How Can He Walk With (rhymes with “Walls”) That Big?
D.A. Ridgely on Dec 11th 2008
In a House Committee on Oversight and Government Reform hearing to examine the role of Fannie Mae and Freddie Mac in the financial crisis, former Fannie Mae CEO Franklin Raines named ‘the real culprit’:
Now, the reality is that the crisis was precipitated in an, um, bipartisan manner and that the government did play a substantial role both in pressuring both Freddie and Fannie to take greater risks in the name of “more affordable housing” and in looking the other way at the level of risk being taken. (Until a few months ago, the obvious joke here would have been “Who the hell has unaffordable housing?” As it turns out, though, the answer appears to be millions and millions of people whose real estate investment strategy was that an even bigger fool would be along shortly.) The WSJ story went on to note quite correctly that Freddie and Fanny were both “spending millions on lobbying to ensure that regulators did not get in their way” and that both were making investment decisions and policies to placate politicians whose grasp of economics might be just a tad unsound.
Captive regulators? Government pressure and complicity? Who knew?
In a related story, listening to NPR the other night I heard a ‘financial expert’ explain that the current financial crisis was set off by flooding the market with too much cheap money resulting in too many low interest mortgages and that the solution is to flood the market with cheap money to permit more low interest mortgages.
The expert was vaguely concerned that there might be a problem here but fortunately he had a solution:
This time we’ll be careful.
Filed in The Basement
Anyone who is much richer than any second person is likely to have housing that is unaffordable to that second person. I don’t understand your confusion with the idea of affordable housing.
You don’t? Really? Okay, then let me explain it a bit differently. Anyone who is managing to pay for housing of any sort can, ipso facto, afford it.
If a person can’t afford any housing, then no housing is affordable to that person. If he can afford some housing, however, then the whole notion of “affordable housing” is simply a rhetorical obfuscation (read: a lie) to convince taxpayers or force builders and landlords to subsidize a higher level of housing than the recipient could have afforded by himself.
I take minor issue with your latinate argument: being able to afford something often means being able to pay for it without suffering great inconvenience. As you mention in your article, there have been people living in housing that was being payed for, but that they couldn’t afford.
More to the point: your second paragraph begins with a sentence of a form which, yes, is often taken to be a logical axiom (in some systems it is structurally implicit), but your conclusion does not follow. Perhaps your “he” can afford some house, but if that house already has someone living in it then that is no help to “him”. If all of the houses “he” can afford are taken, then more affordable housing is required.
The purpose (if perhaps not the result) of trying to create more affordable housing is not to allow people to own houses they couldn’t otherwise afford, it’s to allow people to own houses that wouldn’t otherwise be available to them (thus “more”).
Take major issue, if you prefer. Doubtlessly, one can attempt to define affordability such that it entails not “suffering great inconvenience”; but then one must also define “great,” “inconvenience,” and so forth. Shelter, like food, is a necessity. If one’s income suffices to pay for it together with life’s other necessities (not, e.g., including air conditioning, cell phones, cable TV, etc.), then it is affordable to that person. No one is entitled to convenience — your word, not mine — especially at someone else’s expense.
The point remains that “affordable housing” is a euphemism dishonestly used by its advocates to suggest both that there are many people who literally cannot afford shelter of any sort and that someone else should pay to see to it that they have some. Neither is the case.
Since you have granted me sole ownership, I will define convenience. In your dictionary you will find maybe three or more options, and only one of them is opposed to necessity. It is not the most common modern usage, but when I said “without suffering great inconvenience” I only meant hardship. If convenience for you is the difference between a hutch and a house, then I say that people are entitled to convenience at others’ expense (if not necessarily at their inconvenience).
As to the point that remains, it hasn’t been made. You have not given evidence as to the intentions and motives of people who use the phrase “affordable housing,” and I will not guess what prompted you to guess that they were dishonest. I don’t presume to know peoples’ minds. So tell me why you think “more affordable housing” isn’t used to mean the reasonable thing I said it might, and tell me why its advocates are such liars, what their motivations are.
