Tag Archives: welfare state

Hate the Game, Not the Players

In his 1973 book, For a New Liberty: A Libertarian Manifesto, Murray Rothbard rejoiced at the momentum that libertarianism had achieved within just a few short years. After almost a century of dominance by the “progressive” movement (both conservative and liberal), Rothbard sensed that the moment had arrived for a rapid and dramatic sea change in American political thought. As he wrote,

“In particular, we must examine the firm and growing conviction of the present author not only that libertarianism will triumph eventually and in the long run, but also that it will emerge victorious in a remarkably short period of time. For I am convinced that the dark night of tyranny is ending, and that a new dawn of liberty is now at hand.”[1]

By 1989, Rothbard had left the Libertarian Party and sought other vehicles for his ideas. While never one to despair, he certainly must have adjusted his expectations of an imminent “Libertarian Spring” by the time of his death. Despite its repeated failures, the state had managed to maintain its legitimacy in the minds of the people. During the apparently prosperous 1990’s, the widespread belief that government no longer worked had subsided. Electoral success for libertarians had plateaued. The name “libertarian” was no longer in the forefront of popular consciousness and rarely, if ever, mentioned in the mainstream media.

Today, all of that has changed. Beginning with Ron Paul’s 2008 presidential campaign, the word “libertarian” can now be heard over the mainstream airwaves again. As the present presidential primary contest gets underway, not only Paul but former New Mexico governor Gary Johnson are openly referred to as “libertarian candidates,” despite the fact that they are seeking the Republican nomination for president. Mainstream media pundits now routinely refer to a significant minority of Republican legislators as “libertarian-leaning.” The “L-word” has been de-stigmatized. Over the next several years, it seems likely that libertarianism is going to get another hearing.

While all of this is great news, it does beg some very important questions. What was the reason for the stigmatization in the first place? More importantly, why has the libertarian movement failed to get off the launch pad after such an auspicious start in the 1970’s?

Certainly the biggest hurdle for libertarianism has been its difficulty for most people to accept. With true liberty comes an enormous amount of personal responsibility. As W. Somerset Maugham wrote, “the path to salvation is narrow, and as difficult to walk as on a razor’s edge.” For an American electorate that has come to expect government to “take care of” so many things for them, rolling back what to libertarians are merely incursions into their liberty seems unworkable. Most people have been taught since childhood that government intervention is necessary and that the slightest reduction in any of it will result in unspeakable horrors.

However, while the task of persuading our fellow citizens to adopt libertarian ideas is difficult, it is apparent that libertarians often compound the difficulty with their approach. Let’s face it, we’re an unforgiving crowd, ready to pounce upon the slightest mistake of logic or deviation from principle with a ferocity that rivals the National Park Police at a Saturday afternoon dance party. Indeed, the most vitriolic attacks made by libertarians are upon other libertarians – for not being libertarian enough.

Yet, we still have plenty left over for those we deem “the usual suspects,” namely government employees, the beneficiaries of government programs, and the military (and this is by no means an exhaustive list). Certainly, there are a plethora of reasons that libertarians might cite to take issue with people in any of these groups. After all, they are actively participating in those activities that are destroying civilized society and robbing us of rights that we are entitled to enjoy. Even those who do not actively participate but who support these institutions with their votes are subject to our unrelenting scorn, typically punctuated by the damning rejoinder “statist.”

Now, these criticisms are almost always well-deserved. In supporting government intervention into our lives here at home and in the affairs of other nations, our opponents are claiming the right to initiate the use of force. Even on domestic issues, these interventions amount to acts of war against us as individuals, for an act of war is nothing other than the initiation of force by one party against another, whether the parties are nations or individuals. It is hard not to respond with sarcasm and contempt when proponents of intervention argue that their opinion is just as valid as ours – the opinion that they have a right to invade the life and property of other people.

Although we have been right on every single issue since the modern libertarian movement was born, it is apparent that our approach hasn’t worked. In terms of national politics, the high-water mark for libertarianism was Harry Browne’s 2000 presidential campaign, which netted less than 1% of the vote. Since then, libertarian candidates have not even done as well.

