Is the New York Times warming to Austrian economics?
David Streitfeld is out tonight with Grim Housing Choice: Help Today’s Owners or Future Ones. It begins by presenting a view of the problem:
The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.
I am not going to debate whether the post-tax credit drop-off in home sales was unexpected or not. Mr. Streitfeld has set the table. In the third paragraph, he surprises by saying:
As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.
Even more surprisingly, he reports that this solution emanates from one of the citadels of Austrian economics thought in America:
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”
Usually when the Times talks about unnamed "experts", it is referring to deficit spenders when the topic is economics, and "warmists" when the topic relates to climate change. Now all of a sudden, the unnamed experts are preaching the common sense virtues of letting markets seek their own level.
Deeper in the article are references to more mainstream experts, who support the Sanders/George Mason approach:
“We have had enough artificial support and need to let the free market do its thing,” said the housing analyst Ivy Zelman.
Michael L. Moskowitz, president of Equity Now, a direct mortgage lender that operates in New York and seven other states, also advocates letting the market fall. “Prices are still artificially high,” he said. “The government is discriminating against the renters who are able to buy at $200,000 but can’t at $250,000.”
Not present in the article is a Krugmanlike derision of Austrian/free market thinkers as "Austerians".
Moving on to a deeper level of intrigue, an article that comes out on or about Labor Day on this topic has to be considered to possibly be political. Is someone in the administration or at least Congress using Mr. Streitfeld as a stalking horse?
To support that musing, please consider the finale to the article:
Some members of the National Association of Home Builders say a new credit of $25,000 would raise demand but their chances of getting this through Congress are nonexistent.
“Our members are saying that if we can’t get a very large tax credit — one that really brings people off the bench — why use our political capital at all?” said David Crowe, the chief economist for the home builders.
That might give the Obama administration permission to take the risk of doing nothing.
The risk of doing nothing . . . what a felicitous phrase. And from none other than the lead online story in the New York Times. Methinks the debate is, in fact, changing.
And if by some happy reason the Obama administration actually stops intervening in natural processes, perhaps it will realize how futile a poorly thought-out strategy ARRA was; how wrong it was to lean on FASB to change accounting for bank holding companies; and that the "surge" in Afghanistan was simply plumping for one group of narcotics traffickers against another. Might the president also whisper to Chairman Bernanke that a policy of non- (or at least less)intervention in the free market in money might also ultimately be in the national interest?
I know you are thinking, "Dream on DoctoRx". But what's wrong with good dreams? It's time for our long national nightmare to end.
Three months ago, who would have expected to see the Times running this particular article during the kickoff to election season?
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