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Source link: http://archive.mises.org/14402/the-housing-market-all-politics-is-local-and-thats-a-problem/

The Housing Market: All Politics is Local, and That’s A Problem

October 28, 2010 by

Here’s a summary of the forum on the housing market from yesterday. It’s also the subject of my next Forbes piece. Here are a couple of quick reactions:

1. I asked Senator Corker to “state and explain the specific conditions under which government intervention in the housing market is appropriate” and then “in what ways are these conditions met in the US?” His response would have earned maybe 3 out of 15 points on the exam I’m giving this coming Wednesday. That’s probably to be expected: it was a politically astute response to a pretty straightforward question. The rhetorical lesson is that if we can’t define and be precise about what we’re discussing, we’re probably not going to make much progress. There are a lot of areas in the social sciences where we’re still looking for precision. At the introductory level, externalities and marginal analysis are not among them.

2. The forum focused on the costs and benefits of policy changes to very easy-to-identify interest groups (Memphians and participants in the real estate market). It’s good (local) politics, but it’s bad economics. We can’t simply take for granted that Memphis needs to have a strong housing market. It’s a big country, it’s a big world, and we need to recognize that there are a lot of trade-offs. Economics in One Lesson (particularly chapter 14, “Saving the X Industry”) was written for such a time as this. The link is to a PDF of an old version. Here are interviews on the book from 2008. Here’s the most recent edition. Here’s Jeffrey Tucker’s A/V archive on Mises.org; in at least one of these, he explains how IP has prevented the Institute from posting a $0 version of Economics in One Lesson. I write this as someone who probably owes more on my house than it’s worth, so I would be a direct (and substantial) financial beneficiary of the policy stance I’m criticizing.

Update, 9:34 AM: In looking over my notes, I saw that one of the panelists said “fighting over who lit the fire doesn’t make the fire go out.” True. However, when people are effectively asking for another book of matches, it’s a pretty good idea to check their track record.

Update, 10/29: here’s my new Forbes piece.

{ 23 comments }

Ohhh Henry October 28, 2010 at 9:56 am

In addition to the links posted above it may also be useful to learn why a politician would practice “bad economics”. See Democracy: The God that Failed and Crisis and Leviathan. Since their entire texts aren’t online I will summarize IIRC their main points: (1) politicians and bureaucrats don’t know what policies are best in the long term for the entire population because such knowledge is impossible to acquire; (2) in any case they don’t care because (a) politicians have only a relatively short timeframe in which to gain and exercise their power and have no (assured) family dynasty which would suffer the consequences of their bad policies, and (b) bureaucrats are safe behind union job protection and indexed salaries and pensions, and also have no way of passing on their power to heirs; (3) these people (politicians, bureaucrats) are actually motivated to make things worse for the general population, because the more strife and poverty in society, the easier for them to seize additional power and money.

There is actually a third, powerful class lurking behind politicians and bureaucrats, namely bankers and other plutocrats. These people also benefit from strife and chaos (for example bailout money put more else directly into their pockets, huge arms sales paid for with borrowed money in times of war, etc.) but unlike the other classes they do have family dynasties to preserve. Despite having dynastic concerns, it is not clear if they have any real motivation to favor the peaceful, steady accumulation of wealth. If they can help sow the seeds of chaos then they can obviously make billions of currency units by as many devious means as they can invent – riding and manipulating the roller coaster of booms and crashes. During long periods of poverty and war they can go to ground, as it were, by accumulating tangible assets like gold and farmland and sitting on them until the next opportunity arises to start another lucrative boom/bust cycle.

The difference between this class of dynastic bankers and plutocrats and a dynasty of monarchs is that the former group are international and will not be deposed or murdered after they have ruined a country, but can easily transfer their assets and their families out before the crash and hide them in any favorable jurisdiction.

I’m not an expert on this class but I think that it is worthy of serious study. Rothbard wrote a bit about the Morgans and Rockefellers in America, but it seems that for the most part any writing about them is branded as loony/paranoid or antisemitic. The CFR seems to be one of the few places where this class sticks its head a little way above the parapet, in order to interface with the other classes of parasites (politicians, bureaucrats). A diligent scholar could assemble a fair amount of material on these meetings and sifting through it, may be able to illuminate whether the CFR policy prescriptions tend to try to preserve peace and (general) wealth as they would claim, or if they instead represent the subtle game-planning of financial bubbles and eternal war.