To use a well-worn cliché of the punditry, much of hardcore libertarians’ rhetoric isn’t resonating. When talking to those just hearing libertarian ideas for the first time, one must be very careful with words like parasite, thief, or murderer. Make no mistake, there is a time and place for calling a spade a spade and there is never an appropriate time to back up on a principle. However, there is an important distinction between vehemently opposing the violation of our rights and denouncing those who (for the most part) unknowingly do so as defective people. The natural reaction of anyone made to feel this way is to reaffirm their self-worth and find any justification – however illogical – for the interventions in question.

This is especially important in dealing with those programs that purport to help the poor. While libertarians should never compromise the principle that money should not be forcibly stolen from taxpayers even for this purpose, we should focus on the theft itself, rather than on those who reap its pitiable rewards. Remember that the perceived necessity for these programs is mostly caused by the myriad other government economic interventions, without which the vast majority of welfare recipients would be gainfully employed. Liberals taking an interest in libertarianism might be open to opposition to these programs based upon the non-aggression principle or the welfare system’s obvious failure. However, they will shut down completely if the argument sounds like the conservative one, which places the blame for the programs on the recipients and their supposed shortcomings.

In addition to eliciting a defensive reaction from those who support government intervention, libertarians have also inspired genuine dislike towards themselves. People who are open to libertarian ideas often conclude, quite understandably, that libertarians themselves are not likeable people. Part of this is rooted in the refusal of libertarians to compromise on their principles, prompting accusations of “extremism.” That is unavoidable without actually compromising – which we shouldn’t do. However, at least some part of this is due to the passion with which libertarians argue their points. When directed at ideas, it is admirable. When directed at people, it can be downright ugly.

As we enter a new era in which libertarianism is again on the table in the mainstream, we should learn from the mistakes we’ve made in the past. There is a time for throwing bombs (in the philosophical/literary sense), and no one does that better than my two favorite libertarian columnists, Will Grigg and Karen De Coster. However, there is also a time, when our friends, neighbors, readers, or audiences have expressed an interest in hearing our ideas, to persuade rather than to attack (something Grigg and De Coster also know and practice). It is important to remember that most of the people, most of the time, want to do what is right. However, they have been taught bad ideas about what is right for their entire lives, reinforced ad nauseum by politicians, media, and popular culture. We are fighting deep emotional attachments to many of these ideas, rather than conclusions arrived at through reason. It is crucial to remember this when trying to persuade those who are genuinely interested.

As the Age of Government draws to its inevitable end, libertarianism has another chance to fill the void. Let us never stop opposing the state at every turn. Let us never compromise that great law of nature, the non-aggression principle. However, let us also recognize that our brothers and sisters in this great family called humanity have not been taught this principle – that it has in fact been purposefully kept from them – and tailor our approach accordingly. When we achieve acceptance of some of our ideas, let us be as quick to praise those who have made that great leap as we are to attack those who advocate for the state. And when those same people take a step backwards on another issue, however illogical and inconsistent that step may be, let us remember the words of that great teacher, “Forgive them father, for they know not what they do.”

If that sounds too religious for your tastes, then Chris Rock put it another way: Hate the game, not the players.

Check out Tom Mullen’s book, A Return to Common Sense: Reawakening Liberty in the Inhabitants of America. Right Here!

[1] Rothbard, Murray For a New Liberty pg. 321

What’s So Hard to Understand About Ron Paul?

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Ron-Paul This time things are going to be different for Ron Paul’s presidential run. After correctly predicting the collapse of the housing bubble and the resulting financial and economic crisis, Paul has become a mainstay on business talk shows, especially on the conservatively-oriented Fox News. One can almost sense the resignation in the voices of talk show hosts and reporters as they acknowledge that Paul will not be ignored by the media this time around – which is ironic because it is these same people who ignored him in 2008.

However, while supporters will rejoice at the increased quantity of coverage of Paul’s campaign, they should be realistic about the quality of the coverage. Namely, supporters should expect that conservatives will agree with him on most of his economic positions, including cutting down the welfare state and rolling back government regulations, but disagree with him on foreign policy.

Similarly, supporters should expect that liberals will agree with Paul on foreign policy (although somewhat reservedly while there is a Democrat running the empire) and civil liberties, but disagree with him on economic policy, especially when it comes to Paul’s positions on responsibly ending Social Security and Medicare.

