Oligarchy Watch II at New Ruskin College
www.NewRuskinCollege.com
Lecture Notes: 06-21-05 Oligarchy Watch II
What has been missing in the coverage of the housing bubble is its relationship to humanity.
The economist will cite the figures, but what they are missing is the understanding. How to relate those abstractions, the numbers, to people. To show people how they have caused the bubble.
This was the direction Max Weber and Ludwig von Mises were taking Economics and Sociology. (see Weber and Ludwig von Mises at the Max Weber Institute(http://www.newruskincollege.com/maxweber/id18.html)) But their methods fell out of fashion with the professional academics.
In Sociology and particularly Economics “the numbers”, numerical analysis has been favored for its perceived “objectivity” and “rigor.” (“Rigor” in the sense of the Natural Sciences.)
The problem is that most people do not read the footnotes of scholarly economic reports. So there is this disconnect. The scientists know but do not know how to communicate what they know. (In the Humanities people like Derrida have actually taken this problem as their starting point. When conservatives complain that the Structuralist’s and Poststucturalist’s “works” are incomprehensible they respond, ‘But of course, do you not also find Modern Physics incomprehensible, Messieur?’ (‘But . . . but . . . you are writing about Tom Sawyer!’ ‘Yes, but Tom Sawyer as understood by the alternative interpretations of the oppressed, the very people that ---- but how can you hope to understand these matters, they are so . . . how do you say . . . complex . . .’ etc. etc.))
So when I have talked about the housing bubble I have tried to place it in the context of a general theory of Economics and Politics: Conservatism.
It is an ideological interpretation. But we know from the developments in Western Philosophy as it has merged with Eastern Philosophy that there is no “objective” “The Truth.” There are only our contextualizations, our theories. (Many Conservatives regard this as a capitulation to the relativism of the Left. However, as we have explained elsewhere, (see Wrong at the Max Weber Institute) our simple minded conservative friends are mistaken.)
And as has been reported before this misunderstanding is ironic as Conservatives see themselves as defenders of the “free market”. Ironic because the free market stands as the evidence and proof of the ever changing, multi dimensional, relativistic floating world, in which all relationships are in continual movement, and the change in any one alters all the others. A complex system not unlike our Earth itself. Indeed it is this close similarity between the natural systems and this human construct, the market, which accounts for its superior performance.
Where the market has failed, pollution for example, the cause of the failure can be traced to the absence of the necessary feedback loops. For example, Ludwig von Mises contended that pollution would have been controlled far more easily by an extension of the law of property than with bureaucratic regulation. A polluter is not engaged in voluntary associations of mutual assent. He is a trespasser. But owing to historical peculiarities, (the oligarchy controlled the courts and the government, (as all polluters are rich men, and therefore)) the necessary developments in tort law to prevent pollution were blocked.
It is worth noting that the greatest improvements in environmental law have come from the application of market principals to pollution control. The market being far more effective in identifying the most cost effective way of eliminating pollution.
And note too that the Leftists, the socialist environmentalists, are the most opposed to these developments not withstanding the superior results achieved. But what is this but another example of the supremacy of subjective judgments over objective results. This is why Ludwig von Mises said that you have learned everything you can learn by eighth grade: everything else is just ideology. You might think that market principles are more effective but at our great universities you will be given low marks.
Now this is somewhat overly harsh. For example the work of Iris Murdoch has been to attempt to restore meaning, reason, to our lives. For reason is the compact, the peace treaty between us. If reason is destroyed then how shall we live but in bloody violence? This reason is a lowercase reason, not the “Reason” of a bygone era. For we no longer believe, can sustain the illusion, of a permanent order or absolute “The Truth.”
And it is this lowercase reason, contingent, relativistic, temporary, that Max Weber and Ludwig von Mises sought, and attempted to communicate. But instead Economics, (among the professional academics) reverted to numerical analysis in attempt to find its footing on the “rationalistic” “objective” metaphysics which sustained Newton and the Nineteenth Century thinkers including Marx. (For Marx also believed in an objective “one best way.)
In discussing the housing bubble, for example, I have emphasized the anti growth, even no growth, policies of the last thirty years as an important cause of the housing bubble. By restricting supply, (in San Francisco at one point the shortfall was 70,000 housing units (compared to new jobs created)), consumer choice has been limited and the prices are a consequence of the market finding its level in and among the deteriorated housing stock which has survived to be resold; new units being artificially kept to a minimum.