Come now, Mr. Koziar. I’ve granted you nothing except the acknowledgment that people can define terms as they please. Especially if they’re up to no good and others are willing to let them get away with it. Indeed, that’s my basic point. So if what you mean by “suffering great inconvenience” is hardship, perhaps you should just say “hardship” and we can skip the Humpty Dumpty role-playing.
Bearing in mind that this particular discussion arose when you characterized my parenthetical joke as “confusion,” I’d say that if you are unable or unwilling to recognize how political activists of all stripes attempt to manipulate language and define terms to suit their purposes, I can’t imagine what sort of evidence would satisfy you. If you do not see that “affordable housing” was decided upon by those who advocate that there be more tax (or tax equivalent) subsidized housing but who realize that “tax subsidized” isn’t a phrase that resonates positively with voters, I don’t consider it my duty to satisfy you on that point. If you remain unconvinced, so be it.
I am curious, however, to hear more about your sense of entitlement. How little hardship should other people have to suffer before they are entitled, on your account, to its alleviation at someone else’s expense?
John Koziar,
As the majority of the mortgage crisis occured not in the segment of the market normally called affordable housing, but in a distinctly middle-class segment, I think the debate in these comments is a red herring. The lack of affordable housing, and consequent effort to help poor people get into decent home rather than hutches, was not the cause of the crisis, but middle class people who wanted a 2500 square foot house rather than a 1500 square foot one.
They are, I not very humbly submit, not entitled to a damned thing at my expense.
What a strange relationship with language you must have, where words are to be preferred by paucity of possible purport. If only I’d known using the word inconvenience would be so offensive to you.
The difference between calling it more affordable and calling it tax-subsidised is one of calling a thing by its method or by its purpose. Neither choice can be said to fully describe the thing. It is an arbitrary choice. No dishonesty need be involved in the selection of one over the other. I don’t think you mean to say that this use of more affordable is dishonest because it is politicians that make it.
That said you are quite right to point out that it is hard to think of evidence that would satisfy me that a given person is being dishonest while not clearly factually lying. I have the same problem, which is more or less why I’m curious about your being convinced.
To fulfill your curiosity, the answer is simple: insofar as it is possible, I would first hope to minimise the total hardship, then I would distribute what’s left evenly among everybody (with exceptions for deviants).
Now really, Mr. Koziar, no need to get upset. The alliterative ambiguities of your comments aside (”preferred by paucity of possible purport,” indeed!), the only thing I might find offensive in your choice of wording is the extent to which it may have been intentionally misleading. As you say, I’m no mind reader, so I don’t accuse you, personally, of such deceit. That others often use words in a manner intended to deceive especially in matters of politics and public policy, on the other hand, is so evident that only a fool or a philosopher could doubt it. I shall assume you are a philosopher.
Indeed, given the breathtaking scope of your sense of distributive justice, I’d say you practically have to be. Your exclusion of those you term “deviants” from that distribution is interesting, though. Do you have something special in mind or just your run-of-the-mill standard deviations?
Sorry to intrude on this “latinate” (whatever that means) argument, but I might observe than even beyond the narrow issue of what “affordable housing” means, there is the question of what “affordable” alone means.
For antiques like me - and, I infer, even for those less antique like Mr. Ridgely - being able to “afford” something means roughly that the prospective benefits of a purchase are at least comparable to the cost, where “cost” includes a complex, somewhat subjective, assessment of things like alternative uses of the purchase price, impact on long-range savings, emergency reserves, et al.
As nearly as I can tell, today “being able to “afford” something often means merely that the purchase price amount can be gotten hold of in some way from some source. And this “definition” isn’t restricted to those lower on the financial resources scale. With a household savings rate near (and not necessarily above) zero, it appears to be the norm - unless, of course, as in Lake Wobegon, most households are saving much more than the average.