Watching Paul’s appearance on The View, one could already see this dynamic in action. While the ladies on the show were very gracious to the congressman, Whoopi Goldberg took the lead in asking some policy questions and demonstrated the liberal take on Paul perfectly. She first stated that she agreed that she would like to see the wars end, but wanted to know how Paul could get us out of them (a concern that never would have arisen with a Republican running the empire). After Paul gave his customary answer, “we marched right in there, we can march right out,” Goldberg then challenged Paul on his position that healthcare is not a right. She truly looked baffled that any politician could be both anti-war and anti-entitlement.

On the conservative side, media figures have been doing the opposite routine with Ron Paul for years. Glenn Beck (pre-blackboard) routinely had Paul on during the economic crisis and always emphasized his agreement with Ron Paul’s economic positions and his disagreement on foreign policy. Ann Coulter has also weighed in on Paul in this way, as have countless other media figures.

Neither conservatives nor liberals agree with Ron Paul that the Federal Reserve should be abolished.

Conservatives believe that along with what they would call “free market capitalism” (their version including privileges and subsidies for big business), one must support a large military establishment and an aggressive foreign policy. For conservatives, it is just inconceivable that anyone could support one and not the other. This is not a position that can be supported by reason. Rather, it is closer to an article of faith to which conservatives have developed a deep emotional attachment. The conservative philosophy still has its roots in the “ancien regime,” whereby the king/executive and a wealthy elite control commerce and support a large, active military establishment, both for the aggrandizement of the empire.

Liberals believe this, too. They share the mistaken perception of conservatives that free market capitalism is dependent upon an imperialistic foreign policy. However, instead of wholly supporting it, they wholly oppose it, confusing the state capitalism supported by conservatives with a truly free market. Therefore, liberals oppose imperialism and free markets as if one cannot exist without the other and cannot conceive of anyone who could disagree. As with conservatives, their positions are not reasonable. They are likewise articles of faith, rooted in the ideals of ancient democracies in which the majority had unlimited power over the life and property of individuals, taken to new extremes by Marx and other socialists in the modern era.

Ron Paul’s positions do not fit into either one of these belief systems, nor does he seem to “compromise” between the two. Conservatives accuse him of being too liberal. Liberals accuse him of being too conservative. For both groups, many of his positions seem completely unexplainable.

To his supporters, Paul’s positions are so obviously consistent that they often attribute genuine confusion about them to some sort of media conspiracy. Paul bases all of his positions on what we today call “the non-aggression axiom,” which Thomas Jefferson and his supporters called “the law of nature.” This is a very simple principle which states that because we are all created equal, no one individual or group has the right to initiate force against another. Consistently applied, this principle prohibits the government from running welfare programs, regulating commerce beyond prohibiting aggression, or waging war unless the nation is actually attacked.

Paul insists that the military only be used after a declaration of war because in order for Congress to issue this declaration, the president has to cite the overt acts of war committed by the other nation against the United States. The Congress then deliberates and votes to determine whether or not a state of war already exists. That process binds the government’s use of the military to the law of nature. That is the way the declaration of war power has been exercised in every case in American history.

The main reason that conservatives and liberals do not understand Paul’s reasoning is that they have never heard of the non-aggression axiom. Despite the fact that it was the founding principle of the United States, it is not taught in schools. It is not discussed in the media. Instead, 100% of political debate revolves around results. “If the government does A, will B or C be the result?” Conservatives argue B, liberals C. Neither discusses the rights of the parties involved. Paul bases all of his positions upon these rights, which is how all political decisions should be made.

On May 5, Paul will participate in the first debate among candidates seeking the Republican nomination for president. One should not expect the objections to his positions to be substantively different than they were in 2008. While he may get more respect and stage time from the media, conservatives will still try to attack Paul’s foreign policy positions. The most that supporters should expect is the grudging admission that he may be right on economic policy, but that his foreign policy would be some sort of disaster. This follows logically from the fact that conservatives apply the tenets of their political faith and Paul follows the law of nature. He may be right, but don’t expect most conservatives or liberals to have caught up with him yet.

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Next They’ll Have Us Salivating

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“Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.”

