Friday, August 05, 2011

Grand Game, Part II: We Need Another Bubble!

The problem is that I think this level of economic thinking is quite representative of the administration's brain trust.

Eugene Robinson, a pretty sensible guy (at least by WAPO standards) asserts that the only way out of our mess is for housing prices to go back to 2007 levels.

E-Rob! That was a BUBBLE. Those prices had no relation to scarcity values, production costs, or demand. And here's the thing: production values and demand are the things that determine price (except in a bubble, of course).

So, anyway, GG time, folks. Let's do this in comments.

I'll go first: For 30 years, the limo-left has been whining about affordable housing. But now that housing IS affordable, their main concern is to jack housing prices (of THEIR houses!) back up again. Have you noticed that all the places where housing prices fell MOST (NY, Boston, Northern Cal) are the places where lefties cluster like ticks? When it comes to blind self-interest for erstwhile do-gooders, all that compassion goes out the window. It's time get out the air pump, Jasper, and reinflate that bubble right away! The poor can just go screw themselves, because the left needs to keep stizacking that pizaper!


John Thacker said...

Lefties have a problem with unintended consequences. They like laws that try to manage and restrict growth, preserve open spaces, and all that sort of thing. But all that drives up home prices (and increases boom and bust by lengthening the time it takes to turn price signals into new construction). They then favor regulations to help make housing affordable.

It's always new fixes to solve problems that previous fixes caused.

John Thacker said...

In fairness, prices also fell a lot in some righty places, though the natives of those places will claim that it was all those damn Yankees and Californians moving there that screwed it up. (AZ, NV, FL, etc.)

Randall O'Toole of Cato would note that all the states with problems had growth management, many of which had only recently adopted it in response to excessive growth.

NC and TX both have done pretty well, by simply letting new houses get built to accommodate the pop increase.

Dr. Tufte said...

I'll affirm this.

I live in one of those righty places: southwestern Utah. And yes, we had a big bubble from people cashing out their equity in SoCal and moving up I-15. And yes, we've had a huge collapse - probably 40% off the market value of my home.

Anonymous said...

Those same places (NY, SF, Chicago, etc) protest the entry of Walmart stores into the area, since they will 'exploit' the poor. Lower prices are a cruel thing for lower income neighborhoods, I guess.