Friday, July 10, 2009

Thomas Sowell on the "Affordable Housing Crusade"

Economist and Hoover Institution senior fellow Thomas Sowell, author of "The Housing Boom and Bust," discusses the economics of the housing boom on the National Review Online (NRO) TV program "Uncommon Knowledge."

Update: All five parts are now available:

Part 1, Part 2, Part 3, Part 4 and Part 5.

Here are some excerpts from an NRO article by Thomas Sowell, based on his book:

Let us go back to square one to consider the empirical consequences of policies in the housing market. Politicians in Washington set out to solve a national problem that did not exist — a nationwide shortage of “affordable housing” — and have now left us with a problem whose existence is as undeniable as it is painful.

Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden. Statistical studies about disparities between blacks and whites in mortgage loan approval rates might be said to have “jump-started” the housing crusades that began in the 1990s.

Politicians and the media led this crusade, with many community activists following in their wake, much like scavengers, able to extract large sums of money from banks and other institutions by raising claims of discrimination, whose power to delay government approval of bank mergers and other business decisions made pay-offs to these activists the only prudent course for those accused.

With rich rewards available — politically, ideologically, and financially — from the “affordable housing” crusade, there were ample incentives to keep this crusade going for years.

HT: Club for Growth


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