– Frank Sinatra as Major Bennett Marco in The Manchurian Candidate (1962)

For anyone who has seen the film classic, The Manchurian Candidate, the quote in the prologue should bring back the subtle horror of the premise of the film. Using experimental methods of operant and classical conditioning, the villains of the film – the intelligence community from the eastern communist bloc – were not only able to control the actions of their subjects, but their thoughts and feelings as well. While the most horrific scenes in the film are those in which Raymond Shaw is forced to kill people he loves or respects, the control exerted over the other members of Shaw’s unit is equally disturbing and much more relevant to our political discourse today.

For those who have not had the opportunity to see the film, Marco and the other characters who repeat the adoring words about Raymond Shaw only do so because they are conditioned to for the purpose of covering up the massive plot that constitutes the story line of the movie. Marco later says, “It’s not that Raymond Shaw is hard to like. He’s impossible to like!” He tells his superior officer that while praising Shaw he really believed what he was saying, even though deep down he knew it wasn’t true. He had been trained to respond emotionally in a way that contradicted his reason. A more appropriate metaphor for American politics is hard to imagine.

The United States of America was born during the Age of Reason. Its founders believed that reason was the law of nature itself, and that the inalienable rights to life, liberty, and the pursuit of happiness were logical conclusions based upon observable facts. Further, they believed that reason was a duty and a prerequisite of those rights – one could only be entitled to liberty if one followed the law of nature, which requires non-aggression in return for the natural right to do as one pleases. This is why children do not have a natural right to liberty. They must first develop their reason sufficiently to be able to responsibly claim that right. As Locke said,

“The power, then, that parents have over their children, arises from that duty which is incumbent on them, to take care of their off-spring, during the imperfect state of childhood. To inform the mind, and govern the actions of their yet ignorant nonage, till reason shall take its place, and ease them of that trouble, is what the children want, and the parents are bound to: for God having given man an understanding to direct his actions, has allowed him a freedom of will, and liberty of acting, as properly belonging thereunto, within the bounds of that law he is under. But whilst he is in an estate, wherein he has not understanding of his own to direct his will, he is not to have any will of his own to follow: he that understands for him, must will for him too; he must prescribe to his will, and regulate his actions; but when he comes to the estate that made his father a freeman, the son is a freeman too.”[1]

So, it is not surprising that an absence of reason has accompanied the loss of liberty, for it is only the former that makes possible the latter. No one would logically conclude they would benefit by placing their life, liberty, or property under the arbitrary power of anyone else, for to do so is profoundly illogical. Yet, every generation, Americans have surrendered more of their rights to a government that has grown into the most pervasive institution of power that has ever existed in human history. They have done so for the most part because they have allowed their passions to replace their reason. Until we recognize this, every “change” we make is going to be for the worse.

Third parties and other tiny constituencies aside, American political discourse is dominated by our two major political parties. Their primary goal in any debate is not to reach the truth, but to enlarge their voting base. Having discovered long ago that appealing to the voters’ feelings is more effective than appealing to their reason, there is little more to most political dialogue coming out of politicians and activists than ad hominem attacks against their opponents and empty jingoism that similarly appeals to conditioned emotional responses rather than any rational position or argument (and once in a while, they cry). Perhaps this has always been true in politics; perhaps it will never change.

However, what is truly frightening is how successfully these parties have been able to train average Americans to think and act as they do, and ultimately to cast their votes likewise. For anyone that has given their allegiance to either of the major parties, no dissent or even discussion of that party’s platform is permissible.

If you are talking with someone who identifies him or herself as a Republican or a “conservative,” the mere suggestion that the United States government should consider decreasing military spending or changing their nation-building foreign policy results in a vitriolic, ad hominem assault of the most vicious nature. Often, the response will reference positions that you not only did not take but were not remotely related to the discussion you were having before you questioned party dogma. You may criticize the war in Iraq and find yourself attacked as “godless” or an atheist or even a traitor, while your subject goes on to tell you why you are so wrong about supporting amnesty for illegal aliens, regardless of the fact that the subject of illegal aliens was never heretofore mentioned and you happen to oppose amnesty for illegal aliens.

Similarly, when talking with someone who identifies him or herself as a Democrat or a “liberal,” any mention of support for a free market will elicit a similar attack. You may be called a racist, a fascist, selfish, or greedy amidst a blustering diatribe about the importance of the separation of church and state and religious tolerance, which are likewise subjects that heretofore were not part of your conversation and which you may well agree with wholeheartedly.

