Random commentary and senseless acts of blogging.
The first Republican president once said, "While the people retain their virtue and their vigilance, no administration by any extreme of wickedness or folly can seriously injure the government in the short space of four years." If Mr. Lincoln could see what's happened in these last three-and-a-half years, he might hedge a little on that statement.
Prisoners of Azkaban
Tuesday, March 11, 2008
Jeff Jacoby has written, wonder of wonders, a silly column arguing that the cause of the mortgage crisis must be - since markets cannot fail - government regulation. For Jacoby, the sub-prime disaster "is a good reminder of that most powerful of unwritten decrees, the Law of Unintended Consequences - and of the all-too-frequent tendency of solutions imposed by the state to exacerbate the harms they were meant to solve." Specifically, the real problem is actually an obscure law passed under the Carter administration. Andrew Sullivan has praised this argument and cited approvingly a reader e-mail suggesting that the problem is in fact Fannie Mae and the mortgage interest deduction, two policies that date back to the New Deal!
If these 75 year old policies were really the cause of the mortgage disaster, wouldn't it have happened a little earlier? If you're looking for causes of the record foreclosures in government action, wouldn't it be a little more appropriate to look at more recent actions, such as the Bankruptcy Act of 2005, which strongly encouraged unsound and predatory lending practices? Or quite a few regulatory changes of the past decade which have increased fees and interest rates and weakened consumer rights? But anything which tilts markets towards corporate interests and away from consumers is regarded as 'deregulation' rather than 'government action', and therefore can never, ever have unintended consequences.
Stopped clock addendum: Jacoby is actually right about ethanol, an idea whose time, if it ever did come, has long ago gone. It's a bad solution to several problems and a good solution only to the problem of finding more markets for corn, as if huge existing markets for human food and cattle feed arent enough.