When I read Bill Gross’ endorsement of a proposal for the government to blow up a million homes as a solution to the collapse of the housing bubble, I thought, “it’s a good thing that no one is stupid enough to actually do that”. And I was right. As Doug French blogged last month, there is only enough federal funding to destroy 3,000 homes in Detroit.
Source link: http://archive.mises.org/12901/good-sense-on-the-housing-collapse/
Good Sense Prevails on the Housing Collapse
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Come back, Howard Roark. All is forgiven! (And bring your dynamite).
Yes, if we just broke all the windows in Dallas, there would be a huge economic boom in Dallas from everyone having to buy new windows. Well, at least, that would be true among window makers and installers.
Do you think people have ever heard of the Broken Windows Fallacy?
I don’t think that Detroit’s plans (no matter what one thinks of them) to consolidate the city have much of anything to do with propping up a failing housing market.
They are an attempt, albeit desperate, to continue to provide city services to a geographical area that is now the size of many counties. It’s actually one of the more sensible ideas I’ve heard from Detroit in my lifetime.
Bastiat doesn’t apply here. The windows are already broken and no one is claiming that fixing them will create any economic growth. In fact, the hope is that fewer of them will be broken in future.
Well said. Detroiter here. This is the second blog I’ve seen here referencing the Broken Window fallacy. Not really the issue. We’re looking at a city that’s lost more than half it’s population and has thousands of vacant homes and empty lots. It simply cannot afford to keep up city services to sparsely populated areas.
The real issue here is the inability to institute free market reforms. Rather than tearing down the socialist structure that Detroit has been wallowing under for over 50 years and REALLY encouraging private investment so that private individuals decide the best use for the land all Mayor Bing can do is tear down some vacant buildings.
We are so far off track it isn’t even funny.
Very sad what this once great city has become.
Stop permitting the inherent fraud called government to pretend that it gets to provide any services.
Windsor boy here. Detroit was indeed great once. Then its (and Michigan’s) government became monstrous and unleashed decades of proto-Obama destruction.
Irrelevant. People will migrate on their own to more habitable parts of the city, people will buy empty lots by the neighborhood and level the houses to do more productive things with the land, and government “services” in any case are part of the original fraud.
In my part of the country there’ve been a number of half-finished luxury subdivisions left standing with most of their homes in various stages of completion. With the market for them currently gone, the costs of maintenance high and the local teenagers waiting each night to burn them down, there are issues of expense as well as liability.
More than one developer has made the rational business decision to tear down his unsold units.
This has created a certain amount of work for the demolition industry.
Since so many investment companies and hedge funds are overvalued and are existing on what amounts to government life support, I think it would be a good idea to start blowing up these organizations by liquidating whatever assets they have and returning as much money as possible to their investors, while their management could seek new jobs elsewhere. This would enhance the value of the remaining companies and guarantee a healthy, vibrant investment sector for the foreseeable future.
Any volunteers, Bill Gross?
It’s not just Detroit. Dayton has destoyed over 1,000 homes and politicians are shocked they keep finding more to destroy. They think if they wipe out every home in Dayton, it will be a great place to live.
http://www.daytondailynews.com/news/dayton-news/dayton-cant-knock-down-new-nuisance-homes-fast-enough-756781.html?cxtype=rss_local-news
Mark – lol you are SO dead on. Can you believe it? Detroit, Dayton, the list goes on. Thanks for the article.
Dr. Dallas Humble
I don’t believe in Wholesale Destruction, but it seems like getting rid of some of the blight and turning it into parks and gardens instead of dangerous hulks of buildings is a good thing.
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