Obviously, I do not mean to contradict Bob Brinker’s point that the recent run up since the late 1990’s is in part due to the increased value of housing as a source of tax free capital gains. The increase in the capital gains tax exemption to the current $500,000 level increases the value of housing relative to other sources of capital gains. This being another example of how taxes are simply another cost like any other, and therefore by lowering this cost, (taxes), the relative value has been increased. Or as the economist would say made more “efficient.” (As if efficient were an “objective” quality. The contingent nature of this term, efficient, can be seen here in this case because it is easy to see that the tax is an artificial cost, wholly imposed by the state and not resulting from any obvious requirement of Nature.)
But Mr. Brinker leaves his analysis here: there was a tax break, and prices responded to the increase efficiency of ‘housing’ as a source of capital gains.
True.
But see how this Congressional action is not unlike the interest payment tax deduction on mortgages up to $1,000,000. And what was the creation of this tax loophole but another example of increasing the “efficiency” of the purchase of a home?
And again efficiency in quotes because this term does not relate to some physical fact of existence, no Natural Law is being observed here. Unlike the bow of a ship or the aerodynamics of an airframe this efficiency results from an accounting gimmick, a change in the tax laws.
Why do I make the distinction? Because Mr. Brinker and the economists who have been writing on this subject have failed to communicate to people the causes of the housing bubble and the coming catastrophe.
The people will suffer and they do not know why.
For example . . . . why in the ---- do you think we have these tax loopholes? They did not come from Heaven. They do not make housing more efficient the same way factory building methods or the market makes housing more efficient. But the difference is contingent upon your values judgment.
Just looking at the numbers housing has been made more efficient if the tax is reduced or the labor and material to produce a unit of housing is reduced. In either case the housing efficiency has been improved. Yet applying our human conscience to the problem, values, we can see the difference. We can no longer say that one is “real” efficiency and the other artificial, only that by application of moral reason we can distinguish them subjectively.
If you fail to ask these questions, (e.g. how come the tax loophole?), you are not being honest.
Note too that the reader who says, ‘Well I am a liberal and this is as you said just a Conservative perspective . . .’ has not understood either. Of course every commentary is going to be subjective. Human. Therefore limited. This is inescapable. There is no pure science of human reason.
Contingent? Yes. However for this time in this universe market principles explain what we are seeing. Tautology they may be but still many useful points can be developed even from a tautology.
For example, when I said that the economists who fail to discuss the underlying causes of the housing bubble are dishonest; that was not an objective statement. What is honesty? It is a subjective statement.
You must decide if it makes sense too look beyond the mere statement that a tax break on the first $500,000 in capital gains helped cause the bubble.
Looking at how these tax breaks work, seeing which classes benefit from these tax breaks, considering if there has been undemocratic influence on the Legislature of the USA, and on the several states, and on the boards of supervisors, and city councils, considering if the entire system: the exclusionary zoning codes that reduce the opportunities for consumers to exercise choice, forcing the consumers to the periphery and extending their commutes, increasing the consumption of fossil fuels, being away from their families, and the civic institutions of their forefathers, being house bound to a mortgage that takes an ever greater percentage of their income; then considering the building codes which restrict the application of more efficient building methods, (and here efficient is not merely an abstract economic term but we can point to real energy and material and labor savings not just bookkeeping entries), which would have given consumers more choice; and then expanding our analysis to the manipulation of the tax codes by rich powerful people who have worked at all these levels of government, (Marin Senator Feinstein being a convenient example of a Tiburon oligarch who used her influence at the San Francisco Board of Supervisors to restrict supply locally and now exerts her malevolent influence at the national level); would such an analysis not add to our understanding of the housing bubble?
And please do not tell me ‘this sounds like a lot of value judgments’ for as we have already explained there is no “objective” interpretation. Without value there can be no analysis.
It is the Economist’s very attempt at objectivity which makes them useless to us. We need meaning. We need to look beyond the numbers.
For example consider how the capital gains exemption works with the mortgage interest deduction:
“ For many higher-income taxpayers, the deduction is indeed a tax shelter. So are the deduction for property taxes, the break on capital gains and the untaxed income -- in the form of housing services -- that a homeowner receives on his equity investment. A landlord, with a similar investment, has to pay tax on rental income minus expenses.
“ Altogether, the benefits from those tax breaks are wildly skewed according to income levels and where taxpayers live. In general, higher-income households that can easily afford to own a house without such subsidies get the bulk of the benefits.
