Books I Haven't Read 1: The Vision of the Annointed

[_Analytics]

The reason why the tools who blame the CRA are racist is because they equate “sub-prime mortgages” with poor minorities. In reality, sub-prime mortgages aren’t associated with minorities living in crappy neighborhoods. Sub-prime mortgages are associated with people who borrow more money than they can afford to pay back. The question is, what do these people look like? Are they black people living in bad neighborhoods? No. Even if you have a low income, you can probably afford a house in a crappy neighborhood.

Sub-prime mortgages are associated with people who borrow more than they can afford to pay back. People who borrow more than they can afford to pay back are living beyond their means. They look rich—they live in nice houses, drive nice cars, have nice furniture, and go on nice vacations. That’s what people who take out sub-prime mortgages look like. People who live in crappy neighborhoods most likely aren’t living beyond their means, and the ones who want to purchase houses there aren’t even trying to live beyond their means.

[_Kevin Graham]

The reason why the tools who blame the CRA are racist is because they equate “sub-prime mortgages” with poor minorities. In reality, sub-prime mortgages aren’t associated with minorities living in crappy neighborhoods. Sub-prime mortgages are associated with people who borrow more money than they can afford to pay back. The question is, what do these people look like? Are they black people living in bad neighborhoods? No. Even if you have a low income, you can probably afford a house in a crappy neighborhood.

Sub-prime mortgages are associated with people who borrow more than they can afford to pay back. People who borrow more than they can afford to pay back are living beyond their means. They look rich—they live in nice houses, drive nice cars, have nice furniture, and go on nice vacations. That’s what people who take out sub-prime mortgages look like. People who live in crappy neighborhoods most likely aren’t living beyond their means, and the ones who want to purchase houses there aren’t even trying to live beyond their means.

Exactly!

And the racism comes in with the false assumptions that minorities are less likely to be responsible and pay their bills.

The simple fact of the matter is that the black population has been below 20% since forever in America, and yet they are gradually moving in to "wealthier" neighborhoods. People moving from lower to middle class are more likely to appreciate the bump in social status and will be more likely to make their payments. Even if that means sharing the home with another family (which many Mexicans do) to split the mortgage payments. It drove my parents nuts to find out there was a black family moving down the street from them eight years ago. Now there are at least four black families in that neighborhood. After returning from Brazil, I can see that this area has been completely saturated with minorities of all stripes, and we're in a pretty nice part of town. When we moved here in 87, it was essentially all white.

This pisses the racists off, and Hannity and Boortz play to their prejudices by using CRA as a punching bag. All it does is get people to hate minorities even more. Just for kicks, go to your local Tea Party and see how many colors you see.

[_Kishkumen]

Great discussion, guys!

[_Socrates]

I wish there were a study to determine what percentage of foreclosures come from minorities, because in my experience the minorities are the ones most likely to keep their homes.

Actually, there is such a study, and its findings do not bear out the politically correct assertions made in this thread, nor your personal experience.

Here you will find the conclusions of the study: from 2007-2009, 7.9% of loans to African Americans had been foreclosed, 7.69% of loans to Latinos, and only 4.52% of loans to non-Hispanic whites had been. The rate for African Americans was 74.78% higher than the rate for non-Hispanic whites. The rate for Latinos was 70.13% higher than the rate for non-Hispanic whites.

It also appears that foreclosures are not clustered in the high-end homes. Here you can see that in 2010 and 2011, the average sales price has for foreclosure activity has been between $90,000 and $130,000. Not exactly high-end homes by the well-to-do overextending into $300,000+ homes.

Whether or not the Community Reinvestment Act of 1977 is or is not to blame, it would appear that however those that bought lower priced homes, and are of racial minorities, got their mortgages, that's where the high frequency of foreclosures is occurring. Consider, though, that banks are more willing to work with buyers of high end homes with big mortgages because the loss to the bank if it forecloses on that mortgage will be much greater than what the bank would experience on a lower end house/mortgage.

[_Droopy]

Sowell essentially said that in principle, of course government can create wealth, and the bridge story is an example of how it is possible. He totally conceded the point. He said that in practice the government rarely does create wealth, and went on a tangent about how in my example, the government would likely continue charging tolls after the project was paid for (which is a terribly bad point on his part in its own right). But he conceded the main point.

