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Monday, September 17, 2007
Don’t let ‘affordable housing’ push trigger subsidies
The Atlanta Journal-Constitution
Holding the good liberals back when the opportunity arises to expand government and hide the costs — the opportunity being the fallout from the subprime lending foreclosures — is a bit like turning the lead cow in a stampede or quelling panic on Wall Street: More than likely, a trampling will precede sanity.
We are now said to have an “affordability crisis” that was masked by subprime lending but is now revealed by the wave of foreclosures that resulted from irresponsible lending and borrowing.
That problem was best described by Lewis Ranieri, former chairman of Salomon Brothers. Talking about the industry, Ranieri explained: “We’re not really sure what the guy’s income is and … we not sure what the house is worth. So you can understand why some of us become a little nervous.” Lots are now nervous. More than half of bankers responding to a Federal Reserve survey report that they’ve tightened subprime lending standards. No question some buyers and sellers over-reached, taking far greater risk than was responsible.
But as with commutes, clean air, sprawl and economic justice — the buzz-words employed to drive public policies preferred by liberals, those who profit from high-density development or more government borrowing — campaigns such as “affordable housing” invite government intervention in ways that may not be warranted.
“Affordable” housing is a mom-and-apple-pie appeal to take on two mortgages — yours and the mortgage of a stranger selected by government, or one of its designated nonprofits, for a housing windfall. That’s one way housing is made “affordable.” Government borrows money — a great bonanza, incidentally, to bond lawyers and others who profit from the transaction — and lend it to individuals who are lucky or have connections.
The taxpayer who is providing the subsidy — who may, incidentally, be a renter saving to buy a home — is the only “loser” in the lot. Everybody else is making money taken to transfer wealth, in the form of a housing subsidy, to a happenstance or connected borrower who may or may not be most deserving of the windfall. The taxpayer never recovers the wealth given, no matter how much the property appreciates.
The second way housing is made “affordable” is to hide the cost in a development and spread the financial burden to other home buyers.
When governments give higher-density zoning or permits in return for the developer setting aside some units to be sold at below-market rates to satisfy politicians or advocacy groups, two undesirable trade-offs occur. One is that other buyers in the complex are paying too much so that some preferred buyers can get more house than they can afford. In that instance, other buyers pay the social costs politicians have imposed.
The second consequence of the trade-off may well be that roads and schools are overburdened by the unwarranted density, spreading the social cost still further.
Sharon Gay, an Atlanta lawyer, offered an op-ed opinion in Monday’s AJC, declaring that with recent developments in the housing market, “it is actually getting harder to find an affordable home in anything like a convenient location.”
The trend always has been that free-market buyers in crowded markets go to places where land and housing is cheaper. Affordable housing exists but now government’s additional imperative, we are told, is to offer it in “a convenient location.” Is “a convenient location” such a compelling public concern that money should be transferred from the accounts of renters and people paying their own mortgages to strangers chosen for a housing bonanza by bureaucrats or their designees? Decidedly not.
Some local government may choose to offer a direct housing subsidy to junior firemen, starting teachers, janitors or some other lower-wage public employees.
But it should be up-front, drawn from the general treasury. Then we’d know who the beneficiaries are, whether the public policy objective is being achieved, and what the costs are. Voters could decide at the ballot box whether they wanted to continue housing subsidies to certain employees and how much.
Now it’s hidden. Either let the free market work, so that people live in the houses they can afford where they exist. Or pay the subsidies openly and directly, and require them to live where government wants.
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A war for oil?
The Atlanta Journal-Constitution
In a new book scheduled for release this week, former Federal Reserve Chairman Alan Greenspan contends the Iraqi phase of the war on terrorism is “largely about oil.”
“Whatever their publicized angst over Saddam Hussein’s ‘weapons of mass destruction,’ American and British authorities were also concerned about violence in an area that harbors a resource indispensable for the functioning of the world economy,” Greenspan wrote in “The Age of Turbulence: Adventures in a New World.”
“I’m saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraq war is largely about oil,” said Greenspan, who retired in January 2006 after 18 years as chairman of the nation’s central bank.
Defense Secretary Robert Gates, appearing Sunday on ABC’s “This Week,” disputed Greenspan’s opinion. “I have a lot of respect for Mr. Greenspan.” But, he said, “I think that it’s really about stability in the Gulf. It’s about rogue regimes trying to develop weapons of mass destruction. It’s about aggressive dictators.”
Saddam Hussein “launched wars against several of his neighbors,” Gates said, and was “trying to develop weapons of mass destruction, certainly when we went in, in 1991.”
My oft-stated believe is, of course, that the war was launched for the reasons President Bush stated in response to the attack on this country. But that is a debate pundits and historians will have for decades to come. It won’t be resolved here today.
While the Iraqi phase of the war was not about oil, there’s no question that oil is, as Greenspan observed, a “resource indispensable for the functioning of the world economy.” Military action to prevent evil regimes from destroying or severely crippling industrial economies around the world would be a legitimate use of force. The U.S. , and other industrial nations as well, certainly have a vested interest in preserving stability in the region and in preventing rogue regimes from using oil as a weapon.
On another Iraqi front, Gates said he would urge Bush to veto legislation proposed by U.S. Sen. James Webb (D-Va.) to prevent the military from deploying troops back to Iraq until they have spent as much time at home as they spent on their last tour in Iraq. It’s a veto Bush should issue if the proposal passes. It’s clearly intended as a way for Congress to micromanage the war and to tie the administration’s hands in prosecuting it.
On another Greenspan front, the former Fed chairman is right in observing that the Republican Party is losing its small-government principles. When Republicans controlled Congress they “swapped principle for power” and “ended up with neither,” he wrote. “They deserved to lose.” No argument here. That same temptation is before Republicans who have come to power in Georgia. They, too, will deserve to lose if they follow in the footsteps of those on the national level who “swapped principle for power.”