“ Last year the National Bureau of Economic Research published a paper by two Wharton School economists, Todd Sinai and Joseph Gyourko, who used data for the U.S. 2000 Census and other sources to compute the subsidy per owner-occupied unit in each state in 1999.
Unevenness Soars
“ That subsidy ranged from a low of $2,240 in North Dakota to $12,759 in Hawaii. Among metropolitan areas the disparity was much greater: $26,385 in San Francisco-San Mateo-Redwood City, California, and a scant $1,541 in McAllen-Edinburg-Pharr along Texas's Mexican border. Some East Coast areas also had huge subsidies and many in states such as Tennessee, Ohio and Louisiana got little benefit.
“ Given what has happened to home prices on the two coasts since 1999, the unevenness of the value of the combined tax breaks has soared.
“ It's clear from the Wharton economists' study that the extremely rapid rise in home prices in some high-income markets and the subsidies, including the mortgage-interest deduction, feed on one another. Certainly the existence of the deduction encourages purchase of larger, more expensive homes.” --- It's Time to Drop the Home Mortgage Deduction: John M. Berry May 19 (Bloomberg) (http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=a8Gu53fSyGLw )
Did you note the sentence: “In general, higher-income households that can easily afford to own a house without such subsidies get the bulk of the benefits.” See how the Left’s rhetoric of helping the “poor” and “middle income” to buy their “home” is used here by the oligarchy in the same way we saw earlier that the poor and middle class must now pay the Social Security of the top 20% who control 50% of the national income and 60% of the financial wealth not withstanding that now the ratio of workers to retirees is 3 to 1 and soon will be 2 to 1.
Recall too the Carter increase in the “insurance” on savings and loan deposits to $100,000. Not per person but per account! See how the Left’s rhetoric is used to plunder the treasury for pensions which pay 100% in retirement for public employees who now comprise half of all union members. (Business Week: Public Pension Sink Hole) And the other half, the back bone of the Democrat party. Their pension and medical “insurance” deals are bankrupting their companies.
Time and again we find the Left in the service of the rich oligarchs. Why? Or for example, why must we pay 50% of the cost of the photo voltaic panels on the roofs of the rich? Why? Or why is CalTrans spending $200 million for a tunnel on the scenic highway out on the coast where development is strictly limited, in a county, San Mateo, where the median home value is $1,000,000, while millions of commuters are daily waiting in line to travel through the Caldecott Tunnels where CalTrans has already estimated that a tunnel there would also cost $200 million? Why? Do not ask the Democrat for an explanation.
And notice that the Marin Senators Boxer and Feinstein will not discuss this deeper analysis of the class structure of American tax law, and zoning law, and building codes, etc. etc. This is because they are supporters of the status quo. Oh, sure, another hundred million for government ‘affordable housing’ but nothing more. Of course they will control who will benefit from these ‘affordable homes.’ And yet they are still called liberals! They are so Post Liberal.
Mr. Berry points out that only 30% of American tax payers claim the interest deduction not withstanding the fact that 70% own their own homes. And yet this loophole still costs the public $62 billion a year. Simply changing the maximum mortgage from the current $1 million to $500,000 would save $48 billion over the next 10 years.
Who are the primary beneficiaries of these tax windfalls? Texas or Marin? Red or Blue?
Without a values analysis, without values the economists are just talking numbers.
“Just numbers on paper.” (Peter Peterson, Running on Empty, Foreign Affairs) That is what the great thinker in the Oval Office said of the National Debt. There is your objective analysis by the simple minded conservative. Yet those numbers will mean real hardships for your grandchildren. A real diminishment in their opportunities, their freedom. Their world will have $ 8 trillion dollars in capital taken out of it. Sitting in Treasury Bonds that capital will not be searching out new ways, for example, to build houses faster, better, cheaper. Those capitalists will not be staying up late nights thinking of ways to meet the consumer’s needs.
Those capitalists will be sitting back letting the IRS force the money from your grandchildren.
Not voluntary associations of mutual assent but coercion.
But the great thinker in the Oval Office says it is “Just numbers on paper.”
And that is what the housing bubble is as it has been reported by the economists: just numbers on paper.
And so the simple minded conservatives think they understand the system by which they play. They are utterly blind to the heavy thumb pushed down on the scales. They fail to perceive the dangers that have been created by the oligarchy’s control and manipulation of the housing market because they are only told about the numbers not shown the values which are at issue. They do not yet understand that the blue state party machines, under the oligarchy’s control, have so distorted the housing market that the entire nation will suffer.
