Advice is like snow;
the softer it falls,
the longer it dwells upon,
and the deeper it sinks into,
the mind.
Samuel Taylor Coleridge
A Nightmare From K Street
Regular readers know I've coined some colorful recurring feature titles, e.g., Sunday Talk Soup, Political Potpourri, Obama Narcissistic Behavior Watch, and Wonderful World of Obama. I'm ready to announce a new one: "A Nightmare From K Street". K Street, of course, is the legendary address synonymous with lobbyists. I don't resent lobbyists doing their job anymore than I blame Charlie Brown's little sister Sally for wanting her fair share.
I hold government responsible: you are talking about an organization spending nearly a quarter of GDP. It's an asymmetric relationship: government is a monopoly, and government imposes rules on businesses, not the other way around. I've been sounding a familiar theme over the past few weeks: increasing, unsustainable government scope creep, the road to serfdom, economic fascism, i.e., a government-dominated economy. Government does not have to own businesses to pull their strings. This feature will focus on perverse, corrupting nature of government intervention in the economy.
AEI's Wallison and Pinto authored a well-written article on the housing bubble. Some basic takeaways:
- "The United States is the only developed country with a significant government role in housing policy. Most other countries leave housing finance largely to the private sector, have less volatility in housing starts and house prices, and do not suffer the recurring crises characteristic of the US market."
- "A private US market would offer homeowners interest rate reductions for substantial down payments, limits on refinancing, and more rapid amortization."
- "In less than twenty-five years, average home equity plunged from 45 percent to 7 percent. Since 1986, residential mortgage debt has increased from 39 percent of gross domestic product to 50 percent in 1999 and then to 75 percent in 2007. "
- "The private housing finance system has virtually disappeared, and the government system that remains is pursuing the same policies that produced the current problems."
- "Government policies are also to blame for the deterioration in the US housing market, including affordable housing goals imposed on Fannie Mae and Freddie Mac in 1992, the thirty-year fixed-rate mortgage, the mortgage interest tax deduction, the right to refinance without penalty, and the Community Reinvestment Act."
- "In 2009, one in four taxpayers itemized mortgage interest; on average, families stay in their homes for only seven years."
- "The FHA has increased its market share of home purchase loans, from 8 percent in 2007 to 43 percent in 2010."
- "One factor may have been an income tax law change in 1997, which made speculating in homes a vocation for many homeowners. A married couple could live in a home for two years and pay zero tax on the first $500,000 of capital gain."
- "Between 1995 and 2004, the US homeownership rate rose from 64 percent—where it had been for thirty years—to more than 69 percent."
Warning: reading this article may raise your blood pressure. The Three Stooges are clearly Bill Clinton, George W. Bush, and Barack Obama. I think what's particularly obscene is the fact that even after the meltdown, Democrats and Barack Obama have continued to grow the government's footprint into lending (look at the FHA bullet point above). Oh, yes, they want to bash the favorite whipping boy, the banks. No doubt that some banks took imprudent risks, but Obama in a still tough economy was handing out new FHA loans with low down payments like candy: without housing prices at a bottom and job security tenuous at best given high unemployment, it's like catching a falling knife and exacerbates the government's losses.
It's difficult to explain these facts in any way short of gross incompetence by the Congress and the Presidents. Why were the GSE's lending out fixed mortgages at 30 years, knowing the average housing tenure ownership was 7 years? Why was the government subsidizing rapid turnover in housing ownership? Why, just years after investors were hyping absurd Internet company valuations in terms like "we are in a new economy where profits don't matter", is Bush rejoicing at the highest percentage ownership of housing (in a tepid growth economy) as if the long-term historical average of ownership didn't matter? What about the declining amount of average home equity, the historically high relative exposure of the government to risk?
Here we are in an allegedly "free market" economy. Yet, just like we're among the last countries not to privatize the post office yet, we're also the only major economy to intervene in the housing market. Why haven't all the other developed nations intervened in the same way as our government has? In fact, ownership is comparable--without policy adjustments or exposure of the public sector to similar risks.
It's time for government to GET OUT OF THE BANKING BUSINESS. It's time to repeal laws that subordinate risk of home ownership to social policy considerations. It's time for home purchases to be treated like any other purchase--without the government bribing the prospective homeowner.
