Arnold Kling  

Imagine a Referendum on the Housing Bill

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Megan McArdle writes,


Instead of moving to put FM/FM into a more easily understood model--either nationalizing them, or privatising--they're making the GSEs even weirder, and of course, piling on more debt...keeping pet companies on a leash so that you can use them as a sort of housing market slush fund, while pretending that the liabilities you thereby create don't really affect the government, is the kind of thing one expects to see in a banana republic, not a free and prosperous nation.

The Center for American Progress is ecstatic over the $3.9 billion in community development block grants.

Local governments could use the grants to purchase, renovate, and resell foreclosed homes, and then use the proceeds from these sales to repeat the process.

I get it. If I use my own money to purchases, renovates, and resell a home, that's greedy speculation. But if you use my money to do it, that's community development.
The Washington Post reports,

In addition to mortgage bankers, interest groups as varied as home builders, real estate agents and civil rights groups back the legislation.

The "civil rights groups" are local activists who expect to rake in the big bucks from "community development."

Basically, the housing bill rewards everyone who participated in the excesses of the housing market and punishes the rest of us.

Lately, I've been reading a lot about Switzerland. There, just about any legislation is subject to veto by a popular referendum. This is an instance in which I wish we had a referendum in this country. I doubt that this housing bill would win more than 20 percent of the vote.


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CATEGORIES: Public Choice Theory



COMMENTS (8 to date)
ryan writes:

Shouldn't political competition make it hard for very well-publicized, very unpopular bills to be passed? To paraphrase Churchill, in a democracy, the median voter gets the government he deserves, and gets it good and hard.

Arnold Kling writes:

Ryan,
Explain to me how political competition works in this case.

Congress has an approval rating of less than 20 percent. That does not seem to affect their behavior.

aaron writes:

Maybe you should run. To see if competition is possible.

GU writes:

Arnold,

I have long been interested in Switzerland. Do you have any recommendations re: Switzerland reading? Any good books or articles?

ryan writes:

Dr. Kling,

I would think political competition would work by lots of members losing relection in 3 months. If they want to keep their jobs, wouldn't we think each person would try desperately to come up with something wildly popular and make a big show of voting for it?

But what's the alternative? Either (a) Congress feels they're going to be run out of town, so they take this opportunity to vote for the nastiest things they can come up with in a sort of "pox on all your houses" [pardon the pun] move, or (b) that being unpopular and doing unpopular things doesn't affect their chances of reelection, or that they don't want reelection in the first place? I might be wildly off-base, but it seems likely to me that Congress thinks these policies will go over well, regardless of how misguided they are.

Sorry for the long reply

Kurbla writes:

I think majority of European states have referendum, and you need something like 1-5% people sign a petition to initiate it. Its great thing, among other reasons, because it silences the extremists who repeat that politicians do not fulfill their promises from campaign, and that revolution is the only way to democracy. Now one can always respond - did you tried to organizing referendum?

Glen writes:

Just because I've got a bad opinion of congress does not mean I've got a bad opinion of MY congress persons. People's bad opinion of congress comes from the results of the legislation, legislation that at proposal time they supported.

Lord writes:

My experience with the initiative is it is all too easy to qualify anything for the ballot and creates as much mischief as it solves.

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