“ New federal housing data show that the nation's most overheated local housing markets now make up such a large share of the total U.S. market that a sharp fall in their values could stall or slow national economic growth.
“ ..."It's a widespread boom and has macro implications," says Richard Brown, chief economist of the FDIC. "A slowdown would not only hurt these markets, but the U.S. as a whole."
“ ... Unlike stocks, the housing market "would be more likely flat with 10% to 20% declines in some regions, or down slightly nationally with some regions looking ugly," says Ethan Harris, chief U.S. economist at Lehman Brothers. Even local housing crashes take years to unfold, he says.”--- (http://angrybear.blogspot.com/2005/06/housing-bubble-talk.html )
And do you suppose that we will all equally suffer? Do you suppose that the rich who have caused these distortions in the tax code, the zoning code, the building code, the allocation of the roads, the “insurance” which protects every aspect of their lives, will suffer equally with the poor and middle class? Are you being “objective” or are you being a fool?
For if you look deeper into these numbers you will see how the rich exercising their monopoly over government, federal, state and local, to distort the market and exempt themselves from taxes yes, but more importantly exempt themselves from the forces of the market, they have thus freed themselves from market constraints and need no longer concern themselves with anyone but themselves.
Sounds like Marin. The revenge of the blue state is coming:
“ Throughout history, financial bubbles—whether in houses, equities or tulip bulbs—have continued to inflate for longer than rational folk believed possible. In many countries around the globe, house prices are already at record levels in relation to rents and incomes. But, as demonstrated by dotcom shares at the end of the 1990s, some prices could yet rise even higher. It is impossible to predict when prices will turn. Yet turn they will. Prices are already sliding in Australia and Britain. America's housing market may be a year or so behind.” ---- The Economist, (http://www.economist.com/opinion/displayStory.cfm?story_id=4079458)
(see paper no. 1948. Edward L. Glaeser and Joseph Gyourko The Impact of Zoning on Housing Affordability next link )
( http://post.economics.harvard.edu/hier/2002papers/2002list.html )))
www.NewRuskinCollege.com
-10-
Lecture Notes: 06-21-05 Oligarchy Watch II
What has been missing in the coverage of the housing bubble is its relationship to humanity.
The economist will cite the figures, but what they are missing is the understanding. How to relate those abstractions, the numbers, to people. To show people how they have caused the bubble.
This was the direction Max Weber and Ludwig von Mises were taking Economics and Sociology. (see Weber and Ludwig von Mises at the Max Weber Institute(http://www.newruskincollege.com/maxweber/id18.html)) But their methods fell out of fashion with the professional academics.
In Sociology and particularly Economics “the numbers”, numerical analysis has been favored for its perceived “objectivity” and “rigor.” (“Rigor” in the sense of the Natural Sciences.)
The problem is that most people do not read the footnotes of scholarly economic reports. So there is this disconnect. The scientists know but do not know how to communicate what they know. (In the Humanities people like Derrida have actually taken this problem as their starting point. When conservatives complain that the Structuralist’s and Poststucturalist’s “works” are incomprehensible they respond, ‘But of course, do you not also find Modern Physics incomprehensible, Messieur?’ (‘But . . . but . . . you are writing about Tom Sawyer!’ ‘Yes, but Tom Sawyer as understood by the alternative interpretations of the oppressed, the very people that ---- but how can you hope to understand these matters, they are so . . . how do you say . . . complex . . .’ etc. etc.))
So when I have talked about the housing bubble I have tried to place it in the context of a general theory of Economics and Politics: Conservatism.
It is an ideological interpretation. But we know from the developments in Western Philosophy as it has merged with Eastern Philosophy that there is no “objective” “The Truth.” There are only our contextualizations, our theories. (Many Conservatives regard this as a capitulation to the relativism of the Left. However, as we have explained elsewhere, (see Wrong at the Max Weber Institute) our simple minded conservative friends are mistaken.)
And as has been reported before this misunderstanding is ironic as Conservatives see themselves as defenders of the “free market”. Ironic because the free market stands as the evidence and proof of the ever changing, multi dimensional, relativistic floating world, in which all relationships are in continual movement, and the change in any one alters all the others. A complex system not unlike our Earth itself. Indeed it is this close similarity between the natural systems and this human construct, the market, which accounts for its superior performance.