The US Government's Role in Building and Bursting the Housing Bubble
[4/28/12: See here for an update.]
View more presentations from AEI
Student Loan Subsidies? Thumbs DOWN!
This may seem like a strange coming from a former professor, but I oppose subsidies for student loans (without Congressional action, interest rates will double from 3.4% to 6.8% this summer). I am concerned about the risk of losses, especially given the fact that we are talking about the federal government's exposure to student loans being up to a trillion dollars; worthy students should be able to get loans, especially from the private sector.
Speaker Boehner is willing to do a deal doing a quid pro quo of interest rate subsidies with the healthcare preventive care fund (which, of course, Democrats will heatedly oppose), and Romney has also signaled support. I think Boehner and Romney are just trying to co-opt Obama on the issue. Boehner is talking about pay-go, but I see all of this as politics and business as usual. (An Internet search didn't reveal Ron Paul's position on this issue, which is intriguing because Paul gets strong support from college-age voters. I would think Paul's position is similar to mine on principle; it may well be that he thinks his position is obvious or my query was poorly written.)
I personally believe that colleges factor subsidies into pricing decisions. We already know a number of students receiving subsidized loans and/or Pell grants never complete their degree problem. I think the more we do this kind of thing, particularly with Obama unconscionably selling college like snake oil, we end up contributing to yet another bubble (as if we haven't learned enough from stocks and real estate!), and sooner or later, the day of reckoning is coming, because the college cost bubble is unsustainable.
[4/28/12: See here for an update.]
Rubio's Revised DREAM Act? Thumbs UP!
Senator Rubio (R-FL) would provide similar legislation to the failed DREAM Act of the 111th Congress, with a principal difference being no guaranteed special path to citizenship (i.e., an unauthorized dependent would be allowed to attend college or work and get a terminal residency status). I voiced a similar concern at the time, because I wanted equal protection when it comes to granting citizenship. Note that citizenship is still possible through Mexico's legal immigration agreement with the US, but they won't get privileged status as in the Dems' version. Speaker Boehner is ambivalent given well-known activist opposition to any softening of a position on unauthorized aliens. I think Boehner should get behind it: Dems are under pressure from the Latino community to make progress on the issue, and I think they would reluctantly agree to half a loaf vs. no loaf.
By some polls, Romney is down over 2 to 1 among Latinos; I expect Romney over the weeks ahead to bring up visiting worker visa reforms (which the labor unions have routinely vetoed). But I think his support of the Rubio legislation is a no-brainer, because, among other things, it boxes Obama in. Romney is probably worried by a media conservative backlash.
Political Potpourri
I was puzzled about the fact that the WSJ delegate count shows no Romney bump in Pennsylvania following his big victory there, but I ran across an article which said that Pennsylvania delegates were running officially unpledged. I'm still baffled by what seems to have to be a big bounce for Obama in the Gallup poll, going from about 5 points behind Romney to 6 ahead. Fox News shows a tie and Rasmussen has Romney up by 3. Romney is struggling in the battleground states but we're still over 6 months until the election. Clearly Romney needs to pick up support among Latinos. See. my discussion of Rubio's DREAM compromise above.
Public School Teacher Abuse of Students:
ZERO TOLERANCE
Teaching has its moments. Two moments particularly stand out at my alma mater at UH. Probably the most personally embarrassing happened in the context of my undergraduate decision support systems. I required my students to give a presentation on their class project. So one day this clean-shaven guy with a recent haircut in a nice suit came into my classroom and approaches me at the head of the class. I honestly didn't recognize him and thought that he was in the wrong class; the whole class started roaring with laughter at me. The student thought that I was putting him on; I had never seen him without facial hair, long hair, and jeans.
The second, also at UH, was the most bizarre; I've never heard or seen this happen in any other college classroom. I was teaching in an auditorium style classroom. There was this one coed whom was a dead ringer for my 14-month younger little sister, only taller. She was sitting roughly halfway up in the center of class. Sometime during the last 15 minutes of class, she started doing something inappropriate, and it felt like I was invading my sister's privacy: I wanted to wash my brain out with soap. I wasn't quite sure how to handle it: I didn't want to draw attention to what she was doing or embarrass her in front of the class. Do I discuss it with her after class, given pervasive ideological feminism and my being a single white male? No-win situation. I spent the rest of lecture looking at the floor. (In case you're wondering, I came to the next lecture with blank drop slips in hand and said that I would exercise my instructor's prerogative if the nonsense didn't stop. A handful of concerned students, including Sister Clone, approached me after class. No more student problems, and no one was dropped from class.)
