The Obama Plan: What Is Fair?
Fairness will be the death of us. In all the discussions of Obama's new housing plan, the notion of fairness, or rather, the plan's fundamental unfairness, comes up again and again.
You know the litany:
It's unfair to reward irresponsible homebuyers who are now underwater on mortgages they never should have taken out. It's unfair to extend a helping hand toward people who have mortgages on their primary residence, but provide no direct help for those with mortgages on a second home. It's unfair to help people with conforming loans, but not those with jumbo mortgages. It's unfair to spend $275 billion of taxpayer money helping just 9 million deadbeats.
We hear that this plan rewards the reckless and punishes the responsible.
I say so what?
Who cares if it's fair?
We can worry about right and wrong when the economy's not on life support. Right now all of these issues are totally tangential at best. I just want the housing plan to work.
Look, most people in their 20s don't own homes. So in a narrow sense, it's good for me and my friends if people keep getting booted out of their houses because they can't cover the mortgage and housing prices keep going lower. And you could say the opposite of that is true, using our tax-dollars to keep these people in their houses and prop up prices is bad for people who don't own homes but might want to.
If that's all there was to it, if this were really just a zero sum issue, then it might make sense to talk about fairness. But it's not zero sum.
As it happens, there are a bunch of people who need Federal assistance to keep up with their mortgages and stay in their homes. I suppose you could say they're lucky because they're getting government help now and "they don't deserve it." But if they don't get help, there's a domino effect that hurts all of us. The banks that loaned them money go under, or at the very least have less capital and become even more unwilling to give people financing. We need a banking system more than we need the government to spend money in a way that's "fair."
On the other side of the equation, if these homeowners don't get assistance a big chunk of their wealth is going to vanish. Many of them will be poorer, all of them will feel poorer. Now you've got millions of people who are spending less money at a time when we need just the opposite. And consider the effect on housing prices. I'm pretty sure that this program will cause home values to be higher than they would've been without a housing rescue package. That makes all homeowners be wealthier and feel wealthier, which causes them to spend more money, which helps get the economy out of recession, and I'm pretty sure that's good for all of us.
Now, you could argue that this program is too small, or that the details could be changed so that it gives us more bang for our buck, or even that doing nothing instead would do more to end the recession and that would be totally valid. Fighting about whether it's fair, on the other hand, just doesn't make any sense to me.
We've got bigger fish to fry.
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