One must recognize at this point that you are not engaged in a debate. The person you are talking to is no longer reasoning, but instead giving conditioned responses to words he or she has been trained to react to with abhorrence and intolerance. In most cases, you can expect no chance to redirect the person back to the discussion you were having nor any chance to make a further point, as your opponent will likely continue to cut you off and ultimately withdraw from the conversation, having heard nothing beyond the trigger word(s) that set the absurd reaction in motion.

If the whole encounter seems bizarre, consider the associations that were likely revealed during it. Anti-war equals godlessness (is God pro-war?). Free market equals racism. Property equals greed. Neither Orwell nor Burgess could have imagined a victory over reason so complete. Soon, like the iconic Dr. Pavlov, our masters will need to do no more than ring a bell to direct our thoughts, feelings, and actions.

Without reason, there can be no liberty. Reason – the law of nature – is what allows us to discover the natural, non-aggression limit to human action. It is what defines liberty and distinguishes it from the state of war. It is doubtful that any one of us has not been guilty of abandoning reason at one time or another, although there are some that are certainly guiltier than others. It is also clear that there are those who would go on exhorting our passions in order to cloud our reason and therefore rob us of our liberty, for their own gain at our expense.

There is only one way that we can regain our freedom. We must “pull out the wires,” as Major Marco said to Raymond Shaw. We must break the links that we have allowed others to implant within our minds and begin to listen to one another again, even when we disagree. Pacifism is not communism, freedom is not racism, and property is not greed. These associations are as insane as “War is peace, freedom is slavery, ignorance is strength.”[2] We should be disgusted with our political class for manipulating us this way and ashamed of ourselves for allowing them to train us like dogs.

Until we break free from this irrational partisanship, we are like the children that Locke describes above, without the understanding that qualifies us for liberty. There are plenty in our political class that prefer us this way, so that they may “will for us” in regard to every aspect of our lives. However, unlike wise and loving parents, they have demonstrated throughout all of history that they will teach us nothing but nonsense and guide us nowhere but to war and economic destruction. Even a small child will stop touching the stove after he has burned his hand a time or two. Are we not even as intelligent as this?

There are a few simple things to keep in mind as you attempt to fight the good fight. If you are conscientiously arguing a position that you believe in but find yourself being called a racist, a satanist, a right-wing extremist, or a traitor, keep doing what you are doing. You are very likely winning. On the other hand, if it is you that is resorting to calling your opponent names, ask yourself, “Why am I attacking my opponent? Am I unable to refute his argument?” Maybe it is time to consider the other side.

If you find yourself saying anything that you heard a politician or any of the politicians’ lapdog media hounds say, think very carefully about whether you really agree with it or not. It is likely that further thought will change your mind.

Finally, if you hear a bell ring and find your mouth starting to fill up with water, be aware that there is something very, very wrong.

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[1] Locke, John Second Treatise of Government Hackett Publishing Co. Indianapolis, IN (1980) pg. 32

[2] Orwell, George 1984 New American Library (Penguin Group) New York, NY (1961) pg. 4

Tom Mullen is the author of A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

>Housing in the New America II: The Stage is Set

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>“Abolition of private property and the application of all rent to public purpose.”

– Karl Marx and Friedrich Engels (1848)[1]

Just after the abominable housing bill of this past July, I wrote an article about the very real prospect of the government getting into the property management business, due to the nationalization of the mortgage industry that effectively occurred when the government seized Fannie Mae and Freddie Mac. The scenario was admittedly conjectured, but unfortunately it seems to be playing out even worse than I could have imagined (and I can imagine pretty bad from our government). An article in the New York Times put one more piece of the puzzle in place.

Keep in mind that the real devastation of this economic crisis has not really occurred yet. We still don’t have double digit unemployment (at least using the government’s numbers), but that is inevitably what is coming. Right now, we have unemployment that is setting records for one-month growth, but we do not have tens of millions of Americans out of work. That makes today’s news all the more disturbing.

If you have any experience with rental properties, as either a landlord or a renter, you know that when a rental property goes into foreclosure, the tenants are routinely evicted. It is much easier to sell a foreclosure property without tenants, among other reasons because choosing tenants is one of the skills that separate successful landlords from unsuccessful ones. Good landlords also usually want to do some renovation to the property, which is at least inconvenient and to some extent virtually impossible with the property already occupied. The justification for the eviction is, of course, that the property now lawfully belongs to someone else (the bank), who never consented to the rental agreement and has every right to refuse to honor it.

