Revolutionary justice in the Mortgage Market.

TKO - watch it on the video!

Via Eschaton, LI went to this astonishing site, the Irving Housing blog. The writer uses public information to profile the use of multiple loans on houses to extract money on the “appreciation” of the house’s value – and, of course, that money was not exactly invested in the organs of production in these here states. More like vacations and private schools and the lot. The rhetoric on the site is reminiscent of the charivaris and jacqueries of the Old Country, when communities would come down upon the those who threatened the social order. At the same time, there is a distinct whiff of real estate porno about the whole thing – the comments about the condition of the houses pictured, down to the year and model of the stove in the kitchen, are … amazing. Rather like YouTube comments about whether some stripper/singer in some video is fat or not.

The resentments definitely are going to be spilling out this year. I was happy to see, on the NYT Opinion page last week, the loathsome opinions of that all around toad, Steven Landsburg – the oh so contrarian economist who contributes to everybody’s favorite white supremicist mag, Slate. (a, but they are contrarian KKK-ers there, as we all know – secretly liberal to the core!). It was a Timon of Athens happy feeling - the feeling of confronting something rotten in its purest aspect. Landsburg starts out dumb and gets dumber, paragraph by paragraph. His point is that free trade is good! mmm good! Welfare is bad! We don’t owe anybody nothing, people unemployed as manufacturing goes down, ha ha sucker. Landsburg, who is supposedly defending a thesis about international trade, defends it by cavalierly identifying it with trade per se:

“I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care. Access to a trained physician might reduce the demand for grandma’s home remedies, but — especially at her age — she’s still got plenty of reason to be thankful for having a doctor.”

How to put one’s brain around this fatuousness? Suppose I defended a law making it illegal not to speak French in the U.S. by writing – I doubt there’s a human being on earth who hasn’t benefited from language.”

Landsburg’s idea is that the destruction of the U.S.’s manufacturing base is made up for by the lower prices on goods we get from abroad:

“All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?
Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?”

This is a nice argument. It calmly ignores the fact that the era of free trade has coincided with the era of trade deficits. Of course, if you just conceptually abolish the difference between trading in a nation and trading between nations – which is the point of Landsburg’s idiotic paen to trade – then there’s no problemo. The globe itself doesn’t have a trading deficit. But if you actually live on some point in that globe – say, the U.S. – then there is a big problem. If we pay for the lower prices through lower wages and greater and greater amounts of national debt, we are eventually going to be constrained in very nasty ways – or I should say, the bulk of the American population. Landsburg’s notion of we is confined to the five percent of the exploiters who have, through various unscrupulous and predatory means that are unwinding as I write this, engrossed the great benefit from destroying the bargaining power of labor.

These thoughts, I must confess, came to me only after I read a very sharp commentary on Landsburg’s column by my new favorite economics blogger, Peter Dorman. My first reaction to Landsburg is that he is using a measure that excludes intangible goods – in other words, he is tallying up the lower prices of first order consumer goods and ignoring social costs, which are evident whenever you go to Rust belt areas or industrial areas and start poking around. They are multipliers of crime and decreased well being. But, as Dorman points out, Landsburg is also bullshitting on the macro-economic level – like most of the radical free traders.

“Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.

Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.”

LI has some respect for the libertarian view of limiting the state’s right over one’s lifestyle choices. But we have zero respect, in general, for the libertarian view of the state. It is childish nonsense, and its motives are simply to paper over the unhinged system of mass inequality and increased exploitation in which we live with spurious justifications sprung from defective economic models. And, of course, the more spurious it is, the smugger the tone. I think libertarians have captured a certain tonal range of smug that you rarely hear, outside of successful high school debate teams. Ah, the soul in the tone of voice! There's the unctuous "I know best" voice of PC lefties hairsplitting identities and vying for the victim brand; and then there is the adenoidal, bowtied smugness of libertarians. I can take the former, but barely. The latter is the kind of thing that you just want to punch in the face.