Categories
national politics & policies too much government

Fiddling in the Flames?

The president and congressional leaders came to some sort of an agreement last night. It sounded a tad vague to me. Apparently, politicians still fear taking pride in identifying actual cuts.

Harvard economist Jeffrey Miron, writing last week, argues that the deals then on the table amounted to “fiddling while Rome burned.”

The only thing surprising about the above sentence, to savvy readers, might be the suggestion that “Harvard economist” is not a contradiction in terms. But hey: Judge for yourself.

“The problem with the Democratic position is that it regards redistribution, rather than economic productivity, as the prime goal of government policy,” Miron reasonably asserts. The problem with the Republicans? A “refusal to distinguish between the tax revenue that comes from higher rates and that which comes from fixing tax loopholes that inappropriately privilege certain consumption or production.”

Higher tax rates won’t work, because “the available revenue from the wealthy is far too small. And higher taxes discourage economic growth, making deficits worse.”

But Obama’s idea of closing some loopholes is not a horrible idea, Miron argues. These so-​called loopholes are bad policy to begin with, integral, as they are, to bipartisan folly, favoring some folk at the expense of the rest. Picking winners — what some tart up as “industrial policy,” but most of us identify as “buying votes.”

Miron says that Medicare, though, is the biggest ongoing fiscal destabilizer. Cuts must be made there.

Those will likely be the hardest to secure.

This is Common SEnse. I’m Paul Jacob.

Categories
free trade & free markets too much government

The Housing Boom’s Inflated “Wisdom”

Watch how the received wisdom gets worded: “A sustained rebound in home prices is considered critical to getting the economy back on track.”

That’s from a Washington Post business report on falling home prices. Its passive voice construction covers up who holds the opinion. 

The sentence could have been written differently: “Many politicians, policy wonks, and industry shills believe that only a sustained rebound in housing prices can put the economy get back on track.” But that would have helped the reader see the special interests behind the statement. 

We need housing prices high and rising again … to fulfill the plans of the very people who set up the house of cards that just came down.

Harvard economist Jeffrey Miron’s reaction is worth quoting in full: “No, no, a thousand times no!

Housing prices are falling because they soared to ridiculous levels during the bubble. Any policy that attempts to keep prices high — or, equivalently, that attempts to prevent foreclosures or juice housing construction — is fighting a crucial market adjustment to past distortions.

The housing boom mania — fed by multiple government subsidies and massive financial intervention coupled with cheap money from the Federal Reserve — served some people at the expense of the public at large. Progress doesn’t depend on it. Real progress depends on rejecting such nonsense.

By the way, other things equal, inexpensive housing is good for us. The whole “rising prices” mania defeats the alleged rationale for mortgage subsidies in the first place.

This is Common Sense. I’m Paul Jacob.