Where the market has failed, pollution for example, the cause of the failure can be traced to the absence of the necessary feedback loops. For example, Ludwig von Mises contended that pollution would have been controlled far more easily by an extension of the law of property than with bureaucratic regulation. A polluter is not engaged in voluntary associations of mutual assent. He is a trespasser. But owing to historical peculiarities, (the oligarchy controlled the courts and the government, (as all polluters are rich men, and therefore)) the necessary developments in tort law to prevent pollution were blocked.
It is worth noting that the greatest improvements in environmental law have come from the application of market principals to pollution control. The market being far more effective in identifying the most cost effective way of eliminating pollution.
And note too that the Leftists, the socialist environmentalists, are the most opposed to these developments not withstanding the superior results achieved. But what is this but another example of the supremacy of subjective judgments over objective results. This is why Ludwig von Mises said that you have learned everything you can learn by eighth grade: everything else is just ideology. You might think that market principles are more effective but at our great universities you will be given low marks.
Now this is somewhat overly harsh. For example the work of Iris Murdoch has been to attempt to restore meaning, reason, to our lives. For reason is the compact, the peace treaty between us. If reason is destroyed then how shall we live but in bloody violence? This reason is a lowercase reason, not the “Reason” of a bygone era. For we no longer believe, can sustain the illusion, of a permanent order or absolute “The Truth.”
And it is this lowercase reason, contingent, relativistic, temporary, that Max Weber and Ludwig von Mises sought, and attempted to communicate. But instead Economics, (among the professional academics) reverted to numerical analysis in attempt to find its footing on the “rationalistic” “objective” metaphysics which sustained Newton and the Nineteenth Century thinkers including Marx. (For Marx also believed in an objective “one best way.)
In discussing the housing bubble, for example, I have emphasized the anti growth, even no growth, policies of the last thirty years as an important cause of the housing bubble. By restricting supply, (in San Francisco at one point the shortfall was 70,000 housing units (compared to new jobs created)), consumer choice has been limited and the prices are a consequence of the market finding its level in and among the deteriorated housing stock which has survived to be resold; new units being artificially kept to a minimum.
Obviously, I do not mean to contradict Bob Brinker’s point that the recent run up since the late 1990’s is in part due to the increased value of housing as a source of tax free capital gains. The increase in the capital gains tax exemption to the current $500,000 level increases the value of housing relative to other sources of capital gains. This being another example of how taxes are simply another cost like any other, and therefore by lowering this cost, (taxes), the relative value has been increased. Or as the economist would say made more “efficient.” (As if efficient were an “objective” quality. The contingent nature of this term, efficient, can be seen here in this case because it is easy to see that the tax is an artificial cost, wholly imposed by the state and not resulting from any obvious requirement of Nature.)
But Mr. Brinker leaves his analysis here: there was a tax break, and prices responded to the increase efficiency of ‘housing’ as a source of capital gains.
True.
But see how this Congressional action is not unlike the interest payment tax deduction on mortgages up to $1,000,000. And what was the creation of this tax loophole but another example of increasing the “efficiency” of the purchase of a home?
And again efficiency in quotes because this term does not relate to some physical fact of existence, no Natural Law is being observed here. Unlike the bow of a ship or the aerodynamics of an airframe this efficiency results from an accounting gimmick, a change in the tax laws.
Why do I make the distinction? Because Mr. Brinker and the economists who have been writing on this subject have failed to communicate to people the causes of the housing bubble and the coming catastrophe.
The people will suffer and they do not know why.
For example . . . . why in the ---- do you think we have these tax loopholes? They did not come from Heaven. They do not make housing more efficient the same way factory building methods or the market makes housing more efficient. But the difference is contingent upon your values judgment.
Just looking at the numbers housing has been made more efficient if the tax is reduced or the labor and material to produce a unit of housing is reduced. In either case the housing efficiency has been improved. Yet applying our human conscience to the problem, values, we can see the difference. We can no longer say that one is “real” efficiency and the other artificial, only that by application of moral reason we can distinguish them subjectively.
If you fail to ask these questions, (e.g. how come the tax loophole?), you are not being honest.
Note too that the reader who says, ‘Well I am a liberal and this is as you said just a Conservative perspective . . .’ has not understood either. Of course every commentary is going to be subjective. Human. Therefore limited. This is inescapable. There is no pure science of human reason.
