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Private Benefits, Socialized Costs

Honestly, I'm having trouble caring about the latest meme on the recent Fed actions, namely that they are socializing the costs (i.e., having the taxpayers bear them) of risky actions but allowing the private benefits to accrue to financiers. True, it may be bad (macroeconomics is not my forte, but I am not in the least impressed by neo-Austrian or folk economic explanations of how the Fed steals money from us ordinary peons). Nevertheless, suppose it's completely true that the Fed is handing over benefits left and right to people in finance.

Does anyone seriously doubt that high finance is a net positive contributer to the national government? Between the taxes on corporate earnings (the max rate is what, 35%?) and 35% top rates on income (federal alone), the government siphons off enormous sums during boom times. So during normal times the government takes a large percentage of the proceeds of finance, and every now and again the flow goes the other way. But surely in net, financiers help pay for government and not the other way around.

Now, there's certainly a moral hazard argument against Fed 'bailouts', and I'm sympathetic to them. But forgive me if I refuse to be OUTRAGED!!!! if the house throws a chip or two back at the bankers every couple of years.

ADDENDUM: To clarify a bit, it's not that I don't think bailouts and the like (if that's what this is) are wrong. I do. It's more along the lines of this argument here, regarding how the rich really do subsidize the government. There's a current of populist belief out there that somehow the federal government just lines the pockets of financiers, but I just don't think that's the case on net, and until I'm persuaded otherwise on that fact, emotionally, I just can't get up in arms about these things, even if I think they are wrong.

[Some of the above text was also edited for clarity.] 


Would Increasing Immigration Help the Housing Crisis?

According to a news story I read today (but, convinently, cannot find right now), there are 600,000 houses sitting empty now, owned by investors but sitting unwanted. One would think this is a pretty major reason for falling home prices, which is part of the reason credit markets are so gummed up now. Also, it's certainly probably that both the supply and demand for housing is fairly inelastic (right?), so a small increase in demand could lead to surprisingly large price increases.

So how about this for an 'emergency' measure to help the economy: Issue 1 million extra visas this year. I'm partial to Arnold Kling's visa auction proposal, but it could be done other ways. But if the U.S. could sell 1 million visas for $20,000 each (has anyone ever tried to estimate the market value of a U.S. work visa before?), we have a lot more play money for emergency 'bailouts' and the like, not to mention the housing effects.

Now, I should say as a renter, I'm pretty annoyed that everyone assumes that high housing prices are great, though this is partially counterbalanced by my amusement in seeing self-styled liberals and "affordable housing" advocates screaming about how bad falling housing prices are. Nevertheless, I'd certainly trade slightly higher home prices for avoiding a major recession. And if doing so, we can attract more of the best and brightest, that's a double gain.


Why Even Have Juries?

Via Instapundit, I'm reading this argument against jury nullification, arguing that they should be fact finders and nothing more.

My question is this: If that's true, why even have citizen juries at all? Surely you could take people well trained in the law and have more accurate fact finders. And it can't be that anti-nullification, pro-jury people think the "facts" themselves would be different if found by different types of juries.

So can anyone think of any purpose for juries beyond their role as a check on government authority? I'm trying, and I honestly can't.


Economic Illiteracy: The Video Game

The posters here are likely a good bit more tech-savvy then me, so they have probably seen ads for this spectacularly strange video game being released today. Here's a trailer for "Frontlines: Fuel of War", a fantasy about peak-oil-induced resource wars coming in 2024. It's actually pretty amusing. Can't wait for those weeks-long blackouts to start rolling across the country this summer!

What I'm wondering is this: Has anyone ever studied (very doubtfully) or wrote about (possibly) the impact of video games on political belief formation? I shudder to think of a generation of teens being taught about resource wars through first person shooters.

I've actually thought about this for a while. I remember playing SimCity and the various iterations of it, and I wonder if, subconsciously, games like that train people to think as planners. Houses in the way of progress? Switch to the bulldozer button and let the good times roll!

Schumpeter said that capitalism contains the seeds of its own destruction, subsidizing the intellectuals who would bring about its downfall. I doubt he thought the intellectuals would be sitting around learning resource economics from their XBox360s though.


Let's Hear It for Apathy!

I'm not a huge baseball fan, but my respect for the players as individuals shot through the roof reading this strange hit piece on them from Jeff Pearlman on ESPN's Page 2. Apparently athletes are focused on being athletes rather than being political activists:

Yet while ballplayers are bound both by their disparate backgrounds and an uncompromised love of the game, they are also united by one not-so-great characteristic: political indifference.

And what's the problem here? Pearlman complains that ballplayers didn't know the results of the Wisconsin Democratic primary. Why should they? What difference could that make? It's one thing to be uninformed about issues, but are we all bound to follow the incredibly boring ins and outs of the "Ballot Bowl" (as CNN dubbed it) process? I'd like to think most Americans are sick to death of this election already. The only redeeming feature I can see of having the process last over two years is that by the time Obama is inaugurated, people will already be fatigued of him that he won't have a honeymoon in which to ram through his whopping tax increase.

Another apparent issue is that the athletes don't sit around and discuss politics in the locker room. This is totaly bizarre too: Who wants to sit around their workplace talking about elections, especilaly in sports, where team chemistry is so critical? More importantly, who wants to listen to their officemate prattle on about Obama (or McCain) forever? Most workplaces would probably be a lot more productive, not to mention happier, if there weren't obnoxious activists foisting their beliefs on everyone else. (I've almost stopped reading the excellent sports site Deadspin because I'm so sick of Will Leitch's incessant pimping for Obama. Sports is where I go to escape the nonsense of everyday life, not to be "inspired" about politics.)

There's a great big America out there, full of people falling in love, raising kids, going to the ballpark, and doing everything else that make life worth living. If most of those people don't spend their waking hours obsessing over which stationary bandit is going to rob them more, or worse, actually spending time to help the bandits take power, well, then I say God bless them.


Congestion and zoning

Ilya Somin has a wonderful post here discussing the effects of zoning laws on the housing bubble. In the comments, someone objected that without zoning, we would have everywhere look like Houston, which is "dirty, congested, sprawling, and the traffic is horrendous".

It never ceases to amaze me what people will just make up, when two seconds of googling will reveal this argument to be nonsense (my first foray into Distributed Republic was about similar numbers, about state migration). Average travel times in American cities are not state secrets. Houston's average travel time is lower than mass transit centers like Boston or Chicago, and much lower than the worst in the U.S. (New York City, beloved of the planners). Nor is Houston without all planning laws. A neat tome about parking regulations explains that Houston suffers from the same ludicrous requirements for minimum parking regulations. But Houston just isn't the high traffic hell people assume.

What does any of this have to do with libertarianism? If there's one area where libertarianism has a realistic chance to make an impact in everyday lives, it's probably zoning (Bryan Caplan agrees). The welfare implications are immense. (And, I might add, pathetically understudied by economists. I suspect that the gains from deregulating housing would be of the same order as the gains from adopting optimal taxation, a massive area of study).

The first step to a free housing market is showing that less zoning doesn't lead to long commutes and congested hell-holes. (The second might be showing it doesn't lead to hog farms next to children's playgrounds. As if the common law on nuisances that dates back to before the time of Blackstone doesn't cover localized pollution concerns!)