Count me in as a taxpayer, mortgage holder, and economist who thinks that the Obama mortgage bailout program is bad policy-it’s expensive with little obvious benefit, it creates bad incentives and ex post rewards bad decisions (bad decisions that were abetted by bad government policy), and it’s morally reprehensible. Peter Klein’s remarks on the plan reflect my beliefs:
I am bewildered. But, more than that, I am angry. I can’t count how many news accounts I’ve seen about the poor, struggling homeowners who can’t make the monthly mortgage payment, are about to be foreclosed, and risk losing the family home, yard, white picket fence, and piece of the American Dream. But I haven’t heard one word about the poor, struggling renters, the ones who scrimped and saved and put money away each month towards a down payment, who kept the credit cards paid off, stayed out of trouble, and lived modestly, and thought that maybe, just maybe, the fall in housing prices meant that they, finally, could afford a house — maybe one of those foreclosed units down the street. These people are Bastiat’s unseen. For them, Obama’s housing plan is a giant slap in the face. To hell with the prudent. Party on, profligate! Now that’s what I call moral hazard.
I join Peter in being both angry and bewildered. That’s why I was heartened to see the groundswell of support for CNBC commentator Rick Santelli’s “Chicago Tea Party” mortgage revolt video from the floor of the Chicago Mercantile Exchange yesterday. Santelli, a former trader who has been a critic of the Fed’s monetary policy and its effects in the housing market, gives voice to the feelings of anger and injustice of many taxpayers and homeowners. After his show yesterday he talked with Stephen Spruiell of the National Review, and continued to be firm and eloquent:
The issue is, you can’t pick out 8 or 9 percent and give them things that weaken the 90 or 92 percent who are carrying the water. You need to come up with legislation that may help the people that need it but not hurt the people that… listen, my 401k’s a 201k, my kid’s college tuition is going up 10 percent. This is tough for everybody. Maybe a tax break, maybe everybody who has a house gets something. They need to quit picking winners and losers, and they have to quit alienating the classes. You have to figure out a way to float all boats, and I think that’s where the administration has gone wrong, and I think that’s the nerve I hit.
He sure did hit a nerve; CNBC has set up a poll page where you can vote on whether or not you would join Santelli’s Chicago Tea Party. When I voted “yes” and saw the results, it looked like this:
And now someone (calling himself “Patrick Henry”) has set up a Chicago Tea Party blog.
These invocations of the American Revolution reflect the important fact that the origins of the United States rest on the economic consequences of unjust government policy. We are a country founded on a tax revolt, and more importantly, on the ideas of individual liberty and autonomy that are crucial for us to be able to live together in civil society. To the extent that more and more people see the bank bailouts, loans to the auto industry, the “stimulus” bill, and mortgage bailouts as unjust government policy, we are going to tap into these beliefs.
And frankly, I say bring it on. I usually “keep on keepin’ on” with respect to politics; I’m non-partisan, I hate politics, and no politician has ever represented my philosophy and values, so I just take politics as a drag on productive activity and move on. But this is beginning to worry me and make me angry.
As an aside, this is one reason why I think the “liberaltarian” conversation that Will Wilkinson and others have been having will always be strained — if American progressives embraces fiscally irresponsible government policies that are seen by many people as unjust, this progressive liberal-classical liberal confluence is going to be very shaky indeed.