

Government Debt Hurts Taxpayers

As the US government faces higher borrowing costs, net interest payments (the interest the government must pay on its debt, offset by interest income) will dramatically increase. The image below comes from the AIER Explainer “Financing the Federal Government: How Government Takes & Spends Your Money”; it depicts a breakdown of how the federal government spent each dollar in FY 2024, which ended on October 1, 2024, long before the Moody’s downgrade.

Note that 13.5 cents of every dollar went to net interest payments. As borrowing costs increase, more spending is dedicated to net interest payments, which then crowds out funding for other federal programs. My former colleague Brooklyn Roberts and I discussed this after the Fitch Rating downgrade in August 2023, noting that cuts to transfer payments (particularly Medicaid) to state and local governments would be seen by federal policymakers as more politically viable than addressing bloated federal programs.

So far, the federal government has spent $578.7 billion on net interest payments out of the $4.16 trillion spent this fiscal year. In other words, 14 cents of every dollar this fiscal year is going to net interest payments, which is likely to increase by the end of FY 2025.

Buchanan also noted that debt-financed spending shifts tax burdens from present to future generations. While bond investors trust that their loan will be paid back with interest, future generations will bear the cost of the government spending undertaken today. 

A Declining Dollar Hurts Everyone

The credit downgrade, along with uncertainty in monetary policy, has hurt the dollar. The US Dollar Index (DXY) fell following the credit downgrade announcement and continues to decline. Analysts also note that the decline in demand for Treasury notes also led to a decline in demand for dollars.

As the demand for the dollar decreases, a sell-off of dollar assets could increase the supply of dollars in the foreign exchange market, leading to further depreciation in the dollar’s value. This depreciation is likely to lead to reduced living standards, weaker economic growth, and higher inflation.

Ultimately, policymakers in Washington are only hurting themselves. As my colleague Pete Earle aptly put it:

“The greatest threat to the soundness and utility of the US dollar, and in turn to the financial health and prosperity of American civil and commercial life, comes not from shadowy figures in faraway lands, but from unremarkable apparatchiks carrying out the edicts of US officialdom.”

As the US loses its status as the world’s reserve currency, politicians and bureaucrats in Washington have no one to blame but themselves.

Can Washington Course Correct?

Earle notes that there is still time to correct course through “economically coherent, consistently applied policies.” Ultimately, this must come from serious spending reform and (particularly) spending reduction.

My colleague Ryan Yonk and I lay out several options for spending reform in the AIER Explainer “Understanding Public Debt.” While the Department of Government Efficiency (DOGE) seemed to get off to a promising start in January, it failed to tackle the primary driver of spending growth: entitlements. Worse, members of Congress have thus far failed to make the few cuts DOGE recommended permanent. Now, DOGE Director Elon Musk is stepping down.

After the news of Musk’s DOGE exit broke, a headline from The Babylon Bee quipped “Elon Musk Leaves Job Of Making Government More Efficient For Much Easier Job Of Sending Humans To Mars.” 

Reversing course is possible, but it will demand political courage and coordination to overcome the incentives millions in the federal government have to maintain “business as usual.” Let’s hope such a transformation is still possible.

Cancel culture, it seems, is alive and well on the right.

A Bruce Springsteen cover band called No Surrender was slated to play at Riv’s Toms River Hub on May 30, but the bar owner got cold feet after Springsteen himself criticized Trump during the Boss’ European tour. As the owner told No Surrender, it was “too risky at the moment” for the band to play their planned gig. Why? Because his conservative audience would have a problem with anything to do with Springsteen. As the owner wrote: “Whenever the national anthem plays, my bar stands and is in total silence, that’s our clientele. Toms River is red and won’t stand for his [Springsteen’s] bull—.” 

And so the bar owner canceled the planned gig, not because of anything that No Surrender themselves said (which would have been bad enough), but because someone the band was covering said something that his red audience wouldn’t like.

