Newmark's Door

The real estate biz in the recession

The repo business is doing very, very well.

And "mortgage rescue" scams are way, way up.

"Obama's Irrelevant War Rhetoric"

Army Reservist David French (Townhall, 7/9):

My entire life, I firmly believed the pen was mightier than the sword and that great armies moved under the inspiration of great men. Now, I’m not so sure. In one year, my small unit — an armored cavalry squadron of less than 1,000 men -- liberated hundreds of square miles of Diyala Province from the darkest evil. It was not stirring rhetoric that stopped AQI terrorists from torturing and beheading entire villages, or shooting children in the face to “send a message,” or imposing the worst forms of Sharia law while they spent their days high on drugs, raping women, and watching Turkish porn. It was not the pen that cleared mine-laden roads or brought the first signs of economic life to communities trapped in grinding poverty.

Read the whole thing.

Link via Michael Greenspan. 

"[T]he hidden cost of national health care"

Glenn Reynolds:

The normal critique of socialized medicine is to point out that people have to wait a long time for these kinds of treatments in places like Britain. And that's certainly a valid critique. I'm sure my mom and daughter would still be waiting for their treatments, while my father and wife would probably be dead.

The key point, though, is that these treatments didn't just come out out of the blue. They were developed by drug companies and device makers who thought they had a good market for things that would make people feel better.

But under a national healthcare plan, the "market" will consist of whatever the bureaucrats are willing to buy. That means treatment for politically stylish diseases will get some money, but otherwise the main concern will be cost-control. More treatments, to bureaucrats, mean more costs.

"White House Still Deals Up Pascal's Wager"

Casey Mulligan writes (6/2) with a smile: "We are lucky to have the White House to save us from so many disasters!"

Exactly right

From David Klinghoffer's review of a forthcoming book, The Israel Test, by George Gilder:

As Gilder puts it, "The [Israel] test can be summarized by a few questions: What is your attitude toward people who excel you in the creation of wealth or in other accomplishments? Do you aspire to their excellence or do you seethe at it? Do you admire and celebrate exceptional achievement or do you impugn it and seek to tear it down?"

SOME PEOPLE see wealth-creation as a zero-sum game, where your enriching yourself means that you are taking something away from me. Others see wealth as almost miraculous. Material value is created from nothing - ex nihilo. That is, from nothing material - but from an idea, from creativity, from genius. In this view, your enrichment takes nothing from me. In fact, it creates opportunities for your neighbors to enrich themselves by doing business with you. Israel's Palestinian neighbors, with their pitiful economy, have failed spectacularly to perceive this.

Elementally, there are two different personality types here. Where you come down reveals a lot not just about your politics - though political views flow from it - but about the orientation of your soul.

Zero-sum personalities often resent the rich and the gifted and may succumb to a temptation to punish them. Anti-Israel and anti-Semitic sentiments are a frequent consequence. Ex-nihilo personalities have no reason to resent Jews or Israel.

Exactly right once again

From David R. Henderson's review of a recent book, The Case for Big Government, by Jeff Madrick:

Consider how Madrick makes the case that economic freedom has failed. If economic freedom works, he argues, our economy should be doing very well because we have had “the rise of laissez-faire economics since the 1980s.”What is his evidence of the rise of laissez-faire economics? He gives none. That’s not surprising given the heft of the Federal Register, the U.S. government publication that lists new regulations. It averaged 72,844 pages annually during the Carter years from 1977 to 1980, just before Madrick’s “laissez-faire” 1980s. The average fell to 54,335 during the Reagan years, rose to 59,527 during the George H.W. Bush years, then to 71,590 during the Clinton years, and finally to a record 75,526 during the administration of the supposed great believer in laissez-faire, George W. Bush. It’s true that Federal Register pages aren’t a perfect measure: when governments deregulate, they must announce those changes, and so some of the pages represent genuine deregulation. But most of the pages listed new regulations, no matter which president was in power at the time. Far from moving away from regulation, the U.S. economy has become even more regulated in recent decades. The almost quarter of a million federal regulators would be surprised to learn from Madrick that they don’t have jobs.

"Get Smarter"

An article in The Atlantic argues that to deal with looming problems--"Pandemics. Global warming. Food shortages. No more fossil fuels"--we should get smarter.

While I'm not sure the problems listed will be our biggest problems or that they'll even be problems at all--food "shortages"?--I agree with "get smarter". I noted almost six years ago Aaron Wildavsky's fine answer to how we should cope with all the potential risks we face. He argued we should 1) get educated, and 2) get rich, and then take our chances. (Chicago Boyz referenced Wildavsky's argument, too.)

Reliance on markets, not governments, are our best ways to get smarter and richer, but that's an argument for another day.

It sounds like Megan McArdle agrees . . .

. . . with Steve Margolis's transitional gains trap analysis of Waxman-Markey. See here.

Even if you support national health care, you certainly wouldn't build Medicare in its current form.  But there is path dependence in institutions:  once they exist, they're precious hard to change.  Enacting a crappy climate trading system in order to do something forestalls the possibility of enacting a better design five or ten years from now. 

Economic historians will really have their work cut out for them

In addition to the many possible financial and institutional causes of our current deep recession, ranging from alleged deregulation and easy money to government-created bad incentives for the ratings agencies--see the current issue (volume 21, nos. 2-3) of Critical Review for a nice assortment of proposed causes--there are now at least two real shocks seriously proposed as causes.

One is the run up in oil prices, as discussed by James Hamilton (see, for instance, this post). Professor Hamilton argues that ten of the eleven postwar recessions have followed a "sharp increase in the price of oil".

And two is a sharp decrease in productivity growth, beginning in 2005. See "Productivity and the crisis: Revisiting the fundamentals" (Vox, 7/11) and "Productivity Swings and Housing Prices" (New York Fed, July 9).

For a good long while, economic history will be lots of fun.

Score one for Larry Summers . . .

. . . as quoted today by George Will:

Liberals oppose a VAT because it is regressive and conservatives oppose it because it is a money machine, but a VAT might come when liberals realize it is a money machine and conservatives realize it is regressive.