Archives: 01/2010

Where’s Our Bailout Vote?

It’s easy to forget that the financial crisis was not simply one of American financial institutions getting into trouble; banks around the world found themselves on the brink of failure.  One of the more interesting cases is Landsbankinn, a privately owned bank in Iceland.  Landsbankinn also operated a branch in Britain and the Netherlands called “Icesave.”  When Icesave failed in 2008, the British government rushed in and covered the deposits of its British savers — a move that was neither requested by Landsbankinn or the government of Iceland.  Now the Brits are demanding that Iceland pay them to cover those expenses.

For a brief moment it looked like that was exactly what was going to happen, as the legislature in Iceland passed a bill to pay off the Brits.  Sensing the public opposition, Iceland’s president blocked the bill.  This is likely to lead to a public vote by the people of Iceland on whether they want to cover the losses of British depositors in Icesave. 

Britain had no legal basis for seizing Icesave assets in the UK, nor did depositors in Icesave have any right to have their losses covered.  If England wants to bail out its citizens, that is its business.  Asking Iceland to foot the tab afterwards sets a dangerous precedent.

But then at least the citizens of Iceland are getting a vote on whether to bail out or not.  By comparison, both U.S. Treasury Secretaries Paulson and Geithner have decided that U.S. taxpayers must honor foreign investments in Fannie Mae and Freddie Mac, even if those investments were explicitly not insured by the U.S.  government.  Perhaps the U.S. could learn a little about democracy and accountability from Iceland.

Eat, Pray, Love, Marry—as Long as You’re Heterosexual

Elizabeth Gilbert, the bestselling author of the memoir Eat, Pray, Love, is back with a new book, Committed: A Skeptic Makes Peace With Marriage. In her earlier book Gilbert reflected on her broken marriage, her travels around the world “looking for joy and God and love and the meaning of life,” and her determination never to marry again. In the new book we learn that she surprised herself by meeting a man worth settling down with, a Brazilian living in Indonesia. So they became a couple and settled near Philadelphia, with Jose Nunes regularly leaving the country to renew his visitor’s visa.

But then came a legal shock:

She was in the early stages of research for that book when Nunes was detained, after a visa-renewing jaunt out of the country, by Homeland Security Department officials at the Dallas-Fort Worth International Airport. Popping in and out of the country as he’d been doing was not legal, Nunes was told, and if he wanted to stay permanently they would have to marry.

Gilbert didn’t want to marry. She and Nunes spent 10 months traveling in Asia. But then, reading about marriage, writing about her aversion to marriage, getting closer to her new partner, she decided to marry. And so they did. And they lived happily ever after in the New Jersey suburbs.

A happy ending all around. As long as you’re heterosexual. Because, of course, if you’re gay, the U.S. government will tell you that your life partner from Brazil may be allowed to visit the United States, but he won’t be allowed to stay. And guess what? He could stay if you were married, but you can’t get married. Catch-22. And even though you could now marry in some foreign countries and some American states and the District of Columbia, the Defense of Marriage Act still prevents the federal government – including its immigration enforcers – from recognizing valid marriages between same-sex partners.

Is this just a theoretical complaint? As a matter of fact, not at all. At least two well-known writers have recently faced exactly the same situation Gilbert did: a Brazilian life partner who couldn’t live in the United States. Glenn Greenwald, a blogger, author of bestselling books, and author of a Cato Institute study on drug reform in Portugal, has written about his own situation and that of others. Like Greenwald, Chris Crain, former editor of the Washington Blade, has also moved to Brazil to be with his partner.

Carolyn See, reviewing Gilbert’s book in the Washington Post, wrote, “The U.S. government, like a stern father, proposed a shotgun marriage of sorts: If you want to be with him in this country, this Brazilian we don’t know all that much about, you’ll have to marry him.” A shotgun marriage, sort of. But at least the government gave Gilbert a choice. It just told Greenwald and Crain no.