Across the aisle, Sarah Silverman shows that cancel culture is still alive and well on the left as well. Speaking to fellow comedians, Silverman mocked the idea that “we can’t even say what we want anymore” and retorted that the only difference now is that comedians face “consequences” for saying the wrong things. This reframing of “cancel culture” as merely “consequence culture” has been pervasive on the left for years.

The twenty-first century has seen repeated swings, as first one major party and then the other claimed to support the idea of free speech. In 2003, it was the left who valorized speaking your mind, as the right tried to cancel the Dixie Chicks over their criticism of then-president George W. Bush. During the Great Awokening (roughly, 2014-2024), it was the left who tried to get people fired for speech, while polls and studies showed that the right was more supportive of free speech than the left was. Today, players in both major parties are willing to support cancel culture.

I think the deeper lesson is that neither side is any more philosophically opposed to cancel culture than the other side. As Lord Acton famously wrote, “Power tends to corrupt.” Let me explain.

In 2003, in the wake of the 9/11 terrorist attacks and with the country newly at war in Iraq, the right was ascendant; and so they were the ones who tried to get their political opponents canceled, while the embattled left proclaimed the virtues of free speech. During the Great Awokening (and, especially, before Elon Musk bought X), the left had cultural and institutional power. And so it was right-wing professors who were fired or investigated, and people who expressed right-wing views were mobbed on social media. Now, with cultural power returning to the right, the right has rediscovered the virtues of cancel culture. 

At the same time, comedy is still a very left-wing environment, which might give us a hint as to why Silverman is defending cancel culture in that environment. It’s possible that she’s simply a principled opponent of free speech, but it’s also possible that she would be singing a different tune if her audience was full of conservatives who were trying to cancel her for disrespecting President Trump.

When “our team” is the one that’s being stepped on, we all wish the boot didn’t exist. But as soon as our team gets power, we start to think of all the beautiful things we could do with the boot. That’s why whichever group is out of power supports free speech, only to turn around and support cancel culture as soon as they’re back in power.

So how can we actually beat cancel culture? As the examples above show, I don’t think it’s as simple as trying to vote for the ‘right’ political party. Instead, I think we need to cultivate real cultural change.

For one thing, we need to cultivate a culture of courage. When a social media mob comes for us, we should stand our ground instead of issuing the kinds of groveling apologies that only seem to encourage the mob. When our livelihood is threatened for something we said (or, even sillier in the case of No Surrender, something that someone whom others associate with us said), we should make a fuss. We should contact news outlets, as we would if we were the victims of any other kind of discrimination, and rally supporters to our cause. That’s what worked for No Surrender: once the story went viral, the owner of Riv’s Toms River Hub backed off and said that they could still play on May 30.

Cancel culture thrives on fear and groupthink, and when we act with courage, we throw a wrench into the whole censorious machine.

I also think we need to cultivate a culture of grace. Too many of us want to wear the boot because we remember what it was like to be stepped on ourselves. We feel hurt by our political opponents, and so when we get power, we want to hurt them back. Turnaround, as the saying goes, is fair play.

But while this kind of retribution might feel justified, when we all pursue vengeance, we do real harm—to ourselves and our country. When both parties use their power to support cancel culture, they chip away at the robust culture of free speech and expression that is so quintessentially American. And, because culture is upstream of politics, this chipping away might lead to a similar chipping away at the legal protections of the First Amendment. If we value our own right to speak up, then we need to stop trying to punish our political opponents for exercising that same right.

Instead of seeking retribution, we should cultivate a culture of grace for each other. Jesus of Nazareth told his disciples to “love your enemies and pray for those who persecute you.” Buddhism encourages its followers to “Hurt not others in ways that you yourself would find hurtful.” Hinduism has a similar saying: “One should never do that to another which one regards as injurious to one’s own self.” 

Following the wisdom of these spiritual traditions is not easy. It is much easier, when we have been hurt, to try to hurt the other person in turn than it is to turn the other cheek. But while turning the other cheek may not be as emotionally satisfying in the short-term, in the long-term it is the best way to rebuild a robust culture of free speech and expression. 

We all need to rediscover the virtue of letting our political opponents speak before it is too late for any of us to speak.