Silas Barta October 28, 2010 at 9:58 am

in at least one of these, he explains how IP has prevented the Institute from posting a $0 version of Economics in One Lesson.

This childishness again? Did someone forget that without IP, LR wouldn’t have even written Economics in One Lesson? If he wanted to write it for free, unencumbered by copyright, he could have. But apparently, he demanded this as a condition of writing it … and now you’re blaming IP for how you can’t put up a free version of it>

Where do you people come up with this stuff?

Greg October 28, 2010 at 10:35 am

Who is LR? Henry Hazlitt wrote the book in question. And you are making some pretty large assumptions when you say that he demanded IP as a condition of writing the book, and that he wouldn’t have written the book without IP. In fact, there is so much belief tied up in unproven assumptions that it borders on faith.

Silas Barta October 28, 2010 at 11:00 am

If Hazlitt (thanks for the correction) didn’t require copyright, then why is the book under copyright? If he really didn’t want to be so encumbered — say, he really didn’t care about the money or anything — he could have just written it and authorized copying, like everyone else in the position you posit. If all he cared about were spreading the ideas, that’s exactly what he would have done.

However, some works require a little more than just love of one’s art to produce, and it looks like this was one of them. Blame Hazlitt, not copyright, even if that’s a “sad thought”.

It’s just bizarre to act like Ei1L came down like manna from heaven and the government just decided to arbitrarily restrict its publication.

Seattle October 28, 2010 at 8:03 pm

Most publishers won’t touch a book unless they own a restrictive copyright to it. LvMI is one of the very few, and back in Hazlitt’s day there probably were none. If Hazlitt wanted to publish the book without copyright (if the idea of such a thing being possible ever even occurred to him) it would have been economically impossible.

Silas Barta October 29, 2010 at 7:43 am

Most publishers won’t touch a book unless they own a restrictive copyright to it.

Did you ever stop to think about why that might be? Maybe not everyone is as willing to make the money – for – spread – of – Misesian – ideas that the Mises Institute is? So … we should stop people from instantiating Ei1L with THEIR OWN PROPERTY just so HH can pimp his new book? How does that work?

If Hazlitt wanted to publish the book without copyright (if the idea of such a thing being possible ever even occurred to him) it would have been economically impossible.

Good point, that definitely justifies delegation of aggression against piraters of Ei1L. You know, if you put enough blinders on.

“Dur, if I had to give away my food for free, it would be *economically impossible* to profitably make it. So I’ll charge people for it while claiming to be against all property rights.”

Greg October 29, 2010 at 10:51 am

Just because everyone does something, that doesn’t mean it’s the right thing to do. Government grants companies a way to make extra profits via IP, and so they’ll take that route to do so. If the government said that car manufacturers would be given $10k per car sold under the condition that they had an 8-track player, would you then say that since every car had a 8-track player in it, clearly that was what people wanted?

Stephen Adkins October 29, 2010 at 9:25 am

If Hazlitt (thanks for the correction) didn’t require copyright, *then why is the book under copyright?* If he really didn’t want to be so encumbered — say, he really didn’t care about the money or anything — he could have just written it and authorized copying, like everyone else in the position you posit. If all he cared about were spreading the ideas, that’s exactly what he would have done.

You can actually apply that same question to literally everything the Mises Institute publishes, since everything it publishes is under (creative commons) copyright. Hypocritical? No. If a work is not copyrighted there is nothing stopping somebody else from filing a much more restrictive copyright and keeping the author from printing and selling his work.

Of course, I have no idea what Hazlitt himself thought about IP. However, even if he were totally against it, it would not follow that he would simply write a book and not copyright it. It’s unfortunate, but a world in which private property rights are legally encroached upon through channels such as IP, everyone must play ball, if only to protect themselves.

Greg October 29, 2010 at 10:47 am

Keep in mind that I’m not in the publishing business, and don’t know the history of publishing. But isn’t it possible that he’d have a better chance at getting his ideas out there by going with a major publishing house of the day (which would require copyright), than to simply give his book to a few people and hope they copy it? Before the digital age, distributing material was much more difficult.

Richard October 28, 2010 at 11:02 am

No kidding. Publishing firms in 19th century Britain paid authors up front for the first draft of their works, printed thousands of first editions and sold them. There was not copyright law protecting them from other publishing houses making copies of the first editions and selling them, which happened all the time.