This unfairness could be solved, of course, if the government would have the good sense to listen to Cato chairman Bob Levy, who wrote last week in the New York Daily News on “the moral and constitutional case for gay marriage.” And it may be solved by the lawsuit seeking to overturn California’s Proposition 8 that is being spearheaded by liberal lawyer David Boies and conservative lawyer Ted Olson, writes Newsweek’s cover story this week, “The Conservative Case for Gay Marriage.” Until then: eat, pray, love, marry – as long as you’re heterosexual.

The Real World - D.C.

Reason.tv has a characteristically good video about the failure of House and Senate leaders (and the president) to make negotiations about the health care bill transparent.

It’s probably not true, House Speaker Nancy Pelosi’s statement that “there has never been a more open process…” But even if it is, that doesn’t matter. Technology that can make the legislative process far more open is there, and the audience wishing to use it is there too.

The public’s expectations for open government have risen to what can be achieved—matching past practice is not good enough.

No Privacy Please, We’re Millennials

TrueSlant’s Kashmir Hill notes—and endorses—Facebook CEO Mark Zuckerberg’s conclusion that the kids today won’t stay off my lawn just don’t care much about privacy.

On the one hand, this shouldn’t be terribly surprising. Quite apart from the recent proliferation of social networking technology, generational researchers have long contrasted the heavily supervised and scheduled upbringings of (middle class) Millennials born in the ’80s and early ’90s with that of their “latch key” Gen X predecessors. And for anyone currently of college age, post-9/11 levels of security theater are viewed not as a novel expansion of official intrusion, but as the baseline, as normal. This can’t be a matter of total indifference to the fogeys among us, because shifting norms will affect both legislators’ willingness to ratchet up surveillance and, at least potentially, judicial assessments of which “expectations of privacy” society is prepared to recognize as “reasonable” for Fourth Amendment purposes.

Still, let me throw out some grounds for questioning this broad generational diagnosis. Privacy is not just a function of the raw quantity of information available about each of us, but of the control we exercise over that information. To be sure, it may seem that we have less of that as well when any scrap of data that appears on the Internet can so easily be copied and circulated. But for the generation that came of age online, those scraps of data are often part of a very conscious public performance of identity. Not necessarily a performance all of them will be eager to own ten years down the line, but a performance all the same.

In his excellent book The Digital Person, legal scholar Dan Solove contrasts two kinds of privacy dystopia: the Orwellian and the Kafkaesque. The focus in the Orwellian vision is on exposure: Big Brother’s spies and cameras are everywhere, and no detail of your personal life too minute to escape notice. But the plight of Kafka’s Josef K. is somewhat different: He finds himself at the mercy of an inscrutable bureaucracy, with no access to the details of his case file, and no way of tracing the provenance of the information it contains or correcting errors. We are more exposed, but we increasingly set the terms of our exposure.

It’s easy to look at all the information that comes up in a simple Google search for someone’s name and conclude that privacy is dead. But I think it’s at least as significant that the crucial first page of results is likely to consist of information that the individuals themselves have chosen to make public: Blogs, Facebook or MySpace profiles, Twitter accounts, Last.fm pages, YouTube channels. A similar inquiry a generation ago surely would have been much more laborious and less fruitful, but it also would have consisted to a far greater extent of what others had to say about the target: gossip first and foremost, but perhaps also press mentions, official records, and so on. It’s not that such information is now less accessible, but for the average person, it’s pushed to the margin by what we’ve chosen to disclose. That’s not an unmixed blessing—some may feel as though this merely traps them in a kind of openness arms race—but neither is it the privacy death-spiral a purely quantitative analysis might suggest.

Monday Links

  • So, have you been following the health-care debate on C-SPAN? Oh wait…

Al Qaeda Wants You to Panic

If you read just one thing on al Qaeda’s failed Christmas Day bombing, read Fareed Zakaria’s column in today’s Washington Post.

If you’re hungry for more, Peter Beinart in Time and this article in the Wall Street Journal also get it right.

And if you’re convinced, or even modestly intrigued, by the suggestion that one of the key goals of terrorism is to terrorize, and the appropriate response is to not be, then listen to or watch this event on Wednesday.

