- Cafe Hayek - http://cafehayek.com -
Posted By Don Boudreaux On May 3, 2011 @ 9:28 am In Government Intervention,Housing,Myths and Fallacies,Other People's Money,Subsidies | Comments Disabled
Here’s a letter to the Wall Street Journal:
Writing about the residential rental market, Peter Donovan asserts that “Private capital may serve the higher-end properties and top-tier markets well, but it has not shown the same interest in work-force housing or housing in smaller markets. A private-only solution would leave many markets unserved and millions of Americans out in the cold. As evidence, fully 90% of the government-sponsored enterprise-financed apartments over the past 15 years -10 million units – were affordable to families at or below their community’s median income” (Letters , May 3).
Mr. Donovan mistakes an artifact of current policy as being some sort of law of nature. The fact that government subsidizes the financing of a huge chunk of lower-market apartments means only that government subsidizes the financing of a huge chunk of lower-market apartments. Because government – unlike private lenders – can offer arbitrarily low interest rates on loans to apartment developers, it would be shocking if such government involvement the market for lower-end apartments did not result in this market being dominated by government-subsidized loans.
If Uncle Sam were instead to subsidize the financing only of luxury apartments, the construction of a huge chunk of these apartments would be financed with government-subsidized loans. Would Mr. Donovan then conclude that ‘a private-only solution would leave luxury-rental markets unserved and millions of wealthy Americans out in the cold’?
Donald J. Boudreaux
Article printed from Cafe Hayek: http://cafehayek.com
URL to article: http://cafehayek.com/2011/05/flawed-logic.html
URLs in this post:
 Letters: http://online.wsj.com/article/SB10001424052748703567404576293492614451426.html?KEYWORDS=donovan
 Image: http://www.blinklist.com/index.php?Action=Blink/addblink.php&Url=http%3A%2F%2Fcafehayek.com%2F2011%2F05%2Fflawed-logic.html&Title=Flawed%20Logic
 Tweet: https://twitter.com/share
Copyright © 2011 CafeHayek.com. All rights reserved.