Homelessness in the E.U.: Rectifying a Right

In late 2025, the E.U. Commission presented its first European Affordable Housing Plan. The E.U.’s involvement in “social housing,” which translates into federal funds being used to provide housing beyond homeless shelters for people who cannot afford to house themselves, implies that the programs of the states had been insufficient. The U.S. could take a lesson from the Commission’s plan, which is cleverly multi-pronged in tackling the societal problem. Both in the E.U. and U.S., both federal and state funds were needed even in 2025 when neither economy was in recession. It is better to increase the supply of affordable housing when times are good than when unemployment is soaring. This is an exception in the E.U. to the usual pattern wherein the E.U. increases its competencies, or enumerated powers, in periods of one crisis or another. Russia’s multi-year invasion of Ukraine, which borders the E.U., and the Union’s foreign and defense activity demonstrate how European integration has typically been enhanced by crisis rather than when times are good.

The full essay is at "Homelessness in the E.U."

Public Policy on Housing in the E.U.: On the Impact on Federalism

With rents and the price of houses being historically high in 2024 in the E.U., it is no surprise that housing was a salient issue in the E.U. election campaigns that summer. Legislative action on the state level had been insufficient. Hence, President von der Leyen told the parliament, “I want this Commission to support people where it matters most, and if it matters to Europeans, it matters to Europe.”[1] The Union complementing legislative action by state governments on such an important issue is admittedly a step in the direction of solving an urgent problem, but the impact on the federal system in the future should not be ignored. As important as a pressing issue of the day is, someone should be keeping an eye on the shop itself. The gradual political consolidation of the U.S. federal system over more than two centuries at the expense of federalism is an example of what can happen when policy-makers are too oriented in putting out policy “brush fires” without bothering to ask how the federal system itself could be impacted. 

The full essay is at "Public Policy on Housing in the E.U."

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1. Paula Soler, “Von der Leyen Promised an EU Commissioner to Tackle the Housing Crisis,” Euronews, August 13, 2024.

Is Modest Growth vs. Full Employment a False Dichotomy?

As Summer slid into Autumn in 2012, the Chinese government was giving no hint of any ensuing economic stimulus program. This was more than slightly unnerving for some, as a recent manufacturing survey had slumped more than expected, to 49.2 in August. A score of 50 separated expansion from contraction. A similar survey, by HSBC, came in at 47.6, down from 49.3 the previous month. Bloomberg suggested that China might face a recession in the third quarter. So why no stimulus announcement?  Was the Chinese government really just one giant tease? I submit that the false dichotomy of moderate economic growth and full employment was in play. In short, the Chinese government did not want to over-heat even a stagnant economy even though the assumption was that full employment would thus not be realizable.

The full essay is at "Economic Growth and Full Employment in China." 

Wall Street Snuffed Out President Clinton's Goal of Homeownership for the Poor

It is one thing for the head of a government (or a government’s executive arm) to set a praiseworthy goal that is in the public interest, and quite another thing to rely on the financial sector to implement it. Finance has its own means tied to its own goals, with plenty of greed in the mix. Governmental officials may tend to minimize the potential damage from ego-laden greed to the goals of public policy. Such policy ideally strives for the good of the whole, whereas the goals of a private sector of a part. This could account, at least in part, for the financial crisis of 2008 and the continuing bear market in housing in much of the U.S.

The full essay is at "How Wall Street Snuffed Out Clinton's Goal."

TARP Paid Off: But What about the Foreclosures?

TARP, the "bailout" for banks rather than mortgage borrowers, was the first big issue facing the Obama administration before the roughly $800 billion stimulus plan and the health insurance overhaul that stoked the rise of the Tea Party movement. After supporting TARP, several Republicans lost in the elections of 2010 largely because of their votes. For many Americans, TARP is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans continued to struggle to make mortgage payments or lost their houses outright.  “This is the best federal program of any real size to be despised by the public like this,” said Douglas J. Elliott, a former investment banker now associated with the Brookings Institution. “It was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has,” Mr. Elliott added. “But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.” TARP was good for the public not in that the funds enabled Wall Street bonuses; rather, the good was solely on the macro level, as the frozen credit markets eventually thawed such that the financial system meltdown was averted.  However, this does not mean that it was "the only effective method available."

