Arnold Kling  

Ruining my Day

Singaporean Sense... Today's Tylerisms...

John Tierney writes,

it is the duty of the press to scour the known universe looking for ways to ruin your day.

Indeed. David Broder writes,

Each year, as the money comes in, the trust fund will distribute it to the states using a formula that measures the seriousness of their low-income-housing needs. At least 90 percent of the funds must be used to construct or rehab rental units. All of the benefits are ticketed for very low- or extremely low-income households.

What he is referring to is a provision of the new housing bill that takes about $500 million a year from Freddie Mac and Fannie Mae to fund an "affordable-housing" program. Broder notes that since the FM's are undercapitalized right now, the program will not take effect until 2010 (as if they will have enough capital by then).

Broder helped ruin my day in a number of ways. First, he reminded me about this program, which I had only seen in early versions of the housing bill, and which I had been assuming was dropped in order to avoid embarrassment. Second, he praised the program effusively, because Congress is doing something about "affordable housing."

Affordable housing? We have millions of unoccupied homes in this country. Housing is becoming more affordable every day. There is no shortage of houses. If people can't afford housing, what they need is money. They don't need a state-run rehab program that adds to the inventory of houses.

Rooting for Congress to do something about affordable housing is like rooting for a thief to find an empty car with the door open and the keys inside. "Affordable housing," like "family farmer," is nothing but a stalking horse for pork.

Also on the Washington Post op-ed page, the governors of New York and Maryland pat themselves on the back.

In New York and Maryland, we have made targeted investments in clean, renewable energy. We have stepped up where the federal government has fallen down to make critical investments in our infrastructure, including mass transit and roads. We are also supporting foreclosure prevention programs and investing in public education so our students continue to improve and excel, and increasing access to health care for those who remain uninsured.

They suggest that the Federal government follow their example by doing more to "stimulate" the economy.

It is estimated that for every $1 billion invested in transportation projects, 42,000 jobs are created, and that every dollar spent on infrastructure projects generates about $5.70 in economic activity.

In that case, since the Federal government collects 20 percent of all economic activity in taxes, the Federal government deficit declines by $.14 for every $1 it spends on infrastructure projects. If we spend about $3.5 trillion on infrastructure, we can turn the $500 billion deficit into a surplus!

Unless the source for the governors' estimates (they do not give a citation) miscalculated. It will be interesting to see how the governors' own budgets perform, given their economic judgment.

Finally, we have Daniel Henninger.

Recently the subject came up of Al Gore's assertion that the U.S. could get its energy solely from renewables in 10 years. Sen. McCain said: "If the vice president says it's doable, I believe it's doable."

Have a nice day!

Comments and Sharing

COMMENTS (6 to date)
Jonathan W writes:

There is no shortage of housing, that is true. In politics, regional demographics and economics rarely see the light of reality.

Will the social planners take into account the cost of living in an urban environment? Probably not. If they were to give it some thought then they could begin to cordon off sections of Central Park and build rental units so that persons would have affordable access to downtown Manhatten. Rent control failure aside, the price of living in Manhatten is much more expensive than the cost of living in say, Muncie, Indiana.

Like you say, there's plenty of housing, often very affordable but not in the most desirable areas.

I think the government should consider regulating desirability. That petty nuance of wanting a space of your own in a place where you can afford
is all so.... individualistic.... (hence: thoughtless, greedy, mean-spirited, etc,..)

liberty writes:

Sen. McCain said: "If the vice president says it's doable, I believe it's doable."

Clearly, he meant Cheney.

randy writes:

"housing is becoming more affordable every day"


i highly doubt that rents are going lower. perhaps they are not keeping up with real inflation (not that inflation-ex-inflation boloney), but neither are wages.

Sarah writes:

The one flaw in your argument -- the political complications of telling all those suburban families that the foreclosed houses next door is going to poor urban people.

Also, I'm not sure how well you know your foreclosure law, but there's no real mechanism now for turning REOs (bank-owned homes) into affordable housing run and regulated by the state. Unless, of course, the states uses money to buy those homes at auction at then fix them up. That money isn't to be found now in most state budgets -- maybe this money could be put to that end?

"$3.5 trillion on infrastructure, we can turn the $500 billion deficit into a surplus!"

It seems to me there may be ways we could do that intelligently, and actually get those results.

For example, suppose we spent $3.5 trillion on:
(1) A west coast and east coast super high speed train network
(2) ubiquitous high speed, broadband wireless network in the 100 largest metropolitan areas in the united states, including all the subway systems.
(3) Complete upload of the Library of Congress, and every state and federal document and historical archive to the internet, as well as every state university.
(4) Fund a large incentive pay system to make the behavior of dysfunctional citizens more rational or beneficial to the public, like Bloomberg experimented with.

This may not add up to $3.5 trillion (It's like the movie Brewter's Millions, hard to do) but I do think more spending on infrastructure can correct areas where markets seem to have a more difficult time optimizing our wealth.

If I'm wrong about this, I'd be interested to hear why.

Jim Glass writes:
"Affordable housing," like "family farmer," is nothing but a stalking horse for pork.

A fun contest: How many two-word synonyms can readers come up with for "pork"?

Comments for this entry have been closed
Return to top