Federal Bias Toward Homeownership

The Wall Street Journal ran the story last week: “U.S. Now a Renters’ Market.” Apartment vacancies hit a 30-year high in the last quarter of 2009, and rents are falling in most markets. For current or former homeowners trying to stumble out of the debris left from the government-fueled housing bubble, a renter-friendly environment is a positive opportunity.

But it’s also a reminder of how the government’s obsession with homeownership continues to distort the market for housing. As the Journal notes, “Government efforts to prop up the housing market also threaten the apartment sector by making it easier for some renters to buy homes. Some landlords have reported a slight uptick in renters moving out to buy homes.”

Homeownership in the U.S. began an upward trajectory following the federal government’s plunge into the housing market during the Great Depression. Prior to that fewer than half of Americans owned their own home according to University of Pennsylvania Prof. Thomas J. Sugrue. Owning one’s home is now viewed in this country as American as apple pie. but as Sugrue points out, this mentality is “a story riddled with irony”: 

[F]or at the same time that Uncle Sam brought the dream of home ownership to reality—he kept his role mostly hidden, except to the army of banking, real-estate and construction lobbyists who rose to protect their industries’ newfound gains Tens of millions of Americans owned their own homes because of government programs, but they had no reason to doubt that their home ownership was a result of their own virtue and hard work, their own grit and determination—not because they were the beneficiaries of one of the grandest government programs ever.

Indeed, the housing industry “army” remains a potent force behind the government’s distortionary housing policies, as I discussed in a policy analysis on the Department of Housing and Urban Development’s failures:

An important driver of the bad policymaking is the large influence that housing lobby groups have in Washington. Ultimately, federal policymakers are responsible for their actions, but a brief review of the political power of the housing lobbies illustrates where policymakers get a lot of their bad ideas.

Since the financial crash, one would think that Congress and the administration would be moving to withdraw federal housing subsidies from the market because they have caused so much damage. However, the opposite is happening. Policymakers are following the advice of the various housing lobby groups that continue pushing to expand federal intervention in housing markets.

Politicians justify the federal government’s vast array of subsidies for homeownership on its alleged civic virtues. But as we’ve seen in the wake of housing bubble’s bursting, there’s nothing virtuous about putting people into homes that they can’t really afford.

Wharton real estate professor Joseph Gyourko recently described “Five Myths about Home Sweet Homeownership” in the Washington Post. He dismissed the idea that homeownership makes better citizens:

This is the rationale behind the government’s many efforts to subsidize and expand homeownership, and there is an appealing logic to the argument. Since homeowners have a financial stake in their communities, one might expect them to be more responsible and involved citizens. But there’s no overwhelming evidence that higher homeownership rates make for better societies. Austria, Germany and Denmark all have ownership rates in the low 40 percent range, meaning that just over two-fifths of all housing units are occupied by their owners. This is well below the 68 percent ownership rate in the United States, but those countries don’t appear to be suffering a shortage of civic-mindedness. At the other end of the spectrum, Spain’s ownership rate tops 80 percent, but no one seriously claims that this makes Spaniards better citizens than Americans.

Gyourko also frowned on the idea that owning a home is cheaper than renting one:

It’s true that if you own, you don’t have to write a check to a landlord. However, you have to cover all the costs of maintaining the house. It is the same house with the same operating costs, whether you pay them directly or whether you pay rent to cover them. By covering these costs as the owner-occupier, what you spend (including your mortgage payment) comes very close to what you would have spent if you rented your house.

I often hear people say that owning a home is better than renting because with the latter “you’re just throwing your money away.” But I would question just how much one truly “owns” when, for example, a person puts down the Federal Housing Administration’s minimum of 3.5 percent. As one of the increasing number of Americans living in a house with a mortgage that’s “underwater,” I don’t view myself as owning anything. I’d much rather be “throwing my money away” on rent to a landlord than being in debt to my mortgage company.

Gyourko has stated elsewhere that “we should have a level playing field” when it comes to homeownership versus renting. This can only be achieved by removing the government from the housing market. Unfortunately, Washington policymakers in both parties are very, very, slow learners, and we all pay a price for that.