Archives: June, 2009

Beyond Irony, Part II

In a previous post, I noted the irony of taking advice from Karl Rove on how to fight big government. It appears that Rove is not alone in having a battlefield conversion. According to the Wall Street Journal, the Chamber of Commerce is planning to spend $100 million as part of a “Campaign for Free Enterprise.” This sounds great, and I hope it helps, but is it rude of me to point out that this is the same organization that endorsed the bailout last year and the so-called stimulus this year?

Senate Hearings on Prison Reform

The Senate Judiciary Committee is holding hearings today on Sen. Jim Webb’s (D-VA) bill to create a National Criminal Justice Commission. Senator Webb is a long-time student of what has gone wrong with American criminal justice.

The bill provides for an 18-month review of the nation’s criminal justice system and recommendations for reform. I plan to attend, and the proceedings will be available on video here. Click here to read The Sentencing Project’s endorsement of the legislation.

My colleague Tim Lynch recently published a book on crime and punishment, In the Name of Justice. Notable authors such as Court of Appeals Judges Alex Kozinski and Richard Posner, Professor James Q. Wilson, and veteran defense attorney and law professor Harvey Silverglate weigh in on how the American criminal justice system has deviated from its moral foundations.

Senators Want to Delay Housing Recovery

As discussed in a recent Bloomberg piece, several U.S. senators from both parties are pushing to almost double the recently enacted $8,000 tax credit for first-time homebuyers to $15,000. The same senators are also pushing to remove the current income restrictions — $75,000 for individuals and $150,000 for couples — while also removing the first-time buyer requirement.

The intent of the increase, and the original credit, is to increase the demand for housing and to create a “bottom” to the housing market. The flaw of this approach is that it creates a false bottom, one characterized by government-inflated prices and not fundamentals. It was excessive government subsidies into housing that helped create the housing bubble, additional subsidies to re-inflate the bubble will only prolong the actual market adjustment.

If it were only a matter of prolonging the adjustment, then the huge cost of the tax credit might be easier to justify. Yet by encouraging increased housing production, the tax credit will increase supply when we already have a huge glut of housing. Despite housing starts being near 50-year lows, there is still too much construction going on. The way to spur demand in housing is the same way you spur demand in any market: you cut prices.

Removing the income limits makes clear the real intention of the tax credit, to help the wealthiest households. About three-fourths of existing families already fall under the income cap of $75,000. As we move up the income latter, home equity makes up a smaller percentage of one’s total wealth. The richest families can make do with a decline in their housing wealth and continue spending; they have other substantial sources of wealth. If we have learned anything from the housing boom and bust, it should be that continued government efforts to rearrange the housing market have been costly failures.

Walking Is Controlled Falling Forward

People walk by propelling themselves forward in a way that would cause them to fall, then swinging a leg ahead to prevent the collapse.

So it is with innovation and economic progress. Change comes in a way that threatens to land us on our faces, but we swing a leg forward and find ourselves further advanced than before.

I was reminded of this today when I saw the Washington Post headline about the digital television transition: “Digital TV Ready to Rule the Tube, Leaving Some Viewers in the Dark.”

If it’s true that 3,000,000 homes in the U.S. will find their TV screens blank on Saturday — and if the people in those homes care — they’ll swing a leg forward by getting a digital TV converter, and the march to progress will continue.

If you think about falling forward in isolation, it looks like a bad idea, and earlier this year Congress delayed the DTV transition. Thank goodness we’ll get to take that step now.

America Threatened as Never Before

The Justice Department is on the job.  Perceiving a dire threat against the American republic, they have acted to keep America safe.  As my colleague Sallie James noted yesterday, they are stealing confiscating the money of Internet gamblers.

Reports Richard Morrison of our friends at the Competitive Enterprise Institute:

Just when it seemed that those in power had begun to think about Internet poker in a positive light, the Department of Justice throws us back into the digital dark ages by seizing $34 million in funds rightfully owned by around 27,000 online poker players. The government is alleging that the funds are associated with illegal online gambling and money laundering.

In a letter sent to Alliance Bank, the prosecutor said accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, assistant U.S. attorney for the Southern District of New York.

Knowing that the federal government is busy violating our privacy and grabbing our money to save us from ourselves just makes one feel great to be an American

Beyond Irony

Karl Rove should have been named Man of the Year at some point by the Democratic National Committee. The political consultant/Bush adviser played a big role in expanding the burden of government, convincing Bush to saddle the nation with fiscal disasters such as the “no-bureaucrat-left-behind” education bill, the corrupt farm bills, the pork-filled transportation bills, and the horrific new entitlement for prescription drugs. He also helped ruin the GOP image with his inside-the-beltway version of “compassionate conservatism,” thus paving the way for big Democratic victories in 2006 and 2008.

I can understand why libertarians have no desire to listen to his advice, but I’m baffled why Republicans or conservatives would give him the time of day. Yet he is a constant presence on FOX News and has a weekly column in the Wall Street Journal. With no apparent irony, his latest WSJ column is entitled “How to Stop Socialized Health Care.” Too bad he didn’t follow his own advice in 2003 when pulling out all the stops to enact the biggest entitlement in four decades.