All of which says to me that as suggested by Mr. Raines, the risk aspect of determining what one can “afford” has been largely removed from the calculation. Which is fine (from a purely financial perspective, not ethical) as long as it’s a minority position and the majority can cover lost bets. Unfortunately, if it’s a majority position, when it comes time for “them” to cover lost bets, “there’s no them there”. Which appears to be where we are today.
So I, too, am half amused, half disgusted at “solving” a crisis caused by excessive debt - especially high-risk debt - with more debt. But then, addicts often avoid the painful consequences of their addiction by “hair of the dog”.
“[Can] a given person is be[] dishonest while not clearly factually lying?”
More apologies for intruding, but the question of what constitutes “lying” is of particular interest to me.
For just the reasons Mr. Ridgely raises (obfuscation in the political arena), I have grappled with this and have come to the conclusion that we err in focusing on the speaker rather than the listener in defining “lying”. Eg, the objective of a lie is to effect the listener, so if you’re alone in the forest and say something untrue, is it a lie?
I have come to define “lying” as making a statement intended to make the listener believe something that isn’t true. Under this definition, the veracity of the statement is not determinative, and the answer to the question above is “absolutely”. This doesn’t, of course, resolve the issue of speaker intent, but that’s a problem even in the case of a factually incorrect statement.
“Do you have something special in mind or just your run-of-the-mill standard deviations?”
Careful, here; re my last comment, you’re suggesting something at variance with the facts - or did you mean something else? If so, I don’t consider that normal. In any event, now I’ll log off.
Charles, do you have any idea how hard it was for me to come up with the right phrasing so I could work my little “distribution / standard deviation” joke into my answer? Sheesh! *grin*
The question whether one is lying if what he states is not factually incorrect (let’s forget “clearly”) seems to me a mildly interesting question of semantics or maybe even of linguistic philosophy, but I merely claimed that intentionally ambiguous language can be used dishonestly. Someone might ask me, for example, if Pulp Fiction is a violent movie and I might answer that there is no gratuitous violence in it. But if I knew the questioner could care less about whether the violence was gratuitous or not, such an answer could hardly be considered entirely honest.
Mr. Koziar at one point, for example, conflated the phrase “affordable housing” with the phrase “more affordable housing.” In fact, “housing advocates” (a label already up to some mischief — who are housing opponents?) speak routinely about “affordable housing,” simpliciter. Of course, the way to have more affordable housing in the sense that there is more housing that is affordable to more people is to increase personal wealth and / or reduce the real cost of housing. Subsidizing that real cost doesn’t make the housing any more affordable, really, except in the sense that if you all chipped in to buy me a Rolls Royce, I could then afford one.
Which would be nice. So, if you’re wondering about what to get me for Christmas…
insofar as it is possible, I would first hope to minimise the total hardship, then I would distribute what’s left evenly among everybody
I think, Mr. Koziar, you would quickly find a change in the median definition of “hardship.” A system that takes based on ability, gives based on need and shares based on surplus encourages agents to understate their ability and overstate their need, which will quickly leave you with no surplus whatsoever. And at that I’m assuming an aparatus of distribution that doesn’t take everything for the distributors.
“do you have any idea how hard it was for me to come up with the right phrasing …”
Yes, which is why I responded - to make sure you know that the effort was appreciated!
As to making housing “affordable”, as you note either the resources available to buyers/renters must be increased or their nominal cost must be reduced. But in either case, the real cost of the transaction must be paid. Eg, with rent control, its paid by the lessor; in the case of subprime mortgages, it was paid by the increased risk assumed by the purchasers of the mortgages. Which - unbeknownst to us - has turned out to be us.
Hanley: how cruel you sound!
AMW: I meant to state a goal, not to make a claim as to what method was the best with which to achieve it.
