"many Republican contributors in the financial sector were making a fortune on garbage mortgages? "

Dean Baker with another good post:

"Bush, the Political Philosopher, Reappears in the NYT

That's right, the headline of an NYT article tells us that, "White House Philosophy Stoked Mortgage Bonfire." Was it their philosophy? How about as an alternative hypothesis that many Republican contributors in the financial sector were making a fortune on garbage mortgages ( I AGREE )?

The article is actually reasonably good in making this point, but the headline writer certainly deserves some grief. The point, for the 946,326th time is that people get elected to office by currying the favor of powerful interest groups( THIS IS OUR SYSTEM ). They don't get elected for their excellence as political philosophers. Reporters and headline writers should know this.

The article also includes the remarkable revelation that people in the Bush administration first noted the soaring sale price to rent ratio in March of 2007 (okay, some did note it sooner). While this discovery is attributed to someone who is described as a 29 year-old "whiz kid," this is about the most basic statistic that one can use to examine house prices. Any analyst of house prices who was not familiar with this ratio should have been fired instantly for an ungodly level of incompetence. ( AN UNGODLY LEVEL OF INCOMPETENCE DESCRIBES THE BUSH ADMINISTRATION )

If you don't understand the central place of Interest Groups in our Political Culture, you won't be able to understand much of what takes place in it.

"Southern states, which have fronted billions in local taxpayer dollars in the past two decades to attract foreign auto plants"

I mentioned in a previous post that Southern GOP Senators claiming to defend the free market in the Big 3 Bailout was largely BS. I've no doubt that Ideology played some small part in their positions, but the main reasons were Sectionalism and protecting their constituents, and skewering Labor Unions who are a major Interest Group in the Democratic Party. I mentioned that Southern Auto Plants have received government favors in order to be lured to those southern states. I term that Government Intervention.

Here's Matthew Yglesias:

"Nice piece from Mike Lillis at The Washington Independent about the tenuous commitment to free market ideology shown by the union-busting southern conservatives who want the domestic auto industry to die, in order to benefit Dixie-built cars from foreign-owned firms:

“We don’t think it is the role of government to intervene,” Sen. Jim DeMint (R-S.C.) told the Fox Business Network last week. “We need to let the market and the laws work the way they are already in place.”

Yet this argument — that the government has no business interfering in free markets — ignores an increasingly frequent tradition among Southern states, which have fronted billions in local taxpayer dollars in the past two decades to attract foreign auto plants. Those incentives, arriving in the form of tax breaks, training for new employees and even land, have enticed BMW to South Carolina, Mercedes to Alabama and Nissan to Tennessee. The result of the government subsidies has been the steady emergence of the South as an auto-manufacturing powerhouse. Some are dubbing it the “New Detroit” – a region where real estate is cheap and the labor’s not unionized.

Not coincidentally, these Southern states are represented by the same coalition of GOP senators who led the fight against the recent Detroit bailout proposal. That legislation would have provided $14 billion in emergency bridge loans to General Motors and Chrysler, both of which say they lack the finances to survive the month. Rallying behind the animated opposition of GOP Sens. Bob Corker (Tenn.), Richard Shelby (Ala.), Mitch McConnell (Ky.) and South Carolina’s DeMint, Senate Republicans killed the legislation.

This is, of course, but a small slice of the larger southern politics tradition which has always insisted since the end of the Civil War that cheap labor and a low-tax, low-service, high-inequality social and economic system are the key to prosperity. This approach left the South perennially poorer than the rest of the country, but over the past couple of decades this made-in-dixie failed approach to economic development has come to dominate national policy. Not coincidentally, during this period the United States has begun to fall behind high-wage, high-service, low-inequality northern European countries in terms of average living standards."

If people are resorting to incentives to lure industry and jobs to their area, it's not immediately clear how that lowers wages and living standards for that area. It might be true that it has a negative effect on the whole country, but, then, there wouldn't be any Sectionalism, which there clearly is. I list Sectionalism under Interest Groups.

Nevertheless, this does provide yet more evidence that we don't have a "Free Market" system, but, rather, a Mixed Economy or Welfare State, in which various Parties and Interests vie for Government Largess, which, to be fair, they are helping to pay for. This would seem to give them some claim on government aid, depending, of course, on the merits of each individual case.

What's The Bother About Labor Unions?

I want to consider the following point by Sebastian Mallaby in the Washington Post:

"And, given the object lesson from the collapse of the Big Three carmakers, government should think carefully before empowering labor unions further."

Now, I understand that Labor Unions are, in general, an interest group in the US tied to the Democratic Party. I also understand that GOP Senators from Southern States where there are foreign automakers competing with Detroit wouldn't be excited about given a lending hand to Detroit, based on regional politics and the interest's of their constituents. It might be nice to know if those states used what are called "incentives" in order to lure those automakers to those states, which I call government intervention in the market. So far, I understand.

What I don't understand is the bother created by Labor Unions in general. After all, the Labor Unions represent individuals who have freely chosen this representation, and the contracts that they arrive at with their employers are also freely entered into. What's the big problem?

As to wages, I have no idea if the wages they receive are fair or not, without looking into exactly what they're making and what they do and how much the company makes. Even then, I have no exact feelings about the correct or fair wage compensation. That's up to the people involved.

I don't understand this bother created by people making good money. What's the problem? That's not a bad thing. I would hope that they make as much as they can. So would I.

I also agree with Dean Baker here:

"The Employee Free Choice Act and the Right to a Secret Ballot

Workers do not currently have the right to a secret ballot in elections deciding whether or not they will have a union. The employer has the option to recognize a union based on card check (a majority of workers sign a card indicating their desire to join a union) or to demand an election certified by the National Labor Relations Board. The Employee Free Choice Act that will be considered by Congress in the next session gives this choice to workers.

Under the legislation, workers could organize by card check, but they can also petition to have an election overseen by the NLRB. Therefore it is incorrect for the Post to assert that the bill's "intent [is] to eliminate secret ballots in union elections."

But my bottom line is that I have no opinion about Unions. If people want them, that's fine. If they don't, that's fine as well. As long as people are freely choosing to organize and freely agreeing to a contract with their employer, who is also freely agreeing, I don't have a position one way or another.

This also informs my feelings about CEO pay and Hedge Fund Managers pay. It does seem excessive and the incentives seem poorly designed, but I have no position on what they should make. Again, I'd have to see what they do and how well they do it, and how important they are to their business in general. I have no a priori figure in mind.

I also understand that if, as I said before, I worked at AIG in a division that had been making money throughout this bubble and crisis, I wouldn't be too happy about having to take a pay cut because of other's stupidity. It might well make me feel unappreciated, and I would leave AIG. So, not all of their bonuses are necessarily idiotic.

I know that there are people who have theories of justice, say, that demand certain limits to salaries and wealth and their concentration, which I have some agreement with. I certainly don't want to see concentrations of power, and, if concentrations of wealth lead to that, then that's a problem that needs to be addressed.

My main concern is for the truly needy. In that sense, I agree with Rawls and others who believe that our shared resources should aid the truly needy first. Now, who's truly needy is a matter of opinion in many cases, and whether or not people are derserving of help is another matter of opinion, but I stand by the belief that we should help the truly needy first, as in foreign policy, we should focus, in our human rights aspect of foreign policy, on where the most people are suffering and dying. What good we can do might vary, but we can at least keep our eyes on, and focus enough of our attention on, where the worst human suffering is occurring.