The full essay is at "TARP and Foreclosures."

Fannie and Freddie: A Lavish Corporate Lifestyle after the Financial Crisis

Fannie Mae and Freddie Mac spent more than $640,000 to send 100 employees to a mortgage-industry conference in Chicago in the fall of 2011. According to a letter from the Federal Housing Finance Agency, which oversees Fannie and Freddie, the spending included nearly $342,000 for travel, food, hotel and meeting-room space. Incredibly, $74,000 was spent on four invitation-only dinners for mortgage-lending companies that are regular customers of Fannie and Freddie. Because Fannie and Freddie at the time dominated the U.S. mortgage market, "purchasing and guaranteeing about 70% of new loans from mortgage lenders,” who in turn thus had few alternative potential buyers, managers at Fannie and Freddie still felt the need to wine and dine their customers under the subterfuge of valuing “face-to-face meetings with customers as a way to understand their needs,” according to the Wall Street Journal. Apparently the folks at Fannie and Freddie were not familiar with customer surveys or even the telephone. Instead, Freddie spokesman Doug Duvall bragged, “[We were able to meet] with our lender customers in a cost-efficient way. In just two days we held approximately 200 meetings.” Undoubtedly some of those “meetings” were held at the dinners, each of which cost the taxpayers $18, 500.

The full essay is at "Fannie and Freddie."

A Housing Bubble in China: A Rationale for Government Intervention

As of October, 2016, China was in the midst of a dizzying housing bubble. A month before, “economists at the Bank of China warned in a report that worsening asset price bubbles were adding to a frothy market that could result in trouble.”[1]  Shanghai’s average housing price was up nearly one-third from a year before; prices in major cities like Beijing and Guangzhou were not far behind.  The recognition of the bubble—which does not come easily—should have triggered counter-cyclical measures by the Chinese government.

The full essay is at "A Housing Bubble in China."

1. Neil Gough and Carolyn Zhang, “In China, Property Frenzy, Fake Divorces and a Bloating Bubble,” The New York Times, October 16, 2016.

Homelessness in the U.S.: A Reflection of American Values

According to a report by the National Center on Family Homelessness in 2014, nearly 2.5 million American children were homeless at some point in 2013.[1] The U.S. Department of Education had reported that 1.3 million homeless children were going to school. California, which accounted for one-eighth of the U.S. population at the time, had one-fifth of the 2.5 million, which comes out to nearly 527,000. The relatively high cost of living and shortage of low-income housing, along with a largely stagnant minimum wage, are the more visible factors behind the gap.

The full essay is at "Homelessness in the U.S."

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1. David Crary and Lisa Leff, “Number of Homeless Children in America Surges to All-Time High: Report,” The Associated Press, November 17, 2014.

Human Weakness Enables Market Bubbles: A Nietzschean Perspective

As a young idealist in business school, I believed in the efficient market hypothesis; an efficient market based on perfect competition would obviate excess profits (e.g., monopoly rents) while keeping prices as low as possible. I assisted a professor with his article on the NASD (National Association of Securities Dealers) as a stellar example of industry self-regulation. The ideology cutting off the far left of my peripheral vision, I dismissed the possibility that an industry would look the other way on a miscreant firm as executives of other companies fear accountability from the industry association. Moreover, the business practitioners may profit, at least in the short term, from foisting on the general public the illusion of industry self-regulation, which can serve as a front protecting a squalid underbelly.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

Return of the Mortgage-Based Bonds: Another Bubble in the Making?

In case it has been a while since you have been entertained by going around in circles while sitting on a painted wooden horse, permit me to re-introduce you to the Merry-Go-Round, a staple at virtually any amusement park.

The world itself might just be such a ride, with us mere earthlings playing out our respective roles while spinning around and around as the world goes by once and then again, and again. Lest it seem monotonous to go around in circles, it is possible—at least in principle—to learn something new on each pass.  Weighing against a learning-curve that might thwart an eternal recurrence of past failures are other, less salubrious proclivities of the mind. These include (but are not limited to) avarice, power, and even the force of habit. More damning still may be the arrogance of pride—the hubris of presumption. 

The full essay is at Another Bubble.