Charles: The quotation with which you began your first post on lies does not keep my original intent. I wasn’t asking a semantic question about the intersection of “dishonesty” and “lying”; rather I was asking what constitutes evidence that someone is being dishonest, when the statement or word or phrase in question is not precisely true or false. The current example being the use of the term “more affordable housing” in contrast to “tax-subsidised housing”. I suggested that neither term was more or less accurate, and so using one over the other is not true or false. I quite agree with your answer to the question besides.
Ridgely: Your most recent paragraph assumes the effectiveness of the market to match demand. You say either wealth must be increased or the cost must be decreased; but it could be that the first is high and the second is low, and housing is not being built.
When I woke up this morning, I never expected to be accused of being a philosopher.
It could be, at least temporarily, but we have no experience of demand not being met by supply unless a fairly high level of inefficiency is introduced. (EDIT: Or if supply is literally impossible. No matter how much demand there may be for anti-gravity devices, immortality elixirs, perpetual motion machines or good movies from M. Night Shyamalan, most if not all such demands cannot be met at any price for purely non-economic reasons. None of that is relevant here, but I thought I’d note it to forestall a possibly digressive dispute.) Such things do happen in the real estate market, unduly restrictive zoning and rent control laws being prime culprits. All the more reason to keep government out of the market as much as possible.
But you miss my point. The only way to make more housing affordable or to make more affordable housing — the two mean slightly different things– in general is to raise real wealth without simultaneously raising the cost of housing commensurately or to lower the cost of housing without lowering real wealth commensurately. (Charles was wrong to use “nominal” instead of “real” in his comment on this point.) But those are, as you note, merely necessary and not always sufficient conditions. The state can and all too often does skew the market by, for example, permitting people to increase the value of their property by making it artificially scarcer via restrictive zoning laws. It also, I hasten to add, artificially lowers housing values when it insists as a condition of permitting construction that a builder construct a certain percentage of what some political activists label “affordable housing.”
However, the point is that one or the other is necessary; merely shifting the cost doesn’t create more affordable housing except in the sense that if you help pay for my Rolls Royce it will be more affordable to me alone. Of course anything that I get to spend your money for will be more affordable to me, but that will not per se affect either the real price or the real supply of whatever it is.
“Charles was wrong to use “nominal” instead of “real” in his comment on this point.”
Actually, I was wrong to use either since both have a well-defined and distinguishable meanings in a strictly financial context, but that’s not the distinction I had in mind (although I thought that was clear in the context of the comment). By “nominal” I did mean the actual purchase price, but by “real” I meant not the inflation-adjusted price but the nominal price plus the incremental cost due to the increased risk, hence likely higher default rate, and hence additional cost (on average) to the mortgage holder.
I think in essence it’s analogous to your new Rolls-Royce (BTW, congratulations!). Sub-prime loans were only “affordable” because someone other than the borrower (and, as it turned out, the lender as well) assumed the higher risk. And given the defaults, those mortgage holders - AKA suckers, AKA, as noted in the comment, us - are stuck paying the difference.
As an aside, I might note that there probably is plenty of affordable housing around. It just happens not to be where anyone wants to live.
John K:
Ah, you were addressing what I dismissed in my comment - intent. Sorry. However, I did address the question of intent to myself and answered as follows:
Although it is true that we can’t know another’s mind directly (ignoring modern technologies such as fMRI), we can detect patterns of behavior. Which is what I was doing re “political obfuscation” and I assume what Mr. Ridgely was doing re those talking of “affordable housing”. If a politician repeatedly says things that are technically correct but create in the listeners’ minds (as evidenced by their actions) wrong or misleading ideas, I believe intent can be inferred. Similarly, while occasional use in casual conversation of content-free modifiers like “affordable”, “fair”, “moral”, etc can be excused, I also believe that their repeated use in ostensibly serious policy discussions is at least suggestive of questionable intent.
