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My aunt remarked the other day that a house is something that people do not have an innate right to. It sounds cold, but I have to agree with her. I do think that we as a people should help those who are truly down on their luck, help them have shelter. As mentioned before, I think the private sector (habitat for humanity, community homebuilding) can do this more efficiently. When the the government does it, multiple bureaucratic organizations take their cut of the revenue, driving up the cost to taxpayers. Unfortunately, Obama wants to lessen the charitable tax credit, which will have a negative impact on giving to private organizations that help people.
One of the issues at the heart of the affordable housing debate is the issue of private property. With the government continually backing more mortgages than ever before, the line between public and private property is getting blurrier all the time. Star Parker makes an insightful comment about where the blurring of this line could lead, in her column in the Deseret News today. In light of the outrage of the AIG bonuses paid to executives, and the government threatening regulation of executive pay (regulations which were not part of the stimulus money given to AIG), Parker remarks: "Or maybe we should check if families whose mortgages we bail out are going on vacation or out to dinner."
Think about it!
Companies like AIG regularly pay out bonuses; it's how their business operates. Pay for performance is a common policy in the private sector. Too bad our government officials are not paid based on performance.
If the government doesn't like how AIG handled their bail-out funds, then they should have attached more strings to the money.
HONESTLY...
we should not have bailed out these companies with taxpayer dollars in the first place. Fannie Mae and Freddie Mac should be dismantled. Let's get the government out of the mortgage industry; look where their meddling has gotten us!
Star Parker cites a "new study...the International Property Rights Index." It correlates national prosperity with security of private property. The nations that do a better job of securing private property are more prosperous. Enough said.
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I completely agree, in fact 90% of Amreicans did not want the bailout, and yet it happened anyway. There is another investment firm whose Corporate executives refused bonuses saying they did not feel it was fair at a time like that. I think you compare a Somalia with the pirating going on in the Indian ocean, there is no protection of private property and therefore, no security, and therefore, no prosperity. Good post Paul.
ReplyDeleteI had to laugh when I read your line about gov officials paid according to their performance, that one is a real winner. Great post!
ReplyDeleteI will digress on one point, I don't have a problem with Fannie and Freddie in principle or theory. In fact the existence of a secondary market is what makes our housing market work and drives down costs. The problem with Fannie and Freddie is the lack of oversight, their entrance into the subprime loan market, internal corruption, and payouts to senators to keep them from being reformed. The existence of a secondary market is a win for consumers, but not when it is unregulated, "losing" billions of dollars on the books, and the largest payer of lobbyist funds in the country. Besides, most of the corrupt bureaucrats that left Fannie and Freddie are now in Obama's presidency, and that shouldn't come as a surprise to anyone, since Fannie Mae made Obama what he is today. From his start as a prosecutor on behalf of Fannie against banks who refused to comply with the new CRA legislation, his election backed by their money, his defense of Fannie and Freddie and key position in actively blocking legislative attempts to reform them, campaign contributions to his presidency, and the appointment of Ex Fannie to his selection committe and Chief of Staff, let there be no doubt, he is every bit in their pocket as the rest of the democrats and most of the republicans. That is the problem with Fannie and Freddy, their involvement in politics blocking appropriate oversight. Off soapbox. :P
Sorry, another comment. While pondering Star's article I decided I dont think her logic quite follows. She talks about a loss of property rights, yet I don't see that happening. With AIG the US Government essentially purchased the company, and for all intents and purposes the same occurred with the US Automakers. They did not have property seized, they had property sold, by themselves. Is is any wonder then that Obama comes out and says they have to be more energy efficient? Government liquidation of banks is there to ensure that assets are not intentionally depleted when banks become insolvent, and for good reason. The government insures up to $100K on private accounts, so it is in their best interests, and the consumers, to oversee the the liquidation personally. The Fed avoid losses that would lead to higher claims, consumers get their money and avoid paying taxes to cover the claims they would have had on their own accounts.
ReplyDeleteWhat we should really be discussing is the ethics of governments purchasing companies, rather than pretending they marched in and took them over on a whim.
Obama's comments regarding Wall Street (and I am no Obama fan) are not far off the mark. Wall Streets entrance into the subprime housing market fueled a lending frenzy that never should have happened. The government encouraged it by letting the Fed artificially keep interest rates low and by failing to regulate the industry. Both are to blame, and in both cases the due to greed.
There is no human alive capable of overseeing this pile of garbage, filth, "____"! I think it would take years of service...that's right...non-profit service from good countrymen interested in saving this nation from complete collapse.
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