Silas Barta October 28, 2010 at 11:15 am

Yeah, good point Richard — when the work already exists in a first country because of copyright, the second country doesn’t later need copyright for it to exist! Obviously copyright is not necessary for any work to exist!

J. Murray October 28, 2010 at 12:26 pm

You’ll have to ask Chaucer’s literary agent if that’s true.

Silas Barta October 28, 2010 at 12:53 pm

Ah yes, the High Middle Ages, that golden age of literary works.

J. Murray October 28, 2010 at 1:05 pm

But, based on your twisted logic, Chaucer wouldn’t have pioneered much of our modern literary technique or moved the center of the literary world to England because there wasn’t any established IP law.

Silas Barta October 28, 2010 at 2:33 pm

No, doesn’t quite follow from my logic unless I’ve claimed that all intellectual works originate from a desire to profit on the exclusive right to instantiate that intellectual work.

I could just as well say, “Hey, maaaan, some dude on my street was giving out bread … that totally proves how property rights are totally stupid.”

Peter Surda October 29, 2010 at 6:04 am

Silas,

profit

Profit is a result you get when you subtract expenses from revenue, and only if it’s positive. If it’s negative, it’s not a profit but a loss. As you surely know, IP affects both revenues and expenditures, therefore we do not know apriori whether the result will be a profit or loss. But you must continue to fabricate lies in order to keep flame of your conviction alive, otherwise it would fall apart like a house of cards.

Richard October 28, 2010 at 2:25 pm

Silas,

You wrote that HH would not have wrtitten EiOL if there were no copyright. I only pointed out that plenty of authors wrote books in 19th century Britain where there was no copyright – and publishers paid them.

What exactly is your point?

Silas Barta October 28, 2010 at 2:34 pm

I don’t know — what the point of claiming that IP law keeps you from posting Ei1L online, when IP was the whole reason Ei1L exists?

And why is your comment responsive?

Peter Surda October 29, 2010 at 5:44 am

Your argument is akin to asking why anarchists are using fiat money, thereby making funding of military operations by inflation possible. It’s a purely utilitarian question with no connection to the anarchist theories. But of course, you need to interpret all actions in a very specific way and ignore other possible and more likely interpretations (e.g. that Hazlitt might not have been aware of the disadvantages of copyright), as well as factual background (Hazlitt’s books are only covered by copyright because US extended copyright length after Hazlitt wrote the book, in 1976, 1988 and again in 1998), otherwise your theory falls apart.

Silas Barta October 29, 2010 at 7:37 am

Your argument is akin to asking why anarchists are using fiat money, thereby making funding of military operations by inflation possible.

Nah, not really. You can publish a book without IP, you just won’t get the Pareto-efficient payments from people that want it.

Again, if HH didn’t want the benefits of IP rights, why did he still demand them? You can waive rights, ya know…

Peter Surda October 29, 2010 at 8:39 am

Silas,

it has been explained several times that copyright is not a process that the author does, but that the government does. What you can do is to create a more permissive license.

What is more important though, you ignore the actual point I was making, a very common method used by people who are unable to counterargue. If the government didn’t extend copyright after Hazlitt wrote the book (three times), it would be in public domain by now anyway and the whole point would be moot. Also, Hazlitt simply might not have been aware of the negative results a contract with publisher that was common at that time brings about, or he might not have thought that the question of license is important. There was no copyleft movement and no in-depth handling of IP by Austrians sixty years ago. You’re attempting the Marxian trick, by interpreting all human action through class affiliation and ignoring more reasonable explanations as well as facts.

You’re trying to pull off a fraud by betting that your opponents suffer from a memory loss and forget past arguments, but in the end you only fool yourself.

Peter Surda October 29, 2010 at 6:33 am

Did someone forget that without IP, LR wouldn’t have even written Economics in One Lesson?

And let’s not forget, without patents we would not have the general theory of relativity because Einstein would have been unemployed.

This childishness again?

Ok, vagueness and lies didn’t work, so you’re trying ridicule now.

George October 28, 2010 at 7:02 pm

Obviously, Private sector needs a high amount of capital to take this business from Fannie or Freddie. However, government loan is “free” way for government. ( lend them after 30 years, low interest, currency inflation). Why use “private sector”. Just for ” creating jobs” AND ” private sector manager annual bouns” ?

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