Contingent? Yes. However for this time in this universe market principles explain what we are seeing. Tautology they may be but still many useful points can be developed even from a tautology.
For example, when I said that the economists who fail to discuss the underlying causes of the housing bubble are dishonest; that was not an objective statement. What is honesty? It is a subjective statement.
You must decide if it makes sense too look beyond the mere statement that a tax break on the first $500,000 in capital gains helped cause the bubble.
Looking at how these tax breaks work, seeing which classes benefit from these tax breaks, considering if there has been undemocratic influence on the Legislature of the USA, and on the several states, and on the boards of supervisors, and city councils, considering if the entire system: the exclusionary zoning codes that reduce the opportunities for consumers to exercise choice, forcing the consumers to the periphery and extending their commutes, increasing the consumption of fossil fuels, being away from their families, and the civic institutions of their forefathers, being house bound to a mortgage that takes an ever greater percentage of their income; then considering the building codes which restrict the application of more efficient building methods, (and here efficient is not merely an abstract economic term but we can point to real energy and material and labor savings not just bookkeeping entries), which would have given consumers more choice; and then expanding our analysis to the manipulation of the tax codes by rich powerful people who have worked at all these levels of government, (Marin Senator Feinstein being a convenient example of a Tiburon oligarch who used her influence at the San Francisco Board of Supervisors to restrict supply locally and now exerts her malevolent influence at the national level); would such an analysis not add to our understanding of the housing bubble?
And please do not tell me ‘this sounds like a lot of value judgments’ for as we have already explained there is no “objective” interpretation. Without value there can be no analysis.
It is the Economist’s very attempt at objectivity which makes them useless to us. We need meaning. We need to look beyond the numbers.
For example consider how the capital gains exemption works with the mortgage interest deduction:
“ For many higher-income taxpayers, the deduction is indeed a tax shelter. So are the deduction for property taxes, the break on capital gains and the untaxed income -- in the form of housing services -- that a homeowner receives on his equity investment. A landlord, with a similar investment, has to pay tax on rental income minus expenses.
“ Altogether, the benefits from those tax breaks are wildly skewed according to income levels and where taxpayers live. In general, higher-income households that can easily afford to own a house without such subsidies get the bulk of the benefits.
“ Last year the National Bureau of Economic Research published a paper by two Wharton School economists, Todd Sinai and Joseph Gyourko, who used data for the U.S. 2000 Census and other sources to compute the subsidy per owner-occupied unit in each state in 1999.
Unevenness Soars
“ That subsidy ranged from a low of $2,240 in North Dakota to $12,759 in Hawaii. Among metropolitan areas the disparity was much greater: $26,385 in San Francisco-San Mateo-Redwood City, California, and a scant $1,541 in McAllen-Edinburg-Pharr along Texas's Mexican border. Some East Coast areas also had huge subsidies and many in states such as Tennessee, Ohio and Louisiana got little benefit.
“ Given what has happened to home prices on the two coasts since 1999, the unevenness of the value of the combined tax breaks has soared.
“ It's clear from the Wharton economists' study that the extremely rapid rise in home prices in some high-income markets and the subsidies, including the mortgage-interest deduction, feed on one another. Certainly the existence of the deduction encourages purchase of larger, more expensive homes.” --- It's Time to Drop the Home Mortgage Deduction: John M. Berry May 19 (Bloomberg) (http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_berry&sid=a8Gu53fSyGLw )
Did you note the sentence: “In general, higher-income households that can easily afford to own a house without such subsidies get the bulk of the benefits.” See how the Left’s rhetoric of helping the “poor” and “middle income” to buy their “home” is used here by the oligarchy in the same way we saw earlier that the poor and middle class must now pay the Social Security of the top 20% who control 50% of the national income and 60% of the financial wealth not withstanding that now the ratio of workers to retirees is 3 to 1 and soon will be 2 to 1.
Recall too the Carter increase in the “insurance” on savings and loan deposits to $100,000. Not per person but per account! See how the Left’s rhetoric is used to plunder the treasury for pensions which pay 100% in retirement for public employees who now comprise half of all union members. (Business Week: Public Pension Sink Hole) And the other half, the back bone of the Democrat party. Their pension and medical “insurance” deals are bankrupting their companies.