Or do they? According to the Charles Duhigg of the Times, Fannie Mae announced today that it would “sign new leases with renters living in foreclosed properties owned by the company.” Of course “owned by the company” is an ironic choice of words, because “the company” is none other than the U.S. government. While my previous article envisioned Section 8 as the possible vehicle for converting large percentages of the (former) middle class into government tenants, this new policy today goes one step farther. Section 8 uses public funds to subsidize rent payments to private owners of rental properties. This policy represents renters making rent payments directly to the U.S. government, for the “privilege” of living in government-owned[2] homes. While the numbers for homes owned outright by Fannie Mae are small at the moment, it is no less a watershed moment.

Of course the policies of Fannie Mae are not binding upon the so-called “private sector” (is there still one?), at least not yet. As the Duhigg reports,

““We’re not in the business of managing rental properties, and we’re not in the business of being a landlord,” said Thomas Kelly, a spokesman for JPMorgan Chase, which owns about two million loans. “Clearly the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.”[3]

It is somewhat amusing that a representative of J.P. Morgan Chase would speak so reverently about the law, as if it were some bastion of property rights and justice. Having been the beneficiary of the lion’s share of the largesse during the financial sector bailouts, this bank should know better than anyone that the law and justice no longer have much to do with each other. If property rights get in the way of some new government theft, a law is simply passed to eliminate the obstacle. Having eschewed the concept of republican government in exchange for “democracy,” there are now no rights that cannot be violated, as long as a sufficient number of votes can be raised among elected representatives. Indeed, our government does not really recognize “rights,” which transcend government. It grants privileges and erroneously refers to them as rights.

I doubt that private sector banks will retain the privilege of evicting tenants from the properties they acquire in foreclosure for very long, once the new presidential administration and Congress take office. Already, the cries for “fairness” are beginning to be heard. As the Times article reports,

“Some lawmakers and housing advocates say such policies are unjust.
“If your loan is owned by Fannie Mae, you get to stay in your home. If your loan is owned by someone else, you’re on the street,” said Mr. Taylor of the National Community Reinvestment Coalition. “These banks need to realize they’re in the property management business now, whether they like it or not.”[4]

Note the use of 21st century coercion-euphemisms. Any statement beginning with “You need to…” is one that could just as well start with “I ORDER you to…” At least the tyrants in centuries past made such statements with swords drawn and pointed at their victims. Today’s authoritarianism with a smile is actually more horrifying.[5]

With all of the travesties of justice taking place during this blackest of years in our history, one might argue that insisting that banks retain the right to put renters out on the street represents confused priorities. Perhaps so. However, one thing is certain. The line was already blurred regarding the right to own property before this, as the government could seize it from you merely for being unable to pay its property taxes. Now that the banks (and soon anyone buying properties in foreclosure) have no say over who lives in the house that they just bought, that line has become a smudge at best. In reality, there really is no such thing as homeownership. Government merely grants the privilege of stewardship over ITS homes. This latest farce merely makes that fact clearer.

So much for the moral considerations on this issue. I seem to have been far less efficient in confronting them than the government, which breezed right on by them. Who says it can’t get things done quickly?

As far as unintended consequences, this latest bit of idiocy is so ripe with them that it is hard to know where to begin. I am not sure who truly manages these properties, now that they are the property of the government but still occupied. Who does the tenant call when the sink starts leaking? If you think you see a program like Medicare or Medicaid coming, you’re not alone. We could always use another network of overpaid providers rendering sub-par service at a cost of hundreds of billions of dollars to taxpayers. Worse yet, as more and more average Americans wind up in government-owned or subsidized homes, the program to pay handymen to do repairs could grow into an institution, just like the aforementioned medical programs. Among other negative consequences, this will tend to push the prices for these repairs through the roof for everyone, just as government-provided medical care and student loans push up the cost of healthcare and tuition for everyone. Let’s hope the government doesn’t start providing beer – we can’t afford bubble prices for that in times like these!