The following two videos (the second is a few months old, the first is currently a viral video) reflect teachers and teacher aides in special education classes. (The second video is actually a composite of 2 clips.) In all these cases, there were secret recordings made of encounters between the children and their teachers.
I generally have good self-control. In all the classes I've taught, I've been very careful not to criticize or mock a student in front of his or her peers; in fact, in one class, a coed literally had a temper tantrum in front of the class (I had issued a brief rebuke at the start of lecture that I caught two unidentified students whom turned in the same work; she openly questioned whether she was one of the persons involved: talk about self-incrimination!) and I responded with patience. I never raised my hand to nephews or nieces when babysitting them, no matter how they misbehaved.
I have repeatedly stated in my posts that children are gifts from God. In a world where raising a typical child is challenging enough, I can't imagine how much harder it is to raise children with special needs or children whom look different. All kids want to fit in, and making friends is hard enough without individual differences. I have a lot of political differences with Sarah Palin, but the way she loves her youngest child with special needs tells me volumes about her character; I'll always respect her for her decision to bring that precious little boy into the world.
I've never known an autistic person like Akian Chaifetz. One of the incidents in the tape of 10-year-old Akian involved his seeking reassurance that he would be seeing his dad again after visiting his separated mother over the weekend, and instead of getting reassurance, the teacher broke his spirit. It was totally unnecessary and heartless. It was cruel and unusual punishment by someone whom knew exactly what she was doing. There is no excuse for that: she's a trained teacher; we expect a higher, not lower standard of behavior. You know (at least I knew) that this wasn't an isolated incident. These incidents are off the charts in terms of what I would expect from any legitimate teacher even if she was having a bad day. I think Stu recorded the video in an angry mood, but I don't blame him.
As for Cheyanne: I know how sensitive teenage girls are about their appearance, and I know at least one niece went through a very tough time. It's bad enough that Cheyanne has to deal with likely cruel comments from others because of her special needs. (I think she's a beautiful gift from God.) It broke my heart to hear someone she trusted undermine her positive self-image. I have no idea if and when it's ever appropriate for a teacher to discuss a student's appearance under normal circumstances (obviously if the child looks ill, injured, has a disheveled appearance, etc., a teacher should address the matter). I never discussed my female students' appearance. But I would rely on the old saying, 'If you can't say something nice, don't say anything at all.'
For Julio: I think it's a matter of civility: when someone asks to be addressed in a certain way, you respect that person's wishes. I mentioned before in the blog, I once had a student whom addressed me as 'Ron'; I corrected him: 'Dr. Guillemette'. He defiantly called me 'Ron' again. And a third time. Eventually he figured out that he wasn't getting anywhere and said 'Dr. Guillemette' in a very contemptuous tone. It was more a matter of context: I was his teacher, not his drinking buddy. In the professional ranks I have never been addressed as 'Dr. Guillemette'; a lot of well-mannered people will inquire whether I prefer 'Ron' or 'Ronald'. (In my family, 'Ron' is my baby sister's spouse, and only Aunt Bea used to get away with calling me "Ronnie".)
Julio's teacher is a piece of work. No excuses: you don't address a student with profanity; you don't threaten to kick his ass.
I think a couple of teachers have been reassigned but not terminated. NOT GOOD ENOUGH. I think it's sad that the administrators were absolutely clueless as to what was really going on.
There are lots of good teachers looking for work. That these jerks were not fired for cause is inexcusable; any union protecting these "professionals" undermines its own credibility. Hard-earned tax dollars paying the salary for some ineffectual, unprincipled "professional" whom doesn't like children? NO WAY.
- Akian and Stu Chaifetz: Public School Teacher Abuse
- Clip 1: 14 year old student Cheyanne bullied of Ohio's Miami Trace Middle School bully; Clip 2: 15 year old Julio bullied at New Jersey's Bankbridge Regional School .
Musical Interlude: My Favorite Groups
The Rolling Stones, "Paint It Black". My favorite Stones' rock hit.