Time and again we find the Left in the service of the rich oligarchs. Why? Or for example, why must we pay 50% of the cost of the photo voltaic panels on the roofs of the rich? Why? Or why is CalTrans spending $200 million for a tunnel on the scenic highway out on the coast where development is strictly limited, in a county, San Mateo, where the median home value is $1,000,000, while millions of commuters are daily waiting in line to travel through the Caldecott Tunnels where CalTrans has already estimated that a tunnel there would also cost $200 million? Why? Do not ask the Democrat for an explanation.
And notice that the Marin Senators Boxer and Feinstein will not discuss this deeper analysis of the class structure of American tax law, and zoning law, and building codes, etc. etc. This is because they are supporters of the status quo. Oh, sure, another hundred million for government ‘affordable housing’ but nothing more. Of course they will control who will benefit from these ‘affordable homes.’ And yet they are still called liberals! They are so Post Liberal.
Mr. Berry points out that only 30% of American tax payers claim the interest deduction not withstanding the fact that 70% own their own homes. And yet this loophole still costs the public $62 billion a year. Simply changing the maximum mortgage from the current $1 million to $500,000 would save $48 billion over the next 10 years.
Who are the primary beneficiaries of these tax windfalls? Texas or Marin? Red or Blue?
Without a values analysis, without values the economists are just talking numbers.
“Just numbers on paper.” (Peter Peterson, Running on Empty, Foreign Affairs) That is what the great thinker in the Oval Office said of the National Debt. There is your objective analysis by the simple minded conservative. Yet those numbers will mean real hardships for your grandchildren. A real diminishment in their opportunities, their freedom. Their world will have $ 8 trillion dollars in capital taken out of it. Sitting in Treasury Bonds that capital will not be searching out new ways, for example, to build houses faster, better, cheaper. Those capitalists will not be staying up late nights thinking of ways to meet the consumer’s needs.
Those capitalists will be sitting back letting the IRS force the money from your grandchildren.
Not voluntary associations of mutual assent but coercion.
But the great thinker in the Oval Office says it is “Just numbers on paper.”
And that is what the housing bubble is as it has been reported by the economists: just numbers on paper.
And so the simple minded conservatives think they understand the system by which they play. They are utterly blind to the heavy thumb pushed down on the scales. They fail to perceive the dangers that have been created by the oligarchy’s control and manipulation of the housing market because they are only told about the numbers not shown the values which are at issue. They do not yet understand that the blue state party machines, under the oligarchy’s control, have so distorted the housing market that the entire nation will suffer.
“ New federal housing data show that the nation's most overheated local housing markets now make up such a large share of the total U.S. market that a sharp fall in their values could stall or slow national economic growth.
“ ..."It's a widespread boom and has macro implications," says Richard Brown, chief economist of the FDIC. "A slowdown would not only hurt these markets, but the U.S. as a whole."
“ ... Unlike stocks, the housing market "would be more likely flat with 10% to 20% declines in some regions, or down slightly nationally with some regions looking ugly," says Ethan Harris, chief U.S. economist at Lehman Brothers. Even local housing crashes take years to unfold, he says.”--- (http://angrybear.blogspot.com/2005/06/housing-bubble-talk.html )
And do you suppose that we will all equally suffer? Do you suppose that the rich who have caused these distortions in the tax code, the zoning code, the building code, the allocation of the roads, the “insurance” which protects every aspect of their lives, will suffer equally with the poor and middle class? Are you being “objective” or are you being a fool?
For if you look deeper into these numbers you will see how the rich exercising their monopoly over government, federal, state and local, to distort the market and exempt themselves from taxes yes, but more importantly exempt themselves from the forces of the market, they have thus freed themselves from market constraints and need no longer concern themselves with anyone but themselves.
Sounds like Marin. The revenge of the blue state is coming:
“ Throughout history, financial bubbles—whether in houses, equities or tulip bulbs—have continued to inflate for longer than rational folk believed possible. In many countries around the globe, house prices are already at record levels in relation to rents and incomes. But, as demonstrated by dotcom shares at the end of the 1990s, some prices could yet rise even higher. It is impossible to predict when prices will turn. Yet turn they will. Prices are already sliding in Australia and Britain. America's housing market may be a year or so behind.” ---- The Economist, (http://www.economist.com/opinion/displayStory.cfm?story_id=4079458)
(see paper no. 1948. Edward L. Glaeser and Joseph Gyourko The Impact of Zoning on Housing Affordability next link )
( http://post.economics.harvard.edu/hier/2002papers/2002list.html )))
www.NewRuskinCollege.com
-10-
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