Posted on 09/05/2010 9:40:16 PM PDT by Kaslin
It’s interesting why behavior that we readily recognize, on an individual level, as undesirable, we routinely promote and accept as government and social policy.
What rational person would suggest that being detached from reality is a good thing?
Or what rational person does not want good information when making important decisions?
But increasingly we live in an environment, created by government driven policies, in which the picture of reality we have is false, and the information available to us for making routine decisions is distorted.
University of Chicago economist Raghuram Rajan demonstrates this problem in what he calls “let them eat credit.”
According to Rajan, we have a big problem at the lower end of our income spectrum. Low end incomes not only are languishing, but adjusted for inflation, are dropping. From 2002 to 2008, real wages for the top ten percent of earners increased, but for everyone else they dropped.
What to do?
Rajan points out that the real culprit is education. As the economy gets increasingly sophisticated, the penalty for lack of education gets greater. But we’re failing to deliver this needed education to lower income Americans.
Core to the problem, Rajan argues, is that politicians are more interested in being popular than solving problems. They’d rather offer free money in the form of subsidies and easy credit to low wage earners than take on real problems.
Programs like subsidized mortgages, which contributed much to the housing bubble, make life look artificially cheap and reduce the sense of immediacy regarding the need to get educated.
The rate of U.S. home ownership increased from 1995 to 2005 from 65% to 69%. Over the same period of time home prices doubled, before everything fell apart.
As reported by Peter Wallison of the American Enterprise Institute, in 1992 government backed lending enterprises, Fannie Mae and Freddie Mac, were directed to “promote affordable housing” and to do this by enabling down payments of less than 5% and approving credit for borrowers with shaky credit history.
Through the 1990s and 2000s HUD continued to push Fannie and Freddie to relax standards, requiring them, according to Wallison, “to buy increasing numbers of subprime and other risky mortgages.”
The faulty assumption behind all this, which we’ve learned the hard way, is that politicians think they can use taxpayers and the money printing press as a bottomless pit of funds to promote government schemes.
Many low income families, bought homes they couldn’t afford. Not just because of lying mortgage brokers, but because the whole artificial reality that distorted prices and credit was created by government policy.
It’s hard to find a place to turn where we don’t deal with a reality distorted by government.
We’re all concerned about runaway costs of health care and health insurance. What’s behind it?
In 1960, 50% of our health expenditures were out of pocket and 50% were OPM (Other People’s Money – Insurance, Employers, Government).
Today, 12% of our health care expenditures are out of pocket and 88% are Other People’s Money.
According to Harvard economist Robert Barro, the current persistent high unemployment rate, helping drag out this recession, is traceable to the unprecedented extension of unemployment benefits from the normal 26 weeks to almost two years. The argument that we are currently in unchartered territory and must do the unusual is not true.
Barro points out that unemployment in the 1982 recession reached 10.8% - higher than today.
The perhaps not so funny joke that neurotics build castles in the air and psychotics move into them is worth thinking about.
The ability to succeed is predicated on both freedom and having good information on which to make decisions.
As we distort, through government policies, reality around us, and citizens increasingly get bad information for matters about which they have important decisions to make, we’re not going to recover.
Hey, K. TY very much. Consciousness raising is in order.
I had an argument with neighbor who is big lefty. He asked me if I was a hypocrite for putting solar panels on my roof, especially the subsidies that I received. He thought that solar panels were great. I said that I put up the panels to protect my family from artificially inflated energy prices due to Democrat policies. I indicated that the subsidies were immoral, rewarding relatively wealthy individuals at the expense of the typical ratepayer and taxpayer. He did not understand the problem as he indicated that the panels are saving money on my utility bill. I indicated that the subsidies are not free. Denmark and Germany are the Democrat visions of energy Utopia. Both countries have much higher utility rates without any appreciable benefit to the environment. I told him that I strongly prefer that Democrat energy policies be stopped. My vote cannot stop the rat madness. I can only react to the terrible rat policies.
It shows you how clueless the left wingers are.
for many people, detachment from reality is an instinctual survival mechanism that allows one to prevent the possibility of death via lethal injection after freaking out, yet still remain technically functional.
the rest just live in their little worlds.
don’t ponder it.
otherwise, hope your instinctual survival reflex twitches. otherwise things won,t end well.
You are welcome. It is indeed in order
Have you seen some of the instructors the government pays to instruct the poor? Many are those who have not the education themselves to teach or at best minimal. A friend took one of the "free" college courses offered....subsidized for the "illiterate" because they did not know computer skills. The instructor spent much of the class playing computer card games instead of teaching. And then we wonder why these folks cannot find work thereafter...they do not learn because the instructors are low grade instructors.
“neurotics build castles in the air and psychotics move into them”
Politicians collect the rent.
Part of the problem is how employees are hired. Most resumes are screened for keywords. If the resume doesn’t contain the right keywords then it goes into file 13. With all due deference to HR they are the proverbial cart pulling the horse. HR tends to act more in a forward screening capacity than in a support capacity. Most managers are no allowed to hire directly but must accomodate HR and hire from the pool of people HR selects which leads back to the difficulty of meeting the posted job requirements which often have nothing to do with the job.
At some point it becomes a matter of survival.
I’m commenting from a small, self-installed PV plant on a tiny construction dwelling. The power plant for the house will be to code, etc., but no money will be spent unnecessarily (owner-builder). There’s no nearby power grid access, and that’s a small hardship. I won’t take a tax credit, and there will be some satisfaction each year in further avoiding contributions to this hysterical and dying substitute for an economy. Knowledge is power nowadays, and for some of us, at very low costs.
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