Saturday, April 04, 2009
Cheap Political Theater
Death threats to executives at AIG, because of the bonuses they received, are one more sign of the utter degeneration of politics in our time.
Congressman Barney Frank has threatened to summon these executives before his committee and force them to reveal their home addresses-- which would of course put their wives and children at the mercy of whatever kooks might want to literally take a shot at them.
Whatever the political or economic issues involved, this is not the way such issues should be resolved in America. We are not yet a banana republic, though that is the direction in which some of our politicians are taking us-- especially those politicians who make a lot of noise about "compassion" and "social justice."
What makes this all the more painfully ironic is that it is precisely those members of Congress who have had the most to do with creating the risks that led to the current economic crisis who are making the most noise against others, and summoning people before their committee to be browbeaten and humiliated on nationwide television. ...
False Solutions and Real Problems
...What was the problem that didn't exist? It was a national problem of unaffordable housing. The political crusade for affordable housing got into high gear in the 1990s and led to all kinds of changes in mortgage lending practices, which in turn led to a housing boom and bust that has left us in the mess we are now trying to dig out of. ...
...But, vast areas of the country in between-- "flyover country" to the east coast and west coast elites-- had housing prices that took no larger share of the average American's income than in the decade before the affordable housing crusade got under way. ...
...Almost invariably, these severe local problems had local causes-- usually severe local restrictions on building homes. These restrictions had a variety of politically attractive names, ranging from "open space" laws and "smart growth" policies to "environmental protection" and "farmland preservation."
Like most wonderful-sounding political slogans, none of these lofty goals was discussed in terms of that one four-letter word that people do not use in polite political society-- "cost."
No one asked how many hundreds of thousands of dollars would be added to the cost of an average home by "open space" laws, for example. Yet empirical studies have shown that land-use restrictions added at least a hundred thousand dollars to the average home price in dozens of places around the country.
In some places, such as coastal California, these restrictions added several hundred thousand dollars to the price of the average home.
In other words, where the problem was real, local politicians were the cause. National politicians then tried to depict this as a national problem that they would solve.
How would they solve it? By pressuring banks and other lenders to lower their requirements for making mortgage loans, so that more people could buy houses. The Department of Housing and Urban Development gave the government-sponsored enterprise Fannie Mae quotas for how many mortgages it should buy that were made out for people for low to moderate incomes. ...