Of course, these beliefs may be wrong, but I believe the probabilities are in my favor. And, of course, that belief may be wrong …
Ridgely says “we have no experience of demand not being met by supply unless a fairly high level of inefficiency is introduced”. Well of course not, if you think that inefficiency is the thing that prevents supply from meeting demand.
You said that some inefficiency is the result of government interference, and perhaps that is true; but to lay the blame for all inefficiency on the government is absurd. If you agree with that, then the point can easily be made that governments can improve a market. From there it becomes a question of scale what the net value of government intervention is on a market. (As a disclaimer which might be needed later, the argument I just outlined makes assumptions which I think are false.)
As to your recurring Rolls-Royce example: you have kicked the nail on the head. Having everyone chip in to buy you a car is just the idea behind “more affordable housing”, except that instead of a fancy car we are chipping in to buy you [this is a statement of purpose not necessarily of the result] something which you need to meet the mean of comfort, and which you don’t already have.
Charles: first, why do you think that listeners have the wrong idea? Apparently you don’t. Second, is it still being dishonest if that wrong idea is one which the politician believes?
Regarding how markets work, I wasn’t making a tautological claim, Mr. Koziar, but an empirical one. And government is required to make markets work, my somewhat loony anarchist brethren notwithstanding to the contrary, but only insofar as it establishes and enforces stable rules under which markets can operate. Beyond that, its track record of making markets more efficient is pretty abysmal
There are, to be sure, people who are as honest and forthright as you are in saying that what they mean by affordable housing is an expansion of the welfare state. There are also those who are less straightforward. Be that as it may, let me hasten to add that I think those of you who seek to reach into your own pockets to share with those who, for whatever reasons, are less affluent should be lauded for such compassionate behavior. It is only when you reach into other people’s pockets to effect this wealth transfer that we part company. If you thought Mr. Hanley’s comment above sounded cruel, I suspect you would find a thorough explication of my views on such subjects hellish beyond comprehension.
I’m still curious about your idea of government’s track record. It seems to me, that an economy is so complex as to make the verification of what caused what difficult or impossible (why economists so often disagree). So if you present an example of the sort this-shit-happened-and-it-was-government’s-fault I will wonder how you know it was government’s fault.
The other sort of example would be a demonstration that lack of government or of governmental intervention “improved a market” (to keep with my terms).
I don’t know of examples where there was no governmental control or complete governmental control of an economy.
“why do you think that listeners have the wrong idea? Apparently you don’t.”
As I said, “as evidenced by their actions”.
Example: in the 2004 presidential campaign Kerry was accused by the Bush people of “flip-flopping” because Kerry said (foolishly) “I voted for it [a military funding bill] before I voted against it”. Bush subsequently said something to the effect that he couldn’t understand “not supporting the troops”. Kerry’s changed vote had to do with different funding methods, which Bush surely knew. The media, the RW slime machine, etc, jumped on the issue, evidencing that they assumed the “flip-flop” label would resonate with the public. Bush presumably knew that his false accusation of “not voting to support the troops” would be interpreted literally by the public whereas that was not an accurate description of the situation. Ie, the largely ignorant public was misled whereas those who knew the whole story weren’t.
“is it still being dishonest if that wrong idea is one which the politician believes?”
No, that’s just being incompetent and/or ignorant.
Of course you mean incompetent ignorant or in disagreement with you; I assume you think there are competent and knowledgeable people who have what you’d call “wrong ideas.”
“Of course you mean incompetent ignorant or in disagreement with you”
No. I’m aware of some of the philosophical difficulties with “truth” in the abstract, but here I’m just addressing being wrong in the everyday sense: eg, thinking that Sunni Islam is the majority religion in Iraq, the Iranian president is his country’s driving political force, or a normal distribution is bi-modal.
When I make statements of opinion, I try to remember to add an “IMO”, “I think”, etc, to emphasize that I recognize it’s just my opinion. My knowledge on most topics is too meager to presume to be “right” on much of anything, never mind difficult subjective questions.