Of course, the glaring weakness in this latest move has to do with the central issue – selling the foreclosed properties. The whole reason behind lenders taking possession of a property when the borrower defaults is to sell that property and recover some of the losses on the loan. This new policy of Fannie Mae’s, which will almost certainly become a law sometime during the next Congressional term, will only prolong the time that these properties are on the market. Far less buyers will be willing to acquire properties if they are forced to take their chances on a tenant that they haven’t personally vetted, and on a property where their options are limited in terms of what they can do with it after they acquire it. This fits the FDR pattern of intervening into the markets and preventing a needed correction perfectly. The market is trying to liquidate these properties and allow them to be sold at more reasonable prices to more viable customers. The government policy will arrest that process, causing the crisis to take longer resolve itself, if it is allowed to resolve itself at all.[6]

It also goes without saying that the landlords who will buy the homes are more likely to be poorer landlords, as they are by definition landlords who care less about who they rent to. This tends to manifest itself in the appearance and upkeep of the properties, affecting property values throughout the entire neighborhood. Add to that the poor service and quality of work that comes with the government or banks providing the property management and you have the recipe for some scary neighborhoods. Collateral damage certainly isn’t just a military term, once our federal government gets rolling.

So where does this all lead us? I said at the beginning that one of the most disturbing aspects of this story was that an idea like this has been born before the real crisis gets rolling. We have had a market crash and ensuing credit crunch, but everyone seems to be in denial over what inevitably comes next – massive unemployment. Once that starts really manifesting itself (probably as early as next summer), the “state of emergency” mindset will kick in with our government and things could really deteriorate quickly. Right now, loan defaulters are being evicted from the property that they borrowed against and are finding homes in the abundant rental market. However, when the vast majority of them are unemployed, they will need the government to help them, too. It is certainly not hard to imagine a scenario where unemployed loan defaulters are evicted from their homes in foreclosure, only to be “placed” into rental properties that the government owns (but cannot sell), or even into another property that the same bank that just seized their home acquired in foreclosure on somebody else!

For those properties owned by the government, the renters would pay the government directly (eventually it may even be a standard payroll deduction). For those properties owned by a private bank, the Section 8 program will provide the rent subsidies, which the government is now obligated to pay the bank/landlords because they forced them to get into the property management business in the first place. Alternatively, the government may just start buying the houses from the bank, in order to “stablilize” the housing market and because it now has an incentive to grow its new program. The government will certainly have an incentive to put people into the houses that it already owns and cannot sell. This program could realistically feed itself until tens of millions of Americans are in government housing.

On the brighter side, at least this will further solidify the close relationship between our banking institutions and the federal government. We could always use more tight collusion between government and big business. There is no sense in repeating the worst mistakes of the past century without throwing in a little more fascism.

However, the fascist model is more the Republican brand of socialism, at least in this century. The Democrats seems to favor the Marxist variety, as evidenced by their increasingly Marxist rhetoric and their choice of a presidential candidate. Make no mistake, government-provided housing is right in their proverbial wheel house, and you can expect them to jump on the “opportunity” next year’s emergency will afford them to hit this one out of the stadium. The Carter years might look like an economic golden age before this is over. Let’s hope that it is apparent to most Americans in four years that the medicine is killing the patient. Medicare may not be around to cover the catastrophic care needed by 2016.

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[1] Mark, Karl and Engels, Friedrich Manifesto of the Communist Party (The Communist Manifesto) 1848. (This is Plank One of the famous Ten Planks of the Communist Manifesto)
[2] I suppose I should be grateful that the patronizing assertion that “the taxpayers” own Fannie Mae was not made in this particular article. That characterization has been an especially insulting aspect of our conversion to socialism. Ownership can only occur when you CHOOSE to own something, and when you have some control over its disposal. Moreover, it should be evident that even in the unlikely event that our government somehow makes money on this travesty, not one dollar will be coming back to taxpayers, nor should we accept it if it did.
[3] Duhigg, Charles “Fannie Mae Lets Renters Stay Despite Foreclosures” New York Times December 14, 2008
[4] Ibid
[5] Sadly, this expression has become ubiquitous in the private sector as well. Americans brought up under the yoke of coercion know no other way to deal with one another.
[6] Of course, this policy would not by any means be the only factor in houses not selling. Neither will it be the only action government will be taking to block the overall correction and make the depression worse.