No he didn't, and if you understood basic economics, and Sowell's core, overall argument, you would not have misrepresented him in this way.

Sowell does not admit, any more than I do, that the creation of a bridge, or stature, or a court for midnight basketball, is the creation of new, net wealth and represents, in any sense, economic growth. To do that, he'd have to back off on this entire economic philosophy.

A bridge is wealth, and no one disagrees there. But it is not wealth creation in any real, net sense. It is the creation of wealth at one point, by the shifting and redistribution of capital resources from another point to that point. That is not wealth creation in any but a lexical sense.

If people like you will stop worshiping the state as your lord, god, and savior, cease your fear and loathing of individual liberty and unalienable rights, and do some serious reading in economics and political economy outside of Paul Krugman op-eds and pop Marxist screeds like Fast Food Nation, these elementary fallacies of logic and conceptualization could be dissipated.

[_Socrates]

Sowell essentially said that in principle, of course government can create wealth, and the bridge story is an example of how it is possible. He totally conceded the point. He said that in practice the government rarely does create wealth, and went on a tangent about how in my example, the government would likely continue charging tolls after the project was paid for (which is a terribly bad point on his part in its own right). But he conceded the main point.

No he didn't, and if you understood basic economics, and Sowell's core, overall argument, you would not have misrepresented him in this way.

Sowell does not admit, any more than I do, that the creation of a bridge, or stature, or a court for midnight basketball, is the creation of new, net wealth and represents, in any sense, economic growth. To do that, he'd have to back off on this entire economic philosophy.

A bridge is wealth, and no one disagrees there. But it is not wealth creation in any real, net sense. It is the creation of wealth at one point, by the shifting and redistribution of capital resources from another point to that point. That is not wealth creation in any but a lexical sense.

If people like you will stop worshiping the state as your lord, god, and savior, cease your fear and loathing of individual liberty and unalienable rights, and do some serious reading in economics and political economy outside of Paul Krugman op-eds and pop Marxist screeds like Fast Food Nation, these elementary fallacies of logic and conceptualization could be dissipated.

Sowell or not, Droopy, government can create new wealth by creating a synergy between elements of a nation's economy that is on a scale that private concerns would not or could not do. For example, imagine what a weak economy the U.S. would have had over the last 50 years compared to that which it did have, had the interstate highway system not been built by the government. Transportation of products and service providers would have been much more sluggish. We'd yet have regional economies more than a national economy, where products would be built at numerous, smaller factories to provide products within each region, rather than the economies of scale obtained by being able to centrally locate the production of certain types of products for distribution to the entire nation via long-haul trucking over the interstate highway system.

More recently, would we even have an internet where you and I can chat on a board from different parts of the country, or e-commerce could take place, if not for the investment by the government in information technology. Al Gore did not invent the internet, but the U.S. Dept of Defense basically did, with government investment. The purpose may have been national defense, but the investment by the government in creating a means of commerce--e-commerce, that is--has vastly enhanced the economy as seen in the late 1990s and in the 2000s.

Government is not the panacea of economic innovation and boosting commerce. It more often than not dampens commerce, but to say that government has never created new, net wealth is like believing in Mormonism's truth claims and the Book of Mormon's historicity--it defies the evidence.

[_Droopy]

Per Kevin's usual ad hominem circumstantial approach to pretty much everything anyone who disagrees with him says, I feel obliged to point out, regarding his source here:

http://biggovernment.com/publius/2010/0 ... e-lending/

http://activistcash.com/organization_ov ... le-lending

http://www.capitalresearch.org/pubs/pdf/v1268673474.pdf

http://www.discoverthenetworks.org/prin ... grpid=7558

In other words, this is yet another carefully and lovingly cherry picked activist source who's convenient stir-fried charts and graphs say what they and their drones, like Kevin Graham, want them to say.

Kevin doesn't have any idea how these graphs were constructed, what data was used and what left out, or what mathematical or conceptual biases exist in their formulation. But he doesn't need to. The cherries are sweet, this time of year.

[_Droopy]

Sowell or not, Droopy, government can create new wealth by creating a synergy between elements of a nation's economy that is on a scale that private concerns would not or could not do.

