Stop Them Before They Kill Again !

The endless cycle of unintended consequences

Workers has written often about how well-intentioned government policy often creates incentives counter to the intention of the policy. For example, the guaranteeing of student loans just drives up tuition prices because subsidized capital gets thrown at schools, who then raise their prices and create loan industries to help the kids afford the new higher tuitions. In the end the students are those actually made worse by the program as they leave school with debt they should not have had and thus get jobs for money instead of for love.

Same thing with guaranteed mortgages. This just makes money for the mortgage lenders and drives up housing prices. Now as of late, the financial markets are rocky because these loans (for overly priced homes) have been made to those who can least afford it, causing defaults and thus financial sector writ-large repercussions. So of course, the politicians want to increase (instead of usually when something doesnt work you want to stop doing it not increase the amount you do it !) the mortgage guarantee programs. Stop them before they kill again. When the politicians sneeze with good intentions we all get a cold.