Monday, October 31, 2011

Freddie Mae to road subsidies

    In light of the reading entitled:THE EFFECT OF TRANSPORTATION SUBSIDIES ON URBAN SPRAWL, I find it interesting that the above article featured in the Associated press discusses how people that took advantage of the lower cost of buying a home before the housing bubble burst are dealing with it now. Even as the confidence of individuals participating in what we call the American economy dwindles further, many people have the same mortgage and interest rate that they had before the recession, but have experienced personal hardship as the participants in the economy begin to trod through the slow correction to prices that had been held up by artificial means.
    I think that the ease with which many americans were able to get homes a few years ago because of government intervention, is very similar to how the road subsidies mentioned in our reading drove transportation costs down by quite a bit. Both of these government policies had noble ideas behind them, but it isn’t that hard to see where these pieces of legislation went awry. Though the errors manifest themselves in different manners, one can use either of these subsidies as case studies as to where bad policies can lead to even worse consequences.
    It is funny how highway subsidies were probably initially provided for a few reasons bootleggers undoubtedly were happy with how good roadways would provide a reliable infrastructure with which to build up the trucking industry which could be seen as a good by the baptists because it would eliminate an overland transportation monopoly that had been held by the railroads for nearly a century.
    Freddie Mac and Fannie Mae were most likely supported by bootleggers because of all of the money to be had in the constructing of new homes with the support of the government. Baptists, more than capable of hiding the ulterior motives under the thought that such subsidies would give housing to needy families just trying to live out the American dream.
    It is funny how both of these subsidies have at least incentivized if not contributed to sprawl in America. Cheap transport got americans out to cheap land on the outskirts of cities, and with the help of cheap loans houses were built on large lots away from the city causing vast outward expansion of the urban areas. It is ironic that many officials in government hate sprawl yet probably voted for these subsidies in some capacity whats more is a possible solution to transport based causes of sprawl proposed in the reading for this week is raising the taxes on things related to transportation in order to “coax consumers into driving less and relying less on motor transport so that they are less vulnerable to energy price based shocks to the economy” something tells me that this will not go exactly as planned.

1 comment:

Larry Eubanks said...

"It is ironic that many officials in government hate sprawl yet probably voted for these subsidies in some capacity"

It might be ironic. On the other hand, if you consider Bastiat's "Seen and Unseen" from the Austrian course, then your observation could be that this irony is another illustration of the analysis of public policy which emphasizes only what is seen and completely misses what is unseen, and the more important implications of the policy are the unseen future impacts.