Banking Lobby Extracts Benefits from Consumer Protector

Turning lemons into lemonade: that could aptly characterize the strategy of the banking lobby as the Consumer Financial Protection Bureau (CFPB) was promulgating a broad set of mortgage rules that were announced in January 2013. Rather than merely seeking to minimize more onerous standards, the industry sought to insulate itself as much as possible from getting sued by borrowers. Ignoring the rather obvious self-interest of the banks, the new regulators accepted the bankers’ claim that the legal protection was necessary for the banks to be willing to produce mortgages.

The full essay is at "Banking Lobby."

Property Taxes: Property at Risk

Thirty years after Californians shrank their property taxes by passing Proposition 13, the same question faced the people of North Dakota as they voted on whether to eliminate their property taxes entirely. In an interesting twist, the debate on the tax incorporated a human-rights dimension that is rarely brought into debates in the American republics.

In addition to pointing to the budget surplus enjoyed by the Government of North Dakota at the time as well as to the unpredictableness of the tax and its inconsistencies, the proponents of a constitutional amendment to prohibit a property tax argued that it is contrary to the concept of property ownership. Beyond property rights, however, the advocates pointed to a human right to shelter irrespective of wealth or income. “I would like to be able to know that my home, no matter what happens to my income or my life, is not going to be taken away from me because I can’t pay a tax,” said Susan Beehler, a member of the group that was pushing for the amendment. The American republics are as it were joined at the hip, so it is no surprise that, Jim Cox, a representative in the Pennsylvania legislature’s lower chamber chimed in by declaring, “No tax should have the power to leave you homeless.” The implication is that having a home is a human right that even a government ought not be able to take away.

There is reason for concern as long as one’s house is subject to one’s wealth. For one thing, a large part of one’s net worth is in the equity-value of one’s house—such value being subject to the wax and wane of the market. According to the Federal Reserve, the medium amount of home equity dropped to $75,000 from $110,000 in 2007 (adjusted for inflation). More generally, the economic crisis of 2008 left the medium American family in 2010 with no more wealth than in the early 1990s. Medium family income fell to $45,800 in 2010 from $49,600 in 2007 (adjusted for inflation). With less of a cushion, should a homeowner lose his or her job, less home equity would translate into more difficulty in getting a loan (or being cut off from even being able to borrow to survive a brief period of unemployment). 

Therefore, housing viewed as not just a property-right, but moreover as a human right (i.e., not to be homeless), is incompatible with the precariousness that goes with treating one’s house as not only a commodity subject to market forces, but also a significant part of one’s wealth. A vicious circle can be engaged that leaves one as though drowning in a whirlpool without a life-preserver.  If nothing should have the power to leave one homeless, our concept of housing must go even beyond our concept of private property to be based in a doctrine of human rights—a concept rather foreign in North America. Paradoxically, a constitutional amendment that would remove one’s house from the government’s (as well as any private company’s or bank’s) grasp would proffer citizens more security (and thus happiness) than even a full-fledged notion of private property (rights), for the right of property—unlike a constitutional amendment—depends on government and is thus subject to eminent domain. To be sure, a competitive market is well-suited to distributing non-necessity commodities, but human rights trumps even economic efficiency (or its ideology). I find it odd that this notion is so foreign in the American states, while it is almost taken for granted in the European states.

Sources:

Monica Davey, “North Dakota Considers Eliminating Property Tax,” The New York Times, June 11, 2012. 

Binyamin Appelbaum, “Family Net Worth Drops to Level of Early ‘90s, Fed Says,” The New York Times, June 11, 2012. 

Wealth and Happiness American-Style

The Organization for Economic Cooperation and Development released an up-dated version of its Better Life Index in May 2012. The U.S. ranked first in income, with average household wealth at $102,000, as well as in housing (Americans spending about 20% of their disposable income on it—the OECD average being 22%).[1] These figures for the U.S. could have been pushed upward by the fact that at the time, the very rich were richer than their counterparts in other countries, for the gap between rich and poor was relatively high in the U.S. For example, 30 million Americans were without health insurance and a record number of Americans were receiving a governmental subsidy for food. Rather than assume that the middle and lower economic segments in the U.S. were better off than their counterparts in other regions of the world, I suspect that the statistics reflect the higher relative pay of American executives and professionals (lawyers, physicians and CPAs). The typical CEO in the E.U., for example, made less than his or her counterpart in the U.S.  This caused trouble in the Chrysler-Daimler merger because the Chrysler executives enjoyed higher compensation even though Daimler was in charge.