Are we then talking about scale of economic activity, or economic growth?

For example, imagine what in a weak economy the U.S. would have had over the last 50 years compared to that which it did have, had the interstate highway system not been built by the government. Transportation of products and service providers would have been much more sluggish. We'd yet have regional economies more than a national economy, where products would be built at numerous, smaller factories to provide products within each region, rather than the economies of scale obtained by being able to centrally locate the production of certain types of products for distribution to the entire nation via long-haul trucking over the interstate highway system.

1. The construction of the highway system itself is a net transfer of productive capital out of the private economy and into government reallocation. This is not an argument against the highways system, but basic critical analysis of economic fundamentals. It represents, at the outset, a net loss to direct wealth creation (economic activity that actually causes net economic growth).

2. The interstate highway system, at best, does not create wealth, but mediates its creation; it allows for more efficient creation of wealth by those elements of society (the private sector) that actually increase the net size of the economic pie. The highway system, in other words, is a precondition for real (net wealth creating) economic activity. Its an economic good, but it does not, itself, create, and the government paychecks used to pay the workmen who constructed it are a transfer from the productive private economy. This represents wealth creation for those workers, but at the expense of others.

Private economic growth tends to encourage and expand numerous other kinds of growth simultaneously, and according to market forces (the desires of 300,000,000 Americans), as opposed to political interests. As mentioned, I'm a big fan of the interstate highway system (although, their are interesting theories about regarding the very real possibility of privatizing such things, which make some salient points).

More recently, would we even have an internet where you and I can chat on a board from different parts of the country, or e-commerce could take place, if not for the investment by the government in information technology. Al Gore did not invent the internet, but the U.S. Dept of Defense basically did, with government investment. The purpose may have been national defense, but the investment by the government in creating a means of commerce--e-commerce, that is--has vastly enhanced the economy as seen in the late 1990s and in the 2000s.

This is true to an extent, as far as it goes, but you still run into the same throny problems as with the highway system.

1. That original government investment represents a net loss to the economy. Its a wealth transfer from the productive sector to the non-productive (do you think the creation of vast numbers of warships, tanks, and bombs represents "economic growth?")

2. Was the technology used in the design and creation of the Internet generated and produced by the military, or by private contractors where the relevant electronics technology was originated and manufactured?

3. The Internet, in its present form, is purely a private sector phenomena, as is the software that runs it. It makes money, not just consumes it to support its existence.

Government is not the panacea of economic innovation and boosting commerce. It more often than not dampens commerce, but to say that government has never created new, net wealth...

To say that the interstate highway system, a taxpayer funded (government, remember, has no money with which to build things like interstate highway systems) project, which creates conditions under which a greater scale of economic activity takes place, then represents, in some sense, the creation of new net wealth is a bit of a sophistry, I think. The system itself took money out of the productive private sector to construct, and itself, directly generates no economic growth. The economic activity that occurs because of its existence does generate new wealth creation, but this new wealth creation is then an indirect effect of the original government expenditure, which I am fine with, but it cannot be conceived of as, itself, an generator of net economic growth. Without it, economic activity would go on anyway, and, if it really was required, entrepreneurs would have discovered a way to build it anyway, at a profit, and at a price that would allow the same economic activity to have occurred that would have occurred with the government constructed system.

Thanks for the good post and rational argument, Socrates. Free of ad hominems and smarm. Very refreshing.

[_Droopy]

I should also point out that the original interstate highway system was not intend, except perhaps indirectly, to accelerate private economic activity. Its was part of the Cold War era preparations for a potential nuclear attack by the Soviet Union, in which massive quantities of military equipment and personal could be moved much more efficiently that previously. It would also assist in mass evacuations from large urban centers.

Military preparedness and defense are among the core functions of a legitimate state, and constitutionally, of the United States, but no one, no matter how supportive of the military they are, should make the mistake of thinking that any of its infrastructure represents real economic growth

[_Kevin Graham]

Droopy lists a bunch of sources he says I relied upon and then accused me of cherry-picking. What the hell is he talking about? I don't recognize any of those links and nothing they say appears in anything I have posted in this thread. I suspect he is confusing me with socrates, but oh well. Droopy never has worked well under pressure.