bleeding heart and the robber baron

Economists tout “success” of policy that drove housing costs up for millions of Californians

In the midst of an affordable housing crisis  in California, UCLA economists have the balls to put out a study trumpeting the success of California’s 2008 anti-foreclosure law.

Their definition of success?  Housing prices are now 15% higher than they otherwise would have been… up to 60% higher in some middle-class neighborhoods of Los Angeles.

Our politicians continue to pass laws — often with the backing of prominent economists — that drive up the cost of education, health care, and housing.

Isn’t it at least possible that one reason we all feel less secure is that the government is driving up the cost of those things that are most critical for a sense of well-being and security?



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The Bleeding Heart and the Robber Baron

Perhaps you’ve heard of  Bruce Yandle’s idea of  “the Baptist and the bootlegger.”

This is how it goes: A group of puritans – the “Baptists” –  argue that public policy should discourage a particular vice (e.g., alcoholism) by banning consumption.  The self-interested heathens  – the “bootleggers” – swoop in to support prohibition because it limits the supply and forces the price up, resulting in windfall profits for the providers who remain.

See Prohibition, prostitution, the Drug War, etc.

I’ve been thinking about a phenomenon that is the mirror image of the Baptist and the Bootlegger.  Call it “the bleeding heart and the robber baron.”

In this case it’s the well-intentioned lefties – the “bleeding hearts” – who  advocate a policy that will benefit the public (e.g., affordable housing, universal health care, public education).  And then the self-interested, right-leaning corporatists – the “robber barons” – swoop  in to reap economic rents from the policies that give them preferential treatment.

See Fannie Mae, Freddie Mac, K12, health insurance companies, the ratings agencies, etc.

In each case, you have support that crosses typical cultural/political lines.  In one case, the lefties take the high road, and the righties follow their self-interest.  In the other, the righties take the high road, and the lefties follow their self-interest.

In both cases, all the rest of us pay the price. Higher prices, higher taxes, higher incarceration rates, and fewer providers to choose from.

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