The full essay is at "Wealth and Happiness."

1. “OECD LaunchesUpdated Version of Your Better Life Index,” OECD. 

Fuld’s Arrogance at Lehman: Systemic Risk

Documents released in May 2012 regarding Dick Fuld at Lehman Brothers prove that he was aware of the high risk involved in holding so much real estate (and related security derivatives). This means definitively that “the ‘forces-out-of- our-control’ argument we hear from Wall Street leaders is [self-serving] bunk. It is the ill-advised behavior of one banker after another, day in and day out, that leads to the sort of devastating financial crisis we are only now emerging from.”[1]

The full essay is in Essays on the Financial Crisis, available in print and as an ebook at Amazon.

1. William Cohan, “Lehman Docs Show Wall Street Arrogance Led to Financial Collapse,” The Huffington Post, May 7, 2012.

On the Arrogance of Assumed Superiority: Assad of Syria

One week after Assad’s Syrian government had agreed to a cease-fire with the state’s opposition, the government added further stipulations. First, it wanted “written guarantees” that rebels would  stop fighting and lay down their weapons before any government pull-back could occur. Second, the Syrian government wanted guarantees that Qatar, Saudi Arabia and Turkey would stop financing the armed groups within Syria. “The regime will not implement this plan,” Col. Riad As’aad, the leader of the opposition militia fatalistically said.[1]

The full essay is at "Assad of Syria."

1. Reuters, “Cease-Fire in Doubt as Syria Demands New Conditions,” The New York Times, April 9, 2012.  

The Federal Reserve’s Housing Bubble

During one of his lectures to a class at George Washington University in March of 2012, Ben Bernanke, the chairman of the Federal Reserve, claimed that the central bank’s lower interest rates did not trigger the housing bubble that began in the late 1990s and ended in 2006. For one thing, the Fed did not start cutting interest rates until a few years into the twenty-first century. Also, home prices rose after the Fed later began raising interest rates. Bernanke also cited Europe, where housing booms have not been associated with either tight or loose monetary policy.

The full essay is at "Essays on the Financial Crisis".

Moral Hazard in Mortgages

“The cherished American ideal of self-reliance has a flip side”[1]  Before getting to the implications, or flip side, I want to fill out what informs this ideal. One could add to it the ideological stance that came into its own in 1980 with the election of Ronald Reagan, who declared that government is the problem. This implies that government should be minimized, and otherwise corrected as much as possible. Government is hardly to be viewed as the solution. This is the legacy of the Kennedy assassinations of the 1960s, the Vietnam War, and Watergate as well as Ford’s pathetic “WIN” buttons and Carter’s micromanagement and failure in regard to the hostages in Iran. I was not old enough for the Kennedys’ truncated optimism (and that of Martin Luther King) to resonate; I knew the political (and economic) pessimism of the 1970s and the energizing “fix it” mentality of the early 1980s. Of course, Reagan’s “new federalism” failed, as did his aim to balance the federal budget, and the jury is still out on whether “peace through strength” pushed the USSR off the cliff.

The full essay is at "Moral Hazard in Mortgages."

1. Shaila Dewan, “Moral Hazard: A Tempest-Tossed Idea,” The New York Times, February 26, 2012. 

Nietzsche on Bank of America

The positive correlation between incompetence and unethical conduct at companies is striking, for, theoretically at least, a person can be talented or smart and of questionable character. Of course, it could be that cutting corners is a survival strategy of people who are not competent. However, shirking seems to reflect a sordid character, which, like personality, is relatively constant throughout one’s life—though character flaws could manifest more when times are tough (as in when incompetence has eventuated in a dire balance sheet). One might investigate, moreover, whether a firm’s culture can become more tolerant of unethical conduct when the finances are going south—or do unethical cultures tend to be like fixtures in organizations irrespective of financial condition?

The full essay has been incorporated into On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available at Amazon.