Friday, February 13, 2009

Nannyconomics

We have reached the point in the US at which pain is treated not as a useful spur for individuals to accel, but as a barrier to be avoided or defeated.

The trouble is that economic problems are not fixed objects. If the government tries to cure the problem of increased home foreclosures by borrowing money to give to lenders or borrowers, the only possible results are increased home prices and a worse problem in the future.

A collapse in home prices, or a glut of homes on the market, make homes more affordable. Isn't affordable housing what the liberals claim to want? Home prices will fall until people start to buy houses. They won't fall while the government is promising to subsidize prices.

More generally, any time the government offers money for people to buy something, look for prices of it to increase to match the offer.


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